I recently engaged in a Quora discussion with someone about the “real” value consultants provide to businesses. I often get asked when a consultant should be hired. Until now, I have avoided writing about it because I fear it will read like some thinly-veiled endorsement of consulting as a business practice or of Redhawk Consulting itself.
After watching a few of my colleagues succeed in misusing consultants and people getting paid for consulting who provide zero value, I figured it was worth taking that risk.
This article is aimed at entrepreneurial companies and not larger organizations. Big companies hire consultants for far different reasons than SMBs. For some publically-traded companies, MBB (McKinsey, Boston Consulting Group and Bain) add a level of credibility to management from the perspective of board members and shareholders. The quality of research and mental horsepower the MBB companies can provide are world-beating. Nothing signals you are taking something seriously more than dropping $2 million in fees with one of the big three firms.
Instead, I want to focus on the specific circumstances entrepreneurs face.
I have engaged several founders who recoil purely out of fear or ego at the idea of using a consultant. They argue that a consultant couldn’t possibly understand the complexity of their business, would cause too much disruption or will tell them things they already know. The juice isn’t worth the squeeze.
In reality, founders are often just scared a consultant is going to call their baby ugly. They know their (fill in the blank) process or system is fundamentally broken and that (fill in the blank) was a terrible hire six months ago. They aren’t excited about someone else seeing the growing pile of stuff that’s been strategically ignored. These entrepreneurs have invested the blood, sweat and tears; they know it’s not perfect but they are pouring their very soul into this endeavor every day. It’s easy to see why working with a consultant could seem almost insulting.
Professional service firms can descend on entrepreneurial businesses like vultures so founders become wary of anyone trying to “help” them. It’s unfortunate but completely understandable. One of the challenges owners face is separating the worthwhile partners from the succubae. That gauntlet can produce some mental calluses where even valuable consultants are assumed to be another parasite.
Consultants working with SMBs should return almost immediate value. The work they do should be deadline-oriented and revolve around specific deliverables. Most of the value from consultants for entrepreneurial businesses comes in one or more of the following three forms.
Expertise
It’s not feasible to hire people for every possible skillset and talent. Most organizations are better off finding contractors for specific projects where their expertise can be “rented” rather than owned in the form of full-time employment.
Perspective
This is a well-worn concept but there is legitimate value in having someone come in to look at processes and systems within your business who don’t carry the baggage of office politics or institutional inertia. This can be especially helpful to founders or owners when they are deadlocked in opposing views of how to move through or past an obstacle in their operation. Good consultants don’t care which owner owns 55% of the company.
Resource
Founders and owners who also act as chief executives run out of time far sooner than they run out of ambition. A trusted consultant can act as a plug-in resource, get projects done or design solutions on behalf of those founders. This creates a force-multiplier and while those consultants cost far more per hour than a typical employee, they should only be there until the engagement has been successfully completed. Meanwhile, the leadership has continued to tackle other opportunities.
There is, of course, the flip side where consultants should be avoided. Engagements that have no deadlines, metrics to measure success or timelines should be avoided like a virus. Unfortunately, there are consulting firms that act like ticks. They make their home in the company by digging under the skin and “uncovering” more and more projects that need their attention. The hours keep getting billed and they end up as an over-priced de facto employee. Firms that focus on working with entrepreneurs should always be working themselves out of job.
The other type of engagement to avoid are those where the consultant or firm must provide ongoing facilitation of the process or system they are introducing to your organization. Entrepreneurs need programs that can be internally perpetuated. The client should own a functional work product that doesn’t require further billing hours.
Be aware of the recently unemployed “consultant.” There is a troubling trend on LinkedIn where people are listing their current position as “Consultant” rather than “Currently Looking.” I understand that consulting offers income for someone while they find their new job but it dilutes the effort and reputation of dedicated consultants. Remember that an LLC costs less than $500 to set up and can be completed online in just a few hours. The barrier of entry to start a consulting firm is really low so check for references.
My firm was started like many where I was able to secure my first customer by deeply discounting my rates to create credibility and work product. I bartered services with other startups and volunteered my time with non-profit economic development programs. If you are considering a new firm, check for these things because that’s how many legitimate startup consulting practices pay their dues.
Consider what you can get out of engaging a firm and have a clear expectation of what a successful project will create. Any consultant worth their salt will be happy to engage in conversation even about potential projects so if you are willing to have an open-minded conversation with a well-respected firm, have one us buy you a cup of coffee and figure out it its worthwhile to work together.
All babies are beautiful, even the ugly ones.