Issues when using consultants

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Australian businesses have tended to follow the European and North American trend towards the use of a wide variety of specialist consulting services. Although I’m a consultant myself, I don’t feel that I have a barrow to push for my colleagues, and as a result of some interesting debates during my training courses about the appropriate use of consulting services, I feel that an examination of the benefits and pitfalls of using these services may be helpful to you.

The most common forms of consultants — accountants and solicitors — have been around for such a long time, we consider them (reluctantly?) as a normal part of business life. We engage them to perform skilled work, which we need infrequently, or which is beyond our capacity or the capacity of our staff. As our commercial world has developed over the last 50 years, a plethora of other forms of consultancy has evolved.

Today, you can hire almost any kind of special assistance you might need — from the advice of a successful restaurateur or a marketing expert, to the services of a master baker. The range is enormous; jump on the Internet or thumb through the trade magazines at the services offered.

The people providing these services range from highly skilled and experienced specialists at one end of the scale, to opportunists, con artists and sharks at the other. The former gives you access to valuable skills and knowledge you normally couldn’t afford; the latter are no more than an expensive and time-consuming waste. The trick is in telling the difference.

If you’re considering using a consultant, the first thing you should find out is if they have a track record of success in the skills you are interested in. Reputable consultants have a resume of their experience, which they will be happy to provide on request. It is good practice to contact them and have this information sent out before you meet and tell them what you want, or there is a danger they may agree to an assignment outside their area of expertise — especially when there’s not much work around.

When you first deal with professionals, it is always a good idea to go to them rather than have them come to you. The circumstances of their office environment may provide you with valuable clues as to their professionalism and success. Don’t be put off by consultants who work from home — a large percentage of good consultants do. If they’re based at home, their overheads are minimum and their fees are likely to be much more reasonable. Conversely, the cost of a super, luxurious office is likely to reflect in the fees charged — the money has to come from somewhere.

Next, if you’re satisfied you’re dealing with a person with the skills you need, talk for a while and see if you feel comfortable. It is important to establish a good personal relationship with a consultant — if they like dealing with you they will take more of an interest in your business and will give you better value for money. Over the years I’ve made many good friends among my clients. My friends get the best deals — they pay the least and get to hit on me for free advice at social functions.

It’s also useful to tell the consultant what you want to achieve — as distinct from what you want done. It’s not normal to go to a doctor and tell them what treatment you need, nor is it smart to do this to a business specialist. If you give them the big picture, they will be in a better position to advise and help you. If you give them assignments by task rather than by desired result you may not get what you ultimately want. To illustrate this, I often get asked for marketing assistance, when the real problem is poor standards and declining trade. If I don’t get the right information, and go ahead and formulate a marketing campaign at the customers’ request, I’ll end up wasting a huge amount of their money.

Reputable consultants should be able to provide you with a written proposal shortly after your initial discussions. A proposal should detail the contents of your briefing, the objectives of the assignment, the proposal itself and a breakdown of the fee structure. If any aspects of the proposal are not satisfactory, they should be renegotiated.

It is also good practice to ask a consultant to include at least three current references (i.e. last six  months) for other consultancy assignments they have undertaken. Phone these people and ask them about the performance of the consultant prior to making the final decision to go ahead.

The fee structures for consulting services can vary tremendously and at first appearance may seem quite steep. The deciding factor is what is the information or service worth to you and what would it cost you to gain the expertise and do it yourself? Watch out for hidden and add on extra charges beyond the basic fee; these can amount to a considerably more than you expected to pay. If travel expenses are involved, clarify the expected costs and request that receipts are provided with the invoice.

Don’t hesitate to HAGGLE! Depending on the type of assignment and the consultant’s workload, they may be prepared to reduce their fees if you are offering a long assignment or retainer agreement (a monthly payment for a specified period of time — read: ‘regular cash flow’). Be careful of requesting additional work without asking for a quotation — some specialist tasks are surprisingly time-consuming and can make for a nasty surprise on the final bill.

‘I have never in my life learned anything from any man who agreed with me.’ — Dudley Malone.

 

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