becoming an independent consultant rev 1
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Be
coming an Independent Consultant
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Contents
Making the decision
Positioning your practice
Marketing plan
Where to locate
Setting up the office
Now youre lonely
Contractual Relationships with associates
Managing your finances
Setting fees Legal, insurance and contractual
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Making the Decision
Consider these changes:
Phone contact vs. direct relationships
Need for self-discipline & time management
Acquire more knowledge of admin & financials
Have patience (and resources) in closing new clients
Have a sharply focused marketing strategy
Learn to operate office equipment/computers
Maintain the highest ethical behavior
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Positioning Your Practice
Identify your unique experience & skills
Your competitive advantages
What has unusual value to potential clients
Can this be communicated effectively
Test out ideas with friendly clients
Consider your marketing strategy:
Types/sizes of clients/industry/geography
Commodity service on an outsourced basis
Convenience, flexibility, cost control Ideally, narrowly focus in a specialty that is in demand, but
has few practitioners
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Marketing Plan
Systematic Marketing is critical
Successful techniques include:
Regular personal letters with clipping or book review
Referrals/testimonial letters from satisfied clients
Make speeches, do seminars or workshops
Write articles as mailing pieces
Publish a newsletter (burdensome on one person)
Develop a web-site
Marketing brochures (can do them w/MS Publisher)
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Where to Locate
Many work effectively out of their homes
Need a pleasant, dedicated room
If an outside office:
Look into office condo or shared space Avoid renting a conventional office too costly
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Setting up the Office
Communications is the consultants life blood
Have 2-3 dedicated phone lines (one for faxes)
Office equipment includes:
Desk, chair bookcases/shelves, many file cabinets Good computer, large monitor, UPS, ZIP drives, media safe
fire proof storage box, scanner, laser printer, CD burner,
good fax
Office software:
Microsoft Office, Quicken (or QuickBooks)
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Now Youre Lonely
Schedule informal lunches during the week
Join a health club and use it!
Plan an errand each day away from the office
Join a service club (Rotary, Lions, etc.) Develop network of consulting colleagues
Local chapter of The Institute of Management Consultants
Have to work hard at this (overcome jealousy)
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Contractual Relationships with Associates
Mostly simple letters of understanding defining mutual
obligations
Compensation vehicles:
Agree on a per diem or per hour rate agree via a detailed
task plan how many hours/days each will get
Agree on a split of the total fees based on roles with the
client (ex x percent for selling the job, y percent for
managing the client, proportioning balance based on est.
hours each is to work on the project
Confidentiality agreement if one party has proprietarytechnology
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Managing Your Finances
Maintain meticulous financial records
Obtain a separate tax ID
Keep separate business checking account
Have separate business credit card Estimate and pay self-employment taxes
Consider self-employed retirement funding:
SEPs, Keoghs
Defined Benefit Pension Plan for good years
Be careful of the relationship with alliance associates (theycould become employees)
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Setting Fees
Do NOT start out with low fees to speed up client acquisition
Low priced consultants not taken seriously
Potential or actual contributions not valued
Fees depend on: Nature of the practice
What competition charges
Size and nature of prospective client organizations
In general, base per diem rate is no less than 10-15% less
than fees charged by large established competitiveconsulting firms for similar work
If possible, estimate the total effort and quote a fixed price
Be careful of quoting to fit clients budget this is discounting
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Legal, Insurance and Contractual
Need reasonable level of commercial insurance
Includes professional and personal liability
Includes protection of office equipment and records from
loss
May need errors and omissions insurance Carefully consider disability insurance
This may be more important than life insurance
With client proposals:
Clearly list deliverables
Basis of fees and invoicing a must
Protect proprietary technology; copyright all written
consulting tools, training materials and forms
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