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Overview

Getting started in consulting can be a tricky prospect. How much should you charge? What type of language should exist in the contract? How can you find clients? Written by a veteran consultant with hundreds of consulting engagements to his credit, How to Make it Big as a Consultant is filled with detailed advice on every aspect of starting up and maintaining a highly lucrative consulting career. The book helps readers:

• get a handle on the legal, tax, and insurance issues involved in setting up and running the business

• understand what clients really need

• create the structure for an assignment (proposals, pricing, contracts, scheduling)

• market the business

• solve clients’ problems using the Harvard Case Study Method

Completely updated and revised throughout, the fourth edition features new chapters on developing strategies for clients, leading consulting teams, and more. This trusted guidebook will help any aspiring reader become the kind of outstanding consultant that clients will turn to again and again.

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Editorial Reviews

MA) Herald (Boston, MA)
Cohen's book covers in detail - lots of detail- everything you might ever want to know about becoming a consultant. (January 12, 2003)
Booknews
Cohen (business, California State University, Los Angeles) offers advice on starting and maintaining a consulting career. He provides instruction on understanding clients' needs, marketing the business, creating the structure for assignments, problem-solving, growth, research, and using the Internet. Chapters also discuss the nuts-and- bolts of the business, including interviews, proposals, pricing, contracts, schedules, negotiating, and presentations. Appendixes include references, a sample brochure, a questionnaire and audit, a sample proposal, and a list of professional associations. Annotation c. Book News, Inc., Portland, OR (booknews.com)
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Product Details

  • ISBN-13: 9780814410325
  • Publisher: AMACOM
  • Publication date: 6/3/2009
  • Edition description: Fourth Edition
  • Edition number: 4
  • Pages: 352
  • Sales rank: 1,414,775
  • Product dimensions: 5.90 (w) x 8.90 (h) x 1.00 (d)

Meet the Author

William A. Cohen, Ph.D. (Pasadena, CA) is President of the Institute of Leader Arts and an international speaker on management and leadership. As Director of the Small Business Institute for California State University Los Angeles, he built the program into one of the country’s largest, supervising consulting for more than 700 small businesses. He is the author of many books including The New Art of the Leader and A Class with Drucker (978-08144-0919-0).

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Read an Excerpt

PREFACE

THE WORLD’S FOREMOST CONSULTANT

AND HIS IMPACT ON THIS BOOK

IT HAS BEEN ONLY LAST YEAR that my book A Class with

Drucker: The Lost Lessons of the World’s Greatest Management

Teacher (AMACOM, 2008) was published. I had the very great

honor of being Peter Drucker’s first executive PhD student and

of maintaining a relationship with him over a 30-year period.

This is significant because Peter Drucker was not only the

greatest management teacher, but was also known as The Father

of Modern Management. Moreover, he was also the most celebrated

management consultant worldwide. Drucker Societies

have sprung up all over the world to continue his ideas and his

legacy. And no wonder: His ideas were not just fluff. Consider

just one of his clients and one engagement.

DRUCKER’S CONSULTING

Jack Welch, the legendary former General Electric CEO, sat

down with management consultant Drucker shortly after

01-HMBC-FM-2 3/4/09 2:32 PM Page xiii

becoming CEO of GE. Drucker posed only two questions, but they

changed the course of GE’s future.Those two questions were worth billions

of dollars over the course of Welch’s tenure as CEO. The first

question was, “If GE weren’t already in a business, would you enter it

today?” Then he followed up with, “If the answer is no, what are you

going to do about it?”Welch decided that if GE could not be number

one or number two in a market, the business would have to be fixed,

sold, or closed. According to Welch, that strategy, which was based on

his consultation with Drucker and the questions Drucker asked, was at

the core of GE’s success.1

Yet Drucker did not consult for just large corporations. He consulted

for small businesses, nonprofits, governments all over the world,

the military, and churches.Yet he had no giant consulting firm to back

him up. He was a sole practitioner who even answered his own phone.

He did not even have a secretary.

Many of the techniques and concepts in this book originated with

Peter Drucker. I just did not realize their origins until I sat down with

my notes from my time as his student and reflected on what he taught.

So I am doubly enthusiastic about updating this book. Its errors, if any,

are mine. But the debt I owe Peter—and that’s what he asked all of his

students to call him—for pushing me in the right direction and showering

me with his wisdom, ideas, and friendship is significant.The incubation

of many of the concepts and techniques contained in this book

are surely his, and I am happy not only to acknowledge this, but to dedicate

this edition, the fourth since 1985, to him.

HOW CONSULTANTS GET STARTED

Before we get into the nitty-gritty of consulting, you need to understand

one thing. Like many others, I did not start out in life with a burning

desire to become a consultant. I know that I am not alone in this

regard, for I have talked to hundreds of other consultants, both full and

part time, and very few started out with that intention. Most of them

must have had an early experience like mine. Because my entrance into

the consulting field was unplanned, the first time I performed consulting

services I had no one to ask for advice.

This is true even of Peter Drucker. Drucker did not plan on

becoming a consultant. I know this because Peter said that his first

experience in consulting started not long after arriving in this country.

Previously, he had been a newspaper correspondent and journalist as

well as an economic analyst for a bank and an insurance company.

However, because he had a doctorate (in international law, not in management),

Peter’s services were mobilized for World War II. Peter was

told that he was to serve as a management consultant. Drucker said that

he had no idea what a management consultant was. He checked a dictionary

but could not find the term. He said he went to the library and

the bookstore. “Today,” he told us, “you will find shelves of titles. In

those days, there was almost nothing.”The few books on management

did not include the term, much less explain it. He asked several colleagues

and had no better luck.They did not know either.

On the appointed time and date, Drucker proceeded to the

colonel’s office, wondering all the way exactly what he was getting

into. A receptionist asked him to wait, and an unsmiling sergeant came

to escort him to the colonel.This must have been a little intimidating

for a young immigrant who not too many years earlier had fled

from the military dictatorship of Nazi Germany, most of whose party

members wore one sort of uniform or another.

Peter was led into the office by yet another stern-faced assistant.

The colonel glanced at Peter’s orders and invited him to be seated. He

asked Peter to tell him about himself. He questioned Drucker at some

length about his background and education. But though they seemed

to talk on and on, Drucker did not learn what the colonel’s office was

responsible for, nor was he given any understanding of what he would

be doing for the colonel as a management consultant. It seemed as if

they were talking round and round to no purpose.

Drucker was more than a little uncomfortable in dealing with the

colonel. He hoped that the officer would soon get to the point and tell

him exactly what kind of work he would be doing. He was growing

increasingly frustrated. Finally, Drucker could take it no longer.“Please

sir, can you tell me what a management consultant does?” he asked

respectfully.

The colonel glared at him for what seemed like a long time and

then responded: “Young man, don’t be impertinent.” “By which,”

Drucker told us,“I knew that he didn’t know what a management consultant

did either.”

Drucker knew that someone who did know what was expected of

a management consultant had made this assignment. Having lived in

England and having read Arthur Conan Doyle’s Sherlock Holmes,

Drucker knew what a consulting detective did.With that knowledge

and the insight that the colonel did not know anything about management

consulting, Drucker asked direct questions about the colonel’s

responsibilities and problems. Peter then laid out some options about

what should be done and the work that he, Drucker, should do. The

colonel was interested and clearly relieved. He accepted Peter’s proposals

in their entirety.This proved to be Drucker’s first successful consulting

engagement. So Peter Drucker was not only the father of modern

management; he may have been the father of modern management

consulting as well.

MY INITIAL IGNORANCE ABOUT CONSULTING

Experience in other fields had taught me that whenever I lacked

knowledge about something,my first step should be to find a book on

the subject. Like Peter, I did just that. I visited several bookstores, and I

checked with the libraries. But I found no books with the information

I needed in 1973 when I became a consultant for the first time.The few

books on consulting were all about consulting by the large consulting

firms.They contained none of the specifics on what to do. It was only

slightly better than when Drucker became a consultant.At least I knew

what a consultant did.

But there was much I did not know. How much should I charge?

Was a contract absolutely necessary? Did I need a business license or

some other kind of license? What could I do as a part-time consultant

without running into a conflict of interest with my full-time employer?

How much could I make if I decided to devote myself full time to

consulting? Also, if I consulted full time, how much time would I need

to spend marketing my services versus actually consulting, and how

should I go about marketing my services anyway? These and numerous

other questions plagued me, but I had no single volume to turn to for

answers.

Eventually I learned, but mainly it was the hard way: through experience.

I made numerous mistakes, which in some cases cost me a lot of

money and in all cases wasted time and brought frustration. However, I

did finally learn what to do and how to do it, and I began to make

money. I consulted for Fortune 500 companies, for small businesses, for

start-up companies, and for the government.

Then in 1979, I received my doctorate and became a full-time university

professor. (By the way, becoming a successful business consultant

in most specialties does not require a PhD, an MBA, or in fact any business

degree at all. More about that later.) In any case, becoming a business

professor did not curtail my consulting activities. If anything, it

intensified them.

AN ACADEMIC COURSE IN CONSULTING

At my university, I noticed that many students had a tremendous interest

in business consulting—and not just business students. I was persuaded

to develop an interdisciplinary course at California State

University at Los Angeles on the subject of consulting for business. As

the course developed, we did not stop at theory; every quarter I invited

practicing consultants from many fields to share their experiences.

The speakers ranged from those in small, one-person operations to staff

consultants employed by multimillion-dollar corporations. My speakers

included full- and part-time consultants, and both men and women.

So popular did this course become that it attracted not only business

students from all disciplines but also psychologists, chemists, anthropologists,

attorneys, and English majors. Many of those who took the course

were older students from outside the university, including engineers,

pilots, and many company executives and professionals who wanted to

leave their corporate jobs or to consult part time.We even attracted a

number of professors, who sat in on these lectures at various times to pick

up what they could and some students from the prestigious graduate

schools in the Los Angeles area.

Partially due to the success of the business consulting course, anoth-

er program for which I had responsibility also prospered.This was the

Small Business Institute at the university, for which I became the director.

The Small Business Institute program, conducted at universities

around the country under the sponsorship of the U.S. Small Business

Administration, furnished consulting services to small businesses.

Business students, supervised by professors, did the consulting. Over a

period of years, we developed one of the largest Small Business

Institutes in the country and several times won district, regional, and

national awards for the top performance among all participating universities.

The Small Business Institute program allowed students in the

consulting course to do hands-on projects as a part of their education.

Unfortunately, this fine program fell victim to budget cuts in the federal

government in 1994. However, many universities continue it, asking

small business clients to pay for the consulting work accomplished.

I have to say, even when small businesses must pay, the program is still

a bargain for the businesses that choose to participate.

Meanwhile, the success of our program led to many requests for

help from outside the university. To make this program mobile, we

developed a consulting seminar that I gave several times a year. These

seminars were attended not only by neophyte and would-be consultants

but also by many consultants with considerable experience in their

professions. They generously shared their experiences and knowledge

with other seminar students and with me. Eventually I taught the consulting

course at other well-known universities, including the

University of California, Los Angeles, and Drucker’s School, Claremont

Graduate University. Sometimes I taught the course as part of an MBA

program and at other times in seminar form for the general public.

I left my first university to become president of a small graduate

school, and eventually I decided to go full time to devote myself to the

Institute of Leader Arts (www.stuffofheroes.com), into which my original

consulting practice has evolved.

THE INFORMATION IN THIS BOOK

As a result, this book is based not only on my own experience but also

on that of many others, including numerous guest lecturers, professors,

and students who have accomplished more than 500 different consulting

engagements for many different small businesses. It is also based on

the face-to-face interchange of ideas from consultants in many different

fields and geographic locations, and many consulting clients all over

the world, some of whom are in the government or military.

Had I had this book in my hands when I first started out, I would

have saved myself thousands of wasted hours and much frustration. I

would have avoided countless blunders, including journeys down blind

alleys, while I struggled to learn how to promote my practice, develop

long-term client relationships, and, in one case, get paid for services

already performed. This book contains the collective experiences of

hundreds who have endeavored to earn their livelihood through the

practice, either full or part time, of business consulting as well as ideas

that I developed based on Drucker’s concepts. Its aim is to help you to

build a successful and rewarding business consultancy.

But the book is practical, not theoretical. If I have done it right, you

should have all the tools necessary and know how to apply them to start

and build a successful management consulting practice. I don’t know

whether you will make it big. As Peter said,“Without action, nothing

gets done,” and the action part is up to you. But in the almost 30 years

since the first edition has appeared, literally thousands have used it to

help build a successful practice—and you can, too. So let’s get started!

NOTE

1. John A. Byrne,“The Man Who Invented Management,” BusinessWeek

(November 28, 2005), accessed at http://www.businessweek.com

/magazine/content/05_48/b3961001.htm on November 19, 2007.

Excerpted from HOW TO MAKE IT BIG AS A CONSULTANT, FOURTH EDITION by William A.

Cohen. Copyright ©  2009 William A. Cohen. Published by AMACOM Books, a division of

American Management Association, New York, NY. Used with permission. All rights reserved.

http://www.amacombooks.org.

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Table of Contents

CONTENTS

Preface: The World’s Foremost Consultant and His Impact

on This Book

Drucker’s Consulting—How Consultants Get Started—My Initial

Ignorance about Consulting—An Academic Course in Consulting—

The Information in This Book

1 The Business of Consulting

What Is Consulting?—How Big Is the Consulting Industry?—Types

of Consulting Firms—Why Does Anyone Need a Consultant?—

Signals Indicating the Need for a Consultant—How Do Potential

Clients Analyze Consultants for Hire?—What Makes an Outstanding

Consultant?—How Much Money Can You Make as a Consultant?—

How Do People Become Consultants?—Summing Up

2 How to Get Clients: Direct Marketing Methods

Direct Methods of Marketing—Direct Mail—Cold Calls—Direct

Response Space Advertising—Directory Listings—Yellow Pages

Listings—Approaching Former Employers—Brochures—Designing

Your Brochure—Summing Up

3 How to Get Clients: Indirect Marketing Methods

The Basic Indirect Methods—Speaking before Groups—Sending

out Newsletters—Joining Professional Associations—Joining Social

Organizations—Writing Articles—Writing a Book—Writing Letters

to the Editor—Teaching a Course—Giving Seminars—Distributing

Publicity Releases—Exchanging Information with Noncompeting

Consultants—Summing Up

4 Marketing Consultant Services to the Public Sector

The Government Requires All Sorts of Consulting Services—

Consulting for the Government—How Do You Get on the

Government Bandwagon?—Federal and State Bidding Portals—

Small Business Administration—The Buying Process—The

Importance of Preproposal Marketing—The Marketing Sequence for

Government Consulting—Locating Potential Clients—Screening—

Visiting and Making the Initial Presentation—Maintaining Contact

and Gathering Intelligence—Preparing the Proposal—Negotiating

the Contract—Summing Up

5 Making the Initial Interview a Success

Looking and Acting Like a Professional—How to Build Empathy

with Your Potential Client—Seven Essential Questions—Taking

Notes—Holding off on Giving Advice—Interpreting Body

Language—Making Use of Listening Techniques—Identifying

Emotions from Facial Expressions—What to Do When the

Interview Is Over—The Company Audit—Identification of

Facial Expressions in Figure 5-1—Summing Up

6 How to Write a Proposal

Why a Written Proposal Is Necessary—How to Write a Good

Proposal—The Structure of a Letter Proposal—Opening—

Background—Objectives—Study Methods—Potential Problems—

Data Flow Charts and Product Development Schedules—The

Finished Product—Cost and Payment Information—Converting

a Proposal Into a Contract—Summing Up

7 Pricing Your Services

Price Strategies and Some Other Considerations—Three Price

Strategies—Other Considerations—Investigate the Marketplace—

01-HMBC-FM-2 3/4/09 2:32 PM Page viii

Methods of Billing—Daily or Hourly Billing—Working on

Retainer—Performance Billing—Fixed-Price Billing—Disclosing

the Fee—Summing Up

8 What You Must Know About Consulting Contracts

Why a Contract is Necessary—Developing Your Own Contract—

If Your Client Has a Standard Contract—Methods of Incurring a

Contractual Obligation—Formal Contracts—Letter Contracts—

Order Agreements—Purchase Orders—Verbal Contracts—Types of

Contracts—The Fixed-Price Contract—The Cost Contract—The

Performance Contract—The Incentive Contract—Elements of a

Contract—A Sample Contract—Summing Up

9 Planning and Scheduling the Consulting Project

The Project Development Schedule—Developing a PERT Chart—

Events and Activities—Earliest Expected Date—Latest Allowable

Date—Slack—The Usefulness of PERT—Summing Up

10 Negotiating with Your Client

Six Steps in Contract Negotiation, as Seen by Uncle Sam—

Appreciating the Goals and Objectives of the Counterparty—

Preparation:The Key to All Contract Negotiations—Be Wary of

Telephone Negotiations—The Negotiation Plan—Negotiation

Gamesmanship—Making the Other Party Appear Unreasonable—

Placing the Other Party on the Defensive—Blaming a Third Party—

The Good-guy, Bad-guy Technique—Giving up on Straw Issues—

The Walkout—The Recess—The Time Squeeze—More Negotiation

Tactics—Some General Negotiating Hints—Summing Up

11 How to Easily Solve Your Client’s Problems

Peter Drucker’s Method of Solving Problems with His Ignorance—

Defining the Central Problem—Listing Relevant Factors—

Listing Alternative Courses of Action—Discussing and

Analyzing the Alternatives—Listing Your Conclusions—Making

Recommendations—The Charles Benson Problem: A Case Study—

The Charles Benson Problem—Solution to the Charles Benson

Problem—The Central Problem—The Relevant Factors—

Alternative Courses of Action—Discussion and Analysis—

Conclusions—Recommendations—Psychological Techniques for

Problem Solving—Why the Subconscious Mind Can Help You—

How to Help Your Subconscious Solve Your Consulting Problems—

Summing Up

12 How to Research

The Two Basic Kinds of Research—Sources of Secondary

Research—The Library: Still a Good Bet as a Starting Point—

Examples of Simple Primary Research—More Complex Research

Problems, and How to Do Them—Personal Interview Surveys—

Mail Surveys—Telephone Surveys—Electronic Surveys—You Can

Research Anything—Summing Up

13 The Importance of Ethics in Consulting

Business Ethics: Sometimes Not Clear-cut—Ethics versus Jobs:

The Lockheed Case—The Ethics of Marketing Research—What

Washington Researchers Discovered by Surveying Their Seminar

Attendees—An Executive Recruiting Story—A Japanese View of

Duty—Ethics and the Law are Not the Same thing—Typical

Problems Pertaining to Ethics in Consulting—The Institute of

Management Consultants (IMC) Code of Ethics—Summing Up

14 Making Professional Presentations

Objectives of Presentations—Five Keys to a Successful

Presentation—Professionalism—Enthusiasm—Organization—

Practice— Visual Aids—Overcoming Stage Fright—Answering

Questions—Summing Up

15 How the Computer Has Changed Consulting

Proposals and Desktop Publishing—Need Overhead Transparencies?

No Problem!—Managing Your Practice—Direct Marketing—

Correcting Your Writing—Naming Products and Services—Making

Forecasts and Plans—Evaluating Potential Employees—Marketing

Research—Voice-Activated Word Processing Is Here!—Scanning

Documents and Photographs into Your Presentations—Instant

Communication—Some Reading Suggestions—Summing Up

16 The Internet and Consulting

What Is the Internet?—What Do You Need To Get Online?—

Preloaded Connection, Browser, and Portal Services—Internet

Connections—Researching on the Internet—How to Use Search

Engines—Evaluating and Using Your Results—Marketing on the

Internet—The World Wide Web—Once You Have Your Site

Developed,Then What?—Selecting an ISP—Selecting a Name—

Why Not a Cybermall?—How Should You Market on the World

Wide Web?—Publicity:The Number One Secret for Marketing

on the Web—Using Banners—Cyberlinks—Giving Information

Away—Why Not an E-mail Newsletter?—Books on Internet

Marketing—Summing Up

17 How to Run Your Consulting Business

Selecting the Legal Structure for Your Consulting Firm—The Sole

Proprietorship—The Partnership—The Corporation—Other Legal

Necessities—Obtaining a Business License—The Resale Permit—

Fictitious Name Registration—Clients’ Use of Credit Cards—

Stationery and Business Cards—Insurance and Personal Liability—

Keeping Overhead Low—The Telephone—Fax Machines—

Anticipating Expenses—Necessary Records and Their

Maintenance—Tax Obligations—Income Taxes—Excise Taxes—

Unemployment Taxes—State and Local Taxes—Minimizing Tax

Paperwork—Sources of Additional Information—Summing Up

18 Developing Strategies for Your Client

Why My Recommended Approach to Strategy is Different—

Principles, Resources, and Situational Variables—Example: Attacking

a Market Leader’s Top Product—How Lever Bros. Did It—

Integrating the Principles—Looking at Resources—Lever Bros.’

Secret Weapon—Enter the Great Depression—The Launch—Apply

the Principles Scientifically—Summing Up

19 How to Lead Consulting Teams

Why Teams Work—How Should You Lead a Team of Consultants?—

Recognizing Team Stages—Stage 1: Getting Organized—Stage 2:

Getting Together—Stage 3: Fighting It Out—Stage 4: Getting the

Job Done—Summing Up

20 Personal Consulting: Counseling and Coaching

What Exactly Is Coaching?—Different Kinds of Coaching—How

Coaching Got Started—How is Coaching Done?—Learning to

Be a Coach—Coaching Fees—Marketing Coaching Services—

Summing Up

Epilogue

Appendix A References Useful to Consultants

Appendix B Sample Consultant’s Brochure

Appendix C The Consultant’s Questionnaire and Audit

Appendix D Associations of Consultants

Index

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