Looking to Hire a Contractor? Know Where to Look and Whom to Pick

July 16, 2012

More and more businesses are hiring consultants and contractors to fill vacant positions or to perform specific tasks within the company, and some of them are never actually present in the office but spend the majority of their time working remotely. Better Business Bureau is advising businesses that are looking to grow their workforce, whether through remote consultants or in-house contractors, to consider a few simple tips to finding the consultant who’s right for the business’s needs.

“Both in-house and remote contractors can be a great business strategy to augment permanent staff or get one-time projects completed,” said Katherine Hutt, spokesperson for the Council of Better Business Bureaus and a former consultant herself. “Technology is on our side when it comes to having consultants work remotely, but it’s important to take the time in the hiring process to ensure that you don’t waste your business’s resources on a contractor who doesn’t live up to your expectations.”

BBB suggests the following tips to help find consultants who are right for your business:

The key to picking the right consultant is to be certain that your company needs one. Take the time to lay out the specifics of the problem you face, the exact objective you want to accomplish, and a time frame for doing so. Consider whether your immediate “problem” is a symptom of a larger issue or simply due to a lack of internal manpower. By carefully thinking things through, you may discover that you do not need an outsider to identify the true problem. Maybe one of your employees has the ability and the desire to do the job.

Ask around. Your business network is a great place to start. Check websites like LinkedIn to find people you may know. Ask people you trust for referrals to qualified consulting firms or sole practitioners. Contact each referral with a brief letter, email or phone call describing the project, your industry conditions and your management style.

Schedule an introductory meeting with three or more of your best prospects. This will allow you the opportunity, by asking pointed questions, to verify that the consultant has experience with the specific problem or project, and your industry.

Check references thoroughly. Reputable consultants should be able to provide references readily, while would-be-consultants will have few, if any, to offer. Also check to see if the consultant is accredited by a national association. Some associations do extensive background checks and their members usually must be in business for at least five years. They may also hold members to professional codes of conduct.

Get a written proposal. Reliable consultants will provide a written, detailed proposal before the contract is signed. Without specifics you could end up losing valuable time and money.

Clearly spell out all fees. Consultants can charge a fixed fee, an hourly rate or a monthly retainer. Hourly rates could raise your costs substantially, so ask the consultant to put a ceiling on the job to cap your expenses…and make sure the consultant knows who is authorized to assign them additional tasks that are not spelled out in the contract. Also beware of the consultant who asks for all of the money up-front. Depending upon the industry, it can be customary to pay as much as one-third to one-half in advance, with the rest due on specific dates or  upon completion of the project.

Keep good records. For each consultant you hire, establish a file, which should contain the consultant’s contract, invoices, copies of 1099 forms and any other information that shows the worker is operating an independent business. This may include the consultant’s business card and stationery. This is important to establish that the consultant is not working as an employee and that you are not required to deduct payroll taxes, pay a portion of his or her Social Security, etc. This is especially important if the consultant ever works on-site at your facility.

Consultants can be a great addition to your team and can really help you when your internal resources are stretched. As Rick Blaine says at the end of “Casablanca,” this could be the beginning of a beautiful friendship. Hire contractors as carefully and selectively as you would employees and you can write your own happy ending!

For more business tips, go to www.bbb.org and click on For Businesses.