Consultants . . .

are professionals who perform specific services for a fee. Many start-ups hire consultants to obtain specific expertise and to delay the expense of hiring additional full-time employees. Later stage growth companies often engage consultants who have specific training or expertise not available from the company’s employees. Consultants do not earn fringe benefits, as employees do, and thus can be less expensive in the short run. They can also be hired by task and thereby may be used when a full-time employee would not be economical.

One common use of consultants is to assist in the preparation of a business plan. Another is to assist in conducting market research or to advise in developing a company's product, manufacturing process, or marketing strategy. Sometimes, companies hire persons to consult whom they are interested in hiring full-time in the future. This allows the company to get services it needs and evaluate a person for staff employment at the same time. (As with company employees, consultants should always be required to sign confidentiality agreements when they are given access to company secrets.) Consultants' services can be paid for in a variety of ways.

Consultants hired to help raise money should be engaged with clear expectations about their responsibilities. Regardless of their claims, do not expect them to replace management entirely in the fund-raising process. Even with the best consultant or broker, investors will want to meet and measure management's knowledge of its business plan and its ability to make the company succeed. They can only do this if management participates actively in the preparation of the business plan and in discussions with investors. See: Brokers for more information about contracting with consultants to assist in fund raising. See also: Consulting Agreements, Mistakes I Made at a Business Plan Forum, The Writing of the Business Plan.