Choosing a Business Consultant
|Publication Date:||May 2016|
|Last Reviewed:||May 2016|
|History:||Replaces OMAFRA Factsheet 09-033 of the same name|
|Written by:||Nick Betts, Business Management Specialist/OMAFRA|
Table of Contents
- The Role of the Business Consultant
- Defining the Work
- Finding A Business Consultant
- Checking Résumés and References
- Interviewing The Candidates
- Writing the Contract
- Determining the Cost of the Services
- Other Considerations
Properly selecting a business consultant (or business advisor) is not easy. Hiring a good professional can be a profitable investment for your farm business, alternatively, a poorly selected consultant can be a high cost error.
The Role of the Business Consultant
A business consultant supplements your existing knowledge, allowing you to make sound, informed decisions. Understanding this is critical to creating a good working relationship that achieves desired results. The consultant's job is to provide input to you, because you are responsible for the final decisions in your business.
Defining the Work
It is easier to select a business consultant if you know what results and "deliverables" you want. Deliverables are the components of the finished product or plan, that you expect the consultant to complete. Transparency at the beginning of hiring a consultant is critical to gaining meaningful deliverables from the consultant: Clearly state what needs to be done. Specify what you expect to be produced (e.g., a business plan). This initial effort will save time.
Finding a Business ConsultantAsk around
- Ask around: Word of mouth is often the best way to obtain the names of qualified consultants. With succession planning, your existing advisors may have the names of other business consultants with whom they have worked.
- Use lists of qualified consultants: Websites of various professional organizations, colleges, universities and government agencies list qualified business consultants. You can find a list of Ontario farm business advisors and lists of agricultural business planning consultant organizations at ontario.ca/agbusiness.
Checking Résumés and References
Ask for a résumé; then check with at least two references or clients.
Questions to ask references
- Ask what the consultant did. Was this work similar to the work you want the consultant to do for you?
- Ask if they were satisfied with the business consultant's work. If not, ask why.
- Ask in-depth questions about the consultant's work. This may trigger memories of problems or concerns they may have had with the consultant.
Interviewing The Candidates
Narrow the list, then meet with each candidate before making your final selection. Do not rely on the proposal or quote. Prior to the interview, write down your needs and what you consider to be sound knowledge of the industry and your situation. You can refer to these during the interviews with candidates.
Personally meet the candidates
A face-to-face meeting is preferred; only use a telephone interview if necessary. Below are sample questions to help you determine his/her expertise.
Many consultants specialize. Choosing a consultant with the exact area of expertise you want can increase the quality of the work and may reduce the cost. Find out:
- What is his/her area of expertise? Does it match what you want the consultant to do?
- Has the consultant ever completed a business plan?
- Has the consultant done similar work with business plans for other clients?
Many consultants have education in accounting, business management, agriculture, commerce, finance or economics. Find out:
- What is his/her experience and education?
- How many years of experience does the consultant have?
- Is he/she a member of a consulting or professional organization
- If yes, which one and for how long?
- If no, does the consultant have a level of education and experience that is necessary to get the job done?
Choose a business consultant who is knowledgeable about the industry. This will improve the quality and decrease the time needed to reach the desired result. Find out:
- What is the consultant's knowledge of the industry?
- Does the consultant personally know the industry players?
Pick a consultant with whom you feel comfortable
Since you will be spending time and sharing information with this person, a trusting and credible relationship is critical.
Choose a consultant with whom you can communicate
Both parties must be open and straightforward with each other to gain the maximum benefit.
Writing the Contract
Normally, the service provider (the business consultant) prepares the contract (also referred to as the proposal or "letter of engagement" for services), not the client. It is important that you are familiar with what is in this document. A properly written contract clearly states who is responsible for what and helps prevent unpleasant surprises. When you and the consultant sign a contract or letter of engagement, you are both part of a legal agreement. If you do not understand something or need further clarification, ask!
In the agreement, ask specifically for everything you want from the consultant
If you don't ask for it, you may not get it. Specify everything you expect the consultant to deliver or produce.
Develop a specific action plan and time line
Outline what you want the consultant to do, when it will start and end and how much will it cost. These are the requirements for a proposal.
Define who will do the work
In the contract, identify whom the consultant will work with and who will do the work, including associates, other companies or other experts.
Specify who owns the work
Identify who owns what the consultant produces, what level of confidentiality is expected, and how information is to be released, if at all.
Specify reporting requirements
Transparency over when, how, and where reports will be delivered to you is critical. You may want to receive interim reports as well as a final report. This is your decision, but additional reports may cost more. However, more interim reports, depending on the scope of the project, will also mean greater accuracy and more opportunities for you to correct the direction in which the consultant is working, should it not be exactly what you are looking for.
Specify the payment arrangement
The consultant may be paid either a flat fee or an hourly rate for services. The consultant may ask for a deposit up front and progress payments. Ensure that the consultant's duties are completed and invoices are paid in the manner specified in the contract, prior to paying for these items. While it is important that the consultant is paid in a timely fashion, be sure not to pay in full until the consultant's duties are completed.
Include provisions for non-performance or unforeseen circumstances
Identify what you consider to be non-performance and the consequences of non-performance. It is important to reserve the right to terminate the contract in the event of non-performance or other unforeseen circumstances.
Determining the Cost of the Services
Cost is important when selecting a consultant.
Negotiate the price
The price the consultant quotes may be negotiable. If possible consider quotes from more than one consultant. All invoices and quotes should be itemized for easy identification and tracking. Note that consultants should not charge you for their costs before you enter into a contract with them (e.g., their time to prepare their proposal or to attend meetings to discuss their ideas with you).
The consultant should provide you with a schedule for payment. Any payments during the course of the work are interim payments. If interim payments are requested in the proposal, make arrangements to allow for these payments. There may be breaks in the flow of work, (i.e., when a decision has to be made prior to continuing, or payment for hiring outside experts).
Ensure that the work is completed as specified in the contract before making a final payment. Trying to get someone to complete work on a contract after they are paid in full is more difficult.
Below are some additional items to consider when selecting and hiring a consultant.
Does the consultant carry Errors and Omission (E & O) insurance?
Insurance protects you and the consultant. If he/she values his/her client's business E & O Insurance is highly recommended. Ask for proof of this insurance.
Does the consultant carry commercial liability insurance?
While not necessarily applicable, this insurance is to protect you and the consultant in case physical damage is done to your business by the consultant. Ask for proof of this insurance.
Stay involved in the project
Although you have hired a consultant, you are still responsible for the project. This Factsheet outlines the process of working with a business consultant as having a clear end goal will help determine your needs.
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