Consultant v. Contractor: What's the Difference?
Everywhere you look today, somebody else is starting another consulting firm. It seems like every other person you meet is a consultant for one thing or another, but what does that really mean? Aren’t they just contractors with fancy titles?
Consultants take work when they feel like it, like contractors. Contractors can choose who they work for, just like consultants. Consultants establish business relationships with contracts and contractors do the same. Both are 1099, both are short term, and if they do a good job, both can extend or renew that contract.
Why do we need two words to describe the same thing you ask? Because the difference is subtle and nuanced, but important nonetheless.
So, What’s a Contractor?
Merriam-Webster defines contractor as: one that contracts or is party to a contract. Using that definition, we all act as contractors at one time or another. In industry, a contractor is typically someone who works at a fixed hourly rate on a given project for a certain length of time.
Oftentimes, contractors are used as a supplement to full-time W-2 employees so that reductions in force are easier to make and sometimes projects are shorter runs and don’t require people to remain employed for long periods of time.
Contractors are higher to do a specific set of tasks or work in a given manner. They typically work for one person or team to accomplish a given set of goals to support a project. Contractors are often those with a specific set of skills like Computer-Aided Drafting (CAD), Finite Element Analysis (FEA), data entry, or software development or for more creative businesses, they may be painters, designers, graphic artists, or musicians. Perhaps a contractor is hired to write a set of Standard Operating Procedures or update the CAD layouts of a building during a few month period.
So, What’s the Difference?
According to Dr. Alan Weiss, cited as “the finest entrepreneurial coach in the world”, it’s all about value with consultants. Where contractors are tools to be used to execute a job function, consultants are resources to be wielded for large scale improvements at any level.
Consultants seeks to build value without their client’s organization. The end game is not to work a fixed number of hours during a fixed number of months facing countless instances of scope creep and redirection to end up missing the deadlines at the end anyway. The purpose of a consultant is to mold the process around the business and work with the business to increase value.
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Where a good contractor may be used to rewrite or edit Standard Operating Procedures or Processes, a good consultant to used to develop those procedures and processes. Consultants draw from a wealth of industry-experience, knowledge, and education to ensure that the processes supported are the best they can be. If more resources are needed, your consultant will know who to call.
A good consultant is your guide and your partner. Clients are not just employers to consultants and their expertise is valuable because it is tailored to you. If your consultant does not make you feel like they are your partner through your business journey together, then it might be time to consider hiring a new one.
What’s the Benefit?
Consultants are often expensive and sometimes you can get lucky by hiring a capable contractor, but you have to ask yourself what are you looking for? Are you looking for someone who will do what you tell them or are you looking for someone who will help push you and make you better?
If skilled manual labor is what you are seeking, there are countless staffing agencies available to help you find the right talent for your needs. If you are not quite sure what you need, consider dipping a toe in the wide world of consultants to see if there is one that might fit what you are looking for.
Some Advice
If a consultant charges for your first call, that’s a red flag
If a consultant won’t share a resume, references, or testimonials…red flag
It can be difficult, but don’t think about consultant time as an hourly rate, think in terms of perceived value – remember, you are partners in the project
UpWork is an excellent platform for finding contractors and consultants, read more about their comparisons here
Be patient and remember that this process can take time, you owe it to your business to find the right fit
CTA: Schedule a call with Mayflower to see how we can be useful to you!
Sources
Marshall Goldsmith, https://alanweiss.com/
Dr. Alan Weiss, Value-Based Fees, 2nd Edition