Thursday, August 12, 2010

The Consultant

When I came in to work the owner rushed over to meet me.  He told me that he had met a really sharp consultant that he thought could be a huge help with his business, and that he had a meeting with him later that day.  I was not a regular employee.  I had been hired when my previous employer folded, and I was finishing projects started by them.  I had worked closely with this company since the owner was a young man some 15 years ago.  He wanted me to sit in on the meeting.

He showed up at the appointed time, wearing a very expensive suit.  He exuded success, and pulled out a book filled with business cards from companies he said he had consulted with.  His company had an impressive three letter acronym for it's name.  I could see why the owner was impressed, but it all seemed vaguely familiar.

The consultant asked a lot of questions, about problem areas the company had, about it's financial situation. Some of his questions indicated he was familiar with the industry, and he indicated his company had a lot of data from the industry which could be used to benchmark this company.  He finished up with a promise to return the next day with a summary and a quote for the kind of work they could do to help this company become better run and more profitable.  The owner was very pleased and asked me what I thought.  I told him that he certainly was very sharp, and we could learn a lot from him.

I worked from home, and stayed two nights a week in a local hotel because I lived too far away to commute daily.  That evening I went back to my hotel and researched his company on the Internet.  It turned out that the company was familiar to me, from an article in INC. magazine from about 5 years ago.  Digging a little deeper I found out that the founder of this consulting firm had been a consultant at another consulting firm, one that had approached me in the same way, nearly 20 years ago!  The sales pitch sounded familiar because it was exactly the same pitch I had heard before!

I printed out the INC. magazine article and gave it to the owner the next morning.  He read it through, and met the consultant at the door when he showed up.  He then gave him and earful and threw him out!  The INC. story detailed how so many small businesses had been victimized by this company.  The salesman was in fact very sharp, and if he actually came out and worked with you the results probably would have been quite good.  But that wasn't why he showed up.  His real job was to size up the mark, carefully getting from the owner exactly how much he could pay out of cash flow.  That would be the amount that the owner could part with quickly, before he realized he was being taken.  If he didn't have the money he'd have to consult with others, and that might expose the game plan.  The sad part is, the slick salesman probably knew enough to actually be helpful.  They got me for $12K before I pulled the plug!

That night, in my hotel room I decided to play consultant.  I knew this company very well.  The owners dad was my first big customer when I had my own business.  When he and his two brothers wanted to get dad to let them do something they often asked my advice, because dad sometimes took my advice.  Sometimes I sided with them, sometimes with dad.  So I wrote up an analysis of the employees working there.

I started with the owner, and explained his strengths and weaknesses.  He was great on strategy, but tended to lose interest in the day to day operations, causing things to fall apart.  The young lady in the office had little bookkeeping experience, didn't take the job seriously and was costing the company a lot of money in taking rebates and discounts from vendors.  The head foreman was very knowledgeable about the processes used, but was a poor manager, who preferred to work alone.  So, people weren't being trained in their jobs.  His younger brother, 21 at the time and working as the maintenance man, had a wonderful attitude and work ethic, the kind every company hopes to find, but few do.

My recommendation was for the owner to take a back seat in the day to day operations of the business.  He should focus on the strategic direction of the company.  He should let the young girl in the office work out in the plant, which she actually preferred, and replace her in the office with a qualified bookkeeper.  The young maintenance man should become the plant manager, and his older brother should now work under him!  Sounds crazy eh?

The owner told me later he got angry when he first read my 'consulting report'.  His wife however thought I had hit the nail on the head, and encouraged him to try it.  She asked me to expand on what I had written, to give them more direction.  The 21 year old young man was now running the entire multi-million dollar operation. The business has done very well, and the owner decided to become Mr. Mom to their five kids, when his wife decided to go back to work just for fun.  They did hit a snag about 4 years later.

The young manager called me one night and said he was thinking of quitting, because he was having real problems with his older brother.  His older brother had been there longer, so he felt he should leave. He wanted to know what I thought.  SoI told him the truth.  I said that for a young man of his age and education he was extremely well paid.  If he left he would take a huge cut in pay, that would take him years to recover from.  Worse, it wouldn't save his brother's job.  Because the new manager wouldn't put up with his brother for very long.  Then he'd be gone because the owner would have little choice but to let him go.

I told him to got to his brother and tell him the truth.  Tell him he is a poor employee, you are not going to put up with his problems any more, and that you will fire him if he doesn't straighten up immediately!  He did it, and the timing was right.  His brother was recovering from a hernia operation, needed because he worked alone, having alienated all the other employees.  It has been about two years and things are going well.

It was nothing more than the right people, in the right seats!