Assessing your business needs: Value vs. Cost
Clients often hire contractors and pay them consulting rates, or, more often, they hire consultants and wonder why they cost more than a contractor they could hire from CraigsList or HotJobs.
We hope this article will draw a helpful distinction between these two very different types of services.
What's the Difference?
Consultants and contractors are both outside parties that get paid for their services (typically) via business-to-business invoicing processes as opposed to W-2 employee salaries. Beyond this administrative similarity, they differ dramatically in terms of their core characteristics, what problems they solve and what they require of you, the client.
A contractor is a car rental. You get the vehicle, but you still need to provide the destination, driving intelligence and hands-on steering.
A consultant is a dedicated, chauffeured limousine provided to you by a limousine management agency. All you need to do is tell your chauffeur what your agenda is for the day and he or she will select the destination, plan the route, and drive you there. And if there is a problem (let's say the chauffeur calls in sick), the agency will provide you with all the support you need to minimize the impact on you and your plans.
OK, maybe I like analogies too much, so here's how this applies to real projects:
A contractor will take your blueprints and, alone or as part of a team, build your project as specified, with perhaps tactical change suggestions along the way.
A consultant will assess your business realities and challenges, work with you to select the right problems to tackle in the right order, define solution approaches for each challenge, deploy the resources, and deliver on the projects along the sequenced roadmap. In the simplest case, this may mean that a consultant helps you refine what it is that you think you need to build in the course of one project; in more complex cases, a consultant may be your partner in a multi-year business transformation roadmap.
Do You Need a Contractor or a Consultant?
You should hire a contractor if all of the below items are true:
- You understand what business value (profitability, client retention, operational efficiency, etc.) you are trying to further
- You understand what challenges, if solved, would deliver desired business value
- You have detailed specifications and designs for the solution in the previous bullet
- You have evidence-based confidence that you have a history of addressing the points above independently and successfully
- You've checked in with yourself and do not believe that your affirmative answers to the questions above are the result of unwarranted hubris
- You have the experience-proven ability to manage a contractor in delivering the specific type of service needed to get your project done
- You have the experience to see problems coming and the ability and budget to recover if something goes wrong
If one or more of the above bullets is not true of you and your team, you need a consultant or consulting firm with the necessary skills to supplement your expertise levels and who deserves your trust.
Alex Asianov is the CEO and President of DOOR3. What are your thoughts on "Assessing your business needs: Value vs. Cost"? Let us know.