Hiring a Consultant? Factor In The Intangibles

By Steve Windhaus | Posted March 03, 2004

What should a small business owner bring to the table when hiring a consultant?

After five years operating my own small business planning service, I've come to realize it's my job to bring something to the table. I'm the one selling the service. Hiring a consultant isn't only about analyzing the costs of the services provided. Hiring a consultant is really about finding new ways to increase sales and profits. In order to make a wise business decision, you must consider the intangibles — those things that are outside of the services rendered.

Not certain what intangibles to consider when hiring a consultant?

Start by thinking like a consumer. You may be a business owner, but this changes when you spend your money — you become a customer. We are all very reluctant to let go of our money for something that, on the surface, is intangible. You can't touch it, feel it, or even see the service before deciding whether or not to buy it. The challenge is greater if the service is one for which success will be determined by your ability, not the consultant's, to facilitate the project.

I recall many times in the past, when teaching in business plan workshops and consulting clients, they would relate stories about soliciting advertising space in newspapers, magazines, on cable TV and radio stations. The sales rep spoke so glowingly of how far and how wide the paper or magazine was circulated, or how many people watched or listened to the station. Then I would ask my client if the rep mentioned anything about the types of people listening to or reading that media. So often, I noticed bewildered looks on their faces. This is especially true of first-time business owners.

In these examples the media sales rep succeeded in overwhelming my clients and students with numbers. Suddenly, they were giving up their rights as consumers — the ones paying for the services. With a symbolic swift kick, I instructed them to "turn the table" on the sales rep. It was the obligation of the sales rep to demonstrate why that particular media was going to create the right image, increase awareness and drive customers to the store, ultimately increasing sales and profits. Oh, and don't forget the sales rep would have to demonstrate the validity of the research data supporting that advertising strategy.

This same example can apply to your decision whether or not to hire a business consultant. Assuming you have the need for a particular consulting service, certain actions should be taken prior to making your decision. The service can be marketing, acquisitions, business plans, marketing plans, advertising packages, or those provided by application services providers, such as online bookkeeping, Web site visitor analysis, online catalog creation, or secure transaction processing, an even hiring a Web master.

You need to define your needs, consider the best candidates, the costs and projected returns on your investment, credentials, testimonials, track records and all the intangibles that are challenging to translate on paper.

Getting Started
Begin by doing your homework. You have an issue or problem that needs to be addressed and resolved. You have perceived needs as to what is required to achieve the intended goal. Hopefully, you have done some research about how your competitors or companies in other industries address this matter. You may even get some good input from vendors and employees.

After concluding the research and determining the possible solutions, begin searching for two or more consultants who offer the services necessary to achieve what you seek. You want options when deciding whom to hire. And don't hesitate to let each of them know there are other consultants being considered.

Why?

You want the best "bang for the buck."

Provide each candidate with the information you believe is needed to prepare the presentations. Keep in mind two very important matters of concern when distributing the information:

  • At this point, do not distribute information confidential to the company unless absolutely necessary. If so, be certain all parties sign a non-disclosure agreement.
  • Do not provide more information to one particular candidate over another. Consultants tend to ask a lot of questions prior to making a presentation. It is possible that one consultant will ask for information not requested by others. If you believe the data is salient, then be certain all of the other candidates have access to the same information.