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DYNAMIC ALTERNATIVES, INC.
Managing Growth With technology Since 1980
How To Manage Your Consultants
And Other Resources
By Michelle Foy
Every year, more and more one and two-person businesses crop up--most of them part of the service and information industry, and therefore requiring much less capital than retail or manufacturing startups. The rapid evolution of quality hardware and software, combined with the declining cost of computers, has made the life of the entrepreneur much easier, allowing him or her to more easily compete with large corporations with fewer staff than would have been possible in the past.
The entrepreneur has an even greater challenge in that the size of the business forces an assumption of a wide variety of roles, each with its own unique set of characteristics. In the one-person business, this challenge can prove so overwhelming that the owner may put blinders on to avoid the choices involved in having to mix and match the many hats she must wear in a typical work week. It is the entrepreneur who understands how to approach and juggle this organizational hat rack who becomes a success.
Each entrepreneur brings a unique set of skills and knowledge to their business. However, these are rarely sufficient enough to allow anyone to be an expert in all the areas needed to run a business smoothly. So, the effective owner/manager will know which skills must be found outside the company--i.e., lawyers, accountants, management consultants, marketing and PR specialists, etc.--and will hire them as needed. These support functions thus become an external, ad hoc, part of the company, making up what is known as a "virtual organization." Strategic alliances, freelance workers and independent contractors may all be components of this virtual organization.
Whatever you call this conglomerate, please remember that anyone who does work with or for your company is part of it, has an impact on your company and its future, and must therefore be "managed." This means you must choose, direct, review and communicate frequently with all these people to assure that they provide your organization with what you want it to have.
This hands-on management style encourages the small entrepreneur to view themselves, not as a solo act, but rather as a team leader or manager of the various individuals who have assumed responsibility within the organization. We thus interact with all outside specialists as their manager on behalf of our company.
It is important to note here that you can actually harm your organization by giving your consultants too much responsibility. Without proper guidance and supervision, they may make poor decisions based on inadequate communication with you, and may therefore cause your business to crumble.
One such client unfortunately called us too late. The three owners of a startup tool company with a promising future hired a high powered corporate lawyer for legal advice and help in filing their paperwork. They told him they wanted to protect their partnership and friendship, and make sure there was no opportunity for misunderstanding over the distribution of the huge profits they were expecting. Unfortunately, they told him little else.
Nor did they stop to question whether he was the right person for the job. They wanted "the best", and he had an impeccable reputation. The fact that most of his clients were large corporations did not concern them.
The lawyer didn’t spend much time exploring their situation, either. He wrongly assumed they chose him because of the type of work he usually did, and our three entrepreneurs ended up paying him a full third of their startup capital for corporate papers that rivaled those of General Motors. So, when their real crises hit later on, they had no money left to deal with them, and they lost everything--except, of course, their voluminous corporate papers!
The tendency these days would be to blame the lawyer. The truth is that the three entrepreneurs were completely responsible for their own failure, because they didn’t have the faintest idea how to choose, manage and guide their consultants. The lawyer probably acted in good faith, and did the best job he could, based on the inadequate information they gave him.
So, before you hire specialists, make sure you inform yourself about them and their work: which kinds of customers and clients they normally serve, as well as their particular area of expertise. And make sure, too, that they understand you, your business priorities and your business, and that they have also visited you there. Ask them lots of questions, no matter how stupid you think they might sound. And even after you have hired them, make sure you take the time to understand what they are doing on your company’s behalf--and why. Also ask about other available alternatives and why they were not chosen. Be sure that, whoever works on your company’s behalf understands clearly, concisely--and whenever possible, in writing--exactly what you expect from them and why.
This kind of hands-on involvement in choosing and managing your consultants will prove invaluable later on when (and if) you decide to bring these functions in-house and hire employees to replace the consultants as your business grows. Viewing your company as an organization in the early stages allows you, the owner, to organize your thinking with regard to what you need to have done by people other than yourself, and how to choose those people, whether they are consultants, independent contractors or employees.
In working with larger troubled businesses, more often than not, we find that this sense of organization was never developed in the early stages. This is because the founders of most businesses are experts in a particular product or service, or masters of a particular skill. They often tend to dislike even the terms "organization" and "management" and religiously avoid "managed" environments, reveling in their newly found independence as entrepreneurs.
We try to teach our clients that management is not a bad word. It takes creative management to guide others in the accomplishment of noble deeds and eye-opening self-discoveries--both of which will ultimately lead to increased success. In addition, good managers can identify key priorities (e.g., money, time, information, people, etc.) and make sure that there is a balanced distribution of business resources in all these priority areas.
No matter what your business, you as its owner must plan for its success by managing it effectively, whether you are working alone, with consultants or with employees, as well. Instead of trying to do everything yourself, the smart entrepreneur brings all necessary resources together and inspires them to help run the business more effectively.
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