From academia to entrepreneur chapter 9 about consultants

From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants From academia to entrepreneur chapter 9 about consultants

About Consultants

9

C H A P T E R

9.3.2.1 What do You Consider as Getting Value for What

9.4.1 What is the Consultant’s Relevant Background and Experience? 171 9.4.2 What Can the Consultant Do for You and Agree to Deliver? 173

References 176

O U T L I N E

9.1 ABOUT CONSULTING

Among the many duties of an academic staff, one task is providing a suitable response to students who seek your advice on a range of top-ics such as modules to take, the specializations in your discipline (mine

was chemistry) to choose, types of career prospects for various study programs, etc Through the years I have noted one recurrent detail No matter how well intentioned or relevant my suggestions may have been (albeit from my perspective), an overwhelming majority of recipients

of my “learned” comments generally follow the path they had decided

advice is seldom followed for the simple fact that since it is unpaid solic-itation, the recipient probably concludes that the advice does not have much bearing on them

On the other hand, I have anecdotally observed that many listen and act on what consultant(s) tell them The attitude appears to be since they paid for the experts who have (presumably) thoroughly evaluated the situation, the consultant must be right

While both an academic staff and consultant are experts in their own right, the two are distinct

Advice is freely asked and given, more on a personal level, therefore its value is harder to measure, and there is no real expectation by both the providing and (especially) receiving parties Just an alternative among many pieces of advice that is handy to gather but can be superfluously discarded

Consulting is paid, as it is a professional and work related matter, and there is an implicit expectation placed on the consultant Both the paying party and the consultant treat consulting seriously

9.2 THEY ARE OUT THERE

When you are an employee, the institution or organization you work for handle matters such as human resource hiring, salaries disbursement and legal affairs When you start up a business, you enter a world where

as the entrepreneur, these varied matters become your responsibility In the real world, these facets are more important; there are laws that you have to be aware of and comply with This is your learning curve, some

of the dues you usually pay to succeed Let me assure you, you are not as helpless as you think, and in my experience you have a lot going for you

if you permit your common sense to rule over your trepidation

One of the advantages of starting-up in a country like Singapore is its thought-out infrastructure I have found that the pro-business environ-ment assists you in starting-up easily As long as you follow the guide-lines you are pretty much OK Furthermore, if you don’t know, just ask Many of the government agencies have websites that tell you in detail

i Based on the students’ comments when they first seek you and their decision

feedback.

9.2 THEY ARE OUT THERE 165

what to do, what is required, how to do it and how much it costs It may take some time and many mouse clicks to assemble all the informa-tion you require, but it is there and not beyond you You can also call

up or visit their offices I was frequently pleasantly amazed at the

if your business is not located in Singapore, there are probably similar rules in your country; you just have to get to know how government bureaucracy, business and labor affairs in your country are organized Regardless of where you are in today’s world, it is easier now than it has ever been

Inevitably, there will come a time when you will have done all that you can You need not feel inadequate because of your inexperience and scientific or technical only background Being a “know all” is never a job requirement for an entrepreneur There will be functions you know noth-ing about or are best done by another party At this juncture, you will have to consider hiring some expertise on a (preferably) short-term basis,

to assist you in sorting out specific matters This is when you may wish

to contemplate finding a consultant.

A consultant in our context is:

knowledge (oftentimes with experience)

contract prior to commencement of work

A consultant is not (or should not be):

There are many kinds of consultants for all kinds of purposes avail-able, but generally are of two varieties

Category 1 are those who assist you to sort out strategic matters or help you identify fundamental flaws in the way you do things in the con-sultant’s specialization Category 1 consultants usually are one-off hires

to initiate “grander schemes” or handle “mini crises”, and are what most

people conceive when the term consultant is mentioned These

consul-tants are typically senior persons who have built up their expertise in big corporations, and left for a number of reasons such as early retirement, independence, searching for new challenges, etc

Category 2 are those who have expertise that you require to take care

of more routine tasks on a regular basis, much like a sub-contractor They

ii I state for the record, this was my experience Your reception may be different.

are normally companies or owner-operated entities specializing in a par-ticular field such as finance and legal matters I include them under the

consultant umbrella because as a runway concern, this resource provides you a value for money channel to get things done while avoiding wearing

out your welcome with relatives, friends and contacts that you have been approaching for advice in their field of expertise for your business Listed below are a few common types of experts that you may con-sider engaging at various stages in your company’s growth Some are predominantly Category 1, others belong more to Category 2, but no dif-ferentiation is made, as there can, at times, be crossover between the cat-egories depending on your circumstances

while others may assist you in plotting out your business growth strategies

developing a quality system, product testing, and if you are

registering a biomed product, the product submission and approval process BRASS is considered a provider in this category

system They can also provide monthly bookkeeping services, as well as annual audits of your company’s accounts (to be proper, the two functions, bookkeeping and annual audits, should be done

by separate accounting firms), and can act as company secretary

Accountants differ in function to financial advisors whose role is to

help you plan the utilization of your funds more effectively, as well as guide you in building value for your company for M&A or IPO

copyright applications, and other IP processes and protection They are also required for business contracts and agreements, disputes handling, and can act as company secretary

staff; plan and organize marketing campaigns or develop marketing strategies

daily workflow, and provide recommendations for improvement

manufacturing processes, as well as specific projects for your business growth

developing staff handbook, staff performance review, etc They

are normally different from “Headhunters” who specialize in the

recruitment of high value-add staff

9.3 bEfORE YOU fINd A CONsULTANT 167

in print, audio, visual and Internet presence as well as for product launches Developing your company logo may also be a task you want a specialist to handle

your organization’s IT infrastructure, including servers and security, and Internet and e-mail services

For Category 2 consultants, their main purpose may be to set-up tasks

to be taken over by any in-house staff you had already identified as part

of the plan Alternatively, the intention for the consultant is short-term until work volumes grow to a level that justifies the hire of a full-time staff to perform the consultant’s function It is best at that stage to hire

a suitable person and have the consultant train the new hire to do the work Few consultants would want to revert to full-time employment or become an employee, and if they propose such an arrangement, consider carefully Interacting with someone on a regular basis is not the same as daily engagement

9.3 BEFORE YOU FIND A CONSULTANT

BRASS has used many types of consultants through the years In many instances, consultants were a cost-effective manner to achieve

a missing link in our processes, or brought BRASS through an issue at hand that we did not have the know-how to resolve

You should not look on consultants as an easy way out or a shortcut

to handling matters when patience and a little effort on your part will achieve the same result Ensure the situations warrant a consultant

before you bring one in Conserve your cash flow for many other more

important things

You are not likely to need business, HR and media (who are gener-ally Category 1) consultants in the early stages of your start-up, per-haps until your business is up and running and generating revenue for

at least a year, with indications that the revenue will be growing for the next 2 years Another indicator that you may need them is when your staff strength exceeds 10 and/or your revenue goes over a $1 million As you grow you need to be more organized, and a structure such as report-ing and workflow has to be built to maintain the company’s momentum

Your staff will need to convert from Jack & Jill of all trades to specialists A

good business and/or HR consultant will assist you to achieve this The caution of the threshold is that bringing in consultants too early will disrupt the harmony and synergy in your five-or-less-person team who

are reacting to “crises” at a “gut” level A small team understanding at the start-up stage is crucial for survival, since whoever is available has been empowered to handle the matter at hand When a person is entrusted with responsibility, the results are uncharacteristically amazing as individuals usually respond well under such circumstances Compartmentalization

or “pigeon-holing” duties and responsibilities too early stifle this activity because the common response is “I thought that was someone else’s duty” Used wisely and at strategic junctions of your enterprise progress, the payoff in hiring a consultant can be worthwhile

Identifying the role and duration for the consultant must precede the sourcing of a consultant If you identify that you require a consultant for more than 6 months, the expertise is probably a staff you should be hiring instead of searching for a consultant You should also determine what you plan to (or can) spend on the consultant Take some time with

your team and get their buy-in.

9.3.1 What Do You Need?

A consultant does not know what you want or need Only you do A consultant’s effectiveness is commensurate with what he is hired to do and achieve If you bring a consultant in and ask them to identify what you want or need, you will probably use the consultant incorrectly, waste pre-cious funds, and almost certainly will not accomplish what you hired the consultant for There are exceptions, such as situations when you know there is a problem but cannot identify it The consultant in this instance, being an outsider, may provide a fresh perspective, especially in spotting what you cannot see because of your close proximity to the matter

Do an audit of what is lacking either in skills or functions in your orga-nization, or what you want done that you don’t know how to or can’t do

Be specific in defining your need for the particular situation at hand and the outcome you want, even though you may have encountered the issue before This is because the same need may require a different approach each time the matter surfaces, so do not treat this as a trivial exercise For example, if you were considering testing your medical device product, you already know the device class and where you are going

to sell If you plan to introduce your product in China, you would want a consultant familiar with the Chinese CFDA’s approval process and medical product testing requirements The language, culture and requirements are different from what you have been used to in Western countries Alternatively, if you plan to sell in the USA, a different expert familiar with the US-FDA procedures may be a better choice The same expert may be familiar with both, but you have to verify On a prelimi-nary basis, you can have a discussion with the candidate consultant to assess the work required and the timeframe to complete The consultant

9.3 bEfORE YOU fINd A CONsULTANT 169

should be able to provide you with an estimate for the cost of the work Ask your consultant to also include contingency amounts, as these can

affect your cash flow Leverage when you can For example, NAMSA,

whom BRASS represents in testing services, has offices in Shanghai, China and a head office in the USA Conceivably, one organization can handle both jobs described above, but you may have to deal with two separate offices (i.e two separate consultants) You can request for one quote that covers both submissions, but be prepared to receive separate quotes on the submission component, as there may be two billing prac-tices for the two countries In contrast, the testing is likely to be done in the USA; therefore you would probably receive only one quote for test-ing As far as is possible, stick to an agreed program and insist on referral back to you for deviations in the work scope

9.3.2 What Can You Afford?

Consultants span a whole gamut of prices Big reputable consult-ing firms that are normally the one-off hires usually do not come cheap Neither do one-person operations that project their expertise and experi-ence as commanding a premium Other times, it is just the nature of the job that requires a sizable fee For example, depending on the scale and impact sought, some marketing or media events can be pricey Settling for small consulting outfits usually appears to be a bargain but they may not deliver to the extent sought

Furthermore, you can never predict the outcome of a consultancy pro-posal with finite certainty What may appear sensible when presented to you in a conference room can exceed your expectations when launched, i.e a good outcome, or can be very disappointing when the intended audience miss the point, i.e you didn’t get the effect you wanted despite you and your consultant believing it would How do you figure out the balance in paying for what you think you will get? It will again be a cost-to-benefit ratio game, a compromise of the following two questions:

9.3.2.1 What do You Consider as Getting Value for What You Pay?

Value, as in beauty, is “in the eye of the beholder” The objective approach to handling this situation is to ensure that the achievable

objec-tives can be fulfilled at a price that will not affect your cash flow In this

way, if the bolder objectives are achieved, that’s great and you end up with a bonus If not achieved, it was on budget!

9.3.2.2 How Much Can You Really Pay?

The proposal before you may be great, but out of your price range

Do not be tempted or persuaded unless you are very sure and others on your team support it

Before you decide, you have in your control your company’s financial

and cash flow positions.

Once you hire the consultant, i.e after you decide, part of that control

is eroded because you have to meet the consultant’s payment schedule, otherwise the consultant has the right to stop (usually stated in their contract) in mid-project if he is not paid (fees are normally paid pro-gressively according to a time or task completion schedule) At that stage you are left with an incomplete project that may have to be aban-doned after expending time and money with nothing to show for the outlays

Therefore, you should settle for a fee within your cash flow capabilities

(pay within your means), as this does not add to your stress Your com-pany may be financially sound and can access additional fund resources

in emergencies, but this option should be used only in extreme (survival) cases Paying for Category 1 consultants on balance are typically about improvements, not about vital functions, therefore they are not an emer-gency You can forgo this expenditure until more favorable financial con-ditions appear

Category 2 consultants are essentially regular service providers that

if you have negotiated reasonably well, are another debtor line in your

monthly payment list that has been accommodated in your cash flow

forecast

The bottom line: Put a dollar number down and stick to it Deviate at your own peril

9.3.3 What Should You Settle for?

High-priced does not necessarily equate to good, nor does it deter-mine the quality of the consultant This was the purpose for you to define what you need (plan to accomplish) and what you can afford dis-cussed in the previous section, before you begin searching for a consul-tant This will prevent you from being inundated by a convincing sales job that may not result in solving the matter at hand, or settling for a con-sultant you can ill afford Even if you have the funds, you should refrain

from the compulsion to hire a brand name for the “image” the consultant can project about your choice Recall, you are a runway entrepreneur

whose pride and ego went out the door eons ago

Neither should you let the lowest bid win the job if the proposal is

“not up to scratch” Cheap does not automatically mean bad, but you should question why the bid is low For example, is the purpose for the low bid to get the job that the consultant can do well or just to get the job?

The bottom line: Do your homework

9.4 sELECTING YOUR CONsULTANT 171 9.4 SELECTING YOUR CONSULTANT

First, disregard consultants from academia in most instances, because that is where you originate You are the expert in your science and engineering If you require expertise from other academics, try the “in-house” approach first, by requesting some pointers and assistance as a colleague This is normally a courtesy extended within academia

You therefore settle for consultants from the commercial setting, because that is most likely what you require Two pertinent aspects have

to be addressed, first is whether they have the necessary credentials to do the job This is about their background and experience Second, can they

do the job you require? This is about deliverables

9.4.1 What is the Consultant’s Relevant Background and

Experience?

For Category 1 consultants, many have high profile credentials An expert in this category normally would have been working in a relevant field for more than 10 years, usually 20 to 25 years is standard Scrutinize their résumés (they should provide one; if not, ask) You should look for job appointments commensurate with their promotions and regularity of advancement Did they change employer frequently, stuck with one their entire work history, or move at strategic points in their career? In your evaluation, it is not so much about one path of advancement being pre-ferred to another, but whether she had made the right impact along the way Relevant appointments and moves at specific junctures of a work history are indicators of competency, decisiveness, shrewdness and a well thought out personal agenda These will provide clues about the consultant’s potential fit to your requirements and ability to do the job you want done

Whether the consultant under evaluation was a former corporate bigwig or in mid-level management also matters The former corporate bigwig’s expertise may be more appropriate for a big corporation rather

than a runway enterprise There are practices that can be implemented

and work well with an organization that employs over a few hundred people, but do not work at all in a 10 to 20 persons outfit, i.e check if they have experience (and success) working with smaller companies The mid-level management expert may be appropriate for the present task at hand, but may not have the broad overview of a top corporate executive for further expansion of the organization This can be crucial

in the overall plan that may stifle your organization down the road These are just some of the issues you have to consider with regard to the

consultants’ background and experience You have to be comfortable with what you eventually decide

Category 2 consultants are easier to define with regard to work scope and pricing, and therefore easier to resolve For example, setting

up a bookkeeping and general accounting system that is followed by a monthly maintenance contract can be sourced out to a provider for a rea-sonable cost Have a 3-month trial followed by a 1-year contract that is subject to renewal This way you can change the provider or move the operation in-house without too much inconvenience

In the first few years, BRASS sub-contracted its bookkeeping to a ser-vice provider The bookkeeper that was assigned to BRASS discussed with me how to organize financial data in a fixed format to be sent to her each month for recording She would have monthly accounts statements ready for collection within 3 days of submission Agreeing to this format may appear trivial, but for a start-up this was vital The statements con-tained the AR (accounts receivables), the information on who owes you

money that impacts cash flow, are the lifeblood of a company We were

satisfied with this provider and stuck with them until we moved the pro-cess in-house many years later

Others require more thought For example, patent attorneys can be

knows the law better A patent agent would presumably know the sci-ence and engineering better Should you go with the patent agent whose fees are likely to be the lower? Flip a coin? But a patent is not so sim-ple First, you have to determine whether the provider is familiar with biomed Second, how specialized in biomed are they? Third, is the price commensurate with the task at hand? Most times a quick discussion would provide you with the feel to make a decision on the right consul-tant Listen to what they say and don’t say If they are comfortable with the S&T or the field of the work (that usually gives confidence that your patent claims will be done well) it will show If they don’t mention spe-cifics about the S&T, ask a few more questions Sometimes they really don’t know, other times they may just have left it out The other aspect is how well they know and keep up with changes in patent related laws in major countries Have a couple of questions along these lines and listen

to the responses

It is also important to remember that the same type of consultant can have differing background and experience Using another regula-tory example, an expert from the pharmaceutical industry may not be

as familiar when dealing with a medical device submission to the same

iii The difference between the two is a law degree An attorney has one; an agent does not.