There’s somewhat of a stigma attached to companies hiring outside consultants. Employees see the arrival of consultants and fear that the company is being entirely overhauled, stripped for parts, and that their jobs are at risk. Or, they see a group of self-proclaimed experts come in, spend a lot of time and money, and only produce some PowerPoints that no one sees or uses after they leave. Thankfully, this image is changing and we’re seeing more businesses use consultants in productive ways.
Business consultants started entering the field around the 1950s. Now, US companies spend over $54.7 billion dollars each year on management consulting. Financial service companies spend the most on consulting, with totals around $13.5 billion, though we see businesses in every sector looking outside of their teams to consultants for guidance and project management. Consultants can help businesses to identify new ways to grow, to expand product lines, to better reach and engage with their customers, and to move into new industries.
But why can’t startups just address problems internally? Well, they may not have the time, resources, expertise, or any combination of the three. There are a number of reasons to hire an outside consultant, and the right consultant can be money well spent.
1. You want an outside and objective perspective
As a startup leader, you may be too close to the problems to see them for what they really are. There are a number of scenarios where you might need to bring an outsider into your team to assess the situation. Your product launch might not be going as well as you thought it would, your competition could be trumping you, you want help targeting a new market segment, or you can’t pinpoint where your startup should be stronger. An outside consultant can bring an objective voice to these conversations and an outsider perspective.
2. You want to save time and money
Take taxes, they are complex and probably out of your wheelhouse. You could save time and money by hiring a financial consultant who can find tax breaks and credits that you would otherwise miss as an uninitiated finance novice. Consultants can also help you identify areas where you’re overspending and help you trim the fat.
There are also financial incentives to hiring a consultant for a short-term contract rather than hiring a new specialized team member. With the consultant you won’t need to provide benefits, you won’t incur overhead costs by having to provide them with a laptop or a workspace, and you only pay for them when you need them.
3. You need their specialized skills
Big consultancies often have a breadth of resources that they can rely on while boutique consultant firms often have a depth of expert knowledge. Both can be extremely helpful, especially when you’re faced with a task that you and your team have no experience in. Additionally, consultants are trained to think creatively about problems and to identify potential answers quickly and efficiently.
By hiring a consultant or team for a special project, you’ll have their years of expertise and experience in the industry at your disposal. Along with bringing a fresh perspective, they can help you to implement tried and true methods that will meet your needs. This can be extremely useful when you’re faced with a problem that no one in your startup has ever encountered before, or has the expertise to address it.
4. You need to deflect the heat
Hey, sometimes the stereotype is true. Consultants can come in to do your dirty work, and that’s okay. It can be hard for startup owners to take aggressive moves with their staff, even when they’re necessary. Consultants can help with job layoffs, major operational shifts, salary reductions/changes, and strategy shifts.
They can be objective in their recommendations about employees in ways that team leaders often cannot. When you know at least some part of your team is going to be upset with these steps, a consultant can take the heat off of you.
5. You want to avoid internal conflicts
Piggybacking off the last approach, consultants can act as an objective reviewer during contract and salary negotiations where emotions can be high. At startups, teams are typically smaller and built on internal relationships. When you’re working on a challenging project, it can be hard to make potentially controversial decisions that rock the boat or upset internal politics. A consultant can work above these internal problems because they’re not privy to your team’s history with one another.
6. You need the manpower.
One of the major benefits of hiring a consultant is that their decisions are driven by data. Rather than speculating or engaging in a trial and error approach, they let the numbers do the talking. Want to know how your product is performing with a new target market? Consultants have the manpower and the research methods in place to collect, synthesize, and analyze the data you need to evaluate your product’s performance.
If you have the internal resources to address the problem at hand, use them. But the majority of resources lack the organizational capacity to run full research and data analysis projects while maintaining their day-to-day operations. This can also be a speed and scale issue. You might have the capacity to run a smaller project over a few months, but if you need an answer in a few weeks hiring a consultant can keep your team from becoming overburdened.
So you’ve decided to hire a consultant. What should you look for? You’ll need to evaluate their experience/specialization, their objectivity, and whether they are a compatible match for your firm. Whether you go with an independent consultant, a Big Four firm, or a mid-size local consultancy, you’ll have to define your short and long-term goals for their work.