HomeStartup Insights12 Mistakes to Avoid While Hiring a Consulting Firm for Your Startup

12 Mistakes to Avoid While Hiring a Consulting Firm for Your Startup

To help startups avoid costly mistakes when hiring a consulting firm, we asked 12 experienced professionals from various industries to share their insights. From prioritizing cultural fit to conducting thorough research, these CEOs, partners, and managers reveal the top mistakes to avoid when selecting a consulting partner.

  • Prioritize Cultural Fit
  • Choose Relevant Experience
  • Ensure Progress Billing
  • Research Firm’s Background
  • Negotiate Fees Effectively
  • Assess Industry Experience
  • Define Scope and Deliverables
  • Establish Clear Communication
  • Involve Senior Staff
  • Evaluate Niche Expertise
  • Inquire About Processes
  • Conduct Thorough Research

Prioritize Cultural Fit

Ignoring cultural fit can be a big mistake for a startup when hiring a consulting firm. I once worked with a consulting firm that had great credentials and experience, but their team’s work style and communication methods didn’t align with our company culture. It led to miscommunications, delays, and frustration on both sides. 

From that experience, I learned cultural fit is just as important as expertise and experience. When looking for a consulting firm, I prioritize finding one whose work style and values align with our company. It not only leads to better collaboration and results but also a more enjoyable experience for everyone involved.

Natalia Brzezinska, Marketing and Outreach Manager, ePassportPhoto

Choose Relevant Experience

When hiring a consulting firm, startups should avoid making the mistake of mistakenly believing that any firm can deliver desired results. One example of this is expecting an accounting-focused firm to help craft effective marketing strategies; while accounting firms may have access to hard data, they lack the experience and expertise required for successful marketing initiatives. 

By choosing a consulting firm with experience in the relevant field, startups increase their chances of hiring experts equipped with the deep knowledge and resources necessary for success.

Michael Alexis, CEO, Virtual Team Building

Ensure Progress Billing

Almost all consultancies should do some form of progress billing. This is an important signal to customers who should see some results before they are expected to pay an enormous bill. It’s reasonable for a portion of the eventual bill to be paid upfront, but milestones are critical. Good consultancies will not have a problem with this, because they know they’ll hit their milestones.

Trevor Ewen, COO, QBench

Research Firm’s Background

It can be tempting to hire a consulting firm based on the cost of their services or because they have impressive credentials. However, it is important for startups to take the time to research a firm’s past success rate and examine its portfolio of clients. Doing so will help ensure that the consulting firm chosen is experienced and knowledgeable about the specific needs of a startup.

Jeff Pollak, Partner, RadioActive Media Inc.

Negotiate Fees Effectively

Failing to negotiate fees effectively and as early on as possible can cause unnecessarily high consulting costs that can jeopardize the financial stability of the startup. Startups need to conduct extensive research on market rates and the typical scope of services offered before entering any fee negotiations with a consulting firm. 

This way, they’ll be able to determine the best rate that aligns with the value delivered and services provided by the firm and use this information to negotiate for more favorable terms. Also, startups should be ready and willing to walk away if the consulting firm is unwilling to negotiate fees or consider alternative fee structures that are favorable to the startup’s financial position.

Dr. Willy Portier, Co-founder, Concerty

Assess Industry Experience

One mistake that startups should avoid when hiring a consulting firm is selecting a firm solely based on their reputation or size, rather than assessing whether they have experience working with startups in the specific industry.

Consulting firms that are well-known or large may not be the best fit for startups, as they may not have the agility or flexibility required to work effectively in the fast-paced and dynamic startup environment. 

Therefore, it is important for startups to do their due diligence and thoroughly research consulting firms, their experience, and their track record with startups in the same industry or domain before making a hiring decision.

Yevhen Koplyk, Head of Marketing, WiserBrand

Define Scope and Deliverables

One of the more common mistakes I see comes from inexperience in working with consultants—the hiring firm fails to clearly define the scope of the project and the expected deliverables. 

When you’re a startup, you’re going to have limited resources and tight timelines, which is what makes this mistake all the more egregious, as you need to have an extremely clear understanding of what the consulting firm is expected to deliver and when. Avoiding this is simple, thankfully. 

You just need to put in more time upfront to define the scope and the specific goals you hope to achieve with the help of the consulting firm. This involves going over timelines, deliverables, budget, and what happens in case of overrun on any of those.

Dragos Badea, CEO, Yarooms

Establish Clear Communication

Not communicating clearly is one common mistake startups make when hiring a consulting firm. Being on the same page with a consultant is critical to achieving the goals laid out. Keep lines of communication open from the beginning the right way, with a kickoff meeting and clearly defined benchmarks, in addition to solid communication standards to uphold throughout the relationship.

Max Schwartzapfel, CMO, Schwartzapfel Lawyers

Involve Senior Staff

Sometimes only the CEO meets with a consulting firm before officially hiring them. This can be problematic because if other managers at the company do not meet with the consulting firm as well, they may realize too late that they disagree with the methods of this firm. 

On the other hand, if all senior staff meet with the consulting firm, they can make a more collective decision to avoid disagreements down the road.

Natalia Morozova, Partner, Cohen, Tucker & Ades Immigration Law 

Evaluate Niche Expertise

One mistake that startups should avoid when hiring a consulting firm is choosing a firm solely based on its reputation or brand name without thoroughly evaluating its expertise in its niche. It’s important for startups to assess the consulting firm’s track record, references, and credentials in the specific industry or domain they are operating in.

Every consulting firm has a unique set of skills and expertise that may apply to specific industries or domains, so it’s important to evaluate their capabilities in the context of the startup’s needs. Additionally, they can also benefit from looking at case studies or testimonials that showcase the consulting firm’s work to get a clear idea of what this firm is capable of before they take their final call.

Harry Morton, Founder, Lower Street

Inquire About Processes

One huge mistake is just not asking enough questions about processes and turnaround times prior to commencing a consultancy agreement. 

You need to know exactly how the consultancy operates and how this can (or cannot) tie in well with the internal processes of your startup.

Wendy Makinson, HR Manager, Joloda Hydraroll

Conduct Thorough Research

One mistake all startups should avoid when hiring a consulting firm is to not take the time to research and vet potential firms. Startups often make the mistake of choosing a consulting firm solely based on price, rather than considering important factors such as experience, expertise, and the quality of service they provide. It’s important to do research and make sure that the firm you’re considering has a proven track record of success and can provide the services you need.

Ultimately, investing in a good consulting firm is an investment in your company’s future success. Take the time to do your due diligence and make sure you are making the right choice.

Leo Vaisburg, Managing Partner, Amazon Suspension Lawyer

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