Due Diligence is Necessary When Hiring Consultants 1

“Being big egzpurt, I am.” Just because someone bruits themselves this way doesn’t mean you should simply take them at their word.

It saddens me that I have to be mistrusting of people, but as one of my favorite aphorisms says, “Just because you’re not paranoid, doesn’t mean they’re not after you.”

We start our businesses wanting to do what we like and know best.  However, that starting up also requires us to deal with many other facets of business which, all too often, we know nothing about.  So we hire consultants and soi-disant (self-styled) experts to help us over the rough spots.

When you hire those consultants your business is at risk, so do your due diligence.  Ask for references, and then call those references and ask as many questions as you can.  Take a few minutes to run an Internet search.  Don’t forget to search for negative reviews as well, and if you can, follow up with those folks as well.  Ask your friends and other professionals.  You can’t be too careful.

Yes, there are plenty of honest, trustworthy, efficient and competent consultants and experts out there, and they contribute immensely to the success of many businesses.

And there are lots of frauds as well.  In the 1990s I was peripherally involved for a short time with a particular company.  They were successful and popular, and wanted to expand and grow.  They hired a consultant who presented a long list of former clients.  He quickly convinced the owner to make him the general manager.  And the organization crashed within two years.

It turns out this expert’s long list of “clients” was a recounting of all the businesses who had hired and then fired him.  The employee who discovered and blew the whistle on this creative reframing of the expert consultant’s work experience was let go soon afterwards, and the company, ignoring the timely warning continued its death spiral.

In the end, the company owner woke up to the unhappy truth, and the “expert consultant” had one more former client to add to his list.  The company survived, barely, at the cost of the owner’s hard earned savings, and after a decade, has not, to my knowledge, recovered to its prior level of success.

Do do due diligence or you could be in deep doo-doo.

About the Author Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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