Tips For Investing In Outside Expertise
by Alf Nucifora
Every small business will ultimately confront the need for outside consulting services. And yet it's a course of action that inevitably generates fear and apprehension. How can I find the right consultant? How will I know whether or not I'm paying too much? Will the advice that I receive legitimately help my business, or is it simply a concoction of right-sounding jargon from a hyper-confident, smooth-talking pitchman?
Rules to Live By
The following advice is a distillation from a number of hiring experiences…some successful, many flawed. It represents the consultant-hiring process viewed from both sides of the table - the client and the consultant. Follow the rules, and you can't go wrong. As always, pay heed to intuition and instinct…if it doesn't feel right, it probably isn't.
- The Three "Cs": The prospective consultant should always pass this simple test:
Chemistry... Do I like the person? Can I form a harmonious working relationship with him?
Conviction... Does he really want my business? Is he as excited about my business as I am? Can I call him 24/7 with a serious problem and get an immediate, willing response?
Confidence... Does he exude an aura of trust and responsibility? Does he know his business, and does he speak with experience and wisdom?
- Trust: Can I trust the consultant with my company's confidential information and inner-most business secrets?
- Responsiveness: How responsive is he likely to be? How quickly will he respond to my phone calls and emails? Will I get enough 'face' time?
- Meshing with the Corporate Culture: Will the consultant's personality conflict with my company's culture, and to what extent will that aid or hinder the evaluation and advisory process?
- Proven Track Record: Does the consultant have a successful track record? To that point, has he worked in similar industries or business categories, and to what extent will I have to train him about my operating environment?
- Ask for references, and check them out carefully: Talk to a minimum of two or three references. Ask probing questions about service, responsiveness, performance and results.
- Know what you want: Many companies will hire consultants without a clear objective in mind. This confuses the consultant and inevitably leads to disappointment. To paraphrase famous ad man David Ogilvy, "Don't buy a dog if you're going to do your own barking." And don't have unrealistic expectations: the consultant can only do so much. Be clear as to what the deliverables will be and confirm that expectations on each side are evenly matched.
- Beware the Jack or Jill of All Trades: Watch out for consultants who say they can do everything. With the exception of the larger firms, most small business consultants specialize in specific areas or functions.
- Strategy vs. Execution: Don't expect consultants to be capable of or willing to execute their recommendations. Most will address the problem, deliver the solution and leave the execution up to you or other parties. If you want the consultant to stay involved through the execution phase, say so up front.
- The inevitable compensation issue: Probe compensation issues carefully. Be specific about what you want and what you're willing to pay for. Ask for specific rates (these will vary by seniority and experience of the staff members assigned to your account). Also be specific about what you will and will not pay for, e.g., out-of-pocket costs such as travel, phone, research time, etc. Put the agreement in the form of a contract. It provides a written record of agreement in the event of a later dispute. And remember that a consultant's fees should be reasonable ($100-$300 per hour). Low fees may suggest substandard quality. High fees may indicate more vapor than substance. Whether monthly retainer, hourly rate, or set project fee, remember everything's negotiable.
- Test the Waters: If you're not totally sold on the consultant, try a test assignment. See how he performs and then decide on a more irrevocable long-term commitment.
Some Dos and Don'ts
Ron B. Lieber of Fortune Magazine, provides some summary advice:
- Don't use a consultant as a 'rubber stamp' for your decisions.
- Don't use a consultant to act as a referee for intra-company battles.
- Don't hire a consultant to second-guess your own people.
- Don't think that the initial scope of work agreement is final…most consultants will try to widen the scope of the assignment as soon as the ink is dry on the contract.
- Don't expect to see too much of the senior consultant after the initial pitch has been made. Be specific about how much time you want from the senior versus the juniors.
- Don't isolate your company's best people from the consultant. Don't fob consultant off to junior personnel because your more senior folks are busy running the business.
- Don't accept arrogance from your consultant. A good consultant is not out to score points at your expense. Smart consultants understand that the client's success is their success.
- Do suggest that your consultant consider a contingency-fee arrangement, where the consultant's fee is paid based on the amount of money saved. Most consultants won't like it because they fear that the company will screw up their recommendations.
It makes sense to hire a marketing consulting if there is a legitimate need that cannot be addressed internally. But, make sure the need is defined and that the objectives of the assignment and the relationship are clearly understood before you pick up the phone. And remember, the best consultants deliver more than technical expertise. They understand that the success of the assignment depends equally on the relationship that they develop with their client which, in turn, provides the platform for truthful and realistic assessment, honest and candid feedback, and a recommendation that will ultimately receive buy-in.