A Former Public Adjuster Turned Consultant, Robert Taylor, Explains the Difference Between Consultants and Contractors
Consultants and contractors are both essential to the functioning of the business world. While both jobs involve bringing a person who is not technically employed by the company, the pay structure and the type of work generally undertaken by these workers tends to be different.
Robert Taylor, a former public adjuster turned consultant, explains how consultants and contractors are different, exploring some cases when contractors and consultants may work together to accomplish a business’s goals.
What is the Difference Between a Contractor and a Consultant?
The consultant’s role is to evaluate a client’s needs and provide expert opinions and advice on doing their jobs better. The contractor’s job is generally concerned with actually doing the work.
According to Robert Taylor, the consultant’s and contractor’s job descriptions have indeed become blurred over the years. This can happen when the consultant gives their professional opinion on how a problem should be handled and then sets out to fulfill their recommendations by performing the tasks they outlined. At that point, the consultant has become a contractor. The terms have also been conflated by industries that have incorporated them into job titles.
Consultants
Consultants are generally self-employed business people who have special expertise or skills. The consultant provides an expert opinion or professional skill to the company paying for their services. The consultant trains others in performing tasks and making decisions.
Consultants may work independently, or they may come from large national firms. No matter where they come from, consultants often bill by the project rather than by the hour. Consultants are often responsible for changing the way a company does business.
The types of projects that a consultant might undertake are generally wide-ranging. The most common type of consulting project is the strategic project. Consultants develop strategies for production and supply chains, entering new markets, and projects that transform a company’s strategy.
One of the most popular types of projects that consultants undertake is the performance improvement project. With this type of project, it is unnecessary to come up with new ideas or enter new markets. The project is simply intended to make existing processes more efficient. Consultants help their clients save money, generate more cash and higher profits, and reduce their need for assets.
Operations improvement is a major component of this type of project. The operations improvement project aims to reduce costs, reduce the inventory used by operations, and increase speed and quality. These projects can include instructing a company on lean manufacturing techniques.
Management projects are another popular way to use consultants. With a management project, a company’s workflow and chain of command are evaluated to ensure they are sensible and efficient.
Mergers and acquisitions are another area where consultants can be helpful. If a company is spending $2 billion on another company, a few million for a qualified consultant’s services are considered a necessary expense. M&A consultants help firms define which companies to buy and why they want to do so. The consultant will help the purchasing company identify any problems that may occur using due diligence.
This is only a sampling of the types of projects that an independent or corporate consultant may undertake. In any area where a company needs help, a consultant can help make the company’s operations more efficient.
Contractors
Independent contractors are self-employed people who are contracted to perform work for another company as a non-employee. Independent contractors need to pay their Medicare and Social Security taxes and withhold their income taxes. Contractors are also not required to receive employment benefits like insurance and retirement accountants. Freelancers can be considered independent contractors.
Writers, software designers, IT personnel, and others who provide independent services are often classified as contractors. Contractors have risen in the past few years as part of the “gig economy.”
While it may seem disadvantageous for a worker to become an independent contractor rather than a regular employee, independent contractors experience some benefits. Contractors can set their hours, pursue only projects they are interested in, and work from home more frequently than regular employees.
When Contractors and Consultants Work Together
Contractors and consultants contribute to the business world in different ways, but they frequently work together to help businesses accomplish their goals. Consultants sometimes bring in contractors to help companies implement the companies’ changes to their daily operations. Consultants may recommend hiring independent contractors instead of hiring more regular employees in a bid to save costs.
Key Business Assistants
Both consultants and contractors can be important to the proper functioning of a company of any size. When internal workers cannot solve a business’s pressing problems, it is possible to hire a consultant or contractor and make the company more efficient. Former public adjuster Robert Taylor recommends that all businesses look into the advantages of hiring contractors and consultants.
