Vivek Sinha, Co-Founder & Chief Business Officer, Buildzar

A consultant to me till some time back meant a premier school graduate who would deliver an excellent sales pitch on what sort of inefficiencies exist and new opportunities lies unexplored, would make a great presentation on way forward, and would leave (after being paid top dollars, of course!) with little involvement during the implementation stage. Such an approach works well for large organizations as they have in-house resources to carry out the mundane job of implementation, once the basic framework is laid done by an external expert. Startups, however, have very different needs   they require domain experts who can not only help the founders in identifying low-cost and high-impact solutions, but actually implement them.

"Business Consulting engagements add more value to start up once you the right business model have been identified"

Early stage setups, being light on both experience and management bandwidth, can be greatly benefited by having external consultants as advisors and as doers. I have been using external specialists on various aspects of our business like digital marketing, product development, technology and processes appraisal, as well as on other transactional areas like taxation & regulatory matters, staffing, infrastructure etc. With the growing activity in the startup ecosystem, several new consulting outfits have mushroomed up whereas some established consulting setups have also started catering to this segment. It is however, important for startup to choose the right advisors. The 7 commandments listed below shall help a startup founder engage the right consultant for his business:

1. Choose specialists, not generalists: Boutique consulting firms, with strong execution capability in their area of expertise add more value to startups. Some startup founders erroneously assume that strategy for their venture can be sourced from else where.

2. Seek results, not recommendations: Startups need quick results, at fraction of the cost - they do not need PowerPoint presentations. They need coaching and implementation support.

3. Choose to engage a consultant who is invested in your setup: The following two approaches comes handy to work with consultant who likes to have more skin in the game, rather than just billing us on an hourly basis:

 Performance based incentive  I always like to break down the consultant’s compensation into a base fee and a bonus/penalty, which is linked to achievement of certain stretch goals. The incentive should be attractive enough to make the consultant to strive hard and earn more.

Compensation using stock options– A consultant who accepts stock options in lieu of cash indicates that she believes in the business and would go above and beyond to give you the best service.

4. Engage at the right time: Business Consulting engagements add more value to start up once you the right business model have been identified. Before a startup reaches this stage, it usually goes through a stage of trying out 10 new things every month, discarding 9 of them and further building on 1 idea which shows promise. The process of experimentation has to be quick and low cost-one. The dollars per billable hours a business consultant would charge can never be justified given the higher failure rate of ideas in early stage ventures.

5. One size does not fit all: A major challenge that I face while working with consultants is their heavy reliance on one-size-fits-all standardized solution. The engagement process typically starts with a few requirements gathering session, post which a roadmap is proposed which is within the framework that is typically developed by the consultant after delivering several assignment of similar nature in the past. Though this is where actual value comes for a consultant (delivering similar solutions repeatedly), at times they simply fail to address the unique requirements of an early stage setup. A CRM consultant recently tried to pitch to me the enterprise version of a popular sales orce CRM tool – the one that I had used a few years back being part of 5000+ Workforce Company.

6. Something can’t be outsourced: The entrepreneur himself should be involved hands - in a few critical aspects of the business - example sourcing first hand customer feedback, vendor feedback and in developing the first product prototype. Your business depends on getting the answers right to these questions.

7. Consultants may not pivot fast enough: Pivots need to happen frequently in your business. Most consultants, however, are habituated in working with limited number of variables and in a methodological manner. Hence they may not pivot fast enough with you. Here, you as the founder, have to make sure that you do not get stuck with a consultant who slows your setup down. You will never have enough empirical data or information on all variables to arrive at a decision.