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Prepaid 101
Consultants
By Gene Retske

In the last four years, we have talked about a wide range of topics here in Prepaid 101. Now, students, we are going to look at something that you may have very little contact with, but may have heard a good bit about. Consultants. They are loved, hated, sought after, avoided, listened to and ignored, respected and reviled.

There are even consultant jokes. Like, what is the difference between a dead skunk lying in the road, and a dead consultant lying in the road? Give up? There are skid marks in front of the dead skunk.

OK, maybe that is insensitive, but bringing in a consultant will be viewed differently depending on whose point of view we are talking about. The Board of Directors may see a consultant as a answer to all their problems. A fresh point of view, unencumbered by any preconceived notions and unswayed by the political structures. Senior management may see a consultant as a necessary evil, but with some trepidation. Lower levels of management will probably fear them. The further down the chain of command you go, the more hostile the reaction to the introduction of a consultant.

I once worked for a corporate vice president who said that a consultant was a person that, “you pay to tell you what your own staff would tell you for free, but you listen to the consultant because you paid them so much for the advice.” There is some truth in this, students. In fact, maybe a lot.

Let’s look at some of the reasons you might want to hire a consultant. First, why you should hire a consultant, and secondly, when do you probably not need a consultant? Although this is Prepaid 101, I think you will find that these principles apply across the board.

The first reason you want to hire a consultant is to get the person’s expertise in a particular area. For example, if you offer your prepaid services in 49 states, but not in Hawaii, you might want to hire an expert in Hawaii, who will not have to research the issue, and bill you for the time required to do so. While you might have to pay the consultant more than you think they are worth, you could save money in the long run by getting proven expertise in the specific area you need.

The second reason you might want to hire a consultant is to get the benefit of someone who has a great deal of experience with businesses like yours. These consultants often call themselves, “personal coaches.” This can be an invaluable asset to your business. In fact, having the right person can be a tangible asset to your business when talking to potential investors, particularly if the person has a reputation in your industry.

Another reason for using consultants is more akin to a contract employee. In this scenario, you hire someone, usually with skills or experience in a specific area. For example, you might need a project manager to oversee the installation of some new equipment or an upgrade of an operating system. It would not be a long term assignment, so you don’t want to hire a full time employee. In this case, you can probably find someone who will work for you as a consultant to manage the process for you. Other examples might be programmers with special skills, or marketing experts with knowledge or contacts in specific areas.
The biggest issue in using a consultant is finding the right one in the first place. How do you find someone that has the specific skills, knowledge and experience that you need? Well, unfortunately, there is no easy answer. Search Google for any conceivable subject, add the words “expert” or “consultant” and you will get thousands and thousands of pages of sites to look at.

You will find some very creative and interesting web sites, all claiming to be the “world’s foremost” expert on the topic you searched. But, how do you know if they are being truthful? In all honesty, you don’t. The best way to find a consultant is the old fashioned way, call business associates for referrals. This is a small world, so you should be able to get a fix on who can do the job. If you Google someone, and no one knows who they are, that alone speaks volumes. Check out the authors of good articles on the topic on which you need help. If the author is not the right person, they may know of someone. And, when you do settle on a potential consultant or two, be sure to thoroughly check out references.

What should you pay a consultant? Well, the answer to this is even murkier. Any consultant who works too cheaply should be viewed with some skepticism, as should anyone who is outrageously high. Having said this, consultants have a right to earn a living also. The more astute ones will be able to confidently give you an idea of their fees. Remember that a lot of consulting work is about unknowns, so any attempt to closely estimate total costs will be difficult to do. You will know if the consultant is being candid with you. In negotiating with a consultant, the best deal is one that is a good deal for both client and consultant.
Students, consultants can be powerful tools for solving business problems. But, like with most things in business, be careful not to over or under use them.

See you next class!