Hiring the right consultant can make all the difference. The problem most small businesses have is deciding upon what type of consultant to hire. To resolve this issue, I’ve come up with a list of 5 steps for small businesses looking to hire a consultant. If properly followed, the chances of hiring the right one increases substantially. Whether it’s the manufacturer looking for someone with the experience to reduce cycle times, and increase production throughput, or the small business looking to increase the company’s market share, the ability to find the right consultant boils down to some simple rules. So, for those small businesses looking to employ a consultant, what are these 5 essential steps?
Working With Consultants
Before going into these criteria, I want to first start off by explaining the process behind how most consultants work. When I first started working in consulting, I work for a company out of Chicago that concentrated on production throughput analysis. We had a 50% initial closing rate after submitting proposals to clients. These proposals are based on an analysis that can take anywhere from one to two days, all the way up to a week and more – depending upon the issue at hand.
Our approach was to provide a proposal that merely touched on the issues, but provided little to no specifics on how to resolve them. Obviously, we needed to incentivize customers to move forward by providing them just enough to pique their interest.
After submitting our proposals, half the customers hired us on the spot while the rest thanked us, and proceeded to try and implement our suggestions themselves. Unfortunately, most failed miserably and hired us after their failed attempt. Once they did, our closing rate skyrocketed to 80%! I mention this because if you think your company can implement the desired changes from your initial analysis, you’re likely going to fail.
If your company had the people, knowledge and experience to make it work, you’d likely not need the services of a consultant in the first place. Consultants work because they provide a different perspective on an existing problem. However, they only work if your company moves forward with hiring them. So, the question remains, what do you need to look for when hiring a consultant?
1. Look for Solution Providers
Anyone can identify problems. In fact, identifying business issues is the easiest part, but to actually come to the table with real solutions, is something else entirely. Look for consultants that work with your company’s internal resources and processes. Identifying issues does nothing at all to resolve them. Most importantly, theory has very little use to companies who need consultants to change the dynamic of the company itself – if that’s what’s needed. Therefore, the first criteria is to identify those consultants who do more than merely provide suggestions, look for ones that are willing to work with your personnel to make the necessary changes.
2. Experience is Essential
Perhaps it simply goes without saying that relevant experience is paramount to success. Now, experience is a funny thing. Most companies immediately assume that experience means the consultant must have a history of successfully servicing clients for a given period of time. However, this isn’t exactly true. Experience is relative. In this case, I’ve met several consultants starting out who have just as much, if not more, experience than a firm with 15 or 20 years direct consulting experience. Experience relates to the function itself and someone who has a history of excellence is worth pursuing. Therefore, use experience to your advantage but don’t immediately shut the door on the consultant looking to get their consulting business off the ground.
3. Establish Criteria with Internal Personnel
Bottom line, somebody somewhere will take offense to the hiring of a consultant. This of course depends upon the scope of their responsibilities. However, for the most part, it’s difficult for employees to accept an outside influence. This is especially the case with those occupying upper management positions. To them, hiring a consultant is the first indication that the company doesn’t believe they have the ability to get the job done. Therefore, to make the job easier for both the consultant, and the company’s employees, it’s a good idea to take the time to sit down with management and explain that their cooperation is essential. Doing so beforehand will ensure that those differences of opinion won’t escalate to serious issues.
4. Look for Quantitative Results and Set a Timetable on Review
For the project to be successful requires your small business have quantitative results and measurements and that both you, and the consultant, agree upon a reasonable timetable for project completion. This includes not only a timetable for the entire job, but also on periodical review periods where progress can be assessed and issues discussed. The best consultants will provide analytics and metrics that speak directly to their business approaches. For instance, when I work for that aforementioned Chicago consulting company, we provided our manufacturing customers with a live update on savings – based on our ability to increase production throughput. This system was available at a moments notice and our customers could immediately see the results of a given approach.
5. Insist on Performance-Based Compensation
It’s always a good idea that a portion of the consultant’s compensation be performance based. Now, there’s no way a “good” consultant will ever agree to their compensation being totally based on performance. After all, your company’s employees & management can be very protective of their roles and it’s not uncommon for projects to fail simply because employees and management wish it to. The fact is, the best consultants rely upon their experience but almost all of them know that someone, somewhere, will try and throw a wrench into their plans. Therefore, insist on a portion be performance based, but don’t expect anything more. A good rule of thumb is to have 10% to 25% of the project’s cost be based on performance.
As mentioned, hiring the right consultant can make all the difference. However, to do that means your company will have to do its homework and provide a working atmosphere conducive to cooperation. One of the issues consultants have is that some of the company’s owners aren’t involved in the day to day operations of their company. It’s during these periods where employees and management can actively work against the consultant. However, this isn’t an issue when small businesses look to hire a consultant. If anything, that consultant often has better access to the company’s owner – which helps to immediately address any of those aforementioned employee and management issues.
Choosing the right supply chain means matching an approach to your business model.
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