A consistent guide to becoming a consultant

The Concise Guide to Becoming an
Independent Consultant

The Concise Guide to Becoming an
Independent Consultant
Herman Holtz
John Wiley & Sons, Inc.
New York • Chichester • Weinheim • Brisbane • Singapore • Toronto
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Library of Congress Cataloging-in-Publication Data:
Holtz, Herman.
The concise guide to becoming an independent consultant / Herman
Holtz.
p. cm.
Includes index.
ISBN 0-471-31573-7 (paper : alk. paper)
1. Business consultants—Vocational guidance. 2. Consulting
firms—Planning. I. Title.
HD69.C6H6199 1999
001′.068—dc21 98-44989
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1

Contents
PREFACE ix
INTRODUCTION 1
Increasing need. How consultants specialize. The consulting
market has grown and changed. The more important view: That
of the client. Who are the clients?
01 WHAT DOES (SHOULD) A CONSULTANT DO? 7
Computers and data processing. The rise of the permanent
temporary. The consultant organization. W2 consultants versus
1099 consultants. The consultant company. Hybrids. The
consultant as a self-employed, independent. Fields and services
suitable for consulting.
02 SEIZING OPPORTUNITY: CAPITALIZING
ON BEGINNINGS 18
Your consulting specialty versus your marketing needs. What
does it take to be a consultant? The several skills of a consultant.
The avenues of specialization.
03 CONSULTING AS A SECOND CAREER 29
What is a second career? Companies for seniors. Almost any
skill/knowledge/experience can be the basis. Marketing—
Winning clients. What kinds of clients to pursue. Marketing your
services. Plowing new fields. Consultants as temporaries. Finding
assignments. A few related considerations.

vi s Contents
04 WHY DO SO MANY CONSULTANTS FAIL?
HOW TO SUCCEED 44
The shadow of failure. The roots of failure. What is failure? The
common mistakes of neophyte consultants. The basic trade-offs.
How specialized ought you to be? Having it both ways in
specializing. Marketing. The ten laws of survival. The
consultant’s image.
05 A FEW KEYS TO SUCCESS 59
The art of listening. Deciding what business you are in. Your
true client. The two basic sales situations. The independent
consultant: Specialist or generalist? Dos and don’ts, especially
for the first year.
06 FOUNDING THE CONSULTING PRACTICE 75
If you had it to do over. General considerations such as licensing.
The matter of a business name. What type of business
organization should you use? Do you need a lawyer? Do you need
an accountant? Do you need a business plan? Some general
observations about business plans. Generalized outlines.
07 FINANCES, TAXES, AND RELATED PROBLEMS 89
Using what your accountant tells you. Accounting is a
management tool. Some common mistakes. Some basic rules.
Basic cost centers and cost definitions. Insurance. Taxes:
Avoidance is legal. Special situations.
08 MARKETING AND SALES: FINDING LEADS AND
CLOSING THEM 101
Success in marketing is always a tonic for an ailing business.
What is marketing? Discovering what clients wish to buy. “I
know it when I see it.” Creating needs. Face-to-face closing.
09 RELEASES, BROCHURES, AND OTHER MATERIALS 118
Marketing and messages. Releases and newsworthiness. Linkages:
Keeping your eye on the ball. Brochures as marketing tools. Other
sales materials.
10 THE NEW MARKETING 131
A not uncommon economic problem. What’s wrong with the “old”
marketing? Is mass marketing dead? But consulting is not sold via

Contents s vii
mass marketing. The marketing database. Networking for clients.
Brokers, job shops, subcontracts, and the IRS. IRS and Section
1706. Technical services firms.
11 MARKETING TO THE PUBLIC SECTOR:
FEDERAL, STATE, AND LOCAL GOVERNMENT 141
A brief glimpse of government markets. What governments buy.
How governments buy. The procurement system. Market research.
Subcontracting and other special marketing approaches.
12 PROPOSAL WRITING: A VITAL ART 154
The evolution of modern proposal practice. What proposals call
for. Why proposals are requested. Proposed plan and proposer. The
ingredients of the RFP. What is a proposal? Proposal scenarios.
Who must you sell? Public- versus private-sector proposals. The
evaluation system. The protest process. Sole-source procurement.
Proposal formats and rationales. Format and general rationale. The
necessary impact. Strategy and its evolution. Functional
flowcharts. A few odds and ends to consider.
13 THE INITIAL MEETING 182
Rule number 1: Have a clear understanding at and from the
beginning. Rule number 2: Be a dignified professional always.
Rule number 3: Sell without hype. The difference between
bragging and reporting. Selling is consulting. Pricing problems.
Where to conduct initial meetings. Things to settle at the initial
meeting. Follow-up.
14 NEGOTIATIONS, FEES, AND CONTRACTS 195
Fees, costs, and profits. Standard rates. Calculating overhead.
What should your overhead rate be? Private-sector parallels.
Government contract negotiation. Private-sector contract forms.
What is a contract? Alternatives to formal contract documents.
The informal contract or letter of agreement. Annual retainers.
Negotiating tips, tactics, and gambits.
15 CONSULTING PROCESSES AND PROCEDURES 211
The art of listening. The art of hearing. Hearing is not a passive
function. Hearing as a salesperson. Listening as a hired
consultant. A basic approach to all analysis: Function.

viii s Contents
16 FINAL REPORTS, PRESENTATIONS, AND
OTHER PRODUCTS 234
Written reports: Products of the consulting project. Verbal reports
and presentations. Other products. Finding a measuring stick.
17 FEES AND COLLECTIONS 248
Cash flow is a problem for everyone. Warning flags. Credit card
convenience—and inconvenience. Collections. Collecting from
government clients.
18 CONSULTANT SKILLS YOU NEED:
MAKING PRESENTATIONS 258
Consulting: Business or profession? Public speaking. The notion
of born speakers. A few presentation principles.
19 SKILLS YOU NEED: WRITING 269
Writing skills for the consultant. Research and data gathering.
The draft.
20 TECHNOLOGICAL ASSETS FOR THE
INDEPENDENT CONSULTANT 291
The new meaning of independent. Database and spreadsheet
functions. Printers. Modems. Facsimile machines. Tape drives
and backing up. The computer as a general aide. Finding
software.
INDEX 297

Preface
Consulting, as a career, has been one of the major beneficiaries of our explo-
sively expanding high technology. The mainframe computer was responsible
for creating a great many computer consultants, for example. Then the per-
sonal computer came along and multiplied the number of independent com-
puter consultants many times over. Then came the Internet and Web sites, and
that spawned a great many new consulting specialties.
Consultants who rely on high-tech skills and knowledge are among the
most rapidly proliferating types and classes of consultants, but they are not
the only ones for whom consulting has become a career. We have consultants
today in every field—wedding consultants, dress consultants, telephone solic-
itation consultants, even automobile parking consultants! Whatever the need
or problem, there is probably a consultant expert who can help.
Through years on CompuServe and now through several years on the Inter-
net, I have been in constant and continuous communication with a great many
consultants. Some are highly experienced old-timers, some are relatively new
to the field, and some are either just embarking on a consulting career or
preparing to do so. The words of one man who is employed as an internal con-
sultant by his firm were especially rewarding. He reported that he did not as-
pire to launch his own, independent consulting venture, but he found certain
principles enunciated in our Internet conversations and in some of his reading
“made the lights go on” for him and were “liberating eye openers.” These are
some of the specific ideas he found to be so illuminating:
s Consulting is not itself a profession, rather it is how one practices a
profession.
s Consultants need to market their services proactively as a planned part
of their business and not as an afterthought.
s The client’s perception is what defines the “truth” or reality of a con-
sulting situation.
s Consultants need to make a profit in addition to making a living, that is,
there should be something left over after paying themselves a salary.

x s Preface
s A consultant must be a specialist and a generalist at the same time.
s A proposal is a sales presentation. (Too often we write proposals as dis-
plays of erudite technical knowledge or proficiency in clever phrasings.)
I learned and I continue to learn more and more about consulting from
other experienced practitioners. I have incorporated input from real live, prac-
ticing consultants whose comments reflect practical experience, rather than
theory. I also learned of the problems independent consultants are encounter-
ing, and what help is needed to cope with these new problems in a changing
world.
A NEEDED RESPONSE TO GREAT CHANGES
With all respect to Ben Franklin and his observation about the inevitability of
death and taxes, I must point out that he neglected to mention another thing
that is inevitable in this world: Change. Change is inevitable, it is constant,
and it is, in the broad view, beneficial, although the immediate effects may not
appear so. Many things about consulting have remained the same over the
years, but much has changed. In this book, I will strive to reinforce that which
is constant, but I will also focus attention on the significant changes that must
be recognized and taken into account to continue succeeding as an indepen-
dent consultant.
Some of the changes are minor and of only minor importance, while others
are of great importance, and critical to one’s success as a consultant. Profes-
sional practices and other businesses often fail because they become obsolete:
Their principals fail to change when change is necessary. An old dog can learn
new tricks, and often must do so to survive. We will look at independent con-
sulting today, with all its opportunities and problems, some of them no differ-
ent than they were yesterday and others totally new and different.
THE PERIPHERAL REQUIREMENTS OF
TODAY’S BUSINESS
In our complex society, we must all be covered by insurance, especially hos-
pitalization and general medical coverage. Few of us can handle the costs of
today’s routine medical costs, let alone the costs of medical emergencies,
without insurance coverage. Large corporations can get group coverage
without great difficulty; independents often have a problem in doing so. In
this book, we will consider insurance and offer some ideas on how to obtain
coverage.
Credit is also a problem for independents. Clients expect to be billed for
services, even if they furnish a retainer to initiate a project. For small proj-
ects, they may want to pay with plastic—any of the popular credit cards. But

Preface s xi
credit card issuers—banks and others—do not welcome independent consul-
tants, especially those who are home-based. This, too, is a problem we will
address.
THE IRS VERSUS THE ON-SITE SUBCONTRACTOR
One of the problems facing consultants who undertake to function as indepen-
dent contractors working on clients’ premises, under subcontracts to brokers,
is the attitude of the IRS: The IRS has questioned the contractor status
claimed by independent consultants who work on the client’s premises and on
long-term contracts. On the other hand, many consultants, those employed in
large organizations and those functioning as independent consultants, work on
their own premises or on both the client’s and their own premises, usually
under contract to do a specific job, rather than under an indefinite-term agree-
ment to work for the client. Some independent consultants have short-term as-
signments because of the nature of the work, but many consultants have
long-term contracts and assignments. Thus, the IRS’ position can be a serious
problem, and it will be discussed in these pages, with suggestions for over-
coming it.
THE PLIGHT OF TODAY’S RETIREES
Early retirement and second careers have been an increasing trend influenced
by the great increase in retirement plans and employees’ vested interests in
such plans. There are also a significant number of military retirees, the major-
ity of whom retire at relatively early ages. With the pressure of high costs of
living today added to the natural energy and vigor of men and women who re-
tire early, many launch second careers, and consulting is a popular option.
THE TECHNOLOGY EXPLOSION
The technological revolution has greatly amplified your capabilities for ex-
panding your profit-making services and your resources for satisfying clients’
needs. The computer age is many decades old, but the era of the desktop com-
puter is barely a decade old. It was explosively revolutionary, even more so
than its predecessor the mainframe computer age, reaching swiftly into every
corner of our lives and changing the way we do many things. The desktop com-
puters of 1988, for example, are primitive, compared to the personal computer
today. Portable computers are more and more popular, so that even away from
one’s office, whether in one’s automobile, an airplane, or a hotel room, all
computer services and facilities are at hand. With the widespread use of
modems, computer owners have ready access to other computers and public
databases—information services.

xii s Preface
You can’t be a consultant today without using a computer. The facsimile
machine (fax) has become almost as popular and common as the telephone.
Cellular telephones enable an increasing number of private individuals, as well
as consultants and other businesspeople to be in touch with their offices and
their clients wherever they are.
THE NEED FOR ENHANCED MARKETING
In these times of general business slowdown and increasing competition, mar-
keting becomes a more critical need than ever. We have given it more atten-
tion here than previously, with discussions of and suggestions for more
efficient promotional schemes and materials. We’ll offer additional and new
insights into methods for marketing your services successfully. A large part of
this book will focus sharply on specific marketing ideas and methods to con-
sider and use, for those are the true ingredients of your success as an indepen-
dent consultant.
These are all matters to be addressed in these pages, along with many other
new developments and current conditions. The book is organized for your con-
venience in finding specific coverage and, more important, specific help for
the solution of problems and exploitation of opportunities to expand and in-
crease your success.
HERMAN HOLTZ
Wheaton, Maryland

1
What Does (Should) a
Consultant Do?
Better be proficient in one art than a smatterer in a
hundred.
—Japanese proverb
There is nothing about the services provided by typical consultants that distin-
guishes them from other contracted-for services, such as those provided by an
interior decorator, image counselor, or financial advisor. The differences be-
tween these specialists and consultants who provide similar services are prin-
cipally in the titles and connotation of the word consultant. In this chapter
we’ll briefly review the titles and have a look at some of the most active fields
for consulting and at several aspects of the consulting industry, especially as
it pertains to independent consultants. (Counseling and advisory services are
often fields where practitioners do not use the word consulting.)
Independent consultants are often independent contractors, but many con-
sultants are specialists who work as temporary employees of service firms
who assign them to work on a client’s premises to augment the client’s staff.
High-tech consultants predominate among those employed in this way. Collo-
quially, they are referred to as “job shoppers,” but are more formally referred
to as “contract professionals.” That kind of employment blossomed in staffing
government contracts with skilled people during the Cold War and the high-
tech arms race. Probably the most numerous class of contract professionals
were and are the computer specialists.
COMPUTERS AND DATA PROCESSING
The desktop computer is now as common as the electric typewriter. Main-
frame computers spawned many consultants and consulting specialties.
Their number swelled rapidly, many independent, others building consulting
1

8 s What Does (Should) a Consultant Do?
companies. There were programmers, systems analysts, designers, engineers,
technicians, writers, computer operators, and others identified by various de-
grees of experience and qualifications. Specialization was forced on consul-
tants by the rapid growth of diverse new technologies.
The accelerating use of the personal/desktop computer and other applica-
tions were made possible by the development of new computer chips. Despite
a decline in defense contracts and in the manufacture, sale, and use of main-
frame computers, the growth in numbers of computer consultants continued,
as did the use of contract professionals in general.
THE RISE OF THE PERMANENT TEMPORARY
The term temporary originally referred to office workers who were a conve-
nience for employers with temporary needs for extra help. Temporary agen-
cies were a boon to women who didn’t want or couldn’t find full-time jobs.
They soon began to place engineers, writers, illustrators, and others who
sought temporary jobs. “Temp” jobs normally pay a higher hourly rate than
does “captive” employment, since fringe benefits are minimal or non-existent.
A population of workers arose who preferred to work on higher pay temporary
assignments and provide their own benefits. Contract professionals are virtu-
ally a subculture. Although many are independent contractors to clients, the
majority work for one of the “job shops,” a colloquial term for suppliers of the
markets.
The situation can be more complex, and a third arrangement is possible: In-
stead of contracting with the client on whose premises the specialist will
work, he or she may work on client’s premises as a subcontractor to a broker
who is a prime contractor to the client. Unlike a job shop, who actually em-
ploys the temporary and assigns him or her to a client’s premises for work, the
broker subcontracts with each individual for work on the client’s premises, so
the individual is an independent contractor.
Originally consultants were hired as temporary employees because it was
the only way to staff a project rapidly enough with qualified specialists. Today
many companies hire contract professionals because it makes better economic
and business sense. It is far less expensive to staff up with temporaries than to
hire and train new employees. Contracting imposes virtually no obligations on
the client beyond paying the contractor for providing the contract labor. Tem-
poraries can be hired quickly, with little paperwork and little legal obligation,
since they are employees of a contractor, not of the client, and they can be ter-
minated easily when the need ends. If a temporary employee proves unsatis-
factory, there are no complications in having that individual’s services ended,
in contrast to the legal problems in discharging a permanent employee for
cause.
The sizes of programs for temporaries—numbers employed and duration
of assignments—vary widely. NASA has used large temporary forces,

The Rise of the Permanent Temporary s 9
notably in engineering and computer-related work, and General Electric
Company (GE) employed large numbers of temporary engineers in their
missile and space programs. Where the project requires large numbers of
temporaries, it is not unusual to have a half-dozen or more firms working to-
gether on the premises.
Duration of assignments also varies from a few days to several years. A
consultant may be employed on an indefinite basis and be kept on for one
project after another. At the Philadelphia-area plants of the GE missile and
space systems, many consultant temporaries were “temporary” for as long as
five years, as were temporaries at the large training center Xerox Corporation
established in Leesburg, Virginia. These training technologists were all
“hired”—placed under contract—as self-employed individuals or indepen-
dent contractors working on the client’s premises.
It is usually not by design that these assignments last so long. Frequently
the assignment starts as a relatively short-term one, but new contracts come in
and the consultants are asked to remain. This can continue indefinitely, the
client always acting on the reasonable assumption that the need is temporary.
(The word temporary thus becomes a flexible term.)
The practice of bringing in whole staffs of specialists, whether called con-
sultants, contract labor, professional temporaries, on-site contractors, or con-
tract labor, has become widespread in many sectors—major government
contracts, commercial or nongovernment industry, and the government itself.
Many federal institutions and facilities are staffed and operated by such per-
sonnel, especially by agencies doing technical work—NASA, EPA, and DOD,
for example—but not exclusively so. The Air Force contracted with private in-
dustry to manage and operate a warehouse where it stores technical docu-
ments. The Postal Service Training and Development Institute contracted
with a private firm to administer its correspondence courses in Norman,
Oklahoma. The General Services Administration hired a private firm to run a
chain of stores selling personal computers to government buyers. The NASA
Scientific and Technical Information Facility in Maryland is staffed and run
by a contractor. There are many government owned, contractor operated
(GOCO) contracts, where it is more expedient or efficient to contract out
management and operation of a government facility.
Clients who hire consulting specialists as contract professionals have the
common problem of needing a temporary force of specialists, usually to staff
a special project. But some clients have more classical problems; problems that
are solved by a staff of specialists—consultants. A computer division of
Sperry Corporation had such a problem, having built a custom-designed com-
puter for the U.S. Navy. The Navy rejected the user manuals and demanded an
acceptable set of manuals. The company contracted for a crew of technical
publications specialists to assist their publications staff in making the manu-
als acceptable to the customer.
The number of computer consultants is still growing, along with the num-
ber of computer owners and computer technologies. When IBM entered the

desktop-computer market, its IBM PC quickly became a dominant design in-
fluence, and the entire industry began a rapid conversion to the production of
IBM lookalikes, advertised loudly as “IBM compatible,” or “IBM clones.”
But IBM and the rest of the industry went from the original PC to ever-faster
and more sophisticated systems so rapidly that the original PC became a Stone
Age computer almost overnight. The universe of possible configurations into
systems is so great that even experts can’t keep up with all of it, but must
choose an area in which to specialize.
Sometimes the client has a problem so highly specialized that solving it re-
quires finding the right consultant. One of my clients had need of a specialist
in Tempest and EMP-hardening technology, areas concerned with data secu-
rity and system survival under nuclear attack. There are many engineering
people who know a great deal about these technologies, but this case required
precise compliance with highly detailed and sophisticated military technical
specifications. Esoteric although this subject is, there is enough demand to
keep an expert in the subject quite busy advising electronic companies, even
the largest ones, about this. They managed to find one such expert who turned
in an excellent performance, but there are probably not a half dozen others
quite as knowledgeable about this specialized lore.
A few years ago NASA commissioned a venerable Japanese scientist to
write a definitive work on celestial mechanics because he was considered to
be the world’s leading authority in the subject, and he was so well along in
years that NASA feared the loss of his great knowledge if he did not soon
record it.
There are many consulting specialties that are not in common supply. My
own specialty is one of these. I write, lecture, and consult on marketing gen-
erally, but especially on government marketing. Clients call on me often to
help them write proposals, the key to government contracts. There are not a
great many consultants with an impressive track record of writing winning
proposals—good proposal writers must be sought out—but the skill is not so
highly specialized that the talented proposal writer is a rare and much sought-
after expert. But everything changes. Once there was only a relative handful
of proposal consultants. But that is changing rapidly as a result of high-tech
developments and the Internet, which have led to an increase in the number of
proposal consultants.
During the 1930s, there were consultants known as “efficiency experts.”
They claimed an ability to raise operating efficiency and reduce costs in com-
panies. Businesspeople succumbed to the lure of relieving some of the eco-
nomic pressure of those hard times, so more than a few companies brought
teams of efficiency experts aboard to work their magic.
How good were they? It’s hard to say because they ran into a buzz saw of
opposition from employees and labor unions, many of the latter struggling
then to establish and justify their very existence. They understandably saw
efficiency experts as the enemy determined to eliminate jobs. (That has not
changed a great deal!) Efficiency experts vanished into history or, more accu-
rately, evolved into industrial engineers and methods engineers.

The Consultant Organization s 11
THE CONSULTANT ORGANIZATION
There are at least two distinct types of consulting organizations, although
there are the inevitable hybrids. One is the supplier of technical/professional
temporaries. The other is the consulting organization that undertakes a proj-
ect, generally under a contract, with a defined end-product or service to be de-
livered, and with work done most often on the consulting organization’s own
site, but if necessary on the client’s site or on both sites.
The Job Shop or Supplier of Temporaries
Typically, the job shop must submit a bid for each contract to supply on-site
consultants. In most cases, the job shop offers resumes of those who are their
potential employees, to be employed by the job shop only as long as the job
shop has a client to send them to and bill for their services. Employment by a
job shop is a technicality and coincides exactly with assignment to a client.
Normally, clients do not simply order a number of anonymous warm bodies,
but review resumes of available individuals and often interview the candidates
as well.
Typically, the job shop quotes consultants by classes, asking the same rate
for each person in a given class, although not necessarily paying each person
in a given class the same rate. (Beginners in this kind of work almost always
sign up too cheaply, but they soon learn what to demand.) Fringe benefits are
scant, if they exist, consisting of a few paid days off and perhaps a group hos-
pitalization plan. And the employee often qualifies for paid days off only after
employment for six months or a year, which is far from certain in that work.
(Most “job shoppers” change employers frequently, as contracts end and new
opportunities arise.)
This arrangement permits the job shops to operate at minimal overhead, an
absolute necessity for survival in that field. Typical overhead rates are about
35 to 40 percent, which must cover insurance, taxes, miscellaneous costs, and
profit. However, when the job shop is fortunate enough to hire on some well-
qualified beginners, they may earn considerably more than their usual profit
on those individuals.
There are many hardy individuals who savor the frequent changes of jobs
and locales, the financial benefits of job shopping, and the many vacations
they are able to take between assignments so they make a career of such work,
earning at least half again as much as they would on salary, and in many cases
considerably more than that. There are also some individuals who choose that
mode of working because they are unable to obtain jobs on the regular payroll
of a company, either because they are too old or can’t pass a medical examina-
tion. Job shopping is also a boon for people who are retired but still active,
alert, capable of a full day’s work every day, and eager to have a second
career.
Although there are many hardy perennials in the field, there are a great
many who turn to that mode of working for a short while, attracted by the

money or unable temporarily to find a job. Many tire of the uncertainty and
the constant moving about necessary to work steadily in that field. Seasoned
by the experience of a few assignments, they move on to work they find more
satisfactory as employees or as independent contractors. It is not at all uncom-
mon for job shoppers to be offered permanent employment by clients. All of
this results in a steady turnover in the field, making it relatively easy to break
into it as a training ground, or a starting point in a career.
W2 CONSULTANTS VERSUS 1099 CONSULTANTS
The distinction between the individual on an agency’s payroll but assigned to
work for the agency’s client and the individual contracting directly with a
client or with a prime contractor is drawn by identifying the first one as a W2
consultant, and the second one as a 1099 consultant. The W2 is the IRS form
kept by the employer and furnished to the employee at the end of the year as
an accounting of relevant taxes (withholding and FICA) paid to IRS. The 1099
is a form the client must furnish to a contractor showing the money paid dur-
ing the year to that contractor.
THE CONSULTANT COMPANY
Many people do not consider job shops to be true consulting organizations nor
contract professionals to be true consultants. But that is part of the difficulty
in defining consulting. For example, among the many procurement categories
the government employs to classify and organize its purchasing, there is
H: CONSULTANT AND EXPERT SERVICES. One might expect that any-
thing listed here would be consulting without question. Among the services
requested here are real estate appraisals, computer software programming,
technical writing, surveys, and other chores that we may not normally con-
ceive of as consulting.
On the other hand, there are a great many services firms offering manage-
ment consulting, among other services, because that term appears to encom-
pass and include virtually any kind of service a business or any other kind of
organization might need.
Prominent among these are the major accounting firms. Accounting firms
apparently find it expedient—perhaps easier than others do—to make the
transition to management consulting and conduct major operations under that
business umbrella.
It is not only accountants who find that a useful transition. Engineering
firms, such as Booz Allen and Hamilton, have also migrated into management
consulting, as have firms in training development, public relations, and other
specialized businesses. Nor is it only established companies who make such
transitions. Individuals launch their independent consulting practices from a
base of experience in some given industry because the potential for practicing

The Consultant as a Self-Employed, Independent s 13
as a counselor or consultant in any of today’s many specialized fields is al-
most unlimited. Although such practitioners do not list themselves under a
main heading of “consulting” as their basic category, they make it clear that
they offer consulting services, whatever their listing. (See the list offered
later in this chapter.)
HYBRIDS
There are two basic types of consulting, which may be at the extremes, classic
consulting, recognized even by the purists, and a second type, which qualifies
as consulting only dubiously. But the world is not black and white, and a great
many consultants and consulting firms fall between these extremes having at
least some characteristics of each.
There is a distinct difference between supplying technical/professional
temporaries and carrying out projects on the client’s premises. In providing
technical/professional temporaries, the provider is selling hours of profes-
sional effort, normally at a per-hour rate. The supplier is obligated only to
supply qualified personnel, as agreed to and contracted for, and does not incur
responsibility for success of the project. It is up to the client to make best use
of this labor—to manage the effort and the people. It is the client who is re-
sponsible for the result and who must pay for every hour worked by the tem-
poraries, regardless of result, just as with internal, direct employees. On the
other hand, the client may summarily terminate the services of the supplying
firm or of any individual supplied. In contracting to carry out a project, how-
ever, regardless of where it is to be done, the contractor must assume respon-
sibility for the end-result, which means also for the management of the staff,
regardless of where they do their work. It’s a critical difference.
Some firms who specialize in supplying professional temporaries also have
in-house capabilities for staffing, managing, and carrying out projects on
their own premises. But many of the firms whose main enterprise is handling
projects in-house are equally willing to carry out projects on the client’s
premises or to supply professional temporaries, so that distinctions between
the two tend to disappear.
THE CONSULTANT AS A SELF-EMPLOYED, INDEPENDENT
The individual independent consultant—the independent contractor—must be
aware of the various organizations available, the markets for services, and the
distinctions in obligations. As a temporary, you are responsible for best ef-
forts, as directed. As an independent contractor, no matter where you work,
you must be project-oriented and manage your project.
Whether you work mostly on clients’ premises or in your own office de-
pends on the kind of service you provide, the nature of your clients and their
needs, and your own choices. If you counsel individuals in personal matters, it

is likely that you will have to arrange to meet them in your own offices for at
least two reasons: One is that in that situation fees are generally by the hour,
usually running to only an hour or two per consultation and by appointment.
That means that you must see several clients a day, making it impractical to
call on clients. Another is that it is usually necessary to have a controlled en-
vironment—privacy and quiet, for example—something often difficult to
achieve in a client’s space. And in at least some cases, you will need direct ac-
cess to certain resources on your premises, such as a computer, a library, or
files.
On the other hand, if you serve organizations and the nature of your work is
such that most of your assignments last at least several days and are billed by
the day, you may work largely and perhaps entirely on the clients’ premises.
However, consulting is a custom service and therefore must be tailored to
each assignment. Even when dealing with large organizations, clients may
visit you and work with you on your premises. In fact, except for presenting
seminars, it is rarely that I do not carry out at least part of my consulting proj-
ects in my own office.
This does not necessarily mean that you must rent offices in a downtown
location or in an office building. Although I did just that for some years, I
subsequently discovered that even major companies who were my clients
were not concerned to find that my offices were in my home, and they were
entirely willing to call on me and work with me there. (In fact, many appre-
ciated the wisdom of minimizing overhead costs by working from an office
at home.)
Overhead reduction and other benefits of working from an office at home
are obvious. However, you must decide for yourself whether it is a desirable
alternative for you—whether you have suitable facilities for an office at
home, whether it is appropriate to your practice, and whether there are local
ordinances that you must consider.
FIELDS AND SERVICES SUITABLE FOR CONSULTING
Anyone who enters into independent consulting gets an education: My own
early experience in presenting seminars reflected the common problem of
underestimating the value of what we offer.
The “Graduate” Course Seminar
We all have a tendency to assume that what we ourselves know well is common
knowledge. The first time I conducted a seminar on writing proposals for gov-
ernment contracts, I assumed that it would be a waste of time to teach the rudi-
ments and such coverage would not attract registrants. I thus planned to focus
my presentation on the grand strategies that distinguish the great proposals
and brush hurriedly by the basics that I assumed were common knowledge to
everyone with an interest in proposals and marketing to the government. I even

Fields and Services Suitable for Consulting s 15
stipulated in my advertising that I offered a “graduate” course, not at all suit-
able for beginners in proposal writing.
To my surprise, a generous portion of the 54 attendees who registered for
that first session proved to be beginners, lured by my promises to reveal a
number of inside tips, techniques, and strategies I had learned or developed
over the years. (In fact, the cautionary note that it was not for beginners
proved to be more an attraction than anything else, and undoubtedly was at
least partially responsible for the extraordinary results I got from the uncer-
tain groping of my first seminar venture.) But there were also a few experi-
enced people, including two senior executives who were in the process of
forming a new division of their large corporation. They had come to the semi-
nar to see if they could pick up a few useful ideas.
Until I conducted that session, I had doubts that I could reveal enough little-
known information to justify the cost and the full day’s time spent by each at-
tendee. (I seriously underpriced that first seminar because of this fear.) I was
amazed to discover that even senior, experienced people were unaware of
many basic facts that I thought to be quite fundamental and even obvious about
proposal writing, facts that I would have expected senior executives to know
as well as I knew them. (Later, I had the satisfaction of having a senior execu-
tive of one large company bring groups from his staff to two successive ses-
sions of my presentation, remarking that he found just one of the ideas I
imparted to be worth the entire day’s cost in dollars and time.)
Let the Client Choose the Services
We make the mistake too often of trying to decide for ourselves what our
clients need and want, when we should be “asking” the clients. That is, we
should be experimenting by offering services and concentrating on listening
and observing client reactions, to discover what works best in satisfying them.
I was surprised by the reaction to my first seminar’s coverage of cost esti-
mating—those cost analyses and presentations required in most proposals. I
had originally planned to do little more than mention these briefly. To my
amazement, that portion of my presentation proved to be one of the greatest
“hits.” Even senior people, I found, tend to be somewhat confused and uncer-
tain about direct and indirect costs, overhead, other direct, and many other
basic cost elements and concepts, let alone the more esoteric jargon and con-
cepts such as G&A and expense pools. I had originally thought that even if
the attendees did know something of the subject, they would be intensely
bored by it.
This experience has been repeated in almost every seminar I have con-
ducted, and I am always surprised by it. Aside from my difficult-to-shed feel-
ing that accounting is a boring subject to most people, I am always surprised
that experienced proposal writers have so little understanding of and interest
in what costs are, how they are generated, how they proliferate, how they are
classified, what they really mean, and how they must be analyzed and pre-
sented. Many years ago when I first became involved in proposal writing, I

was not content to surrender the accounting portion of the proposal effort to
accountants. I decided that costs were too serious a matter to be left to the ac-
countants! I would work out the costs and let the accountants review them. I
insisted that I would not submit (and be responsible for the success of) a pro-
posal until and unless I personally approved of everything in the proposal.
It’s a common error to assume that our peers know exactly what we know.
Not so: You can probably sell your services to your technical/professional
peers too, once you learn in what areas they most need help or what special
knowledge or skills you have in your field that is helpful but not widely known
or available in your profession.
Following is a list of just a few of the many fields/areas in which consulting
services are offered. Even these are mostly generalized items, with various
specializations in each. Study this list. You may find yourself qualified to
consult in more than one field!
Even these descriptors are often too general. One security consultant, for
example, may be a specialist in security devices—locks, alarms, barriers,
safes, surveillance equipment, and other such items, while another is a spe-
cialist in guard forces, patrolling, background checking, and other security
measures based on direct human surveillance, and still another in computer
communications security. Most categories have subcategories. Career and vo-
cational counselors, for example, may easily specialize in at least a half-dozen
areas. There are many kinds of engineers—civil, construction, mechanical,
electrical, electronic, stress, and industrial, and these are all subdivided into
many narrower specialties. Designers likewise fit into all kinds of cate-
gories—package designers, lighting designers, presentation designers—as do
most of the specialists listed here. In fact it is a rare field today that will not
support a well-experienced specialist as a consultant in that field:
Accounting
Administration
Advertising
Agriculture/farming
Arbitration
Audiovisual presentations
Auditing
Automation
Aviation
Business
Business writing
Career and vocational counseling
Communications
Club management
Computer advisory services
Convention, conference, meeting
planning/arrangement
Data processing
Design
Drug and alcohol abuse
Editorial services
Educational counselors
Engineering, general
Executive search
Financial management
Food preparation
Gardening
Grantsmanship

Fields and Services Suitable for Consulting s 17
Hotel management
Human resources
Industrial engineering
Industrial methods
Insurance
Labor relations
Lighting, interior/exterior
Management
Marketing
Municipal services
Organizational development
Payroll management
Personal security
Public relations
Publishing
Recreation program counselors
Restaurant management
Safety
Sales promotion
Strategic planning
Taxes
Training
Transportation
Weddings and social affairs
Word processing services
Writing services

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