Top Ten Criteria for Hiring a Consulting Firm to Help Your Small or Middle Market Business

[Editor's Note:In today's market, there are folks and firms that purport to have all the answers to issues facing small and mid-size businesses. Firms and individuals pop up with articles in local newspapers, blogs, and business magazines with all the answers. New models with fancy and catchy acronyms like RED and FAST appear on the scene. Sometimes, it is difficult for companies and business owners to determine who can really help them navigate the road ahead.

We offer the following comments about what companies should be looking for in a partner to help them realize their potential. This is a reprise of an article published several times over the years. . One of our long-standing clients suggested to me that it might be valuable to update it again.            -dpm] 

 Top Ten Criteria for Hiring a Consulting Firm to Help Your Small or Middle Market Business 

Focus: Beware of "one stop shop" firms that say they do everything. These include accounting firm add-ons, investment banking/M&A firms, or interim CFO firms. Accounting firms provide valuable services - audits, tax assistance, internal controls, and compliance. CFO firms provide accounting, controller, and finance functions. Investment banks/M&A firms provide a great service in the transactional work of selling your company. 

The firm you engage needs to specialize in helping companies in your size range with your range of strategic and value issues ... and have the track record to prove it!  

Execution:

Most consulting firms focus on the front end (their plan and their intellectual input). Make certain you feel comfortable with the execution and their proven ability to assist you in achieving results.  

Overcoming Barriers to Success:  

Most consultants do not actually help organizations understand - and overcome - what is preventing them from being successful at the next level. Those can be tough discussions, but you can't make real progress until these barriers are addressed. 

Value: Many consultants focus on the top line (revenue line) without understanding the key drivers of value.

Flexibility - to YOUR needs:Most firms have a "one size fits all" model and they will squeeze all clients into that same model. 

Tell the Hard Truths: Most firms do not offer truly independent objective advice - they will not tell clients the difficult truths since they want the follow-on business. If it seems too good - or too easy- to be true, it usually is. There are no magic pills or magic bullets. Success in business is generally the product of good direction and hard work.

Been in Your Shoes: Most consulting firms will not have folks that have actually been in your shoes (as owners or CEOs) - and emerged successfully. It's very different when it's not your capital at risk. Ask if they have ever led a company through a period of rapid growth, weathered a downturn, or led a business through a successful sale.

Beware the "Temporary" Consultant: Beware of individuals or firms that sprung up recently. Firms with less than 5 years experience many times exist only as long as it takes for the principals to find their next full-time job, or to have their traditional business volumes return. That could leave your company in the lurch when they lose interest in you.

Talk with Their Clients - Present and Past: Talk with owners of client companies of the consulting firm. Ask them, in the end, what results were achieved. Did the consulting firm exceed expectations? Get specific about the numbers.

Aligning Their Interests with Yours: Will the consulting firm share in the risk /reward proposition with you? Are they willing to risk a portion of their fees based on your company's results?

Small and middle market companies are typically the most significant asset of the owner. They are the product of many years of tireless effort and risk. Selecting a partner who will work alongside you to help your business achieve its potential is an important decision.

 

What are your thoughts about these key points? Share your reactions below.

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 If you would like to discuss how we might help your company accelerate the process of adding value and moving your company to the next level of performance, please contact us.