Scam or The Answer? Management Consulting Firms who call

There is a controversial industry of small business management consulting.  Many have found it to be an expensive scam yet others have found it as “the answer” that they have sought.  Very few small businesses are yet to receive a phone call from such a firm offering a 2-day “business survey” for a nominal cost that will identify savings for you company.  This results in a salesperson arriving attempting to sell you management consulting for $300 per hour per person, travel and other expenses—over $25,000 per week.  Owners who report this as a scam signed the contract before they really understood the cost; owners who are happy had businesses capable of shouldering the cost and had immediate needs.  The quality of these firms varies tremendously and some simple rules will help you make a better decision.

  1. What are your needs?  Do you have an emergency need that must be addressed immediately or are your issues more structural and require a long-term fix?  Can your issues be solved through an intensive couple of weeks work with professionals or are you better off with a long-term relationship?  Do not sign a contract which provides a fix that doesn’t match your issues.
  2. Who is going to do your work?  Does it really make sense to commit to thousands of dollars of fees to a person that you have never met?  If they try to tell you that it does—run the other way!
  3. Did you get references?  Have you checked the internet?  Have you called the references?  (Remember that some companies actually have “shill” references!)  Do your research but most of all, follow your “gut feel.”  Does it seem like this person can help you?

Consulting firms are divided into two groups: those that generate short-term consulting clients and those who develop long-term relationships with their clients. Effective management consulting for small business owners is the development of a long-term relationship between themselves and a competent professional who is able to counsel them in the management of their business. The Institute of Management Consultants recommends that when making the determination as to whether or not to hire a management consultant use common sense—meet the person before committing and make sure that the consultant is in it with you for the long-term.