Monthly Archives: July 2013
No doubt about it, referrals are a leading source of leads for established consultants. But how do you get leads and testimonials when just starting out? Simple… ask for them!
Yes, I know that asking for something scares a lot of people. What if they reject you? Don’t worry — most people won’t. If they know you and like you (and your work), they will be happy to help. Who doesn’t like passing along a favorite doctor, accountant, mechanic, or even a restaurant?
And if they do turn you down? So what – just move on. Incidentally, this often happens if you deal with sensitive issues. But you still may be able to get a passive referral.
The secret is to make it as easy as possible for others to help you. In this post we’ll look at several avenues — active referrals, testimonials, passive referrals, and references.
Active referrals – You’ve just finished a project for a client, and they are pleased. This is the ideal time to simply ask “Do you know anybody else that might benefit from my services? If so, can you share their name?”
Next, follow up with a short letter to the referral. I prefer this to an e-mail (which can end up in the spam folder anyway) or a phone call (which can be intrusive.) Mention the referral source, briefly introduce yourself, and include your brochure and business card. Invite them to visit your web site.
About a week later, follow up with a brief phone call to verify receipt. Don’t push. If you have a newsletter, ask if you can add them to your mail list (the polite thing to do.)
This may not lead to immediate business (and probably won’t), but it does plant a seed for future business. And it only takes a few minutes, and the courage to simply ask.
Once in a while, though, you’ll get some immediate work. So keep at it — particularly if you are just starting out.
Testimonials – This is a variation on referrals that can be very effective. In this case, you ask if your client would be willing to endorse you on your web site.
You need to do the leg work. Write up a two or three paragraph summary of the project, and what was accomplished. Be specific. Did you solve a vexing problem? Did you increase sales or reduce costs?
Make it simple for the client – don’t ask them to write the summary – it will likely never happen. But do have the client review and approve the testimonial prior to publication. No embarrassments that way. Ask for a personal comment or two.
In some cases, the client may be uneasy with a live testimonial (complete with their name & company.) The fact that they have used a consultant may be sensitive. We run into this in our engineering practice, and often sign nondisclosure agreements promising to keep the consultation private.
The alternate is a anonymous testimonial. You write this, but keep it general so nobody can identify the client. However, try first for a live testimonial — much more effective.
Passive Referrals – Similar to active clients, these are non-clients who can still refer business. These include friends, business/professional colleagues, vendors, and more.
We also spend time with the vendors at conferences, and support them whenever we can. Sales people are an excellent source of leads, as they are in the marketplace every day.
Should you pay for referrals? It depends (see my recent post on Referral Fees.) To avoid conflicts of interest, we do not pay (nor accept) referral fees from clients or colleagues.
We do pay fees to bona-fide sales/marketing companies. These include a manufacturer’s rep (we are on their line card) and with training firm (we are in their catalog.) All other referrals are exchanged on a courtesy basis.
Incidentally, most of our engineering business now comes from passive referrals, along with former clients and students. But we’ve been at this full time for over 25 years – one of the few benefits of getting older 🙂
References – The most generic, a list of references can be effective. But if you are just starting out, you may not much of a list. As your business develops, however, you’ll want to include a list of references.
Many consultants include a list of client names (thinking the more names, the more impressive.) If you do this, make sure you have everybody’s permission first. Many companies are very sensitive about their names appearing in your marketing materials. You don’t want to hear from anybody’s legal department.
My recommendation – don’t use client names. Instead, use a project list. Most prospective clients don’t really care who you have worked for — they care what you can do for them — and what you have done in the past.
A project list does this, and protects client confidentiality. It also sends a subtle message that new clients will be treated the same way. Here is our project list.
What if somebody wants a live reference? We will provide them, but only after first contacting the prospective reference. To keep it simple, we usually provide two names.
When starting out, you may need to have some names ready to go. After all, you are still an unknown. This will diminish as you become established.
In closing, referrals and testimonials are very effective… and should be an integral part of marketing your practice and generating new leads. Keep at it, as referrals become even more effective over time!
© 2013 – 2016, jumptoconsulting.com. All rights reserved.
Or, one reason I finally became an independent consultant… I chuckle to myself every time I’m reminded of this story.
Recently posted this as a reply at Perry Marshall’s blog. Incidentally, Perry is another engineer who broke the corporate bonds and went on to found a very successful Internet marketing business.
Thought I was in big trouble – but actually got rewarded…
Prior to starting my own engineering consulting firm in 1987, I was a Field Sales Engineer for Intel. It was a great experience with a great company, and proved very helpful when running my own business.
But it wasn’t all peaches and cream. Like any large company, the bureaucracy was always there. Unfortunately for me, I never got along well with bureaucrats. Guess I wasn’t cut out to be a good corporate rat.
So, when a new monthly reporting form came out, I first chose to ignore it. Known as the “Disti Report”, it asked for a detailed forecast on sales through distribution for my accounts.
Since almost all my sales were direct, why waste my time filling out a report that had no meaning anyway?
But Chris, my sales support, came to my rescue. She reminded me that I had not submitted the report along with the monthly status report.
“So what?” I said. Being wiser in the ways of bureaucracies, she said, “Hey, just do it. It will only take you a minute.”
So I grabbed a form, made up some numbers, and handed it back to Chris. It took about thirty seconds.
She grinned, and attached it to my status report.
The following month we went through the same exercise. Chris asked, “Where is your Disti Report?”
I replied, “Do you have last month’s report?” After she handed it to me, I made a photocopy, handed it back, and she sent it in.
She grinned again.
The next month, she asked “Should I just make another copy of the Disti Report?” I replied, “Yes – and you don’t need to even ask me anymore.”
So for the next twelve months, she just attached copies of the unaltered Disti Report to my monthly status report. I even think she made photocopies of the photocopies, so they were starting to fade.
Then one day, our Regional Sales Manager came to town for a meeting. When he passed out an agenda, one item stood out – Disti Reports.
I winced – looked at Chris – and she winced back. I figured my impudence had caught up to me, and I was about to be severely chastised.
We finally got to the Disti Report on the agenda. The Regional Manager started out, “We have a big problem with Disti Reports, folks.”
I closed my eyes – wait for it, I thought.
Then he continued, “Nobody in this office is filling them out, and we need that information. No wait, Gerke has faithfully filled his out every month — but he doesn’t even sell anything thorough distribution!”
I snuck a look at Chris. It was all she could do to keep from bursting out laughing. Me, I just breathed a sigh of relief. As far as I know, we were never found out.
So what was the big lesson here? If it only takes a minute or two and is not that important, just go ahead and play their silly games.
But the games did finally grind me down. Two years later, I started my own firm and last fall completed 25 years in business.
And no, we do NOT have Disti Reports…
So how about you? Are you a corporate misfit like I was? If so, running your own business may be the answer. Consulting is just one of many possibilities.
© 2013, jumptoconsulting.com. All rights reserved.
In my last post, I discussed how consulting eventually led me to Financial Independence. The primary focus was prior to making my JumpToConsulting. In this post, I’ll elaborate on things done at and after my break for freedom.
First, I put away a startup stash. This is key, as there is nothing worse than having to give up too soon because you’ve run out of money. In my case, I had enough for six months with no revenue, or a year with half revenue.
Although I was pretty sure I’d make it this time (after a false start a few years earlier), a safety net still made sense. That also made Mrs. JTC more comfortable, although she was behind me right from the start. Plus as an engineer, it is always good to have a Plan B.
As it turned out, we never really needed to dig into the startup stash. Thanks to all the plans and a couple of startup contracts, we ran in the black right from the start. And although I stepped out first, my business partner was able to join me in a few months.
Next, we watched our income/outgo like a couple of hawks. No fancy offices – we both used spare bedrooms in our homes. No fancy cars either. Neither were really necessary, as most of our business was on-site, and often out of town.
Each month we would review both our bookings and our billings. The latter is really important for cash flow. Unfortunately, clients often delay paying (particularly their smaller vendors), so you need to stay on top of your the payables.
We did spend money on necessities, such as collateral (business cards, brochures, etc.) but even then we did not overspend. No fancy multicolor brochures — just two colors (blue and gray) on gray stock. We did hire a graphics artist for a logo and typesetting, and it all turned out very professional looking.
After two years, we set up retirement accounts. By that time, we knew we were going to make it, and the income was more predictable. Our accountant suggested Keogh plans, which let us put away up to 25% of our income in tax deferred accounts.
To even out the personal cash flow, we both drew modest salaries – about 80% of our previous corporate salaries. This forced us to be frugal, and helped maintain a cushion in the business account for slow months. It also assured that the Keogh funds would be available at year end.
Any additional profits were distributed as a bonus. Since we were a Subchapter S corporation, these were not “retained earnings” so we paid taxes on the bonus. These funds were put into our regular savings/investments.
At our accountant’s advice, we eventually hired a “fee only” financial advisor. Good thing we did — when the market went sour, he minimized our losses. That lets us focus on making money, while he manages it. Like us, he is a professional who knows his stuff and does his job well. We consider it money well spent.
A word of caution! You need to discuss these issues with financial professionals – your accountant, attorney, and financial advisor (if you have one.) The laws are constantly changing, and unless you are a financial professional yourself, you need their advice. The last thing you need is to tangle with the IRS.
Finally, we didn’t win the lottery — our incomes were comparable with corporate salaries for engineers, plus a reasonable profit for our risk. It was the combination of regular savings in the tax deferred retirement plan plus self-enforced frugality that eventually led to Financial Independence.
You can do it too, and you don’t need to be a consultant. But you do need to exercise some financial discipline and planning. Trust me, it is worth it! Good luck…
© 2013 – 2014, jumptoconsulting.com. All rights reserved.
Since it is the Fourth of July, a rant on independence seemed appropriate. After all, it was my overwhelming desire for Occupational Independence that got me into consulting in the first place.
When I started my consulting practice, I was NOT Financially Independent (FI) — which I define as being able to quit one’s job and live off one’s investments. That came later. But the consulting practice put me on the path to FI.
There are two ways to achieve FI — save/invest more, and spend less. When your investment proceeds equal or exceed your cost of living — viola — you have become FI.
That doesn’t necessarily mean you quit working — but it does man you no longer need to do so. It happened to me after about ten years in my own business. One day, reviewing my finances, I realized I was there. Trust me, it is a great feeling!
With a wife, two kids, and a mortgage I had been locked into a job like so many others. As an engineer, the job was good and paid well. But having grown up less than affluent (my dad died when I was a teenager) I had learned to be frugal. For somewhat similar reasons, so had my wife.
No, we were not paupers. We lived in nice houses, but they were always less expensive — and ostentatious — than many of our peers. We drove decent cars, but most were used — and we drove them into the ground.
We took fun vacations, but many were with a used tent camper — no expensive ski trips or cruises for us. (We did go to Hawaii and Disneyland a couple of times — on free frequent flyer tickets.)
We remodeled, repaired, gardened, and generally had a good time. Because education was important to us, we sent both kids to college, where they graduated debt free. Savings, scholarships, part time jobs, and state universities all helped there.
We did stash other money away. At first, it was not enough to become fully independent. But it was enough to make my own JumpToConsulting in 1987. I figured the start-up stash would last six months with no income, and a year or more with any business at all.
As it turned out, the stash was more than enough. As an aside, I had tried this once before, without enough stashed away. After three months, I threw in the towel and went back to work at a regular job. The second time, however, I was better prepared (and wiser for having tried the first time.) More details here.
Starting any business (consulting or otherwise) does focus you financially. Resources are scarce, and you can’t squander them. You carefully evaluate purchases, and you make tradeoffs. You do NOT waste money!
Incidentally, Warren Buffet did the same thing — even as a child he often traded spending a dollar today for ten dollars in the future. I guess he has done OK.
On a smaller scale, Mr. Money Mustache (a fellow engineer) retired at age 30 by following the same practices. Actually, he didn’t really retire — he now just does what he wants to when he wants to, but with no financial worries.
Hop over to his blog to learn more –– lot’s of good practical advice backed up with engineering data and mathematical “rules of thumb.”
- I particularly like his Rule of 752 — save a dollar a week today, and in ten years you will have $752. For monthly expenses, use 173.
- Another rule – save 50% of your income — and retire in 17 years. Better yet, save 75% and retire in 7 years, which is what MMM did. Yes, it is doable – you just need to do it. (Kind of like dieting… down 20# here in the last six weeks… perhaps a future post?)
Finally, consulting is just one of many paths to achieve FI. By being financially prudent, living beneath your means, and stashing away as much as you can, you too can become Financially Independent.
Happy Independence Day! Start today, and you’ll get there a day sooner than if you wait until tomorrow!
P.S. See more details in the next post – Financial Independence – Part II .
© 2013, jumptoconsulting.com. All rights reserved.