Whether you just started a new business or want to grow your current operation, hiring a business consultant can potentially help you get ahead. A consultant can be a valuable resource for a business owner, but it’s also an expensive investment.
That’s why it’s crucial to understand what consultants do and when they’re most beneficial. Keep reading for more information on how to decide whether or not to hire a consultant, and how to make sure you’re getting the best possible experience if you do.
Why do companies hire consultants?
Consultants are outside experts you hire on a short-term basis. A business consultant has a specialized knowledge or skill set related to business operations, finances, or growth. Small businesses and enterprises alike hire consultants when they need help identifying problems within their organizations, solving those problems, or optimizing operations.
In addition to bringing objectivity, knowledge, and ideas you and your employees may not have, consultants also offer guidance and support. You can hire a consultant to:
- Increase revenue or profits
- Create marketing plans
- Pinpoint problems in operations
- Suggest ideas for business development
- Streamline internal processes
- Transform workplace culture
- Reform the hiring process
- Teach or train employees
How do business consultants work?
Every business consultant works differently. Some consultants execute tasks, some offer advice, and others provide both insight and execution. You can hire a single consultant or a consulting firm, in which case you might end up working with a few different people.
Depending on the nature of their work, a consultant might work onsite with you and your staff for a certain period of time, or interface with you remotely. Regardless of their specialization or work style, most consultants have a four-step process: observation, evaluation, implementation, and follow-up.
- Observation: The consultant will learn about your business and unique needs. They may visit your workplace, ask to speak to your employees, review internal records, or observe production processes and customer interactions.
- Evaluation: The consultant provides an objective assessment of your business, giving you honest feedback about the state of your business and what you might need.
- Implementation: The consultant outlines a plan to improve your business, giving you details on the reasoning behind the plan, the projected cost, the resources needed, and the timeline. From there, the consultant will either assist you in implementing the plan or give you instructions for doing it yourself.
- Follow-up: After a certain amount of time, the consultant may schedule a check-in to see how the plan is going and assess your business’s progress. Keep in mind that not all consultants offer follow-ups, but it can be an important step in actually maintaining the changes you implement.
Types of consultants
Business consultants operate with a variety of different titles and specialties, but most fall into one of six categories:
- Business development: Also called strategizers or management consultants, business development consultants give you advice on how to make large-scale changes to your business to either grow or change direction. They can help you expand, transition to a new market, partner with another business, tweak your business model, refine your sales tactics, or develop new products or services.
- Operations: Operations consultants help you optimize your day-to-day business processes to improve efficiency or save money—or both. These consultants can suggest smarter inventory management techniques, analyze your production processes for quality control or speed, and check out the equipment and tools your business uses.
- People and culture: Otherwise known as HR consultants, people and culture consultants help with management, recruiting and hiring, and workplace culture. They can build out your hiring process, train your leaders to be more effective, advise you on effective workplace policies, and take over administrative tasks like payroll and employee leave management.
- IT: IT consultants leverage their tech knowledge to help your business run faster and smoother—and help your employees work with more ease and efficiency. They can audit your business’s current tech and tools, suggest solutions, and set up new systems.
- Marketing: Marketing consultants help you attract new customers or clients, and get the best ROI for your marketing spend. They can refine or create your marketing plan and budget, launch a marketing campaign, and handle day-to-day marketing work like social media management and ad maintenance.
- Finances: Financial consultants advise you on the best profit and investment strategies for your business. They can analyze your expenses and debts, assess your cash flow management, invest on your behalf, and share strategies for protecting your assets.
Benefits of hiring a consultant
There are a lot of benefits to hiring a consultant to support your small business. With the right consultant, you’ll get:
- Specialized knowledge and skills
- Insight into your business’s problem areas and strengths
- More time to focus on your day-to-day work or long-term vision
- An action plan to reach your goals
Downsides of hiring a consultant
Consultants can be costly and time-consuming. Many consultants charge by the hour, with rates ranging from $75 per hour to upwards of $200 per hour. If you don’t know how long you’ll need a consultant’s services, it can be hard to budget accordingly.
If you’re looking for immediate solutions and advice, a consultant may not be your best bet. When you hire a consultant, you have to carve out time to find and vet them, schedule an initial conversation, and go over contracts and terms—and that’s just the preamble. From there, depending on the help you need, getting the results you want for your business can take weeks or months.
Consultants vs. contractors
Consultants and contractors aren’t the same. Though both contractors and consultants work on a project or contract basis, they provide different services. A consultant is an outside expert you hire to find a problem in your business or create a solution. On the other hand, a contractor is a temporary employee you hire to do a specific job or task.
You typically hire a consultant when you need help but don’t know where to begin, whereas you hire a contractor when you have a clear idea of what you need and when.
When to hire a consultant
Hiring a business consultant can be a significant investment, but it has the potential to drastically improve your operation. Here are some signs you should consider hiring a consultant:
- You need to revive your business but don’t know how.
- You want expert support in a specific area of your business, like marketing, hiring, or investing.
- You’re overwhelmed with your workload and need to outsource an area of your operations.
- You’ve tried growing your business on your own and haven’t had much success.
- You need help thinking more creatively or objectively about an area of your business.
- You’re having a tough time meeting your business goals and don’t know why.
- You want to expand operations but don’t know where to start.
- You have to make difficult business decisions about the future, and need impartial support.
- You’re struggling financially or your business is at a standstill.
- You need to make changes to survive a tough economic time, and need a fresh perspective.
Hiring a consultant vs employee
If you know you need ongoing support with a particular area of your business, you may want to hire a full-time employee instead of a consultant. A consultant can help you jumpstart an initiative or figure out which route to take, but an experienced employee can execute tasks on a regular basis.
How to find a business consultant—and have a positive experience
If you want to hire a consultant for your business, take the following steps to set yourself up for success:
1. Define your business needs
Figure out what you need help with, and what you’re hoping to gain from hiring a consultant. What are the best and worst-case scenarios that can come from hiring a consultant? Answering these questions will help you clarify your needs, giving you a better idea of what to look for in a potential consultant.
2. Review your finances
Consider your business’s overall financial health. Do you have the cash flow to hire a consultant without destroying your bottom line? Of course, in some cases, you may need to spend more money upfront to position your business for financial success long-term, but you still need enough cash flow to maintain regular operations.
3. Find the right consultant
Look for a consultant whose track record and area of expertise align with your needs and goals. You want to be sure a consultant has worked with businesses like yours before, and delivered impressive results.
You can search online directories like Consultants.info or B2blistings.org; search your city or state website; search LinkedIn; join online communities; or ask other business owners for recommendations.
4. Vet the consultant
Some consultants offer free 15 or 30-minute chats, while others charge for an initial meeting. Use the time wisely by reviewing their website, references, case studies, or portfolio ahead of time. Then, during the conversation, make sure to ask:
- What they specialize in
- What their consultation process looks like
- How they charge for their services
- Whether or not they provide follow-ups
- How they measure success
- If they can demonstrate the ROI past clients got with their services
- If they think they can help you
Keep in mind that a good consultant isn’t just capable and knowledgeable; they’re also personable, patient, and easy to work with.
5. Get a contract with terms and deliverables
Before you start working together, it’s critical to draw up a contract that spells out the consultant’s services, fees, deliverables (like a market report or financial forecast), projected timeline, and estimated markers of success.
After reviewing the contract, you should be able to explain what exactly the consultant will be providing, when, how it will ideally affect your business, and how much money it’ll cost.
6. Check in and ask questions
You’re hiring a consultant for their expert knowledge, but that doesn’t mean you have to take a hands-off approach. It’s a good idea to stay involved so you know what’s going on—and so you get the results you want. Don’t be afraid to ask questions, schedule regular check-ins, or give feedback to your consultant along the way.
7. Follow through on your consultant’s advice or plan
Hiring a consultant without following their advice can be a big waste of your time and money. Unless the person you hire turns out to be unprofessional or ill-equipped to address your business’s needs, make sure you actually try out their suggestions or follow the plan they laid out for you.
8. Measure your ROI
Determining your return on investment from a consultant’s services is a smart final step to take. When you can actually see how much value a consultant brought to the table, you’ll have a better idea of whether or not you want to hire them again.
The exact metrics you use to measure ROI depends on the consultant you hire and the services they provide. If your high-level goal was to improve business profits, for example, you could compare your net profits from the quarter before you hired the consultant with your net profits from the quarter after you hired them.
Specific key performance indicators are also helpful. For a marketing consultant, you may want to look at your new customer acquisition rate, for example, or the ROIs for individual distribution channels. If you hired an HR consultant, you could look at your recent hires or hours saved on admin tasks.
Asking for help
One of the most underrated skills you can have as a business owner is knowing when to ask for help. That’s where business consultants come in handy. If you need special support or expert advice to improve your business, a consultant can help. Hiring an outside expert is a big decision, though, so make sure you take the time to vet them properly and get clarity about what you want.