Outside help: A consultant could be the missing piece your business needs

If Troy Berg could have back just half the money he's spent on ineffective consultants, he'd easily be able to take his wife on a trip around the world.

"I spent some money on some real duds," said Berg, president of Dane Manufacturing. "Consulting bills can really rack up fast."

With a history like that, one might expect Berg to be skittish about using consultants in the Dane-based precision metal fabrication and stamping company. But he continues to employ consultants and sees them as a critical part of his company's successful growth.

In the last five to six years, since Berg purchased Dane Manufacturing and combined it with another company he owned, the business has grown from one with $1.4 million in annual revenue and 14 employees to a $6 million company with 40 people.

Inc. Magazine recently ranked the company number 2,015 on its first-ever Inc. 5,000 list of the fastest-growing private companies in the country.

"It's very hard to grow. It's very challenging," Berg said. "Growing that fast takes a lot of energy from the owner, takes a lot of energy from the employees."

To supplement a core group of skilled, knowledgeable workers, Berg said he's turned to consultants in matters of finance, law and business planning, particularly when he's found himself in an unfamiliar situation due to growth.

"You don't know what you don't know," he said.

And that's where consultants can come in.

Consultant specialties

Eric S. Brown is co-chairman of Madison Area Business Consultants, a professional association of independent business consultants in the area, with about 100 paying members. Specialties range from communications to engineering to accounting with many, varied options in between.

Brown himself is a full-time consultant specializing in marketing/sales and organizational development and planning. He said the activities he does as a consultant really are no different than working in an office.

"I just don't have one particular boss," he said.

From a business standpoint, Brown said consultants can be attractive because they offer companies the advantage of workers with specific skills who can be on call but not bankrolled full time. That means no benefits and the ability to find someone geared toward a specific task.

"You only hire them for as long as you need them," he said.

"The question is, for a particular activity does it make sense to hire someone to do it in-house or should we hire a freelancer?" Brown said.

For example, every company may not need a certified public accountant on its bookkeeping staff. CPA work may be something an outside agency addresses monthly or quarterly.

Three categories

Sharon Chamberlain finds herself on both sides of the consulting fence as president of Chamberlain Research Consultants in Madison. She hires consultants in her business in addition to running the consulting firm.

Chamberlain sees consultants in three categories:

1. Those who are hired for some specific kind of employee training or for one specific task.

2. Those who are hired in an ongoing capacity to be part of the team -- just not a full-time, benefits-eligible part.

3. Those who may have been let go by a company due to reorganization but who are then hired back on a consultant basis.

The latter is something Chamberlain said is becoming increasingly common as businesses downsize for overall costs but still need access to the knowledge they're letting go.

"I have heard that from so many companies," she said.

Richard Perrin's work as a Madison-based financial consultant builds on his years of experience in multimillion-dollar companies in such roles as managing IT departments, being a vice president of finance and a chief financial officer (CFO). He is now a member of B2B CFO, the largest CFO firm in the nation serving small and mid-market companies, and chairman of its executive committee.

Perrin said he realizes he's a CPA and not a rocket scientist, but he knows what he knows and can help people see things they might not.

"To me, the smartest business people are the people who surround themselves with people who are even smarter," he said. "People hire consultants to help them come up with answers they can't come up with themselves."

Perrin, who's worked with Berg and Dane Manufacturing, said he's had a number of clients who are very successful and make a lot of money.

"They want to grow even faster and they want to be even more profitable," he said.

And in some cases, smart people have good ideas but may lack the sophisticated skill set to accomplish their goals.

"Business is tougher and tougher these days. You can't just throw out a shingle and start selling widgets," Perrin said.

Research the consultant

But before hiring a consultant, he advised that businesses really have to know who they're hiring and do their homework.

In essence, anyone could test the waters of being a consultant. If businesses aren't careful, Perrin said the wrong consultant could just "blow in and blow out," leaving the company without a lot of help and minus a lot of money.

Wind River Financial, a Madison credit card processor, has used consultants to help assist in:

• Financial controls
• Risk management
• Organizational development
• Human resource consulting.

President Matt Usleman said if he did not have access to consultants, he either would have had to incur greater costs by hiring full-time staff or would not being doing as well in his business.

Simply put, to reach the business's same level of success after eight years, the road would have been rougher or taken more time, he said.

"It's been positive and worthwhile because it's helped us gain the knowledge boost that we needed at the time," Usleman said of Wind River's use of consultants.

Usleman stressed the importance of setting smart goals and defining what a company expects from a consultant.

Although most business owners don't want someone telling them how to run a business, he said the best are smart enough to realize they need help. Taking the suggestions of consultants and then making them your own are a crucial part of the process, he said.

Berg also stressed the importance of that give-and-take.

"It is a symbiotic relationship," he said. A clear directive and recognition of the goals is crucial.

"I have to own that," Berg said of the vision he expects from consultants.

Lawyer Elizabeth Russell consults on matters of law and regulatory compliance, often helping companies who may have questions on such specific issues as trademark and copyright.

Even businesses with in-house counsel might not have specialists in those areas.

Russell agreed that the blame for a failed business-consultant relationship probably isn't one-sided. In fact, she's hired consultants herself and didn't have wonderful experiences.

In retrospect, she feels she knew what she wanted but gave the consultants too much leeway and deferred to them too much.

"That fault, if it doesn't work out, lies on both sides," she said.

Favorable experience

Mark Cullen, chairman of general contractor J.P. Cullen & Sons Inc. of Janesville, has had largely positive dealings with consultants.

"Our experience with them has been favorable," Cullen said. "We've been using them a long time."

Despite having two full-time CPAs on staff, the company also has used outside auditors. Consultants also have helped with marketing and safety issues.

For 25 years, Cullen said the business has used industrial psychologists to help screen job candidates and work with management and employees.

Knowing that finding good employees can be a challenge, Cullen said psychological consultants have helped his company "polish" the diamonds, so to speak.

When hires have some good fundamentals but lack some of the other skills the company would like to see, Cullen said the consultants help them with a plan to make the employees that much better.

Consultant Kathleen Watson works in writing, marketing and sales. She said the benefits of using someone like her to produce a company newsletter in a timely fashion or direct a marketing campaign are very cut-and-dried.

"You're paying that person for that service," she said. "You pay for what you need. There's no waste."

If a business does its homework and hires a reliable consultant, Watson said the payoff is worth it.

"It's money well-invested," she said. And speaking from a consultant's standpoint, Watson said she understands that if she doesn't get the job done she won't get paid and won't get more jobs.

And consulting isn't anything Watson is looking to get away from.

"I like the autonomy it provides," she said. "I like working without interruption ... I like the feeling of independence."

Lisa Maddux is a Portage freelance writer. She can be reached at jasonandlisamaddux@yahoo.com.