A Small Business Owners Guide to Using a Consultant
We look at how you can plan and manage a consultant effectively in your small firm, and make sure it's worth the investment
Whether for marketing, efficiency or another purpose, bringing a consultant is a necessary part of running any business.
Choosing the right consultant is of course crucial, but it is only half the skill of maximising the return on your investment. This article covers how to manage a consultant effectively in order to get the best possible results.
What should my objectives be when bringing in a consultant?
Clarity is the key word here. If you are not entirely clear about what you want to achieve, it will be difficult to use a consultant effectively.
There are many ways you can narrow down your objectives but first start by working out the end goal. Thinking in broad terms, what is it you want? Are you expecting a concrete, tangible output such as an increase in sales, or more ephemeral objectives such as more efficient innovation? Consider who will deliver this change – do you want the consultant to deliver it themselves or will it need to be driven by your staff and aided by a consultant?
After you have figured out your end goal, translate it into a series of SMART objectives. SMART translates into goals that are specific, measurable, agreed, realistic and time-limited. Think about the different areas of your business that will be involved in the process and how you could set achievable objectives for each. After this, work out which of these goals you need a consultant for and limit these as much as possible – if you are planning to get a consultant in for something you could do in-house, why? Consider the external alternatives to a consultant, which may well be cheaper. For example, if you want to limit the resources committed to payroll, new payroll software will be cheaper than getting a consultant in.
How do I brief the consultant?
Briefing the consultant effectively is crucial if you are to limit costs. A good brief will turn the objectives you have created (above) into a clear project plan.
You should start by writing an outline summary. In the outline, make sure to summarise the situation and remember a consultant will be coming into the job ‘cold’, so include as much context as is necessary for a full understanding of the situation.
After you have created a summary, include a list the objectives and set out your budget and deadlines. Remember that sometimes the deadlines will be fixed, like when you need to get work done before an important contract renewal. Other times they are more flexible, but you should always give at least an estimate of when you need to get the project completed.
Finally, identify resources the consultant need – this might include access to key people like the head of sales, or more empirical resources such as office space – and set out what is confidential. Work out the limits of the consultant’s remit now to avoid difficulties in the future.
What can go wrong when briefing the consultant?
Problems with the briefing stage are often the root cause of issues further down the line. Some particular factors to watch for include assumptions and if the consultant only meets the supporters of a project. Sometimes the client or the consultant will assume that the other is responsible for an individual task, and neither will do it as a result, and if sceptics are not consulted, they will feel justified in blocking attempts at change.
Another issue that could arise when working with a consultant is the ‘consultancy creep’. Remember that your consultant is not your best friend – they will be trying to make money from you. Be wary of asking the consultant for extras here and there without agreeing on a price. Most of the time, they’ll be adding it to the invoice anyway – leading to a nasty shock when you receive the bill.
Expenses issues could cause you massive problems later down the line so get a very clear indication at the outset which expenses the consultant will need, and the rates and likely costs these will incur.
How do I draw up an agreement with a consultant?
After preparing your outline brief, invite the consultant to submit a written proposal based on it. If this shows a real understanding of the issues, the next step should be collaboratively producing a detailed written agreement that will set out exactly how the consultant will work.
A written agreement should contain a definition of project completion. This might be something concrete, like ISO 9000 or Investors in People certification, or a measure of progress like meeting new production targets. It should also contain a list of who is responsible, whereby you agree which people will do the work within the firm. Make sure to specify that no work is to be carried out by trainees.
Also, add a detailed project schedule. These should include regular milestones to measure progress against. In particular, set up one early milestone at the end of the first phase of the project, as this will enable you to assess the viability of the plan as a whole.
A written statement should also include info on fees, payment terms and disputes procedure. Set out what to do if there is a breach or disagreement. You should add an option to terminate the contract as a last resort. Setting regular milestone will allow you to assess actual performance against what was promised.
Finally, make sure to add in contingency plans as it’s important to always have a plan B. What happens if you go over budget? What happens if the project runs over time? This should be clearly set out and accounted for.
What are the different consultant fee options?
Generally, there are three kinds of fee structures associated with consultant’s daily fee, fixed fee and a success fee.
A daily fee is the most common method of charging clients. Typically, consultants will charge between £200 and £1,000 a day (although this varies by sector). A key advantage of this fee system is you only pay for what you get, although bear in mind that any issues that slow down the project will cost you money – so it is doubly important to get the planning right on your end.
A flat or fixed rate will be quoted and charged by the consultant before the work begins, which means they bear the cost if the project runs over schedule. However, the quoted price typically contains a significant contingency to deal with this situation, so prices tend to be high. You should also bear in mind fixed fees can incentivise consultants to take short cuts and easy options.
As you might have guessed, a success fee can allow the consultant to earn a lot more if the stated objective is achieved, with the basic fee charged being much lower. When employing experts to help buy or rescue a company, success fees in the form of an equity stake in the client company are common.
When agreeing on a price, try and get different segments broken down and accounted for as much as possible (for example, dividing the analysis and preparation stages).
How to deal with consultant expenses
Often, consultants will charge extra for costs they incur when carrying out their projects. You should monitor this carefully, as unchecked expenses have a habit of racking up. In particular limit what can be charged for. If possible, limit this to economy-class travel and any other specified out-of-pocket expenditures. Insist on receipts.
And make sure to sign off any purchases first. For instance, this might happen if marketing consultant buys ad space as part of a campaign.
How do I prepare for the consultancy process?
Putting the proper groundwork in place will minimise the possibility of costs later on. You should smooth the path for the consultant as much as possible.
To prepare for the consultancy process, one of the first things to do is your homework. Ensure you know all the relevant metrics inside out. Find out any information the consultant might ask for well ahead of time.
Also, make sure to prepare an induction pack, this should include the contact details of everyone who will be working with the consultant.
Finally, ensure that your staff are kept in the loop and ensure you have the resources to deal with the project’s implications. For example, a sales plan might lead to a sudden rise in orders, which you should have the capacity to fulfil.
How do I manage the consultancy process?
After you’ve delivered the brief, the work isn’t over. You need to carefully oversee the project yourself, so you are on hand if issues arise.
In particular, make sure to keep in touch with the consultant. Be constructive with your calls and meetings; if problems arise, try and help solve them. Focus on whether the aim is being achieved, rather than looking at how the consultant is doing it.
Ask to see evidence throughout the partnership. Try not to be overbearing, but do ask for drafts, rough designs and working budgets, where appropriate. Many consultants keep daily log sheets so you can ask to see these. Also think about getting someone to shadow the consultant; by assigning a key employee to see how work is being done should tell you infinitely more than a report would.
Make sure to consider at each of these points whether you need to change your brief or budget going forward and never sign off work you’re not happy with. In worst-case scenarios, these may be opportunities to shut the project down completely but if a dispute arises later, the consultant will inevitably point to the fact you approved the work at the time.
Finally, keep a close eye on costs and ask the consultant to keep maintain the rest of the team updated.
What do I do after the consultant’s work is finished?
When the project ends, the consultant will usually produce a final report. This should state whether the original objectives were achieved and provide evidence to show for it. You should review this report against the written agreement and check everything is accounted for before signing it off. And if the report turns out to be a success, then publicise this in-house to let people know about the win.
Working with a consultant may seem like an expense your small business cannot afford; however it’s worth considering as they can bring contacts and expertise that can bring a project or your businesses’ growth forward.