Warning To Small Business Owners — Be Careful!

July 01, 2010

July 1, 2010 - Columbus, Georgia       The BBB was recently was contacted by a distraught, angry and frustrated business owner. The owner came to the BBB to discuss the reputation of an out of area business consulting firm. The scenario the business owner described was one of high pressure sales tactics, high on promises and low on actual delivery of useful or new business guidance or ideas.

Meanwhile, after an initial consultation, the business consultant was demanding and threatening in order to collect payments for so-called “Services Rendered.” Over the years, the BBB has recorded a number of small business horror stories about business consultant services. Unfortunately, those businesses that are coerced into signing a contract are usually those who can least afford to loose cash flow. Some have even lost their businesses while making payments to a Con-consultant group.

Business owners have stated that their experience begins when consultant company representatives visit a small business location, “promising “to improve bottom lines, streamline operations and provide better marketing methods”. The main objective of the first wave of consultants is getting the contract signed with the business — hanging around all day, if necessary to accomplish this. The next group of consultants then comes in while charging the small business for the expense of lodging, transportation and meals. Then, they will riffle through businesses files pretending to be observing the operation while often getting in the way of a customer transaction. One company’s owner stated, “All we received for a $35,000 fee was a flyer that their own employees could have developed.”

If you are a small business owner and are currently under contract to an out of area consulting company, please contact the BBB for additional information and resources business assistance.

The BBB offers the following when:

Hiring Business Consultants for Your Business

More and more companies are hiring business consultants to fill vacant positions or to perform a specific task within the company. The right consultant can help your company improve efficiency, use technology more wisely or help develop a program or plan. Hiring the wrong consultant can harm your company by wasting time and money and alienating employees.

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 problem. 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.

The BBB suggests these tips to help find the consultant that is right for your business:

  • Ask people you trust for referrals to qualified consulting firms or sole practitioners. Contact each referral with a brief letter or phone call describing the problem you need to solve, 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 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 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 or an hourly rate. Hourly rates could raise your costs substantially, so ask the consultant to put a ceiling on the job to cap your expenses. Also, beware of the consultant who asks for all of the money up-front. It is customary to pay as much as one-third in advance, with the rest due on specific dates or at the 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.