When Outside Help May Be a Hindrance

Seeking assistance outside your company may make sense at times, but beware consultants selling a hammer in search of a nail

There comes a time in the life cycle of most companies when the owner needs to bring in outside help. The outsider may be a temporary employee or a subcontractor. But often, that person is an expert who's brought in to advise on a specific problem or complete a project. Hiring a consultant can be expensive, and finding the right one isn't always easy. In fact, says David Zahn, there are a lot of hacks.

Zahn, a consultant himself, is managing partner at Clow Zahn Associates in Westport, Conn. He's also the author of a pair of books on the topic, The Quintessential Guide to Using Consultants, and How to Succeed as an Independent Consultant, which he co-authored with Herman Holtz. Smart Answers columnist Karen@KarenEKlein.com recently spoke with Zahn about how entrepreneurs can avoid winding up with a turkey for a consultant. Edited excerpts of their conversation follow.

Q: When would a small business owner need a consultant?


When the expertise for a job doesn't reside internally. Say you're launching a product in a new niche. It would be great to have an expert consultant come in and give you advice on breaching that new market. Sometimes, you need a consultant for "political" reasons: Perhaps you're dealing with a topic that's very controversial. Rather than having management take the hit for making an unpopular recommendation, it's easier to bring in a consultant and have them reach the conclusion independently.

Other times, a consultant buys time for management. Say you know there's a problem in the company, but you're not sure exactly what it is. A consultant can find out why output is not as expected.

Q: What are the major problems that you see?


There are too many folks out there selling a hammer in search of a nail. They've got a patented, sure-fire solution to every entrepreneur's problem in 10 easy steps. This consultant does more talking than listening. He's the one who can tell you what you need before he gets in the door at your company. If you hire him, you're not going to get a solution that matches your problem.

Q: What kinds of warning signs should an entrepreneur look for?


The consultant who takes ownership inappropriately. This is the one who says, "I can save you X dollars annually!" You, as the owner of the company, are responsible for results, not the consultant. She has been hired to give you a service, a skill set, and her expertise, but she doesn't have control of the market or your competitors.

Then there's the consultant who doesn't protect your company's confidentiality. During the sales pitch, if a consultant starts telling you what he did for your competitor, watch out.

And it's not uncommon to have a senior partner or "big name" person comes in and sell the job -- but that's the last you see of him. The job gets farmed out to junior staff members, but you're still paying senior staff prices.

Q: What about after a consultant is hired?


Scope creep. It's an insidious situation where a consultant sells you on the third job before she does the first one. The consultant attempts to create more of a problem than truly exists. This builds your dependency. Your problem may be in the compensation department, for instance, but before you know it, the consultant is overhauling your whole HR department.

Q: How does the business owner stop that from happening?


Have a thorough discussion about the scope of the job before the project starts. Let the consultant know -- firmly -- that if she uncovers a need for a future project, it will be put out to bid. Don't give her the idea that she's got the inside track on that work.

You also want to watch out for consultants who accept projects that are better off done in-house. The ones who are really good will be honest and tell you that the job should be done in-house. It's not in their short-term interest, but if they establish credibility with you, they're likely to get another job from you.

Q: Isn't good communication the key to a good experience with a consultant?


Absolutely. You don't want a poor communicator, or someone who's unable to communicate with the most senior and the most junior members of your company. There are consultants who say, "I'm really good with engineers, but I don't relate to the marketing folks." You don't want someone with that attitude that he's too good to talk to someone with less than a vice-president title.

Q: How about other warning signs?


The consultant who claims he can do it all, or says he's an expert in all disciplines.

Q: How does an entrepreneur go about finding the kind of consultant they want?


The best way is through personal recommendations. If you know a friend, or even a foe, who has used a consultant to good effect, ask about it. Go to your industry association -- consultants tend to congregate around those organizations. Read the trade press, and see if somebody written up there or writing articles there would align well with your company.

Another thought is to go back to people who have previously worked for you and have now retired or moved on. They already know a lot about your company, and they may still have the capacity to do a great job for you on a short-term assignment.

Editor's note: When it comes to marketing, Corporate America bandies about big words -- branding, product launches, value-added -- and backs them up with bigger bucks. Meanwhile, small-business owners implement huge marketing efforts on tiny budgets. BusinessWeek Online's SmallBiz would like to share these successes. So, if your marketing drive put some runs on the board, send an e-mail to Karen@KarenEKlein.com and tell us what you're doing. We will choose the most interesting submissions, interview the business owners, and have a marketing expert comment.

Have a question about your business? Ask our small-business experts. Send us an e-mail at Smart Answers, or write to Smart Answers, BW Online, 45th Floor, 1221 Avenue of the Americas, New York, N.Y. 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally

Edited by Rod Kurtz

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