The lines have blurred over the years and the terms ‘consultant’ and ‘contractor’ are now often used interchangeably. By definition, however, these two business professionals perform very different tasks, although the consultant can, in some circumstances, also do the work of a contractor.
The Difference Between Consultants and Contractors: An Example
It is easy to confuse the roles of the modern-day business consultant and contractor. Both are self-employed. Both work with entrepreneurs. Both have the goal of maximising the growth of their clients’ small to medium-sized businesses. But that is where the similarities end.
The Role of the Independent Consultant
So where exactly does the consultant fit into the grand scheme of business things?
So where exactly does the consultant fit into the grand scheme of business things?
These are some of the specific characteristics of consultants:
• They are self-employed
• They are experts in a particular field
• They evaluate a client’s needs
• They provide expert advice on how to meet these needs
• They do detailed planning for the client
• They help the client take crucial decisions relating to the future of the business
• They help the client form a vision and develop a roadmap for the desired goal.
The Role of the Independent Contractor
Let’s look now, at how the independent contractor fits into the picture.
In the United States, ‘contractor’ is a term applying to all independent professionals not deemed to be employees. In this narrow legal definition, workers are regarded as contractors if the client determines only the desired result of the required work, not how it will be done.
But More Generally, Outside of the US, the Contractor Looks a Bit Like This …
• A self-employed businessperson who enters into an agreement to do work for another for an agreed price
• A professional who specialises in anything from copywriting to workforce training and development.
• A professional who agrees that the client defines the desired results and the schedule
• The one who provides the labour, tools and supplies
• The one who keeps control over the work to be done, determines the methods used to be used, and decides the scheduling of the work.
Generally, the rule is that workers are deemed to be independent contractors if the client determines only the result of the work to be done, not how it will be done.
When the Consultant Becomes the Contractor
This is a special case. A consultant, after having rendered his or her opinion of the situation and how to improve it, sometimes agrees (contracts) to carry out the work required. At this point, the consultant may be said to have become a contractor.
Let’s explore a hypothetical example…
Dave has launched a small business. It’s a graphics design agency, employing just two people, besides himself. His business is ticking along quite nicely but not taking off. He decides that it is time to expand, and searches online for a consultant who can help him make the business soar.
Enter Consultant Lucy
Consultant Lucy specialises in graphic design. Lucy studies Dave’s rather meagre client base and realises that drastic changes are needed. She concludes that Dave and his two assistants are real experts in their field, but are under-achieving.
Lucy draws up an expansion plan, which includes increasing the skills of Dave’s two assistants through online advanced educational resources. She also advises Dave that if he wants to fully implement her transformation plan, he needs to hire a contractor.
Dave decides that it is time for an all-or-nothing approach. He accepts Lucy’s recommendation and hires contractor Annie, who comes highly praised by her clients.
Cue Contractor Annie
No-nonsense Annie tells Dave outright that she wants complete control of the operation until it achieves its goal of becoming a major graphics design force.
She insists that Dave employs a skilled search engine optimisation/Internet marketing virtual assistant.
She analyses the day-to-day operations of his business and soon realises that one of Dave’s assistants is doing work on the side, in Dave’s paid-for time. She explains the situation to Dave, who calls in the assistant and threatens to fire him unless he devotes himself fully to Dave’s ‘We Work the Web for You’ enterprise. Dave’s assistant quickly falls in line.
Consultants and Contractors: How Both Can Add Value for Clients
Within a month, the consultant’s advice and the contractor’s hands-on approach are paying dividends. Dave’s company is being noticed and the orders are starting to multiply.
Dave is delighted. His small business has benefitted enormously from the different, but complimentary efforts of consultant and contractor. Whether they work alone or together, the consultant and/or the contractor can massively impact the performance of a small to medium-sized business.
So there you have it. Will you be a contractor or a consultant? I am definitely a consultant, and if you plan to be one too, check back here regularly for more tips and advice on starting out in my industry.
Best Regards,
Rob O’Byrne
Email or +61 417 417 307