Investing Time as well as Money: How Consulting Can Steer a Startup Straight

I recognize the situation: someone has a great idea, recognizes an opportunity and hangs out their shingle — simple enough, right? Until they get to the part that requires a business plan, hiring the right staff and knowing what else is going on in their industry. Facing such challenges may mean it’s time to bring in some outside expertise, which is where a consultant can come into play.

Traditionally, this conjures up images of suits coming in, cutting staff and leaving behind extensive to-do lists. I believe, however, in a much different approach. I only invest in companies that I believe in, the result being that I’m willing to invest my time as well. That might mean acting as CEO. It might mean tightening up a marketing campaign. It might mean any number of things. If you’re in a similar situation as a startup, I advise finding the right expert, someone who knows your industry and has experience helping companies like yours. Such a move can be cost-effective and invaluable in terms of time and headaches saved in the long run.

A trained consultant can offer market perspective and marketing ideas, as well as overall advice and strategy. Unbiased feedback can be crucial to understanding what adjustments are needed to keep things moving forward. That said, there are different types of consultants best for different types of situations. If you call in the big guns, for example, it will cost you. Firms like KPMG or Deloitte do not disclose their fee structure, but can start anywhere from $3,000-$6,000 an hour. That’s why I usually advise small companies to be strategic about hiring a consultant.

The new model of a small business consultant and/or investor is one who spends time and is hands-on. I work as an interim professional or executive. When you’re looking for this help, find someone who works on a project basis, rather than hourly. Make sure he or she is willing to work at all levels, is responsive and adaptive, shares your cultural values and focuses on results. This role is almost like that of a coach. Also, make sure that person has thought through his or her own business model and goals.

I speak from experience. As mentioned, I invest myself in a company, wholly and totally. I try to offer advice that is tried and true. I also try to lead by example and maintain some degree of flexibility, knowing I will likely be needed in any department at any time. And more than anything, I keep the lines of communication open for the up-and-coming entrepreneur. In particular, I make sure he has a business plan and sticks to it.

It’s important for small-business owners to know that consultants generally specialize in certain areas — whether management, marketing, IT, human resources, etc. — and that they should hire accordingly. Whatever the case, entrepreneurs should look to soak up all they can from someone with real-life experience. I’ve often seen people with good ideas struggle, because they take on too much responsibility or use their capital unwisely. That’s why it’s important to maintain clear lines of communication about expectations. This encourages honesty, respect and productive discussions about challenges confronting the business.

Oftentimes those who begin startups haven’t thought through the next steps, much less a year-over-year plan. As mentioned, I make sure my portfolio companies have a strategic plan, which doesn’t mean things are set in stone. Rather, it can serve as a guide, as a way to understand or improve business-building processes or work flows going forward. I always keep the plan in mind (or within reach), so we don’t get off track.

Once I make sure a company has a well-conceived strategy, I help them find the right people to execute it. I focus on helping my clients maintain clarity of vision, and I keep telling management to stick to their priorities and make sure they use their capital in support of those goals.

A consultant who can administer best practices while being aware of the changing dynamics in an industry can also advise their clients about what they may need to adjust as they grow their business. Consultants can generate ideas and serve as a change agent. I’ve been told that my global perspective is important — I look at what is happening around the world and help the companies with which I’m involved get from A to B to C.

I know a lot of budding entrepreneurs think they’ve done their homework and understand where their business will fit in and prosper, but a bird’s-eye view from a seasoned consultant can provide new and important perspective — and either confirm a start-up’s suspicions or help adjust goals or expectations accordingly. As a consultant, I can also act as the heavy, since I’m more independent as someone outside the company, and clearly want to be involved in the success of the operation as an investor.

I know from experience that bringing in a consultant can re-energize a company, refocusing its efforts and giving it a means of achieving its goals. I serve as an advocate and make sure my clients benefit from my involvement without being dependent on me. After all, my job is to make them more independent and healthier, not less so.

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