Here is my first “interview” — Jacob Beningo of Beningo Engineering. It was his newsletter that provided the humor in the previous post.

Jacob speciaizes in the “development and design of  quality, robust embedded systems.” He has a degree in Electrical Engineering (another gEEk), started consulting in 2009, and has been on his own since 2011.

Here is the interview:

(1) What prompted you to consider consulting?  Was there an event, like a layoff, or was it just a general itch to be on your own?

Pretty much since I was a Junior in high school I’ve had the itch to start my own engineering/consulting company. However, I didn’t start to give it serious thought until the 2007/2008 timeframe when I was working as the lead engineer at a start-up.

That company didn’t survive the economic down turn of the time but I started working at a university and started my company as a part-time side project at the same time. I guess you could say that the collapse of the start-up helped give me the extra push to have more control over my own career.

Over the next two years my part-time company eventually got enough work to support a full-time engineer. I took the plunge and have now been doing this full-time plus for the last two years.

(2) How has it been going? See you started in 2009, so obviously you are established in your business.

Paperwork and my first client was back in 2009 mid year. I consistently had part-time work for around a year and half before going on completely on my own in 2011.

In 2011 I was actually working full-time as a W2 employee of one of my clients from the year previously. We were developing sensors for measuring blast profiles from IED’s in the defense industry and there was enough work there that I went on there full-time until the project was completed.

(3) What do you like MOST about consulting?

The best part is all of the projects and technologies I get to work with. Working for just one company you often get highly specialized or forced to live within a small box within the larger design cycle.  I don’t have those restrictions.

I get involved sometimes as early as designing the system requirements, in the heavy development or sometimes at the end just to perform system verification. I have my specialization but also still keep a good birds eye view to understand the technologies and industries and see where they are going which helps my clients immensely.

(4) What do you like LEAST about consulting?

The thing I like least is having to sell. I always feel like I’m boasting when I go through our capabilities, what we bring to the table and what we have done. The customer though wants to feel like they are getting an expert in the field even though, in my opinion, expertise is fleeting with the rate at which technology changes.

(5) How do you get your clients? (BTW, the number one question I get asked when someone finds out I’m a consultant.) What marketing techniques work best for you?

Word of mouth is one of the best techniques for me in addition to LinkedIn. I’ve found that networking with people and just getting in front of someone for 30 minutes with some example projects can go a long way.

(6) How do you set your fees? (Second question I get asked.)

I like to use the different consulting salary surveys such as the IEEE consultant survey. It gives a good idea of what other consultants are charging. The value tends to be on average $110 – $120 which is also what a typical engineering company will charge per hour as well.

Personally I like to come in below that average. I can easily reference that average figure and then show them how they are getting a deal immediately. The quality of our work for the price I think really goes a long way.

(7) How did you decide what to consult about? And why? (Third question I get asked.)

I consult about what I know. I’m an embedded systems guy with a heavy focus on embedded software.  It is what I know best so my clients get the best value by having me consult in that area.

Now that doesn’t mean that I always just do software. Embedded software is tightly coupled to electrical design and hardware. Sometimes I’ll consult just on the hardware design without any software input. Other times I’m given the entire project and design hardware and software, system tests and the whole thing.

If you are just starting out focus in on a niche and then over time open up capabilities. Starting out its tempting to go general to get any business but its better to just focus your attention on one thing.  (Easier to say than do).

(8) Lessons learned since you started consulting?

I’ve learned that I always have to be selling. Just because a big project comes along doesn’t mean that the selling can stop. That project will eventually end and if the selling stopped then there could be months before the next project comes along. Time needs to be set a side every day/week to network and work on selling your services.

(9) What next? Do you plan to do this the rest of your career (like I did?) Or is this a stepping stone to other things?

The goal right now is to do this for a long time. Hopefully with time the work load will grow to where we can hire more consultants and eventually develop our own products. We are moving that way but consulting will remain a core for a very long time. It’s fun, challenging and working with different companies and people is just too much fun.

(10) Finally, what one piece of advice would you give to our fellow engineers who might be thinking about consulting?

Focus on a single niche and go after it. Don’t generalize your service. Sell, Sell and then Sell some more. (Sorry that’s two pieces but once I start talking/writing it’s hard to stop).

Here are some of my comments to Jacob that you may find of interest: 

Thanks for the information. Although I’ve featured a few other firms, you are the first of my “interviews.” I’ll probably post that in a week or two.
 
Glad to hear it is going well. Once you get past the first year or two, you finally realize you’re going to make it. So, congratulations!
 
I certainly agree with your assessment regarding working on different projects. That has been a major appeal for me too.

Frankly, I wish more engineers would break loose so they could enjoy engineering again.  Way too many stuck in the corporate rut. It really pleases me to hear of your success.
 
Yes, selling can be a pain, but it is a fact of life when you are in business.

A little trick I play on myself is to treat the marketing and sales challenges as just another engineering challenge.  After all, we’re problem solvers, so what is another problem to work on?
 
I also consider myself a bit like a doctor — here to help clients either get well or stay well.  Put in that light, it doesn’t feel like I’m bragging when I explain what we can do for them. 
 
Finally, keep on having fun!

Would you like to be featured here? Answer the questions in an email. Can’t promise it will make you rich and famous, but it might just help inspire somebody else to make their own JumpToConsulting.

PS – You don’t need to be a geek — all are welcome to submit their consulting success story.

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10 Signs You Might Be A Consultant…

(1) Your largest expense is socks from never leaving the house.  (More wear and tear)

(2) Business casual is khaki shorts and a Hawaiian shirt

(3) 3 months of vacation a year just doesn’t quite feel long enough

(4) Bean counters panic when they see you

(5) Afternoon naps are an option

(6) You can open a window on a cool spring day and feel the breeze

(7) The biggest wear and tear on your vehicle is going to the grocery store and church on Sundays

(8) Family and friends always start a conversation with “so I have an invention for you ….”

(9) You are cursed with not only having to have knowledge of the bleeding cutting edge of technology but also maintain skills that are legacy by decades (Fortran anyone?)

(10) You use as much open source free software as possible but expect others to pay top dollar for your software

– From the Beningo Engineering Embedded Newsletter (June 2013) – another consulting engineer who also blogs and writes a newsletter.

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Should you pay referral fees? That question was recently posted at LinkedIn on the Business Consulting Buzz group:

Referral Fees for Independent Consultants?

Interested in your opinions: As an independent Consultant, would you be willing to pay and/or receive referral fees?

Here is my reply:

As consulting engineers, we are concerned that referral fees might be perceived as conflicts of interest. As such, we do not accept (nor pay) any fees from the vendors serving our technical community.

When asked for vendor recommendations, we give clients at least two. If asked for our preference, we will share that with an explanation. Our vendors understand that no fee is expected, but we hope that the courtesy of a recommendation will be reciprocated.

We do, however, pay a referral fee to marketing partners for consulting business. These currently include a manufacturer’s rep (we are on their line card), and a training firm (we are in their catalog.) We also have agreement letters in place.

The percentages vary from 10 to 30% of the fee, depending on the effort. 10% is for a qualified lead that we pursue/close; 20% for a purchase order; and 30% for collecting the payment and sending us a check for our share. We pay referrals only when we get paid, and only on the fee (not expenses, as we do not mark up client expenses.)

Also, we don’t partner with consulting colleagues. We tried sub-contracting for a while, but it was more hassle than it was worth. When appropriate, we simply pass along leads with no strings attached. We make sure our clients understand that no money changes hands on referrals, and that we are out of the loop. In other words, we passed along a name — please make your own business decisions.

Hope this helps. Feel free to contact me. Been at this consulting gig 30+ years, happy to share, and still learning…

If you are on LinkedIn, you may want to join this group. If you are not on LinkedIn, what are you waiting for?  LinkedIn is where the professionals hang out.

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Another quick question from reader C, that generated the grist for this post. Thanks, C!

I’m going to a networking event for small business/non-profits, and it has occurred to me that I need a quick elevator speech.

Like “Hi I’m C from … we help people view and analyze their data by using maps”

Most people know that they need a database but most don’t know that you can actually take that data and view it in a different way.

I realize that I need a quick attention grabber – that describes what I do without getting too technical because it is definitely technical.

What do you think?

Here is my reply. Incidentally, C is consulting on the side (always a good way to start), but to protect her confidentiality, I haven’t included full information.  Don’t want to jeopardize the day job.

Hi C,

I agree that an “elevator speech” can help – although I doubt that anyone ever got any business in an elevator

I’d focus it a bit. WHAT you do, WHO you do it for, and HOW it will improve things for the client. Emphasize the results, not the technical details (you can always explain that later.)

What about this?  “Hi, I’m C. My firm helps non-profits better organize, analyze, and use their client/member databases. This helps improve both services and contributions.”

By the way, “contributions” are important — most non-profits constantly struggle with their revenues. You could add “small businesses” to the non-profits, but it sounds like you are targeting non-profits at this time.

If/when asked for more details, then you can explain using mapping technology that was developed for government applications, and how you are now applying it to non-profits and small businesses.

Keep it simple. Maybe a phrase like “You own customized Google Maps…” or some such thing.  I love simple analogies, and often explain my consulting practice as the “Ghost Busters” for electronic systems.

I also agree that you need to be careful of getting too technical. (I say that as an engineer who loves technology,  and who could spend all day and all night talking about it.)

Technology is just a tool to solve problems. Or, as the old saying goes, “Last year, millions of quarter inch drill bits were sold. But not because people wanted quarter inch drill bits, but because people wanted quarter inch holes!”  Focus on the results, and how things will improve.

Finally, you should consider offering a range of services. Initially, you could offer to “do it all”, taking the data, massaging it, and then advising the client on how to best use it. Perhaps even setting up a database if the don’t have one already.

Make it as easy as possible for them to use your expertise. As they become proficient, you could even offer to train someone in their organization on how to use the data themselves.

Some clients just want solutions, while others want to eventually bring the expertise in house, so be prepared to give them both options. Think like an accountant — you can just do the taxes, or you can handle the bookkeeping and other details as well.

Hope this helps,

Daryl

PS to Blog Readers –  If you have a quick question, drop me an email  – which may get answered in a future post (disguised of course.)

PPS - Been a little lax on this end which will probably continue as I take some vacation time.  But stay tuned — more stuff coming!

Copyright © 2013, jumptoconsulting.com. All rights reserved.

As a follow up to an earlier post on LLCs, reader C asked about fees. Here is my response:

Hi Daryl,

Thanks for the advice on LLCs…

Another quick question — how do you go about setting up your fees?

C

Hi C,

Glad my advice helped. Still remember the questions I had many years ago and how others helped me.

Ah, fees. The number two question I hear, after “How do I get clients?”

I plan to do some detailed posts on fees, but here are some quick comments:

- Three popular methods are hourly/daily, project based, or value based. Starting out, you’ll likely use a combination of hourly/daily and project based fees.

- You will need to establish an hourly rate for internal use. It is also helpful when someone just wants a few hours of your time. For longer term projects, you want to move into project based fees.

Most people want to know a project estimate, not your internal billing rate. Think like a remodeler — how much will it cost to redo my bathroom? Not, how much do you charge by the hour?

- Incidentally, value based fees are great if/when you can get them. I think they are better suited for management consultants, where you can charge based on anticipated ROI.

This is a bit harder for technical consultants, which is where you would seem to fit. In those cases, most people want a solution to a specific problem, and want an idea of the overall project cost.

- Back to the hourly rate. You fee should include your salary, overhead, and a profit.

For a very quick estimate, take your existing salary and multiply by 2. Then add a profit of 20% — after all, you are in business and entitled to a profit. These numbers are typical of many businesses today, and should put you in the ballpark.

As such, this is what it would cost a client if they hired you outright (except you get the profit…) These figures can be refined, of course, but are a good place to start.

So, if your salary is $100,000/year, figure $240,000. Divide that by 261 days, and you have a daily rate of  $920/day or $115/hour. This is a MINIMUM — if you work for less than this, you might as well stay employed.

Even if you are part time, you should shoot for this as a minimum, as the market already shows you are worth this to an employer. You can use this rate to estimate project costs.

- Another method is to ask others in your business area. Most consultants will share that info if they don’t see you as a threat. You can also often get that info through professional organiztions.

Once you get a range, shoot for the 1/2 to upper 2/3 point when starting out. You want to be neither too cheap nor too expensive.

Whatever you do, do NOT lower your rates to buy business. A client that buys solely on cost is NOT a good client, and often more trouble than they are worth. (Incidentally, that is a little experience speaking there.)

- If you can charge more, then by all means do so. You do need to charge a premium for short term projects, as your down time and marketing costs are higher.

For example, we do a lot of short term (week or less) projects, so we charge about double what long term consulting or contract engineers charge.

We also charge a premium above that for training projects. Occasionally I’ll get a pushback, but I point out that we “hit the ground running.”

- If you are bidding projects, you need to spell out very specifically what IS covered and what IS NOT covered. You can always do extra work, but only for an extra fee.

Along that line, if someone wants to negotiate, NEVER reduce the fee without reducing the scope. Sometimes people are just fishing around (particularly if you are new,) so hold your ground.

If they do agree to a lower scope, that is fine — maybe they truly don’t have the funds to do everything they wanted to do in the first place.

Anyway, hope this helps. Looks like I have the makings of another blog post here

Best Wishes,

Daryl

Thanks for the response and all the great information. I’ve got a lot to think about and get prepared.

C

My pleasure.  Stick with it – I’m sure you will do well.   — Daryl

P.S. To my blog followers:

–If you have a quick questions, please drop me an email – which may get answered in a future post (disguised of course.) NO CHARGE for brief questions – they make great post fodder! Plus I simply enjoy hearing from my readers.

–If you want in-depth personal help, I’ve decided to add individual “telephone advising” for a nominal fee. See the new Services page.

–As an alternate to the above, I’ll also soon be including a FREE monthly group call-in session. (Watch my blog – still setting that up.)

Copyright © 2013, jumptoconsulting.com. All rights reserved.

Can’t believe we just hit 100 blog posts! Who would have thought there were a hundred things to say about starting and building a small consulting practice?

Well, after two years, there are still plenty of ideas to share and explore. In fact, my original list of possible posts has actually grown.

As soon as the Lead Generation series is done, we’ll begin a series on selling your services — something that seems to scare a lot of people. But is no big deal, as I learned in ten years as a sales engineer working with my technical colleagues.

We’ll also explore fee setting, the number two question I hear after “How do you get your clients, anyway?” We’ll address start up issues too.

Been musing over a few other ideas on where to go with this blog. So check out the new page titled Services.

Some free, some for a nominal fee. Not trying to make a fortune, but any revenues we get will help pay the expenses for running the site, along with adding some new features down the road.

Here is a quick overview:

• If you have a quick question and are not in a hurry for an answer, drop me an e-mail. If time allows, I’ll give you a personal answer. If not, I’ll at least sanitize it and answer in a future post. FREE
• Or, join me for a monthly teleconference. Still working on the details, but watch my blog.  Also FREE. (Borrowed this idea from Pam Slim at Escape From Cubicle Nation. Fellow Arizonan Pam was an inspiration for this blog. )
• Watch the blog for on-line classes. Initially will be done as a series of webinars. Two are already prepared. May add discussion sessions and forums for subsequent offerings. INTERESTED? Please let me know.
• The book. Still a goal, but not sure it is the best use of time for now. The blog and on-line classes might help more people in a shorter time frame. Don’t need it for the ego boost — have already written or co-written several technical books, plus hundreds of articles.  So the book deadline is now TBD.

Caution - if you are receiving my blog  by RSS subscription, please change to an e-mail subscription. Google will be dropping RSS in July 2013, so the future is uncertain. As always, our e-mail lists are PRIVATE, and will not be shared, rented, or sold.

Finally, a big THANK YOU to my readers! Several have commented privately, and I appreciate hearing  from you. A comment or short e-mail always gives me a boost and the incentive to keep going.  If nothing else, it is proof I’m not just babbling to myself.

And now that the house remodeling is finally done, on to the next 100 posts!

Copyright © 2013, jumptoconsulting.com. All rights reserved.

One of my favorite stories, I often share this with wanabee or newbie consultants. It goes like this:

Pat and Mike are out in the woods hunting. They hear a lot of noise in the brush, and suddenly a bear appears fifty yards away.

They decide to run. But after a few yards, Pat stops, drops his backpack, and removes his heavy boots.

Mike says, “Fool, you can’t outrun the bear that way.”

To which Pat replies, “I don’t have to outrun the bear. I just have to outrun YOU.” (With apologies to me Irish friends and ancestors.)

Yes, it is an old story, and a bit corny too. But it does capture the essence of what we do as consultants. You don’t need to know everything about everything — you just need to know enough to help your clients.

Too many people worry about the bear. Rather than jump in, they hold back. They already know enough to be a successful consultant, but they keep spending more time and more money on more seminars, more workshops, more books, more programs, more CDs, more DVDs, or more ???

And there are plenty who feed on those insecurities — particularly in the on-line world.  Ever wonder why they aren’t out there doing it for themselves?

In fairness, there are a few (VERY few as near as I can tell) who have actually done what they promote, and who are willing to share what they know at a reasonable price (sometimes even for free.) Those are the ones you want to follow and learn from!

No, you don’t need to outrun the bear. But you do need to get into the hunt. And best to do so with those who already know how to hunt, and how to outrun the other guy in the first place.

Happy hunting!

Copyright © 2013, jumptoconsulting.com. All rights reserved.

As a consultant, you can’t know everything. Sometimes you need to bring in other experts. When you do, it is much easier if you have greased the skids ahead of time.

Here is a geek story from my college days.

Ernie was an ME (mechanical engineering) student, and a good one at that. However, he was struggling with a mandatory class, EE (electrical engineering) for MEs. It was pretty simple stuff, but he still didn’t get it.

So, he asked my roommate and me, both EEs, to help him out. We all lived in the same place, and that is what we did. Plus we all drank a lot of beer together, a common lubricant for dealing with engineering problems.

“I just can’t seem to get it,” said Ernie. “But Ernie, it’s so simple,” I replied, when I tutored him.  He still struggled, but through rote learning he was able to regurgitate enough to pass. He went on to graduate as an ME.

The following semester, I had a mandatory ME class for EEs on thermodynamics. Like Ernie, I just couldn’t seem to get it.  “But Daryl, it’s so simple,” he said when tutored me. Like Ernie, I was also able to regurgitate enough to pass, and went on to graduate as an EE.

To this day, I still don’t understand thermodynamics, nor do I have a burning desire to do so. But later, I realized the real lesson was in learning to cooperate with colleagues. Without that mutual help, both Ernie and I might not have made it to graduation.

So, help a colleague when needed, and don’t be afraid to ask for help. And establish those helping networks ahead of time.

Finally, don’t over look the benefits of beer, particularly if you are an engineer!

Copyright © 2013, jumptoconsulting.com. All rights reserved.

Here is the synopsis of a recent e-mail exchange from a JTC candidate that you may find of interest.

I’ve edited it and sanitized it (personal information is left out), but I’m sure C will recognize herself.

Hi Daryl,

I came to your website from Mister Money Mustache, and I’ve decided to throw my hat in the circle and JumpToConsulting.

I currently work for XXX and intend to do the consulting on the side.  We are planning to follow the MMM path and retire in 5 years, so I decided I wanted to try and make the stash bigger.

I’ve already picked the company name. I am currently working on the website and need to register my trade name.

I’ve received different advice regarding setting up as a sole practitioner or as an LLC. Can you share some advice?

Finally, would you put LLC on your business cards?

C

Hello C,

Congratulations on your decision to make your own JumpToConsulting! It sounds like it is a good fit with your with your retirement plans too.

By the way, I am a big MMM fan myself. (Hey, he’s another engineer who broke free…)

Here are some comments:

- Recommend the LLC over a sole practitioner. From a marketing perspective, I think it lends more credibility — it shows you are serious. It may also provide some legal protection, but you should talk to an attorney for clarification.

-Recommend using an attorney to do the paperwork. Yes, you can do it yourself, but to me it is worth a few hundred bucks to know it has been done right.

- Ask around to find an attorney who specializes in small businesses. I prefer small firms (one or two lawyers) as they generally cost less and are more personal. Plus, I just like dealing with small practices. I also do the same thing with accounting, and have used a two person CPA firm for many years.

- However, if you are just testing the waters, the sole practitioner may be OK for now. We did that for nine years as part time consultants, but incorporated as a Subchapter S corp when we we went full time in 1987. (LLCs were not popular then, so the Sub S made the most sense.) If you change later, however, you may need to update printed materials (letterhead, cards, brochures, etc.) to reflect the LLC status.

- Regarding LLC on your business cards, my understanding is that if you are an LLC (or any other type of corp) you should put that on your business cards. Check with your attorney, but I believe that gives notice to your clients that you are incorporated. I’d do it anyway as it enhances your marketing image.

- Really like your company name! Yes, you want to register it. You may want to trademark it too. We trademarked EMIGURU which is our website and which we use in our advertising. Glad we did, as it gave us leverage when a cyber-squatter picked up the .net and .org extensions and then used them in a competitive way. Because of the trademark, we were able to stop that. However, it cost us about $2K to resolve the issue.

- So, when you register your domain, pick up the .net and .org extensions, in addition to .com. You might want to pick up others, too, but those are the most common.

- It sounds like you have identified your initial market place - needs, geography, type of business, etc. This is good, as it lets you focus your marketing efforts. But be ready to make changes as you move into those markets as you learn more.

– The markets will guide you. Try not to spread yourself too thin, though, or go in too many directions. “Do a little, do it well — you’ve done a lot.”

-One more piece of advice. Since you will be consulting part time, be particularly careful to avoid conflicts of interest. You don’t want to jeopardize your day job. And keep a low profile — petty jealousies can arise (the voice of experience speaking.)

Finally, I applaud your decisions, both the MMM-path and the JTC-path. I’ve followed both paths for many years, and they have paid off for me.

Thanks for reading my blog, and best wishes in your new adventures!

-Daryl

Have your own quick question? Drop me an email (just use the Contact form)  and perhaps you’ll be featured in a blog post too.

Copyright © 2013, jumptoconsulting.com. All rights reserved.

This is a true story. Not even the names have been changed…

Daryl’s wife (Mary) was at the beauty shop, getting her hair done. She couldn’t help hearing the conversation in the next chair. The discussion centered around the new boy friend of the customer’s niece. Here is a summary of the exchanges:

Hairdresser - “So, it sounds pretty serious with your niece and her young man at the university.”

Customer - “Yes, he seems really nice. The only problem is that he is studying engineering. You know, engineers can be kind of strange…”

Mary - (Interrupting) – “Tell me about it, I’m married to one!”

Customer - (Embarrassed) – “Oh, I didn’t mean…”

Mary - “Don’t worry, it’s true – they are different.” But then she added, “Its OK, though. We’ve been married over 40 years…”

I guess we engineers do have a reputation to uphold. Without us, there would be no Dilbert, right?

Reprinted from Kimmel Gerke Bullets, our client newsletter.

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