Operations Management

Using Consultants

Written by Andrew Goldman for Gaebler Ventures

Many small businesses utilize consultants. Consultants can be a great help, but they can also be costly. Make sure you choose your consultants wisely.

Many small businesses choose to use consultants to help in various aspects of their business.

Using Consultants

Consulting services range from Marketing to Finance to Public Relations to Operations Management. Whenever you bring a consultant on board, you're hiring a presumed "expert" in a particular field. As a result, you are usually paying a premium. Before making this investment, make sure it's justified. Be sure to identify specific needs and clearly identify your deliverables.

Prior to choosing a consultant or consulting service, you should pinpoint the need. This may be an area where you are weak or an area where there is great potential for improvement. Before making the investment make sure it is a skill that you don't have somewhere in house.

For example, if you are hiring an accounting consulting firm to create reports, make sure this is something that your Controller can't handle on his or her own. While this seems obvious, I've seen companies hire consultants unnecessarily. Not only does this add additional costs, but the employee who was passed over may have feelings of resentment.

In addition to searching for the skill in-house, you should make sure the purpose of the consultant can't be found in a book or on the web. While reading and searching the web can be time-consuming, it can save you a lot of money if it eliminates the need of a consultant.

For example, you may be planning on bringing a Quality Control consultant on board to help get your company ready for an inspection. It's possible that the inspecting agency has a book or website with the criteria for passing the inspection. A little reading can wind up saving your company.

If you can't find the necessary information in a book or among your employees, it's time to bring on a consultant. When you make this decision, it's important to interview more than one agency. You should consider many factors, not just price. You should try and obtain references from other companies that the consultant has worked for. This can be a great indicator of their future performance. How well the consultant interacts with your employees is also important as they are going to have to work together in the future.

Once you've decided on a particular consultant, you should be clear in defining the deliverables. This could mean specific reports or other tangible factors. Don't give the consultant too much wiggle room, you are paying them a hefty price and deserve to know what you are going to get.

Make sure to outline your expectations and the deliverables prior to signing the contract with the consultant. I have seen companies burned by consultants before, where the company pays the consultant well only to receive a deliverable that does not help the company.

Hiring a consultant can be extremely advantageous for the small business or extremely costly. Prior to hiring a consultant, make sure there is a need for one and that you know what to expect.

Andrew Goldman is an Isenberg School of Management MBA student at the University of Massachusetts Amherst. He has extensive experience working with small businesses on a consulting basis.

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