5 Ways Startups Can Use Consultants Well: Part 1

Working With Consultants

Not just for the big fish

Startups are revered in our culture. They’re the middle finger to large corporations who can’t keep up with the times or who blow off customers because they’ve secured some near-monopoly on a product or service. Large corporations are incremental, bureaucratic, regressive and litigious. And even if we fall in love with something they make, chances are we find the corporation itself a little distasteful.

Startups are scrappy, idealistic, uncompromising. They pull industries forward, disrupt old business models and give customers new ways to think about old problems. They are powered by monomaniacal, charismatic founders who always seem to be wearing a welding mask or caked in hops from their brewery or buried so far into their laptops, the screens are streaked with nose marks.

But if these two entities represent opposite poles of planet free market, they share the same currency (customers) and are abound by the same laws of business physics. And, perhaps for different reasons, both usually benefit from the input of outside experts. In my firm’s case, we’re interested in understanding your relationship to your customer – how you know them, find them and turn them into loyal, valuable contributors to your company’s brand and financial success.

It might seem like consulting firms belong squarely in the tool belt of big companies, but it isn’t the case. However, if a startup wants to invest in consulting – any consulting, really, but let’s suppose we’re talking about sales and marketing – it should follow a few rules to get the most out of such an investment.

A quick side note before we start: why don’t big companies have to follow the rules I’m about to propose? Well, it’s not that they shouldn’t. Rather, those companies think about strategies and studies that affect such large budgets – in some cases, the work we do shifts investments within a multi-billion dollar portfolio – so the price of a consulting project isn’t material enough to warrant a cultural shift. It’s not an existential decision to invest in consulting for them. So, they work in a way that is convenient, rather than the most effective. Startups: y’all can’t afford to do that. And you shouldn’t build an organization that treats expertise that way, either.

Here are some key things startups can do to get the most out of their engagement with consultants:

Meet the consultants in person

It might seem obvious, but it isn’t. We perform many projects remotely, meeting only initially with the client to define the scope and coming back to them incrementally with large pieces of research, insights or strategy for them to digest. We engage stakeholders, certainly, but a startup has the opportunity to put nearly the entire company in a single room. The collaboration, buy-in, shared experience and alignment on how to proceed is most powerful when experts and leaders build something together.

Back up and talk to them about your business plan

In large organizations, top level strategy can be set several levels above our clients. In those cases, we work on approaches to implement strategies efficiently and effectively within the scope of our projects.

Startups are interconnected and intimate. It’s hard to take on a marketing strategy without immediately impacting product development – chances are, you’ve only got one or two solutions. Also, the initial contact with customers, their expectations and their market behavior, can be a rattling period for a startup that began with a concept but now has to submit their work for ultimate judgment: “would my customer really buy this?”

By giving consultants an understanding of your business model, you will help shortcut recommendations that may be unfeasible or unnecessary. The more context we have, the more likely we are to give you a realistic approach to reaching your goals.

Speaking of which…

Show them your funding needs and requirements

If you ask startups what their most pressing need is, some might say “finding customers and getting our product into the market.” Chances are they’ll actually say, “getting money from investors.” Ok, fair enough – many startups aren’t profitable for years after they begin offering their product or service.

This is an incredible opportunity to be transparent about your business model and tune research to reinforce the messages investors will find attractive. Depending on how large you need to grow or how quickly you need to become profitable, we might recommend separate approaches to go to market. Your goals as a business matter. They dictate our strategies and define the highest and best use of our resources to support your startup.

Another benefit of showing us the books – since most business plans are financial models based on assumptions, and we’ve made lots of assumptions for lots of budgets in our time – we can usually improve the quality or consistency of your assumptions, which shows potential investors you are aware of your market and thinking clearly about your business. If investors don’t believe in your realism and the capabilities of your team, your ideas mean very little to them.

Identify your competitors and discuss how they compete

There are two questions an investor can quickly use to cut wheat from chaff: (1) who is your first customer and why; (2) who are your competitors? I’ve heard so many entrepreneurs, especially inventors, argue they have no competition because no one makes a device quite like this.

When I was in grad school, we heard then REI CEO Sally Jewell speak to us about competition. She asked us who REI’s most dangerous competitor was. We fumbled with some other outdoor brands… Columbia, North Face, and so on. She said, “REI’s most significant competitor is television.” If kids sit on their butts, play video games, watch Saturday morning cartoons and generally associate laziness with leisure, REI is in trouble. Therefore, its job wasn’t just to make its brand attractive, it was to make the outdoors accessible, fun and compelling for a television population.

While most startups can identify immediate competitors, identifying the other ways in which customers fulfill the same need opens up the door to understanding both your full market potential and also the reality of competing for those customers. As a company, when you demonstrate a keen awareness of your competitors, you give yourself the best chance of understanding the business models that work in the world and how to structure your own company to be successful.

Ignore competition and alternatives at your own peril.

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Stay tuned for the next blog, where I’ll outline what you can do with a consultant’s deliverables and how you should shape them during your engagement to get the most after we’ve shown you our last PowerPoint slide and gone home…

Originally published on Lenati.com

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