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5 Rules for How Start-Ups Should Work With Consultants

As both a former lawyer and a veteran of 3 start-ups (two of which I was a founder), I've been on both sides of the company/ outside-consultant table for about 20 years. Hiring, managing and actually extracting effective tangible work from consultant's sounds easy, but it isn't.

Worst case: it is a time/cash-suck that produces little to no results. Best case: you get some valuable insight/ knowledge/ perspective from an expert in a specialized field (law, PR, marketing, design, UX, etc.). Every case: you end up spending too much money.

With that, here are 5 hard and fast rules I have about consultants:

1. Don't plan on outsourcing your business decisions to them. Use consultants for the specialized knowledge they bring to the table - nothing more, nothing less. PR firms are great for PR matters - not for product design or feature development. Lawyers are great for legal advice, not exit strategy consulting or valuation exercises. Focus the consultant on what they bring to the table.

2. Usually, the best work from a consultant comes in their initial gig. The first time you hire a consultant, they are not only earning their money, but also trying to earn your respect and future business. The 2nd through n time you hire that same consultant, that is not the case.

3. Consultants are generally not a substitute for in-house talent. The way a consultant works is that they come to your office, pick your brain for a few hours, go back to their office and then two weeks later present you with the answer. The problem with this is that often times the most important part of the process is the two weeks they are completely removed. In house talent is jut that: in-house. You can chat with them, make suggestions, argue, etc. during the entire process. Usually produces a better result.

4. Consultants are a great way to manage down-side. If a project a consultant is working on screws up, it's the consultant's fault. If a project you are handling screws up, its your fault. Which sounds better?

5. Referrals are the only way to hire consultants. Everyone is motivated by a good referral. This effectively gives the refer-ee two people to answer to: you and the person that refered them. If you grab someone off of google or craiglist without any other personal connections you just eliminated 50% of the folks they answer to. Not a good idea.

I've had many good experiences with consultants - including of course all of the ones that are reading this ;) - and a few not so good ones. Remembering these rules is a good way to help insure a good experience.

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This page contains a single entry from the blog posted on March 30, 2010 10:23 AM.

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