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Small business owners can't be expected to know everything there is to know about running a business. Enter management consultants.

If you asked Wendy Labat eight years ago for advice on starting a business, she would have said "take the plunge first and work out the details later." Ask her that same question today and Labat wouldn't even think of taking that fly-by-the-seat-of-your-pants approach. Today Labat advises: "Work out the details of your business plan early on with the help of a small business consultant."

Why the dramatic about-face? Labat, president of Southern Belk Business Systems Inc., an office equipment distributor in Newman, Ga., says the reason is really quite simple. After hanging her shingle in 1984, Labat quickly realized that she wasn't a Jane-of-all-trades. Says she: "Small business owners are often naive, and think they know everything there is to know about running a business. But that's not necessarily true."

When Labat realized that she needed outside help, she hired consultant Ivory Dorsey to evaluate Southern Belk's internal structure. Dorsey, who is president of Golden Eagle Business Services Inc., an Atlanta-based consulting firm, analyzed Labat's operation and suggested that she contract out jobs, such as accounting and packaging, to free up her four-employee staff for other tasks. "Ivory noticed that many of my efforts were counterproductive," says Labat, who has also worked with consultants in the areas of advertising, market research, office automation and brochure design.

The move to hire experts in their fields was a wise one for the 34-year-old Labat. Southern Belk's sales mushroomed from $60,000 in 1985 to $800,000 in 1991. Labat credits the company's increase in sales directly to her work with the advisers she hired. "Before I started working with consultants, I was doing the same things and achieving very little results," she recalls.

"Had I worked with them earlier," she candidly asserts, "I could have positioned myself better to be where I wanted to be. Before then, I found that I just landed wherever I fell."

Consultants To The Rescue

Labat's story underscores the point that those small business owners who supplement their experience and expertise with that of a consultant will find themselves better positioned for success and long-term growth. More of today's entrepreneurs are finding that hiring the appropriate consultant can often help them reduce--and more importantly--avoid the problems that plague many business owners. For instance, depending on their field of expertise, consultants can provide technical assistance, identify new markets, develop cost-cutting measures and challenge old procedures.

As small businesses continue to struggle in a recovering economy, the role of consultants has taken on even greater importance. "Small business owners can't be expected to have all the expertise that they need to run a business," says John J. Clark, president of Clark & Associates, a marketing and management firm in Pittsburgh. "The decision comes down to, do you hire somebody and affect your payroll, taxes and profit potential, or do you pay a consultant, who's there for the short term?" Adds James H. Lowry, president of Chicago-based James H. Lowry & Associates: "Most small businesses could benefit from the services of a consultant. The average entrepreneur has so much to do that there's a tendency for them to get buried in details."

When Do You Need Help?

How do you determine whether you need outside help? Although there are no hard and fast rules, Clark says that you should consider hiring a consultant "when you have a major decision that requires you to commit a substantial amount of resources."

Clark also recommends that you ask yourself the following questions: * Do you feel that things could be better, but you're unsure of what action to take? * Have your efforts to date proved unable to produce long-term improvements for

your business? * Do you require an independent third-party opinion to confirm a decision or provide an alternative?

If you answer "yes" to any of these questions, start shopping for an expert in the area (such as desktop publishing) where you need advice. Check with business associates, friends and fellow entrepreneurs for leads. If that doesn't work, contact major consultant associations, trade associations or the Yellow Pages. (See sidebar, "Where To Go For Help.")

The key is to define your needs. But before you hire a consultant, decide which problems he or she will address. Assess your company's strengths and weaknesses to determine what the problems are. In some cases, a problem might be elusive and impossible to define before the consultant is hired. In that case, it might be helpful to work with one who uses a "process approach." The ultimate goal is to develop a kind of critical, evaluative thinking so that you can solve the problem yourself.

Once you've defined your company problems and you're able to communicate them thoroughly, clearly and candidly, then you're ready to screen potential consultants. Here are some points you want to consider during your first meeting: * Does the consultant understand the key issues involved? * Does she have enough experience in handling similar situations? * Has a personal rapport been established? * Does she project a sense of empathy? * Did she focus questions on your problem?

Remember, since you will be entrusting a consultant with the innerworkings of your operation, you want to search and screen with the utmost care.

How To Screen A Consultant

Before working with your consultant, ask her to submit a proposal. The bid should contain and spell out the following: * Objectives: What is the specific course of action the consultant will take to help you reach your goal? * Scope: What areas of your business need to be addressed? * Approach: How will your company's problems be solved? * Time and Cost: What is the time frame needed to achieve your company's goal, and how much will it cost?

The proposal should be reviewed, and all questions resolved. Failure to fully understand and agree on all elements of the proposal could lead to unsatisfactory recommendations.

Good communication is another element that's key to a mutually rewarding relationship. Without it, both you and your consultant can be left with less than desired results. Ask yourself: * Do you trust this consultant enough to act on the recommendations she makes? * What has been the consultant's success rate with other start-up or established companies that had problems similar to yours? * Have you clearly communicated your own personal working style to the consultant, so that it can be factored into the recommendation?

What about price? Consulting fees, like everything else, vary. Consultants charge by the hour, day or project. It could cost you $250 for a few hours of briefing, $750 to $1,200 for a half-day session and $1,500 to $2,500 for a full day. Bear in mind that prices will depend on the level of service needed, the length of the project and staff resources that are required. Ask the consultant for an estimate based on his previous experience. Experts say that the costs should be expressed as a percentage of total fees.

If you have limited resources to play with--and who doesn't?--check out the following alternatives: * Small Business Development Centers: Funded by federal, state and private dollars, these centers are nationwide and offer marketing, technical and financial assistance. Contact the Small Business Administration Hotline at 800-827-5722 for more information. * The Service Corps of Retired Executives: A network of 13,000 retired executives who volunteer their services to help entrepreneurs. Call 202-205-6762, to find the location nearest you. * Business Schools and Corporations: Many business schools, such as Harvard and the J.L. Kellogg School of Management, offer consulting services for entrepreneurs. Several corporations such as Ford Motor Co. and Pepsico also provide technical assistance. * Minority Business Development Centers: This nationwide network of centers counsel minority individuals in the areas of accounting, administration, business planning, inventory control, franchising, etc. For more information, call 202-785-2886.

Dorrie Katrine Wise, president of DKW Construction Inc. in St. Louis, says that her firm benefited from the less costly consulting services available through several government-sponsored programs. In 1988 when Wise left her job as an ironworker to start DKW, which grossed $4 million last year, she only had $20,000 in savings and a will to succeed. But Wise remembers that the more practical, how-to information about launching her business came from consultants. "They helped me get certified and incorporated, and get my tax ID number," recalls Wise.

In addition, Wise says her consultants helped her design a brochure that resulted in two $500,000 highway contracts; and, they helped her obtain her first $100,000 line of credit with a local bank, along with two Small Business Administration loans that totaled $105,000.

Putting The Recommendations Into Place

So, you think that after you find a consultant, settle on a price and determine the problem, your work is done, right? Think again. Make sure that you monitor your consultant's work through all stages of the project. When the job is near completion and you're ready to implement the recommendations, it would be wise to test the plan to see if it works. To do that, make sure it meets the following criteria: * The recommendations satisfactorily suit your company's needs. * Enough time was built in to execute the proposed strategies. * The proposals add value to your company's product or service. * The plan has been discussed with your senior managers and chief financial officer, and it is not considered a financial liability. * Your employees are ready to act on the recommendations.

After doing all of that, you and your consultant can begin to reposition your company for greater profitability.

WHAT TO LOOK FOR IN A CONSULTANT

You may want to consider the services of a consultant if you feel that you either lack the knowledge and skills necessary to resolve your company's challenge or if you just lack the time. But what do you look for? Consultants agree that it's wise to work with someone who is established and recognized by their colleagues.

You should also keep in mind the consultant's experience in handling similar situations; what their references say about their ability to make things happen and the personal rapport that has been established between yourself and the consultant during the initial interview.

Also, make sure your consultant furnishes client references. And don't forget: Check them out thoroughly.

Law firms and trade and professional associations often can make unbiased recommendations. Standard investigating agencies such as the Better Business Bureau, Dun & Bradstreet and credit associations should be checked as well. Of special interest should be the results obtained and the honesty and tact with which the recommendations were made.

When reviewing the information, you've gathered, consider the following: * The breadth of experience that encompasses and goes beyond the situation as defined. * The demonstrated ability to complete assignments within the budget and on schedule. * The ability to develop practical recommendations that can be implemented.

The consultant should also be asked to submit a proposal that contains and spells out the following: * The objective/scope of assignment. * The nature of the final report and interim progress reports. * How he will tackle the problem. * The anticipated charges, expenses and terms of payment.

The success of a consulting project can be measured by savings being realized, new business generated and delays eliminated. There should be observable movement toward the achievement of goals or the solution of the problems identified in the consultant's report. The project can be deemed a success if you ask yourself would you hire the same consultant again--and your answer is "yes."

WHERE TO GO FOR HELP

Where do you find a consultant? Recommendations from colleagues who have successful relationships with their consultants as well as your attorney, accountant or banker are good places to start. Another obvious, but often overlooked resource is your business-to-business Yellow Pages. A check of the particular area or industry heading that you desire consultant services in will probably list any number of them.

You should also check trade publications and contact trade associations. Trade shows are also a good place to meet and network with consultants.

The professional competence of those consultants can be certified through the Institute of Management Consultants, 521 Fifth Ave. New York, NY 10175, 212-697-8262.

A check of your local telephone book can put you in touch with the following agencies that provide free or low-cost government-sponsored services. * The Association of Small Business Development Centers, 1313 Farnam, Suite 132, Omaha, NE 68182, 402-595-2387, can refer you to your local SBDC. These centers are sponsored by the Small Business Administration in partnership with state and local governments, the educational community and the private sector. Among the services they provide is low-cost consulting to prospective and existing small business owners. * Small Business Administration Office of Business Development, 409 Third St., SW, Washington, DC 20316, 800-722-1664, provides a list of services that assist small business owners in a consulting capacity. * Kennedy Publications, Templeton Road, Fitzwilliam, NH 03447, 603-585-2200, publishes books and manuals of interest to both entrepreneurs looking for consultants, as well as consultants themselves. Two selections from their list include The Directory of Management Consultants ($94.95), which profiles 130 management consulting firms in 83 services and 107 industries, and How To Select And Use Management Consultants ($3.00), which includes useful how-to information for entrepreneurs. * Service Corps of Retired Executives (SCORE). 409 Third St., SW, Washington, DC 20416, 202-205-6762, consists of over 13,000 business executives who volunteer their time to provide management consulting to entrepreneurs.