Whether you are a start up or at the point where you either need more staff or perhaps investment from a business angel, it’s really important to be very careful. I sometimes equate this to a dating process where we should be so very careful about who we arrange to meet up with and perhaps see again, so here are some thoughts:
1. Do Your Due Diligence Before Engaging with People
It can be very easy to meet someone or have them referred to you and agree to have a 1-2-1 with them and before you know it, you’re thinking they could be the answer to your marketing or other problem, without realising you’ve been sold a pie in the sky. This particularly so if you feel needy. I’ve actually heard people say : “well he’s the only one that has shown interest” – the interest may come from a need that does not ally with your best interests.
Verify Credentials and References
- Check Qualifications: Verify their education, certifications, and relevant experience. Legitimate consultants should have no issue providing evidence of their qualifications.
- Ask for References: Request at least three references from past clients and follow up with them to ask about their experience.
- Online Presence: Look for reviews, testimonials, or case studies on professional platforms like LinkedIn or their website.
- Compare Rates: Research standard industry rates to ensure you’re not being overcharged.
- Due Diligence: Look up their business registration (e.g. Companies House in the UK) and any legal complaints or disputes associated with them. This will help you get a feel for them and the reality of the situation rather than what they are saying.
Look at their financials – if they are a consultant and their annual figures are consistently in the red and they are selling themselves as “the guy” for you, then you’re probably best to stay clear! - Gut Instinct: Trust your instincts—if something feels off, it probably is.
- Listen to What They Say: If you’re speaking to them about getting venture capital for your project and they are trying to sell you something a mate manufactures, pause and think…
Are they using collaborative language or are they being arrogant in any way?
Are they talking about previous projects that are similar to what you need? You’re looking for the experience they have; it’s too easy for someone to talk about the great things they have done, but are of no relevance/benefit to your company.
Red Flag: If a consultant is evasive about providing references or previous experience, that’s a warning sign.
2. Formalise Everything in Writing
- Written Agreement: Always have a detailed written contract outlining scope, deliverables, timelines, and payment terms.
- Milestone Payments: Avoid paying the full fee upfront. Instead, agree on milestone payments tied to measurable outcomes.
- Scope Creep: Be wary of vague or overly broad project scopes that could lead to endless billing.
- Incorporate Regular Updates & Performance Reviews: It’s important to keep consultants engaged, so having regular meetings. It also allows them to feed back on what they are doing and keeps them on their toes.
Red Flag: If their pricing seems suspiciously low or they use high-pressure tactics to push you into signing quickly, make sure you don’t feel obliged.
Don’t be so needy you bite the hand off the first person who comes along!
