Getting the Most Out of Your Consultants

Whatever you call your business consultant, there are keys for unlocking the potential benefits to such relationships. Enterprise Minnesota recently sponsored a seminar in the Twin Cities where business people learned from case studies and discussed basic truths about what makes for a good marriage in business consulting.

BY MIKE STRAND

As political journalist Walter Lippmann saw it, “The best servants of the people, like the best valets, must whisper unpleasant truths in the master’s ear. It is the court fool, not the foolish courtier, whom the king can least afford to lose.” But fools they are not, because today such candid, outside advice is a major investment, prompting critics to suggest that a consultant is someone who saves his client almost enough money to pay his fee.

Yet those were definitely not the majority opinions in the room this past spring at an Enterprise Minnesota seminar focusing on best practices for getting the most from your business consultant. Read on for some of the truisms as professed in tag-team style by individual business participants and their trusted wing men and women.

ACCOUNTING
Company: CrownTonka, Plymouth
Consultant: Baker Tilly Virchow Krause, Minneapolis

STEVE STENSRUD is a 30-year veteran and senior partner at Baker Tilly, a CPA consulting firm whose “life blood” is in manufacturing and distribution, representing about one-third of its business practice. Stensrud is the agency’s primary partner for client CrownTonka, a manufacturer of walk-in coolers for commercial cold storage. One of the keys for maintaining clients is determining “how to make yourself indispensable,” he says. In Baker Tilly’s case it’s having a depth of interstate tax and statutory knowledge, as well as a willingness to go beyond contractual requisites that help keep CrownTonka from striking operational potholes. “They operate in six different states, so we’re there to help them navigate through all the differing regulations.”

MICHAEL POLIS is a 20-year accounting professional, having worked for Ernst & Young as a newly minted CPA right out of college, and later mostly in manufacturing. For the past two years he’s been corporate controller of CrownTonka, which has about 400 employees across the Midwest. The company grew from a single business purchased 20 years ago in Hopkins and has expanded through acquisition.

“In selecting a partner to work with, I want somebody who’s personable,” Polis says. “Somebody who can step into the organization and look at it from our perspective. And I feel we really have that with Baker Tilly. They work with us in our audit. The ownership at Crown sees real value in having an audited financial statement and a history of audited financial statements. It carries a lot of weight when you’re working with banks and respective customers and vendors.”

At the same time, Polis says the consultants work to help reduce audit costs by identifying ways to bring some of that work inside the company.

Business owners have to consider how well a consultant fits their company’s current and future needs. “Ask yourself how your relationship with this firm is going to grow over the years? Are they in a position to grow with us? Ask for references. Check around. Who do you know that’s using them?”

Polis expects his existing connection with Baker Tilly to remain strong into the future. But he keeps his eyes open. “You want to make sure you’re aware of what [else is] out there in terms of services, but keep the relationship strong,” Polis says.

Stensrud believes it’s also important to ensure “continuity of the team” between consultant and client. “I have a vested interest in seeing the owners be successful because when they are, it relates back to what I’m doing as an in- dividual and a partner,” he says. “We make sure it’s a service that’s providing value, not just [generating] the fees. Because when it’s about the fees and you bring everything to the table, you can lose that personal relationship [with the client]. I don’t delegate everything to the staff because I think that’s where you start to lose focus.”

MANAGEMENT REORGANIZATION / SUCCESSION PLANNING & MEDIATION
Company: Louis Industries, Paynesville
Consultant: Grey Plant Mooty, Minneapolis

For attorney LEE HANSON of Grey Plant Mooty, an independent Minneapolis law firm with regional connections to central Minnesota, learning about heavy equipment was a natural progression from his childhood days on the farm. “The importance of the relationship itself can’t be stressed enough. We can all do better to service our clients. But industry knowledge in the sector or space the client occupies is key,” notes Hanson.

Hanson, who also has an accounting degree, believes it’s critical to have the support of a client’s accounting firm. “We refuse to engage in a project with the client unless their CPA firm is on board and agrees with our advice. The CPA firm almost always has a closer relationship with the client than an attorney. And if you don’t get the CPA firm on board, you will eventually lose your role as an advisor to the client.”

For those who doubt the power of networking, consider that Hanson met his eventual client at an estate planning discussion nearly 20 years before he began working with him. Their relationship cemented over mutual involvement in Boy Scouts of America. “He told me I would need him someday and he was right,” says
CEO LEO LOUIS.

Louis has owned the privately held company since 1973. What began as a blacksmith shop has expanded exponentially to provide steel processing, contract manufacturing, metal brokerage, and industrial engineering services. When Louis decided to retire from day-to-day management but stay involved in big-picture planning, he called his friend Hanson. Louis sought advice on how to select a replacement and structure the relationship.

PAUL EBNET has been president of Louis Industries for three years and is past president of Stearns Manufacturing. Louis and Hanson identified him as a person who not only fit the job description, but also the firm’s culture. Having inherited the 20-year relationship with Grey Plant, Ebnet is beyond supportive and says he considers Hanson and his colleagues to be an extension of the management team. Ebnet says it was evident, based on the kinds of sensitive information sharing that was happening, that there was “a lot of trust.”

“They are trying to bring more structure to the company,” Ebnet says. “The foundation and skeleton of the company are very strong; people know how to do what they do, but I’m helping them grow and provide structure.”

One way, Ebnet says, has been to grow the company’s capability through a couple of recent acquisitions. He adds that being a “third-party sounding board, from my perspective, is probably the chief role that Grey Plant Mooty and I facilitate in our organization.”

As the company matures, Ebnet says, the consultants are used less on the transactional side and more for analysis and support.

Ebnet shared a few other key ingredients for effective client-consultant relations: Be sure to talk frequently, not just when there is a problem. “Such information flow and exchange of ideas and information on a regular basis can pay off big in a crisis,” he adds.

Finally, let your consultants look inside the company—from its operations to its P&L sheets. “It’s difficult for them to make these insightful pronouncements about your business if you don’t let them know about it,” he adds. “And that goes back to having someone you can trust.”

HUMAN RESOURCES
Company: Donatelle Engineering, New Brighton
Consultant: Trusight, Plymouth

Trusight supports employers in three primary areas: comprehensive human resources consulting, employee training, and membership benefits. As a non-profit, Trusight provides its members with a variety of HR tools, forms, databases, and resources. CLARE SCOTT, the director of marketing, says her firm primarily serves small to midsized privately held companies. Nearly half of its customers
are manufacturers.

“We work with a lot of small companies who may not have seasoned or senior level HR staff, with some exceptions,” says Scott. “For those folks, we serve as a trend monitor. We’re watching HR trends, we’re listening to our members, and assessing what are hot topics so we can be that resource for them.”

In addition, Trusight makes the case for how investing in human resources can positively contribute to the company’s overall financials. “A lot of people feel HR is touchy feely; ‘I’m a CFO and I can’t really understand how this is making a connection to the bottom line for me,’ ” she says. “We try to help make that ROI case.”

JIM CARRIER has been director of human resources for Donatelle, a privately held engineering company in the medical device arena, for about four years, having worked in HR since 1980. He defines human resources as “the necessary evil” in which “everybody’s an expert.”

Conducting opinion surveys is one of the main things Trusight does for Donatelle. The company previously conducted internal surveys but didn’t obtain results for employee satisfaction levels compared to its competitors. Thanks to Trusight, the response rates are much higher. When the company did its own questionnaire participation was 45 percent; it jumped to 90 percent when the consultants did the surveys.

“Why? It’s a dispassionate third party. They don’t have management looking over people’s shoulders. Trust counts for a lot,” Carrier says. “The key is getting the data, because I’d want to know either way. Now that I know what my marketing advantages are, I speak to and recruit talented folks; I speak to the survey results.”

In addition, good data is worth its weight in gold. “They interpret it for you, help you analyze it, help pay development structures,” says Carrier. “Basically, I pick up the telephone and get the help I need. I look at it as kind of a one-stop shop for my HR needs.”

He defaults to Trusight “when I lack the expertise, or I want [market] information or don’t have adequate staffing, or want to improve the skills of employees or supervisors—basically whenever I want a third-party perspective from recognized experts.”

MARKETING SERVICES
Company: LearningZoneXpress, Owatonna
Consultant: Enterprise Minnesota, Minneapolis

Learning ZoneXpress develops and designs educational materials to teach life skills to children as well as healthy behaviors in the workplace. Because of the Internet, the Owatonna-based company found that its primary market of posters and other printed materials for educators—primarily home economics teachers—was shrinking at a rapid clip of 10–15 percent a year. And with school resources also shrinking, COO JOYCE MATTSON believed LearningZoneXpress needed to make a change.

As home ec classes went by the wayside, the company needed to offset its increasingly limited market, both in terms of products and sales channels. LearningZone Xpress decided to focus on the web as a new method of marketing and distribution. Undertaking a process to develop a marketing strategy and redefine the mission of the company, the leadership of LearningZoneXpress hired some consultants.

“We used the Enterprise Minnesota folks to help us visualize the necessary changes and to think about how to be different,” says Mattson. The focus wasn’t on products or promotion so much as distribution channels to see “how we could grow through new markets.”

LearningZoneXpress wasn’t ready to hire in-house talent, so teaming with Enterprise Minnesota gave the company the resources and expertise it needed to conduct analysis and lay out a roadmap for launching Internet sales. “We used Enterprise Minnesota folks to get the strategic plan in place. Then as we went through the Four Ps of marketing—product, price, place, promotion—we settled on modifying our distribution channels to grow into new markets,” adds Mattson. “Distributors were 50 percent of our sales. Now they’re 30 percent.”

One of the keys to having a successful project with consultants is to give lots of direction up front and dedicate key team members to working with the consultants on a project. “I often think consultants are going to solve that issue for us. They’re really just coaches. They’re coaches in possibility and help steer the company,” Mattson says. “We took that steering very seriously, and you still have to dedicate resources and put key members on the project.”

Lead consultant DICK PEDERSEN, a professional business advisor with Enterprise Minnesota in Owatonna, says he saw early on that it was important for prospective LearningZoneXpress clients not to stumble upon its products by accident, but as part of a select target market. Though the company already had a web site, its staff was unsure how best to use it.

Pedersen and his team helped the company tailor and leverage its web presence to broaden the number of potential markets. They helped LearningZoneXpress utilize the Internet and social media sites for product sales and tie results to the firm’s internal computer systems.

“The web fits very well with their business and clientele,” says Pedersen. “Early on, their Internet response was so great they had to temporarily close down the web server.”

Top 10 Keys to Consider When Choosing a Consultant
1. TRUST & RAPPORT – Relationships matter. Would you show this person your
latest P&L statement? (Hint: If not, keep looking.)
2. RIGHT FIT – Small companies typically don’t have the financial strength to hire larger firms and generally don’t need (or want to pay for) that kind of firepower.
3. CORE SERVICES – What are key services for the firm you’re interested in?
4. SUPPORT – Does the consultant also offer support functions for the services they provide?
5. MATURITY – What stages of business growth does the consultancy typically work with? And, can they grow with you?
6. REPUTATION – Who do you know who uses them? Find out, and then ask why.
7. FEES vs. VALUE – Know what you’re looking for. For accounting, do you need a review or an audit? Does your bank require an audit?
8. ADVISORY CAPABILITIES – What kind of ancillary advisory services do they have, such as sales-tax or income-tax consulting? How well do these match your company’s needs?
9. INDUSTRY KNOWLEDGE – Do they have a manufacturing practice or considerable experience in your space?
10. SHARED VALUES – How well do you know and like the people? Are they more than a sounding-board for you? Would you enjoy their company outside of work?