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What are the pros & cons of hiring strategy / management consultants for a startup?

Did any of the founders here have hired consultants/advisers to help with the strategic thinking and directions to grow a startup? What is your experience like? When is this relevant? How do you find the right person?

34 Replies

Lawrence I Lerner
2
0
Lawrence I Lerner Entrepreneur • Advisor
Digitalization and Transformation Coach
Full disclosure, I am former management consultant from PwC. As part of my practice my team helped launch six successful startups.

As with any other consulting arrangement, if you have
  • Focus on the problem you want solved
  • A need for a temporary injection of talent with reasonably defined boundaries
  • Experience working with an extended team
Personally, I think it's a win all around. Consultants often bring the perspective and experience that you can consume and make part of your team without requiring another FTE. All that being said, can you share broadly what you need? Finance, Strategic Direction, Product Validation? It will help the audience point in the right direct. Do feel free to reach out to me offline.

Cheers
Sanjay Choudhary
0
0
Sanjay Choudhary Entrepreneur
Director
It is better to think before you act. That's what consultants do.. It helps you in making a More informed decision. .. If you can afford them as a startup......
Andrew Lockley
1
0
Andrew Lockley Advisor
Investor and strategy consultant
Pick someone who works a lot with startups. You need someone who works really fast, so they're affordable. It's a personal relationship so choose someone who demonstrates real value before you hire them, rather than just talking a good game. Ignore the brands they've worked for, unless the person was intimately involved in creating the success of those firms.
Scott Hyde
1
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Scott Hyde Entrepreneur
Co-Founder at LIMA3
Andrew, I have been considering a consulting group for my startup. A group I was referred to offers a full team that consults on brand messaging, marketing, finance, biz dev, etc. So you seemingly get a lot for the monthly price. They tell a pretty compelling story, so how you would go about having a team demonstrate their value without engaging them contractually?
Kimberly Salzer
1
0
Kimberly Salzer Advisor
Chief Marketing Officer at Hyperloop One
I consult for startups in the the marketing strategy and brand strategy areas. I find there is a need for this with startups, but they don't have a need for, or can't afford my seniority on a full-time basis. I deliver a strategy and plan that I can hand over to a Mgr or Dir to execute on.
Neil Vineberg
1
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Neil Vineberg Advisor
PR Advisor, Virtual CMO

I consult startups on PR and marketing strategy. Years ago I was in a room at Intel with a founder and an Intel rep to launch a new startup that now had $50 million in the bank. I was the PR/brand consultant. The luxury of having an agency available to early stage entrepreneurs is rare.

Yesterday I sat with 2 young founders to review their new startup aiming to grow a promising local market launch into something national, credible, competitive and venture-backed.

Experienced consultants can help entrepreneurs arrive at more informed outcomes, avoid pitfalls, increase runway, and elevate both game play and opportunity.They also provide needed seniority and sage advice, as Kimberly Salzer suggests.

We provide a middle ground by offering a group of startup experts to startups for consulting on an hourly basis. That way entrepreneurs can tap into senior counsel as needed.

Chris Carruth
4
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Chris Carruth Advisor
VP/Director. Strategy | Business Development | Operations | Product | Solutions
As also having consulted in a number of spaces, products and markets for startups, my two cents...

a) Most startup teams have a vision..but there can be, usually is, a huge gap between vision and profitability, Consultants can be good, with the right background and experience, at spotting that gap and inserting some degree of business reality into the equation. For every product that stayed true to the original vision AND made a profit there are hundreds, if not thousands that failed because the founder's simply couldn't pivot when needed.

b) Consultants are good at "de-risking" the venture from a number of perspectives, depending on how well rounded the consultant is. However the consultant typically does not have any real authority to implement anything, and if management's style is to ignore anything they don't agree with, then the impact is obviously can be very little, meaning you paid a lot for somthing unused.

However, if you acknowledge that you have areas of expertise, as does the consultant, and value is placed on both sides, then the return/impact can be well worth the money.
Vijay Goel, MD
2
0
Vijay Goel, MD Entrepreneur • Advisor
Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)
I've been a consultant (ex-McKinsey engagement manager) and I've hired consultants.

At the end of the day, consultants are expensive and don't live with the outcome of decisions, so they need to be engaged on specific issues where they bring credible experience and practical solutions to the table faster than a cheaper internal resource. This works great when you a) find the right person, b) are looking for more experience than you can hire for, and c) the person is able to move you forward in a way that's practical for your level of company/ bandwidth/ infrastructure OR prevents you from making expensive mistakes (this is different than experiments/ learning/ testing).

They can also provide impartial advice, which may be great for vetting a technical or marketing/sales hire if the founder/ ceo doesn't yet know what to look for.

Doesn't work as well when you need talent developed and made reliable on a core competency for the business. Then the dynamics can be counterproductive (high rates and non-attached talent trying to stay in fees) on something the business really needs to own.

From what I can tell referral networks (incl. alumni networks) are the top places for startups to find advisory talent. There's a beginning of broker networks of independents, but they tend to cater to the Fortune 1000 and Inc 1000.


Andrew Lockley
1
0
Andrew Lockley Advisor
Investor and strategy consultant
Good consultants build competences. Bad consultants prolong problems to build fees.
Inderpal Singh
1
0
Inderpal Singh Entrepreneur • Advisor
Entrepreneur, Advisor and Investor
Yet another consultant opinion (ex-McKinsey, currently run a strategy consulting firm)

I agree with much of what Vijay said - each startup has to pick the specific thing(s) they need help with and find someone that is talented and experienced at those things. I differ a bit on the talent point - where we have been effective is by making others effective. In fact, at times where you have a talented founder or leader, sometimes what they need most is some coaching for others on their team. This is high touch, low frequency - but valuable.

The other place where consultants can be helpful is when a startup is flailing and needs direction / to pivot. Talented consultants can break down problems into a logical structure and then solve each part of that structure to come up with an overall view. This can be helpful when analyzing what went wrong and where you need to go.
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