What is a consultant?
A business consultant is an outside expert who comes into your business to evaluate and advise you on a specific problem or situation. They work as independent contractors on their own schedule, not necessarily based on your work hours. Consultants use their business experience and an analysis of your business to provide customized guidance and recommendations to overcome the problem.
When to consider hiring a consultant
A business consultant offers expert, outside advice on a specific business situation. Business owners usually hire consultants when there’s a problem that’s interfering with business or they’re ready to make a shift.
Some examples of when to hire a consultant include:
- You need to make a major decision.
- You want a fresh perspective on your business.
- You’re facing a major problem or roadblock that’s hurting your profits.
- You’re unfamiliar with a particular area of business and want training from an expert.
- You want to improve processes.
- You have unfinished projects or have trouble following through with projects.
- You need a particular expert, but you don’t have the budget for a full-time employee.
- Your company culture is off, your employees are unproductive or you have other widespread situations that don’t match how you envision your company.
Types of business consultants
Another part of answering “What is a consultant?” is understanding the different types. Knowing what solutions you need helps you choose the right type of business consultant for your situation. Different types of consultants often have industry-specific experience. A financial consultant might have experience as a CPA or CFO; a management consultant might have previously worked as a C-suite executive.
Common types of consultants include:
- Management consultants: A management consultant helps optimize your management personnel and departments to improve operation from the top down. An example is helping restructure the management team or projecting how new management procedures will impact your company.
- Strategy consultants: Strategy consultants help your company create an overall strategic plan to guide the direction of the company. They help determine short-term actions to reach long-term goals. Examples of tasks they can help with include creating a value proposition, strategizing to gain new market shares and helping align your employees with your goals.
- Sales consultants: These consultants focus on improving sales management, such as determining the most effective sales channels or engaging the target customer.
- Human resources consultants: This type of consultant addresses issues in the HR department and the processes it manages. Examples include streamlining the employee acquisition process and auditing HR for compliance.
- Financial consultants: These consultants focus on financial analysis and aligning the financial goals with business activities. Some examples of activities include creating money-saving strategies, reducing customer acquisition costs, determining an investment strategy and evaluating opportunity costs.
- IT consultants: An IT consultant focuses on technology issues and solutions. They might advise you on upgrading your IT infrastructure, integrating various systems or improving cybersecurity.
Steps for hiring a business consultant
Hiring a consultant is a relatively straightforward process, but it requires knowledge of what you need. Follow these steps when hiring a business consultant:
- Identify your purpose for hiring a business consultant. Having an outcome in mind helps you find the right consultant and use your time with them effectively.
- Decide what type of consultant you need for your situation.
- Research potential consultants to determine their qualifications, including years of experience, achievements and relevant certifications.
- Check with past clients to evaluate each consultant’s results.
- Explain the scope of the project to ensure the consultant you’re considering feels comfortable with it.
- Ask questions to make sure you understand the process and the consultant’s qualifications.
- Get a quote for the consulting project.
- Review the contract. If the consultant doesn’t use contracts, keep looking for a consultant who does. Having everything in writing ensures you get the services the consultant agreed to provide.
Tips to work with a business consultant effectively
Hiring a consultant is the first step, but you need to be an active participant in the relationship to make it work. Use these tips to make your relationship with your consultant more effective:
- Be honest: Be honest about the scope of your problem and what you’re willing to do to improve the situation. This helps the consultant provide the best solutions.
- Manage your consultant: Even though the consultant is an expert, it’s still your job to manage what the consultant is doing. You want your investment to be worthwhile, so ensure your consultant is doing worthwhile tasks.
- Prepare for your consultant: Make it easier for your consultant to get started quickly by preparing for their arrival. Have documentation and resources ready for the consultant to review. Have space for the consultant to work, and brief employees who will work with the consultant.
- Be transparent: Employees might take the consultant as a sign of their failure, or they might worry that they’ll lose their jobs. Be open with your employees about the need for and purpose of the consultant.
- Communicate: Don’t be afraid to give your consultant feedback or ask questions about what’s happening. This clears up miscommunication and ensures the consulting sessions are effective.
- Implement the solutions: Follow through with the solutions and strategies the consultant provides. Make sure your team is on board and you’re willing and able to put steps into action immediately. Implementing the actions quickly helps you get the most out of the consultant and improves your business situation faster.
- Track the benefits: Don’t just assume your consultant is bringing you value. Use metrics to track how the consultant is helping you. If you hire a sales consultant, compare the sales statistics before and after hiring the consultant.
FAQs about hiring a consultant
How much does it cost to hire a consultant?
The cost of a business consultant varies based on the type of consultant, their qualifications, what type of help you need, how long the consultant works for you and other factors. Consultant fees typically cost between $45 and $150 per hour, with an average cost of $75 per hour. Some business consultants use a flat-fee rate for various services, such as creating a business plan. Consultants with more experience often charge more for their services.
Which is better: consultant or employee?
After answering, “What is a consultant?” you might wonder how a consultant compares to a full-time employee. A consultant is ideal when you have a specific situation that requires short-term help. If you know you can implement the solutions yourself, a consultant is often a cost-effective option. Consultants offer an impartial view, so they can be honest about the situation. If you’re looking for ongoing help, hiring an employee can be a smart move. You have consistent help in that area, and you always have an expert on staff to consult.
What are the benefits of hiring a consultant?
The main benefit of hiring a consultant is getting expert advice from an industry professional. Going straight to the source often saves you time over learning through trial and error on your own. A consultant is usually a short-term solution, which means the costs are temporary. Being able to make fast improvements with help from the consultant can help recoup those costs quickly.