Consulting Getting Started
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Consulting involves choosing a business structure like a sole proprietorship, partnership, LLC, or S corporation. It also requires setting up important insurances like errors & omissions, disability, life, auto, and home office coverage. Additionally, consultants must establish a company presence through branding elements, choose communication and marketing tools, and obtain the proper legal contracts and payment terms. Managing projects, time, tasks, source control and finances also requires using various software tools. Ultimately, consultants are accountable to clients and must interact professionally while avoiding politics.
Consulting Getting Started
- 1. ConsultingBuilding Your Own Consulting Business
- 3. Sole Proprietorship/PartnershipAdvantagesEasy and Cheap to StartAll profits go directly to owner or 50/50 partnersComplete controlDisadvantagesUnlimited liabilityAll NET income taxed as personal incomePotential loss of tax deductionsSelf employment tax
- 4. Limited Liability Company (LLC)AdvantagesEasy to setupOwner(s) have limited liability protectionDisadvantagesTaxed like Sole Proprietorship/PartnershipAnnual paperworkPotential for extra state taxes
- 5. S CorporationAdvantagesOwner(s) have limited liabilityNo Self Employment TaxSalary distribution can be coupled with profit distribution to avoid higher tax rate. “Reasonable Salary”Additional Tax advantagesDisadvantagesSignificantly more paperwork (legal and accounting)More expensive setup More complex operation
- 6. Insurance
- 7. Errors & OmissionsProtection from legal action related to poor decisions or bad adviceHelps cover any award made against youHelps cover cost to defend a legal actionOnly good while policy is in effect, legal action in future without a policy means you are not necessarily coveredIndustry standard is $1,000,000 coverageDeductible affects the PremiumAKA Professional Liability Insurance
- 8. Disability InsuranceProtects your earning capacity in the event of an accident or fatal illnessDifficult to obtain for Freelancers/Consultants due to fluctuation in income and lack of supervisionWorkers compensation can be a viable alternativeCheck on how the insurance company defines disabilityStandard coverage would be 60% of NET incomeWaiting period affects the Premium (like Deductible on other policies). Waiting periods usually break down in 30 day increments. 30, 60, 90, 120 or 365 dayLength of Coverage Period is how long they will pay you while disabled. Standard terms are 1, 2 and 5 years, but longer terms are available. This also affects the premiumInsurance for You
- 9. Life InsuranceOnly necessary if you have dependentsPolicy TypesTerm Policies vary widely, but some policies will return all premiums at the end of the Term. This affects the premium, but a great payday if you make it to the endWhole Life and Universal Life are not recommended as they are less coverage for a higher premiumStandard recommendation is 70% of your earning power to provide a minimum of 5-10 years income for your dependents.Don’t forget to have a will tooInsurance for Others
- 10. Other InsuranceAuto PolicyTalk to an agent about coverage differences for a car used for your business in comparison to your personal auto policy.Home Office CoverageTalk to an agent about this coverage since business liability coverage is not part of a homeowner’s policy.
- 11. The Company
- 12. Company PresenceNameKeep it memorableConvey a messageBe careful when using unique spellingCheck domain name before final decisionLogoThink about use in print materialsBusiness cardsInvoicesSimple concepts are bestFocus on positive vibrant colorsBlue is most commonly associated with productivity
- 13. CommunicationOffice PhoneCellGoogle VoiceVanity Phone NumberVoicemailFREEEmailNEVER use Hotmail, Gmail, Yahoo, ISP account, etc…Google Apps (custom domain)E-mailCalendarDocumentsFREE option
- 14. Marketing ToolsBusiness CardsOvernight Prints (http://overnightprints.com)Vista Print (http://vistaprint.com)Social MediaTwitterLinkedInFacebookWebsiteVarious hosting optionsContent Management Systems can save time
- 15. Marketing OpportunitiesUser Group meetingsSpeaking opportunitiesChamber of Commerce or Technical Council eventsNetworking eventsBlog
- 16. Home Office TipsSeparate space from living areaKnow your square footageKeep recreational items out of areaInvest in a desk and comfortable chair
- 17. Getting to Work
- 18. ResumeHighlightTechnologiesTypes of ApplicationsIndustriesMetrics of contributionBe sure to never violate Non-Disclosure (stay generic)RemoveHigh School and non technology related jobsIrrelevant comments “I code like a girl”NO Third person bullets “Caleb developed a …”
- 19. SubcontractingW2Employee like benefitsTaxes, Medical, etc…Preferred by recruiting companiesCorp to CorpMust have Liability InsuranceImproves Rate negotiationsBase rateOvertime rateProfessional relationship
- 20. What’s my rate52 weeks (in a year) * 5 week days = 260 days260 days – 10 major holidays = 250 days (2000 hours)250 days – 15 days vacation = 235 days235 days – 5 days (off contract) = 230 days230 days * 8 billable hours per day = 1840 billable hours1840 * $50 per hour = $92k1680 * $50 per hour = $84k ( 25 days off contract versus 5)“Never confuse the size of your paycheck with the size of your talent." Marlon Brando The 2000 hour myth
- 21. Contracts on your ownMaster Service Agreement (MSA)Agreement between your business and client to outline responsibilities and obligations each company has to one another. Your rates for service would be included here.Statement of Work (SOW)References the MSA for authority on those areas.Outlines the deliverables, timelines, etc… for a specific activityFind a good lawyer
- 22. Getting PaidPayment terms can be a great or terrible thing.Net Due - Difficult to get any company to pay Net Due, so don’t plan on getting paid that quickly.Net 10 – Get paid 10 days from receipt of invoice by customer. This is optimal, but not always possible. Plan on a 30 day deliver, just in case.Net 30 – Get paid 30 days from receipt of invoice by customer. Standard for most companies. Don’t go higher than Net 30When the client doesn’t pay you have minimal avenuesSend additional invoice as Net DueSTOP WORKING FOR THE CUSTOMERSend certified or registered letter with copy of invoice stating payment not received and legal action will take place
- 23. Tools
- 24. Project ManagementProjectTurf (http://projectturf.com)Full featured, no FREE optionactiveCollab (http://activeCollab.com)No Free optionBasecamp (http://basecamphq.com)Free optionLighthouse (http://lighthouseapp.com) Free option“Trying to manage a project without project management is like trying to play a football game without a game plan.” K. Tate
- 25. AccountingFreshBooks (http://freshbooks.com)QuickBooks (http://quickbooks.intuit.com)PeachTree (http://peachtree.com)GET AN ACCOUNTANT FOR TAX SEASON“There's no business like show business, but there are several businesses like accounting.” David Letterman
- 26. Time TrackingToggl (http://toggl.com)Windows, Mac, Linux, iPhone, Android, WebWorks with BaseCamp, activeCollab, FreshBooks, QuickBooksKlok (http://getklok.com)Desktop, Android (BETA)Works with BaseCamp and HarvestTick (http://tickspot.com)Web and iPhoneWorks with BaseCampHarvest (http://getharvest.com)Desktop, Web
- 27. Task ManagementSCRUMVersionOne (http://versionone.com)https://github.com/versionone/git-hooksRally (http://rallydev.com)LeanLeanKit (http://leankitkanban.com)AgileZen (http://agilezen.com)
- 28. Source ControlGitHub (http://github.com) Public and Private git repositoriesFree optionBitbucket (http://bitbucket.org) Private mercurial respositoriesFree optionSubversionTFS
- 29. Prime Time
- 30. What is a ConsultantArchitectDeveloperProject ManagerBusiness AnalystSalespersonMarketing personEverything in between“Consultants have credibility because they are not dumb enough to work at your company.” Scott Adams
- 31. Consulting is not for everyoneClients will not always treat you with respectIt isn’t personalClients may cut you loose for stupid reasonsHave an emergency fund of 3 months expenses (minimum)Clients will sometimes use you as the scapegoat for their mistakesBe prepared, document everything to be readyYou may have to take it, but you can protect yourself from legal actionClients can ignore your recommendationsAgain, it isn’t personal“It's just a job. Grass grows, birds fly, waves pound the sand. I beat people up.” Muhammad Ali
- 32. AccountabilitySeriously evaluate any major task to ensure you can accomplish itDO NOT accept any task if you cannot get it done CORRECTLYOwn up to mistakes and accept the consequencesIt is worse to be known as seedy and deceitfulAvoid giving dates without a firm understanding of requirementsAlways send a follow-up e-mail confirming what was communicated and your understanding“No snowflake in an avalanche ever feels responsible.” George Burns
- 33. PoliticsDO NOT participate in office politicsDO NOT speak negatively of any consultant(s) directlyDO NOT be afraid to speak, if you know you are rightKnow who the REAL client is and serve them as suchRemember as a consultant you can ALWAYS leave“Hard work is rewarding. Taking credit for other people's hard work is also rewarding... and faster.” Unknown
- 34. Client InteractionConduct yourself in a professional manner with everyone and in all situationsWork on your ability to translate complex information into simple terms or analogiesTry to have alternative options available, in case the client decides against a recommendationRemember metrics are crucial for communicating benefit, measure and shareDon’t be afraid to say “I don’t know”, but don’t let that be the last thing you say. As a consultant you learn for a living“… a professional is someone who can do his best work when he doesn’t feel like it.” Alistar Cooke, journalist
- 35. Client Interaction (cont.)Develop your ability to speak intelligently on a number of topics, but don’t misrepresent your abilitiesBe a contributor, not just an order takerBreak up work into phasesAllows the client to see progress Protects you from unexpected requirements impactBe clear about your style/approach and how deviation from best practices can impact timelines.
- 36. Questions