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Business Consultant - Should You Hire a Consultant?

Updated on January 14, 2013

A Guru for Your Business

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A Good Consultant Can Transform Your Business


A lawyer, an accountant, and a consultant went deer hunting. All three spotted a deer about 100 feet ahead, and all fired at the same time. They then began arguing over who, actually, shot the deer. Out of the woods came their friend, the local game warden. He grabbed the deer by the antlers and looked at the wound. “The consultant got him,” the warden announced. When they asked how he knew, he said, “It went in one ear and out the other.”

People and companies spend fortunes on consultants, only to take the findings, put them in a drawer, and never look at them again. There seems to be a theory lurking in the world that if you hire a consultant, that act alone will do the trick. Of course, nobody actually formulates this thought but, in practice, it is what too often happens. The reason for this is simple: a good consultant will challenge the ordinary way that you do business, and this challenge may go deeply to the core of your beliefs. If you deeply cherish your way of doing things, do not hire a consultant.

A consultant exists for almost any imaginable area of human inquiry. From the high priced, world-class firms, such as McKinsey or Booz Allen Hamilton, to the guy who used to run a successful hot dog stand, there is a consultant for every need.

The Sarbanes-Oxley Act of 2002, named for sponsoring Senators Paul Sarbanes and Michael Oxley, is also known as the Public Company Accounting Reform and Investor Protection Act and was intended to set new disclosure and practice standards for U.S. public companies, boards, management and accounting firms. The law was a response to some big public company investment scandals such as Enron and Tyco. Some people think that the purpose of the act was to drive public company executives and the accounting profession insane. With the passage of one single law, congress created a whole new breed of consultants to help businesses contend with its vast new category of profit-eating costs. The SarBox consultant was created.

The Right Consultant Can Do Wonders for Your Business

The reason for hiring a consultant is simple: you want somebody to show you how to make your business work better and become more profitable. That’s it. If you hire a consultant for any other reason, you should probably start off with a psychotherapist. A consultant’s job is to help you make your business better. After the consultant’s assignment is done, it’s up to you to implement the practices that he or she has recommended. Think of a consultant as a business doctor. Your doctor asks you questions about your health, diagnoses any problems, and then makes recommendations. Watch your diet, get more exercise, avoid this, eat more of that. These are the things the doctor will tell you, but it’s up to you to carry them out. Some of the things the doctor tells you won’t appeal to you because you will have to change the way you live your life and, in some cases, do without stuff that gives you pleasure and do things that you really would not like to do. It is not the doctor’s job to make you feel happy, but to level with you on your health. And just like the doctor, the consultant is going to recommend some difficult courses of action, some new practices to put into motion, and other practices to drop.

We use consultants because we’re too close to the business to get a clear view of what must be done. Another reason to hire consultants is to plug in specialized knowledge that you or your staff lacks. You can spend whatever leisure time you have boning up on the details that impact your business, or you could hire somebody who already has the knowledge.

How to Hire the Right Consultant

You hire a consultant with the same care that you would hire any trusted advisor—very carefully. Begin with your existing advisors, especially your accountant. An accountant comes into contact with consultants all the time and very often works hand in hand with them on various projects.

Seek out a consultant with expertise in your industry. A generalist, no matter how smart, does not have the experience that you need. Imagine hiring a consultant for a restaurant who has no experience in the restaurant industry.

Don’t overestimate your interviewing skills when you meet with a prospective consultant. Get references and call them. When you interview former or current clients, ask about the results they saw as a consequence of hiring this consultant. A note of caution: the consultant you hire will have experience in your industry, which might mean experience with your direct competitors. Your consultant, assuming he or she is a true professional, will be frank with you about other clients and about issues of competition. If this consultant has worked for one or more direct competitors in your area, this is probably not the consultant for you. Communications with an attorney is governed by the lawyer–client privilege. The lawyer is not only morally bound not to divulge your secrets to a third party, but is legally bound as well. There is no such thing as a consultant-client privilege.

The Consulting Process

Before consultants make recommendations they study and investigate. Your consultant, especially in the early days of the assignment, will virtually move in. No documents should be off limits. A consultant will spend hours interviewing you and your employees. It is critical to alert your employees that you are hiring a consultant, and it’s important to enroll them in the process by explaining the benefits of the consulting process. Some workers can be intimidated by the consultant because he or she will be asking them for details about every aspect of their jobs. It’s your job to make sure that your employees know that the consultant is on our side, not just yours. Let’s be frank. One of the recommendations might be that you terminate a certain employee or eliminate the job position. This is a dynamic that cannot be avoided, and it must be handled diplomatically. After many hours of interviews and re-interviews, the consultant will then present you with a written report that analyzes your business, along with detailed observations and recommendations. You might hire the consultant to return on a regular basis to assist you in implementing the recommendations.

Business Coaching: A New Twist on the Consulting Profession

In the last few years, there has been a tremendous growth in the field of business coaching. Unlike a typical consultant, a business coach is usually a generalist and does not see his or her job as a maker of recommendations, but rather as a facilitator for you to achieve results. Just like an athletic coach, this person’s job is to help you maximize your efforts. A traditional consultant makes recommendations based on the realities of your business and his or her experience with others. A coach , on the other hand, gets inside your head and draws out your own thoughts and ideas. Just like the traditional consultant, the business coach will first spend a lot of time interviewing you and getting to know you. A major part of the early coaching assignment is to get you to set out your goals because that is why the coach is there—to help you achieve your goals. If you have a goal, for example, of opening up 10 new locations for your business in the next two years, the coach will interpret his job as helping you to get there, after reviewing the details with you. A consultant, on the other hand, might simply recommend against the plan based on his prior experience.

A coach can become a part of your business as much as any valued staff member. A coach can be like a business partner without the entanglements. A typical coaching arrangement will include weekly phone conferences with an agenda geared to working toward your goals. A good business coach knows every aspect of your enterprise, just like a sports coach knows every play. And just like the sports coach knows who can pull off certain plays, your business coach knows what you can handle and will recommend against a course of action if she thinks you are going in the wrong direction.

More so than in traditional consulting, coaching is a relationship . A coach’s job is not to be liked, and any coach who tells you what you want to hear is not doing the job. A coach will get in your face when necessary and will confront you with stuff that you won’t like. A good coach is aware of your personal nuances and will not hesitate to let you know that you’re going off track for a stupid reason. A good coach should also be aware of your personal life and should be attuned to how your life affects your business. She will recognize that an entire session might have to be devoted to your working out an issue about your kid who was just suspended from high school. Until your head is clear of that problem, your business will suffer, and a good coach recognizes this. Finally, a good coach knows that business and life cannot, and perhaps should not, be separated.

Peer Group Advisory Boards: Consulting by Committee

A business peer advisory group is a committee of people dedicated to helping each other resolve issues in their respective businesses. Informal business groups have been around as long as business has existed. These gatherings can be informal meetings in a diner once a week or a formal group organized by a leader who charges a fee and facilitates the meetings.

In 1957, a Wisconsin businessman gathered a group of four other CEOs and started a program in which a member would present issues facing his businesses, and the others would bring their leadership expertise to bear on solving those issues. This group became The Executive Committee, which evolved into the unfortunately confusing name TEC. Saddled with a name that had nothing to do with technology, TEC formally changed its name to Vistage in 2006. Vistage conducts peer groups for CEOs of small and large companies. Another organization that performs a similar function to Vistage is The Alternative Board or TAB.

Vistage is a corporate-run organization that utilizes the paid services of “chairs” who facilitate the group meetings and also provide individual sessions with members periodically. The chair is paid based on the size of the group, which the chair is responsible for forming. The Alternative Board is a franchise and their groups, called boards,are run by franchisees and contract facilitators. TAB alsoincludes not-for-profit executives within their boardsand has specific affinity groups such as manufacturers andattorneys.

Both of these organizations are good, and the concept is sound: business leaders helping business leaders. But there are certain considerations in peer group advisory boards that you should be aware of. The main concern is that group dynamics are at play, and one peer group can be excellent while another can be a waste of time. This is a function of who the members are and how strongly the facilitator runs the program. With a group of 10, a couple of bozos can really screw up a meeting. Fortunately, there are few bozos because the facilitator has a vested financial interest in making the system work and will not allow an obvious oddball to become a member. Both the Vistage chairs and the TAB facilitators are paid based on how many people are in their groups. So, if one jerk causes others to withdraw, that jerk is costing the group leader money.

A typical meeting begins with a light breakfast, followed by each member summarizing his or her month since the last meeting. The facilitator then circulates the issues that have been submitted by the members. The first go-around consists of questions to make sure the members understand the issue on the table. Then, each member takes a crack at providing solutions to the issue. Because each member is dedicated to helping his or her peers, the resulting roundtable conversation can be inspiring. While the group is focused on one member’s issue, your mind might suddenly come up with a solution for one of your own issues that you didn’t realize you had. The discussions can sometimes become emotional, as a member gets clear on an issue with the help of his or her peers.

The prices for Vistage or TAB go from hundreds to thousands, depending on the program you select. Both Vistage and TAB provide excellent guest speakers periodically on crucial business topics. Peer group advisory boards can be a powerful part of your business, so it’s worth your time to investigate. A potential new member is often asked to sit in on a regular group meeting, an excellent opportunity for the prospective member to see if the reality matches the theory.

A consultant, a coach or a peer advisory group can have a big impact on the success of your business. It can be a significant financial investment, but if you take the relationship seriously, the rate of return can be excellent.

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    • John MacNab profile image

      John MacNab 5 years ago from the banks of the St. Lawrence

      A very interesting and informative article RFMORAN - and beautifully written. Thanks for this.

    • rfmoran profile image
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      Russ Moran 5 years ago from Long Island, New York

      Glad y0u enjoyed it John.

      Russ Moran

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