Should You Hire a Consultant? The Answer Is Not as Simple as You Think




  • — March 24, 2017

    From the way some execs talk about consultants, they might as well be a four letter word. These bloodsucking scum prey on unsuspecting companies through the promise of improved processes and an unbiased perspective, marketing themselves as some sort of cure-all for the common corporate cold. They then proceed to bleed you dry, performing a function you could have figured out on your own at a far more affordable rate.


    One glaring example of anti-consultancy comes from Matt Rissell of TSheets. Rissell comes from Idaho, and, because of the state’s remote, vaguely connected status in the entrepreneurial world, business owners tend towards a level of independence you won’t find in Silicon Valley or Seattle. If the phrase, “pull yourself up by your own bootstraps” applies anywhere, it’s in Idaho. Rissell is a little more connected than most. He’s Idaho’s closest thing to a Jared Friedman (co-founder of ScribD) or an Alex Dreiling (co-founder and CEO of Clipchamp).


    In Forbes, Rissell rails on consultants, beginning his first blog post with the (intentionally) incendiary statement, “I hate business consultants”. He goes on,


    “I especially don’t like to be told what to do by people who aren’t personally invested in my (or my company’s) success. Which is why I hate consultants. They might claim to be experts in what I do and know the secret to my success, but they’re really only invested in maintaining their careers as consultants.”


    This is one common case against consultants. They thrive on you having a problem. If you solve the problem because of their advice, because they actually dug in and got to know your business on a personal level, then they’re out of a job. It’s better for them to deliver insights from a theoretical, cold standpoint. And of course what else is a consultant for? Certainly not to dive deep into the nitty gritty of your business and provide substantive, actionable insights on how to improve operations where it really matters.


    Additionally, why do you need consultants when technology yields crowdsourced information you can analyze for accurate insights? The software solutions are readily available. All you need is to identify the problem you’re trying to solve and use software to help you sort through and analyze all the readily available information online. You can also build your own analytics solution.


    One reason why you might need a consultant: it costs a ton to do your own analytics, because it involves hiring a team. In terms of salary spend, the following graph illustrates the high cost of building your own analytics:



    Many consultancies, such as McKinsey, already have Data Scientists, Architects, and Engineers on staff. Contractual fees with consulting firms can save you money in comparison with hiring on each individual to build your team and analytics solution. However, if you do build a team, these are people who are directly invested in your success for the long term, and your company can become an authority in this respect.


    When it comes to management consultation, you could think of the internet as one big consultant. Ask any question, and there are a million blog posts on the subject, some written by experts who offer very real advice. The consultant lives in a narrowing window of a world. When it comes to industry data, highly granular studies, the type a consulting firm might be paid to conduct, are available either for free or at a small price. But of course, these studies aren’t specific to your business. Businesses hire consultants when they want outside eyes trained on their specific set of problems.


    But that’s the problem. As Startup Owner’s Manual co-author and entrepreneurship professor Steve Blank points out, “Instead of paying consultants to tell you what they learned you want to pay them to teach you how to learn.” If you’re hiring consultants to solve problems, you’re not learning how to solve those problems yourself.


    Blank discusses the case of a startup, Roominate. Founders Alice Brooks and Bettina Chen created a dollhouse building kit for girls that teaches them about tech and gets them interested. With some fantastic Kickstarter funding and an initial shipment of 5,000 units, Alice and Bettina were ready to manufacture in China. As engineers, they went there to oversee the process, but when it came to striking up sales deals with big retailers like Target and Walmart, they wanted a consultant to do the job for them–like a glorified freelance salesperson. The same went for PR. They were looking for a PR agency to handle the entirety of the process, from start to finish, instead of using what they’d already learned about their target market and asking the agency to help them fine-tune the campaign.


    Blank’s ultimate point is, you need to learn how to speak to your audience and how to negotiate channel sales yourself. If you don’t, your investors will hire an operating executive once they see you’re not knowledgeable about your business model. Consulting agencies that find out you’re there to learn, not let them take the reins and create dependency, won’t want your business. The consulting agency that wants to work with you even though you understand how to do their job is the one you should hire. That agency is there to supplement what you do, not take it over. The very point is to grow your business so you don’t need consultants anymore. In the end, no one is more knowledgeable about this than you are.

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    Author: Daniel Matthews


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