WRITTEN BY

Rebecca Wright

By Matthew Lewison

When my business partners and I first discussed forming OpenCorp, I was working in the role of general manager (Qld) for a large publicly listed company. I was managing a team responsible for more than $1 billion worth of property developments and it was fair to say I had the best consultants, contractors, internal resources and industry contacts at my disposal. Understandably, one of my biggest concerns about starting a new business was that I’d become a small fish in a big pond.

Every small- to medium-sized developer faces the same problem – the only thing that separated us at that time was that we’d been exposed to great consultants so we knew how to sort the good from the bad. As the old saying goes, ‘you don’t know what you don’t know’ and many startup developers can get stuck with a bunch of consultants giving bad advice without even knowing that was the case.

When we were getting OpenCorp off the ground, we developed a strategy for finding and securing relationships with the right consultants and it’s something I encourage all budding developers to do. I’m sure everyone can relate to having had a lousy experience with a consultant that invoiced like they came from the top end of town. As an example, my father used a medium-sized suburban law firm (with multiple offices) to do all his conveyancing. When I started doing small to medium developments in Melbourne I engaged dad’s consultant on the basis that their “hourly rates” and conveyancing fees were cheaper than the big national firm I’d previously used. On the first project there was a dispute over the treatment of GST on our purchase contract – the vendor’s lawyer said that we needed to pay GST on top of the sale price. Our lawyer thought that sounded right and it was only due to my experience that I challenged this position and required that the extra money go into a “trust account” rather than into the vendor’s bank account (where it might never come back). I then engaged an experienced tax consultant and after spending $10,000 on additional legals I got our $130,000 in GST back. If I’d had the right lawyer in the first instance I never would have been drawn into the argument and would have saved the $10,000 – not to mention the time and effort I’d invested to resolve the issue. Had I not known enough about the GST Act then I would’ve been $130,000 out of pocket as a result of my lawyer’s ineptitude.

I share this story with people to demonstrate that for certain professions the cost of a consultant should be assessed against the “risk” of getting the wrong advice. If you need a consultant to lick stamps on envelopes, what’s the worst that could happen if they make a mistake? It costs you a few cents for a new stamp. If you need a consultant that can get you an approval for a heritage-listed site then the cheapest, and probably least experienced, consultant might end up costing you an approval.

So, if you’re growing your business (or development strategy), here are some rules to follow when engaging a consultant:

  • Don’t just look at fees – consider your business exposure to “bad advice”.
  • Ask for names of past clients and request their contact details to interview the key contacts. If you know someone that’s used them, call and run through a full list of questions about timeliness, decision-making and transparency. There’s nothing worse than a consultant that doesn’t share important information with their client.
  • Look at who’ll be working on your account and who they report to. We’d all like the most experienced person but chances are they’re now in a management role so they can lend their experience to junior staff.
  • Ensure there are sufficient resources in the business to meet your deadline if the main person falls ill or is hit by a bus.
  • Seek out emerging new businesses where the principals have cut their teeth in high profile businesses – chances are they’ll employ the same systems and standards but will be cheaper.
  • Work with business people that show passion for what they do and a broader interest in the development industry – it’s a sure sign that they’ll be looking for ways to innovate and grow over time.

As a rapidly growing business it was our goal to engage with consultants that would bid for our business, knowing that their business future would be secure if they could win our work and then deliver on their service promises.

Happy developing!

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