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Start & Run a Consulting Business

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Overview

Consulting has become a multimillion-dollar industry in North America. As society becomes more complicated, people in business, healthcare, education, government, and other fields are calling on specialists to provide answers to complex problems. This practical step-by-step success guide shows how anyone can turn knowledge and experience into a profitable consulting business. Concerns unique to the consulting industry are covered in detail, ...
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Overview

Consulting has become a multimillion-dollar industry in North America. As society becomes more complicated, people in business, healthcare, education, government, and other fields are calling on specialists to provide answers to complex problems. This practical step-by-step success guide shows how anyone can turn knowledge and experience into a profitable consulting business. Concerns unique to the consulting industry are covered in detail, including:Assessing yourself and your skills
Determining market opportunities
Regulations and laws affecting the consulting business
Selecting business and professional advisers
Preparing your business plan
Setting fees and billing clients
Keeping records
Minimizing taxes
Avoiding professional liability and preventing losses
Writing a successful proposal
Maintaining healthy client relations
Running your office smoothly
Hiring sub-consultants
This practical step-by-step success guide shows how anyone can turn knowledge and experience into a profitable consulting business.Understand why people will pay you for your opinion
Learn from the author of 15 bestsellers
Convert your knowledge into income
A bestseller through nine editions and 24 printings during the past 25 years!
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Product Details

  • ISBN-13: 9781770400450
  • Publisher: Self-Counsel Press, Inc.
  • Publication date: 6/15/2010
  • Series: Start and Run A Series
  • Edition description: 9th Edition
  • Edition number: 9
  • Pages: 1
  • Sales rank: 523,948
  • Product dimensions: 8.30 (w) x 9.60 (h) x 0.50 (d)

Meet the Author

Douglas Gray is a lawyer, businessman, lecturer, and consultant to government, businesses, professional, and educational and financial institutions. He has designed and taught numerous seminars and workshops on successful entrepreneurship, starting a consulting business, and marketing professional services.

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Table of Contents

INTRODUCTION xix
1 UNDERSTANDING THE CONSULTING BUSINESS 1
1. WHAT IS A CONSULTANT? 1
2. WHO GOES INTO CONSULTING? 4
3. WHY DO ORGANIZATIONS USE CONSULTANTS? 4
3.1 Temporary assistance 4
3.2 Objective review 4
3.3 Third-party request for problem identification and resolution 5
3.4 Surviving a crisis 5
3.5 Initiating change 5
3.6 Obtaining funding 5
3.7 Selecting personnel 5
3.8 In-house education 5
3.9 Dealing with internal personnel difficulties 5
3.10 Delay tactics 5
CONTENTS
vi Start & run a consulting business
3.11 Executive assistance 6
3.12 Government regulatory compliance 6
3.13 Socio-economic and political changes 6
3.14 Government excess funds 6
4. REGULATIONS AFFECTING CONSULTANTS 6
2 SELF-ASSESSMENT 7
1. INTRODUCTION 7
2. ATTRIBUTES OF SUCCESSFUL CONSULTANTS 7
3. ASSESSING YOURSELF AND YOUR MARKETABLE SKILLS 8
4. RESOURCES FOR IDENTIFYING CONSULTING OPPORTUNITIES 8
4.1 Consulting newsletters and websites 8
4.2 Newspapers and magazines 8
4.3 Consulting and professional associations 9
4.4 Government agencies and publications 9
4.5 Public and university libraries 9
4.6 Continuing education courses and seminars 9
4.7 Competitors 10
3 SETTING UP YOUR BUSINESS 13
1. START-UP COSTS AND MONTHLY EXPENSES 13
1.1 Start-up costs 14
1.2 Monthly overhead expenses 14
1.3 Personal expenses 14
2. SELECTING A NAME 15
2.1 General considerations 15
2.2 Fictitious name 18
3. SELECTING AN OFFICE 18
3.1 Home office 18
3.2 Office outside of home 19
3.3 Equipping an office 22
3.4 Office supplies 24
3.5 Personnel 25
Contents vii
4. SELECTING A TELEPHONE SYSTEM 26
4.1 A separate phone at home 26
4.2 Business line terminating at answering service 26
4.3 Business line terminating at home and answering service 27
4.4 Overline 27
5. SPECIAL TELEPHONE FEATURES 27
5.1 Call waiting 27
5.2 Call forwarding 27
5.3 Three-way calling 27
5.4 Speed calling 27
5.5 Phone/fax 27
5.6 Call display/name display 27
5.7 Call return 28
5.8 Call again 28
5.9 Call answer 28
6. SAVING MONEY ON LONG DISTANCE PHONE CALLS 28
6.1 Charging long distance calls to clients 28
6.2 Calling cards 28
6.3 VoIP 28
7. OTHER COMMUNICATION OPTIONS 29
7.1 Voice mail 29
7.2 Generic telephone number 30
7.3 Pager 30
7.4 Cellular phone 31
7.5 E-mail 31
7.6 The Internet 31
8. DEVELOPING YOUR WEBSITE 32
8.1 Pitfalls to avoid 32
8.2 Keeping the website interesting 33
8.3 Designing an effective web page 33
viii Start & run a consulting business
4 LEGAL FORMS OF BUSINESS STRUCTURE 35
1. INTRODUCTION 35
2. SOLE PROPRIETORSHIP 35
2.1 Advantages 36
2.2 Disadvantages 36
3. PARTNERSHIP 37
3.1 Advantages 37
3.2 Disadvantages 37
3.3 Partnership agreement 38
3.4 Kinds of partners 38
4. CORPORATION 38
4.1 Advantages 38
4.2 Disadvantages 40
4.3 Corporate purposes 40
4.4 Shareholders’ agreement 40
4.5 Maintaining the corporate protection 41
5. S CORPORATION (SUB-CHAPTER OR SUB-S) (UNITED STATES) 43
6. LIMITED LIABILITY CORPORATION (LLC) (UNITED STATES) 43
5 SELECTING BUSINESS AND PROFESSIONAL ADVISERS 45
1. GENERAL CRITERIA FOR ADVISER SELECTION 45
1.1 Recommendations 46
1.2 Credentials 46
1.3 Clientele 46
1.4 Fees 46
1.5 Technical competence and industry knowledge 47
1.6 Style and personality 47
1.7 Confidence 47
1.8 Communication 47
1.9 Commitment 48
1.10 Availability 48
1.11 Length of time in practice 48
Contents ix
1.12 Ability to aid growth 48
1.13 Small firm versus large firm 48
1.14 Comparison 48
2. LAWYER 49
3. ACCOUNTANT 49
4. BANKER 50
5. INSURANCE BROKER 51
6. CONSULTANTS 51
6.1 Private consultants 51
6.2 Consultants subsidized by the government 51
6 PREPARING YOUR BUSINESS PLAN 53
1. WHY PREPARE A PLAN? 53
2. FORMAT 54
2.1 Introduction 54
2.2 Business concept 54
2.3 Financial plan 54
2.4 Appendixes 57
3. ESTIMATING YOUR START-UP FUNDS 57
3.1 Assessment of personal monthly financial needs 57
3.2 Estimated business start-up cash needs 57
4. SUMMARY 57
7 HOW TO OBTAIN FINANCING 71
1. TYPES OF FINANCING 71
1.1 Equity 71
1.2 Debt 72
2. SOURCES OF FINANCING 74
2.1 Equity 74
2.2 Debt 75
3. COMPETITION BETWEEN LENDERS 75
4. TIPS ON APPROACHING YOUR LENDER 76
5. WHY LOANS ARE TURNED DOWN 77
x Start & run a consulting business
6. TYPES OF SECURITY A LENDER MAY REQUIRE 78
6.1 Endorser 78
6.2 Co-maker 78
6.3 Guarantor 78
6.4 Promissory note 79
6.5 Demand loan 79
6.6 Realty mortgage 79
6.7 Chattel mortgage 79
6.8 Assignment of accounts receivable 79
6.9 Postponement of claim 79
6.10 Pledge of stocks or bonds 79
6.11 Assignment of life insurance 79
8 KEEPING RECORDS 81
1. ACCOUNTING AND BOOKKEEPING 81
1.1 Separate record-keeping 82
1.2 Double-entry and single-entry bookkeeping 82
1.3 One-write accounting system 83
1.4 Cash or accrual record-keeping 83
2. BASIC ACCOUNTING RECORDS 83
2.1 Sales journal 83
2.2 Cash receipts journal 83
2.3 Accounts receivable ledger and control account 84
2.4 Accounts payable journal 84
2.5 Cash disbursements journal 84
2.6 Payroll journal 85
2.7 General ledger 85
3. NONFINANCIAL RECORDS 85
3.1 Personnel records 85
3.2 Tax records 85
3.3 Service records 86
Contents xi
4. OFFICE SYSTEMS 86
4.1 Handling new clients and projects 86
4.2 Time records 86
4.3 Standard form letters of agreement or contracts 86
4.4 Billing, credit, and collection 87
4.5 Calendars 87
4.6 Filing systems 87
9 HOW TO LEGALLY MINIMIZE PAYING TAX 91
1. TAX AVOIDANCE AND TAX EVASION 91
2. CASH OR ACCRUAL METHOD 92
3. FISCAL YEAR-END 92
4. CORPORATIONS, PROPRIETORSHIPS, OR PARTNERSHIPS 92
5. MAXIMIZING DEDUCTIBLE EXPENSES 93
5.1 Home office 93
5.2 Automobile 94
5.3 Entertainment 94
5.4 Travel 94
5.5 Bad debts 95
5.6 Insurance 95
5.7 Education and professional development 95
5.8 Salaries 95
5.9 Equipment 96
5.10 Furnishings 96
10 INSURANCE 97
1. OBTAINING INSURANCE 97
1.1 Agencies 97
1.2 Insurance brokers 97
1.3 Clubs and associations 98
2. PLANNING YOUR INSURANCE PROGRAM 98
3. TYPES OF BUSINESS AND PERSONAL INSURANCE 99
3.1 General liability 99
3.2 Products or completed operations liability 99
xii Start & run a consulting business
3.3 Errors and omissions liability 99
3.4 Malpractice liability 99
3.5 Automobile liability 99
3.6 Fire and theft liability 100
3.7 Business interruption insurance 100
3.8 Overhead expense insurance 100
3.9 Personal disability insurance 100
3.10 Key person insurance 100
3.11 Shareholders’ or partners’ insurance 100
3.12 Business loan insurance 101
3.13 Term life insurance 101
3.14 Medical insurance 101
3.15 Group insurance 101
3.16 Workers’ compensation insurance 101
11 PROFESSIONAL LIABILITY 103
1. CONTRACT AND TORT LIABILITY 103
1.1 Contract liability 103
1.2 Tort liability 104
2. REASONS FOR CLAIMS 105
2.1 Counterclaims 105
2.2 Conflict of interest 105
2.3 Conflicting interest of clients 105
2.4 Delegation of part of contract to employee or subconsultant 105
2.5 Third party damages 105
2.6 Unclear expectations by client 105
3. HOW TO AVOID PROFESSIONAL LIABILITY AND PREVENT LOSSES 105
3.1 Client control 106
3.2 Cost estimates 106
3.3 Carefully drafted contracts 106
3.4 Free opinions 106
3.5 Law 106
3.6 Subconsultants 106
Contents xiii
3.7 Records, systems, and procedures 107
3.8 Continuing education 107
3.9 Quality control 107
3.10 Communication 107
4. PROFESSIONAL LIABILITY INSURANCE 107
4.1 Increasing deductibles 107
4.2 Comparing prices 108
4.3 Changing the type of coverage 108
5. PRACTICING WITHOUT INSURANCE 108
12 CREDIT, BILLING, AND COLLECTION 109
1. DISADVANTAGES OF EXTENDING CREDIT 109
2. ASSESSING THE CLIENT 110
3. AVOIDING CLIENT MISUNDERSTANDINGS ON FEES 111
3.1 Communication 111
3.2 Written contract 111
3.3 Invoice 112
4. MINIMIZING RISK OF BAD DEBTS 112
4.1 Advance retainer 112
4.2 Prepaid disbursements 112
4.3 Progress payments 112
4.4 Regular billing 112
4.5 Billing on time 112
4.6 Accelerated billing 113
4.7 Withholding vital information 113
4.8 Holding up completion of important stage of project 113
4.9 Personal guarantee of principals of a corporation 113
4.10 Monitoring payment trends 113
4.11 Follow-up of late payments 113
4.12 Involving client in assignment 113
5. BILLING FOR SERVICES 113
6. WHY CLIENTS PAY LATE 114
7. COLLECTING LATE PAYMENTS WITHOUT LEGAL ACTION 117
xiv Start & run a consulting business
8. LEGAL STEPS IF ACCOUNT REMAINS UNPAID 118
8.1 Collection agency 118
8.2 Small-claims court 118
8.3 Lawyers 118
9. BAD DEBTS AND TAXES 119
13 SETTING FEES 121
1. DAILY BILLING RATE (PER DIEM) 121
1.1 Labor 121
1.2 Overhead 121
1.3 Profit 122
2. HOURLY RATE 123
3. CALCULATING A FIXED PRICE QUOTATION 123
3.1 Determining a fixed price estimate 123
3.2 Tips on preparing fixed price estimates 124
4. FIXED PRICE PLUS EXPENSES 126
5. CONTINGENCY FEE 126
6. PERCENTAGE FEE 127
7. PROJECT VALUE FEES 127
8. RETAINER FEES 127
9. EQUITY FEES 127
10. UTILIZATION RATE 128
11. VARYING YOUR FEES 128
12. INCREASING FEES 128
13. INCREASING PROFITS WITHOUT INCREASING FEES 129
14 DETERMINING MARKET OPPORTUNITIES 131
1. PRIVATE SECTOR 131
1.1 Individuals 132
1.2 Small businesses 132
1.3 Medium-size businesses 132
1.4 Large companies 133
Contents xv
2. PUBLIC SECTOR 133
2.1 Making contacts and obtaining information 133
2.2 Understanding the government approval system 135
3. GRANT CONSULTING 135
15 MARKETING YOUR CONSULTING SERVICES 137
1. WHAT YOU NEED TO MARKET YOUR SERVICE 137
2. MARKETING PLAN 138
3. MARKETING TECHNIQUES 138
3.1 Newspaper 139
3.2 Trade or professional journals 139
3.3 Directories 139
3.4 Brochures 139
3.5 Direct mail 140
3.6 Contact network 142
3.7 Membership in professional, trade, or business associations 143
3.8 Donating your services 143
3.9 Attending public and professional meetings 143
3.10 Lectures 143
3.11 Teaching 144
3.12 Seminars and workshops 144
3.13 Free media exposure 145
3.14 Radio and television talk shows 145
3.15 Letters to the editor 145
3.16 Writing articles 146
3.17 Writing a book 147
3.18 Have articles written about you 147
3.19 Announcement columns 147
3.20 Newsletters 147
3.21 Website 148
16 THE CLIENT INTERVIEW AND CLIENT RELATIONS 149
1. PURPOSE OF INTERVIEW 149
2. BEFORE THE MEETING 149
xvi Start & run a consulting business
3. DURING THE INTERVIEW 152
4. AFTER THE INTERVIEW 153
5. WHY YOU SHOULD TURN DOWN BUSINESS 153
6. HOW TO TURN DOWN UNWANTED BUSINESS 154
17 CONSULTING PROPOSALS 157
1. WHAT IS A PROPOSAL? 157
2. PUBLIC VERSUS PRIVATE SECTOR PROPOSALS 157
3. SOLICITED VERSUS UNSOLICITED PROPOSALS 158
4. SIMPLE AND FORMAL PROPOSALS 158
4.1 Simple proposal 158
4.2 Formal proposal 158
5. GUIDELINES AND FORMAT FOR A SUCCESSFUL PROPOSAL 159
6. PRESENTING YOUR PROPOSAL 159
7. PROPOSAL FOLLOW-UP 162
8. WHAT TO DO IF YOUR PROPOSAL IS NOT ACCEPTED 162
9. HOW TO AVOID GIVING AWAY FREE CONSULTING 162
9.1 Potential client interview or discussion 163
9.2 Analysis of client’s need 163
9.3 Detailed advice in the written proposal 164
9.4 Potential future benefit 164
9.5 Additions to the original fixed price contract 164
9.6 Follow-up consultation 164
9.7 Relatives, associates, and friends 165
18 CONTRACTS 167
1. ESSENTIALS OF A VALID CONTRACT 167
1.1 Offer 168
1.2 Acceptance 168
1.3 Consideration 168
1.4 Competency 168
1.5 Legality 168
2. WHY A WRITTEN CONTRACT IS NEEDED 168
3. STRUCTURE OF FORMAL CONTRACT 170
Contents xvii
4. TYPES OF CONTRACTS 170
4.1 Letter of agreement 170
4.2 Letter of agreement with general terms and conditions appended 174
4.3 Formal contract 174
4.4 Subconsulting agreement 174
4.5 Agency agreement 186
4.6 Letter of retainer agreement 187
5. PREPARING YOUR OWN CONTRACT 187
19 TIME MANAGEMENT 189
1. KEY STRATEGIES 189
1.1 Set priorities 189
1.2 Be organized 190
1.3 Delegate 191
1.4 Be decisive 191
2. AVOIDING TIME WASTERS 191
2.1 Use voice mail effectively 191
2.2 Avoid too many telephone calls 192
2.3 Avoid overscheduling 192
2.4 Avoid too much paper 192
2.5 Follow meeting agendas 193
2.6 Avoid perfectionism 193
20 EXPANDING YOUR PRACTICE 195
APPENDIX — PROPOSAL EVALUATION CHECKLIST 197
BIBLIOGRAPHY 203
xviii Start & run a consulting business
CHECKLISTS
1 ARTICLES IN A PARTNERSHIP AGREEMENT 39
2 GOVERNMENT CONTRACT 184
TABLE
1 MAJOR CONSULTING SUBJECT AREAS 2
SAMPLES
1 START-UP EXPENSES 14
2 BUSINESS PLAN FORMAT 59
3 GENERAL INVOICE 115
4 DETAILED INVOICE 116
5 FIXED PRICE COSTING SHEET 125
6 PROPOSAL FORMAT 160
7 CONTRACT FORMAT 171
8 LETTER OF AGREEMENT (PREPARED BY CONSULTANT) 175
9 LETTER OF AGREEMENT (PREPARED BY CLIENT) 176
10 STATEMENT OF GENERAL TERMS AND CONDITIONS 178
11 FORMAL CONSULTING CONTRACT 180
WORKSHEETS
1 SELF-ASSESSMENT 11
2 ESTIMATING START-UP EXPENSES 15
3 MONTHLY EXPENSES 16
4 MONTHLY PERSONAL EXPENSES 17
5 OPENING BALANCE SHEET (NEW BUSINESS) 65
6 INCOME AND EXPENSE FORECAST STATEMENT (NEW BUSINESS) 66
7 CASH FLOW BUDGET 67
8 PERSONAL NET WORTH STATEMENT 68
9 STATEMENT OF ACCOUNTS RECEIVABLES 69
10 PROSPECTIVE CLIENT SHEET 88
11 NEW CONSULTING ASSIGNMENT SHEET 89
12 TIME AND SERVICE RECORD 90
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