Should You Hire a Business Consultant?
Hiring the right consultant can be a cost-effective way for your small business to leverage specialized knowledge. The challenge for a small business owner is to understand the role of a consultant in their business, and to learn how and when it is cost-effective to hire one. Below, I’ve provided a few bits of advice to consider when deciding if you want to hire a small business consultant.
What does a small business consultant do?
A business consultant is simply an outside expert you hire to solve an internal business problem. A good consultant is a great source of specialized knowledge. A great consultant brings knowledge, skills, experience, and process to improve the client’s condition.
Unlike in-house employees, consultants have independent schedules, may have multiple clients, and are hired on a contract/project basis. A consultant can help with marketing and sales development, business expansion and improvements, and even execution of their ideas and recommendations.
Why do people hire small business consultants?
Small business owners hire consultants as a cost-effective way to bridge a gap in knowledge and skills within their company, or a as a way to bring a fresh, objective, and professional perspective to the company.
Here are the three most common reasons why our clients turn to consultants for help:
To find the problem(s): In many cases, a business may be exhibiting problematic “symptoms”, such as a decrease in sales, or cash-flow issues, and internal management in unable to pinpoint the source of the problem. In this case, a consultant can come in observe the symptoms within your operations, conduct some tests and research, and determine the root of the problem.
To create the solution(s): In some cases, you may have a goal that you can’t achieve internally either because there is a skills gap or because it is simply not within your company’s core competency. Hiring a good consultant can save time and money, and ultimately achieve a better result.
Optimization: In some cases, your company may have grown very quickly and know there are lots of things you could be doing better, but you don’t even know where to start. A consultant can come in and bring in some fresh perspective, evaluate any or all areas of your business, and determine the processes and procedures to increase productivity levels.
Where to find consultants?
Finding the right consultant is the hard part. This is why I cannot stress enough the importance of the “mutual consulting interview”. Whether you talk to your consultant in person or by phone, a live interaction will tell you more about that consultant than any website or review will. Trust your gut. Is the person excited about your business, and about working with you? Do you believe they can achieve what they say they can achieve in the timeframe they quoted?
Now, having said all this, even with the best intentions there may be some consulting relationships that end up just not working out. When that happens, it’s usually a mutual feeling. In other words, don’t feel bad for parting ways with a consultant if things aren’t working out—chances are, they know it’s for the best, too.
Contracts are typically for 3-6 months, with the option to renew the contract as necessary. Setting the optimal time period for your project is important to ensure your consultant has enough time to provide results, and it is also helps to ensure timely progress.
Price is determined by value. Giving you the statistics on fees alone is not very valuable to you when consulting fees can range from $150-$10,000 per hour and projects fees can range from $1,000-$250,000. A good way to determine the right budget for hiring a consultant is to set it as a fixed percentage of your total costs and/or sales. For example, if your monthly sales are $10,000, it is not wise to pay $5,000 per month to a consultant. On the other hand, if your monthly sales are $200,000, and you want that number to grow to $500,000, then $5,000 per month for a 6-month contract with a consultant sounds a lot more reasonable.
Often a consultant can work with you for free to help you determine the right scope and budget for your project. Your preliminary discussions with a consultant are a great way to test the waters with your potential working relationship, too.
A small business consultant can help you run your business, by planning your business strategy and in some cases even executing it. But not all consultants are created equal, and not all businesses or business projects are created equal, either. You’ll need to consider why you’re thinking about hiring a consultant, and how long you’re willing to wait before you see results, and how much you can realistically afford to pay for their counsel. Then, you need to find a consultant that you really click with. When all of that comes together, you’ve positioned yourself for success.
To find more information about small business consulting, be sure to visit us www.kmpbusinessconsulting.com.
Disclaimer: Articles are made available for educational purposes only as well as to give you general information and a general understanding of the legal concepts, not to provide legal advice. By reading this article you understand that there is no attorney-client relationship created between you and KMP Business Consulting Services. The information provided in this article is not legal advice. You should not act upon this information without seeking advice from a lawyer licensed in your own state or jurisdiction.