Hire A Consultant
As your business grows, all different areas of it become more complex and often-times more intertwined. At a point, you might think about bringing on a management consultant. Read in this blog post how to make the most out of the consulting engagement.
What is a management consultant?
A management consultant is a business professional that will help you solve your business problems. Consulting firms often specialize in specific verticals, which could mean either focusing on a specific industry (an eCommerce consultant) or focusing on specific topics (an operations consultant).
What are the reasons to bring on a consulting firm?
You will bring on a consultant to drive a certain change within your organization, be it on strategy, operations or another field. Digging deeper, there are different reasons why you can’t facilitate that change yourself and might look for a consultant.
ACQUIRING ADDITIONAL EXPERTISE
In many cases, the rationale behind hiring a consulting firm is to gather expertise that doesn’t exist in-house. Again, this could be knowledge about an industry or market or methodological know-how about solving specific problems.
Especially for smaller organizations, it will be uneconomical to have all possible expertise in-house, as some knowledge is only required for a specific time or during a specific stage of the company, so it doesn’t make sense to bring top talent for that specific niche onboard for the long run.
Usually, the founders/CEOs of smaller organizations are subject matter experts in a specific domain, e.g. real estate or marketing. They can’t have the know-how for all other business-related topics.
An example: You bring on a consultant to help you implement an ERP system. While it will make sense for you to hire an admin to maintain the system and support users, it doesn’t make sense to hire an implementation expert because you will only need them for the duration of the implementation project.
ACQUIRING ADDITIONAL CAPACITY
Another widespread reason to bring on a consultant is a lack of capacity and detachment to execute a specific project. In other words: It’s not that you, as the founder or CEO, are not able to complete a certain project; it’s just that your schedule and your involvement in the day-to-day operations don’t allow you to. Especially with younger or growing organizations, this is a common problem. Bringing on a consultant to ensure you have enough execution firepower is a great way to solve this problem.
What are the alternatives?
Once you have identified the need, there are some alternatives to hiring a consulting firm.
You could use training for you and/or your team to acquire additional knowledge. There’s a wealth of training offers out there, ranging from free online training to expensive onsite training.
While training might work just to add knowledge to your team, there are two things it can’t do:
- Tailored problem solving: Training will by default be generic and not address your specific problem with all your specific parameters.
- Facilitate change: Often, doing things right is not only about knowledge but about changing behaviour. Training will not help here.
- Add capacity: If you have the capacity and are strong at executing, training might be the right idea for you. As said above, execution is often the biggest problem. Training won’t help here.
The same applies to business literature. But it’s always good to read.
HIRING A BUSINESS COACH OR MENTOR
Hiring a business coach or mentor can be an alternative, depending on your situation. A coach is someone who will give you the right tools and ask the right questions to help you find your own solutions to business problems, whereas a mentor is someone who will share his/her own experience to guide you. Both of these roles will agree with you on the next steps and hold you accountable.
If you are strong in executing, this could be a viable approach. It will, however, require you to gain additional knowledge, free up your schedule to work on whatever problem it is you want to tackle and facilitate the change within your team yourself. A consulting firm will do more of that work for you.
Anyways, it’s always a great idea to have a mentor or business coach.
What to look out for when choosing your consulting firm
If you have decided to hire a consulting firm, you want to consider many factors when choosing the right one.
First, determine what expertise it is you really need. Are you looking for someone to enter a specific market or industry, then you need a consulting firm specialized in this. For market or industry knowledge, years of experience of the consultant or consulting firm are very relevant.
If your goal is to optimize your processes and organization, then look for this expertise. For this field of specialization, the quality of tools the consulting firm uses and their understanding of the specific problem will be more important than the number of years they have spent doing the same work.
Whatever it is you’re looking for: The best recipe for a successful consulting engagement is to be crystal clear about what you want and what your desired outcome will be.
Especially when you are a smaller organization, a project you hire a consultant for will often have a scope big enough to have a lasting impact on your team and the way you operate. For this reason, you want to make sure that the consulting firm you hire has a matching culture that corresponds with your own company culture. Also, this will make the project run much smoother. Note: If you are a remote-first or remote-only organization, it might make sense to look for a remote-first consulting firm.
ABILITY TO DELIVER
The ability of a consulting firm to deliver a project is critical when choosing the firms. The ability to deliver is defined by a combination of the above-mentioned expertise and culture fit, as well as their size (which determines capacity). Depending on the size and scope of your project, one freelance consultant can easily be enough. For bigger or more complex projects, you might need a firm that has consultants with different expertise. Either way, address this topic early to ensure that the consulting firm you hire can complete the project in the time and quality you need.
The Steps of hiring a consultant
DEFINE YOUR BUSINESS GOALS
As described above, the most important step is to become clear on what you want to achieve. After you have that clear goal you want to reach with the consulting engagement, there are more steps to hire a consultant or consulting firm.
DETERMINE YOUR BUDGET
It is critical that you know how much you want to spend on the consulting job. Once you know your goals, it should be fairly easy to arrive at a rough estimate of savings or the positive impact these goals will have on your bottom line. This will give you an anchor to determine your project budget.
FIND A CONSULTANT
There are many different ways to find potential consulting firms for your needs.
- Google: Look up your needs in Google or another search engine. Search for your problem + consulting firm. If you need the consultant to be in your geographic vicinity, add your location or use Google Maps or another location service.
- B2B referral platforms: There’s a variety of B2B platforms that you can use to find the consulting firm you need. The benefit of platforms like clutch.co or wlw.de is that listings are often vetted, which adds some certainty to the selection process.
- Freelance marketplaces: Freelance platforms like upwork.com or Toptal can be a good source for specific needs as well.
- Your Network: Ask business partners or friends if they can recommend someone or a specific firm.
TESTIMONIALS, REFERENCES, REVIEWS AND CASE STUDIES
Once you have a list of possible firms, check their testimonials and references. If they don’t have any, contact the firm to provide some. Lookup their reviews on public platforms. Also, case studies they might publish can be a good source of information about the portfolio of clients they’ve served and past work they’ve done.
Once you have shortlisted the firms, schedule a call or meeting with them to evaluate expertise, culture fit and ability to deliver. Try to make your objectives very clear and get an understanding of how they would reach them. When you hire a remote consultant, check whether the time zone works for you. It doesn’t have to be the same timezone, but it helps to discuss the possible time windows to hold joint meetings.
Score all the consulting firms you have talked to against the above topics and go for the one with the highest score.
In the contracting phase, you agree on the scope, time and budget for your project. This can be done roughly and verbally or very specific and in written form. It depends a lot on how clear you are about the scope. Questions to consider and discuss during this phase:
- Objectives: What is it you want to reach? What will be a successful project outcome?
- Roadmap: What are the steps and commitments, both from the consulting firm and yourself, to achieve the objectives? Are there specific milestones that you can agree on already?
- Payments: Will you pay the consultants on an hourly basis, with a fixed project price or on a subscription basis? If your scope is very clear, a project price is a good idea. When you are not so clear but want to move (and can move) quickly, go for hourly fees. Also, don’t forget to discuss invoicing. A consulting subscription can be interesting for a smaller organization: You buy certain consulting services availability per month for a flat fee. This is interesting if you can’t allocate many resources at once and full-time but need ongoing support.
The contracting phase’s goal is to be clear about what to expect from the engagement and each other.
This last phase is about providing the consulting firm with everything they need to get started. This could be:
- Documents, e.g. non-disclosure agreements you need the new partner to sign
- Company information
- System access to run their own reports etc.
- Contact information of all relevant team members, even better: introductions
- All other pieces of information they need to get going
- Schedule initial kick-off calls
It’s not the onboarding phase’s goal to throw everything over the fence and never talk to the consulting firm again. Your goal as a business owner is rather to get them started as smoothly and quickly as possible. Every hour they don’t spend on understanding the basics about your company or operations will lead you to your objective faster.
Please let me know your experience with hiring consulting firms in the comments.