General Consulting

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Should you take equity in lieu of cash?

Here is a reply to a post by Michael Zipursky over at Consulting Success, where Michael discusses the pros and cons (mostly cons) of accepting equity or shares as payment for services.

Either way, both Michael and I do NOT recommend this. 

I completely agree! Never took stock, nor did I ever agree to work for free on proposals, with the idea that I would get the business if the company won the project (sometimes suggested by defense contractors.)

If asked, I simply explain that I’m too small to carry anyone for free. Better to pursue paying jobs than to lose opportunities being tied up with freebies. Besides, if they really need you they will find the money.

While I have a soft spot in my heart (or maybe my head) for startups, I’ve avoided them and pursued Fortune 1000 clients instead. Even then I’ve been burned (bankruptcies), but only twice in 28 years. Great post!

As a new consultant, you will run into this sooner or later, particularly with smaller firms. Some are strapped for cash — probably not good clients anyway. Others may be testing you — assuming you are hungry for business.

Neither are a good deal. Better to focus your time on real paying prospects.

Remember, you are a professional, just like your dentist or doctor. Very doubtful they would go for this either.

 

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Solo or not? Food for thought…

This post was inspired by Alan Weiss’s Monday Morning Memo (R), to which I have subscribed for many years. He succinctly addresses some pros and cons of going solo.

Dr. Weiss is a leading advisor to consultants. While his focus is on management consulting, much of his advice also applies to technical consulting. *

One of the major differences I’ve seen in people’s choices of careers, often unconscious and unspoken, is affiliation needs. If you don’t need people around you, a solo career suits you fine.

But if you do, it can be enervating to work alone. I can work with people but I certainly don’t require it, and I’d see employees as just so many “baby chicks” to be fed constantly. However, some people derive ideas and strength from working amidst others, and don’t mind investing in a staff that can help grow the business.

I’ve seen too many entrepreneurs dragged under by the weight on nonproductive staff. Pay a salary to those who grow your business, not those who nest in your business. You’re running a company, not an employment agency.

— Monday Morning Memo 7/20/2015

I’ve seen the same myself. Should I go solo, find a partner, or grow the firm?

In my case, I started with a business partner. Most of the time, I advise against partnerships, as I have seen too many go bad. But when they work, the can be great — just like a good marriage. (47 years here…)

But even then, we acted semi-solo. We maintained separate companies for ourselves (payroll, invoicing, retirement funding) and shared a common company for common expenses and income. The goal was to be able to act independently if needed. And while not intended, it certainly simplified things when Bill recently passed away.

We did consider growth once, but only briefly. Business was booming, and we were subcontracting excess work. Not wishing to market or sell themselves, some of those subcontractors inquired about becoming employees.

But we quickly decided against it. Like Dr.Weiss, we were concerned with the need to feed the “baby chicks.” Besides, we figured they would get to do the fun stuff, while we’d be left with all the management tasks and headaches.

So we kept it semi-solo, and I’m glad we did. Perhaps we could have made more money — or perhaps lost it. It doesn’t matter, as we made enough and had a good time doing so.

But either way is fine – you need to decide what is best for you – even if it means climbing back into a corporate job. Saw that happen several years ago with an engineering colleague and friend who started a technical marketing consulting practice.

Thanks to his own creative marketing efforts, he soon developed a thriving practice. But then he abandoned it after about a year. He missed the camaraderie of working with other creative colleagues.

So he rejoined corporate America, and is happy with his decision. But he also now knows that if he ever wants or needs to go solo again, he can do it.

As for me, I’m now completely solo, and plan to stay that way!

* Click here for more info on Dr. Alan Weiss. Books, workshops, newsletters, and more.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Some comments on fees…

Here is my reply to a post at Consulting Success regarding fees. Good info on this site — but with an emphasis on business/management consulting rather than on technical consulting.

As consulting engineers, we’ve used “project fees” for years. When quoting, we provide a budget and a general estimate for time. We use an internal hourly rate for estimates, but don’t include that in our quotes.

To me, hourly rates are useless. For example, if I’m getting a kitchen remodel, I don’t care what the contractor’s hourly rate is — I just want to know how much the project will cost. BTW, I’ve used that analogy on procurement people when asked about hourly rates.

Finally, we don’t bid “fixed fee.” Rather, we include a statement that “we will not exceed the budgetary estimate without client approval.” This gives us some room for contingencies or small changes. Clients and procurement people seem to like it too.

Hope this helps. I always appreciate Michael Zipursky’s insights.

Do you have questions of fees?  Ask away…

P.S. Been a crazy week here, as Mary broke her arm. On the mend after surgery…

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Don’t Hoard Your Experience… Share it…

Learned this lesson early in my consulting career. Fortunately, somebody else made the mistake, and I was able to benefit from their goof-up.

We’ve always had a policy of full and open disclosure for our clients. Retain us, and we will share everything we know about our specialty, with the exception, of course, of proprietary client information.

Worried abut overloading a new client, I quipped,

“We don’t hold back. You can tell me when to shut up, when you’ve had more than enough details and information…”

He replied,

“No, I really appreciate your being open. The last consultant we had (on a different problem) didn’t want to share anything. Seems he was afraid if he disclosed all he knew, we wouldn’t need him anymore.

My engineers were frustrated, and we all decided as soon as we have everything we needed, we’re done.  Which is a shame, as if he were more forthcoming, we’ve have him back again and again.”

Wow, I thought, I’m glad we didn’t follow that approach. Based on this incident, we made it a formal policy to ALWAYS share what we knew.  Even if it means they don’t need us again, because we’re pretty sure they will recommend us to others.

P.S. As a consultant, your goal should be to work yourself out of a job. Your client should always be in a better state after working with you. They will thank you for it by their referrals and recommendations — and by inviting you back for new problems.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Are You an Economic Slave???

Ninety percent of Americans have virtually no savings… so says the latest issue of Money magazine. If you are in the ninety percent, consulting may offer a way out.

The problem with most jobs is that the income is fixed. Unless you are in sales (commissions) or an executive (bonuses), you have little opportunity for upside. But a consulting side-hustle can change that, and may even lead to full financial freedom.

Of course, making more money alone won’t do it. You need to cut your expenses too. Fellow engineer Pete (Mr. Money Mustache) saved his way to freedom in seven years, by cutting his expenses by 75%. Yes, it can be done purely by aggressive savings.

But you’ll get there faster, and with less pain, if you combine frugality with some extra income. I’m a strong advocate of combining both approaches — make more/spend less.

There are lots of ways to make more money. Unfortunately, many are scams or borderline scams. You know what I mean – multilevel marketing, on-line schemes, too many franchises, etc. Most of the money is made by the promoters — not the producers.

But consulting, even part-time, allows you to control your own destiny. The start-up costs are low, and you get to keep the profits of your labor. Other than the IRS, you don’t need to share those profits with those further up the food chain.

This is not meant to disparage other small businesses, such as restaurants, shops, specialty manufacturing, etc. But most of those require capital, commercial space, and employees. Not a problem if that is the way you want to go – or have already gone. :-)

Since you are reading my blog, however, I assume you have at least a passing interest in consulting –which I define as marketing/selling/delivering professional advice, with the goal of  improving your client’s situation.

No, you are not selling products or get-rich schemes – just your time and advice. You are joining the ranks of other professionals – doctors, lawyers, accountants, engineers, architects, business advisers, and more.

Doing so part time is a good way to start. That is what I did. For several years, my business partner and I moonlighted on engineering projects. Eventually, the itch got so bad we went full time. But is was much easier making the transition from part-time to full-time, than from ground zero.

Two final pieces of advice:

  • First, avoid conflicts of interest. You don’t want to lose you day job, and you don’t want to affect your reputation. Integrity matters.
  • Second, keep a low profile.  You don’t want to inflame petty office jealousies. The voice of experience speaking.

My challenge to you — As the new year begins, give some thought to your own economic freedom. Remember, Uncle Daryl wants YOU — to be FREE. Happy New Year!

P.S. Back in the game… My goal is one post per week each Monday, with additional ones as the mood strikes. So join us Mondays, or sign up for our feed and newsletter.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

2014 Annual Review…

Well, another year gone by, and time to reflect.

Got this idea from Chris Gullibeau of The Art of Nonconformity. He does this each year, and each year challenges others to do the same. Great idea!

So once again, I’ll review three categories:

But first, a quick overview…

The Jump-to-Consulting project is now FOUR years old.
The catalysts were questions by my older son, questions by other colleagues, and a fat file for a prospective book. With today’s economy, many people are considering options such as consulting.

I was also intrigued by blogging, and simply wanted to learn more about this Internet phenomena. What better way that to just start a blog. Incidentally, that was the same attitude that got me into consulting. Curiosity, and a desire to learn.

The EMI-GURU project began 35+ years ago, and led to full time consulting in 1987. It has been great fun, and quite successful. I’ve traveled the world, and made a lot of friends along the way.

It made me both location independent and financially independent. Best of all, it allowed me to practice my profession as an Electrical Engineer in a ways I didn’t even imagine as a student or young engineer.

EMI-GURU also provides the grist for JumpToConsulting. Much of what is discussed here is based EMI-GURU experiences. The stuff I talk about is not theory — rather, this is real world and is based on 35+ years experience in the consulting business!

HIGH-LIGHTS in 2014…

Jump-to-Consulting – The blog is up to 150 posts. Had hoped for a few more, but still proved to myself that I can keep a blog going. Slowed down a bit midyear, but no plans to stop.

Not many readers (it is a pretty tight niche), but it has helped several make their own personal JumpToConsulting. (Way to go!) So don’t be bashful — your questions and feedback mean a lot, and they do inspire me to keep going here.

EMI-GURU – Not much new to report here. Continue to ramp down the one-on-one consulting, but still involved with the technical classes. Teaching (and sharing what I’ve learned) is a primary passion.

Personal – Dropped a few more pounds, which means I’ve kept the weight off for a year. Went into maintenance mode with Uncle Daryl’s SEC (Stop Eating Crap) diet, and it worked. But time to get more serious about this lifestyle change.

After 30 dogless years, we “adopted” a pooch in August. She has been great fun, and also an incentive to walk a couple of miles every day. I call her my “personal trainer.”

Spent about eight weeks in our RV. The longest trip was 4700 miles in the fall, visiting grandkids in CT followed by a ride through the mountains of the east coast. Beautiful fall scenery! Also visited several Civil War sites to temporarily satiate my interest in history.

LOW-LIGHTS in 2013…

Jump-to-Consulting – Slowed down in the second half of the year. Not burnout, but time for some reflection, precipitated by the passing of two friends a few weeks apart. So I simply decided to take some time off.

EMI-GURU – Business is slow, but at this stage in my life, I’m content. Leaves more time to goof off. No desire to return to the 30-40 trips per year of a few years back.

Personal – No low lights other than losing a couple of friends to cancer. That, and the closing of a favorite local funky restaurant, the Chino Bandido (Chinese-Mexican.) But life goes on…

LOOKING FORWARD to 2015…

Jump-to-Consulting – Ready to get back into the groove. Keep on blogging, with at least one post per week. Also considering an E-book, on-line classes, monthly newsletter, and a FREE monthly roundtable. Watch my blog for more details. Better yet, sign up for the newsletter!

EMI-GURU – Continue teaching technical classes, which I really enjoy. As an old codger, there is nothing like seeing a younger engineer (and even an old timer) suddenly “get it.”

Also continue to pass consulting jobs to my business partner, who is still very much involved in both consulting and training. I’ll back up as needed, but rest assured, EMI-GURU is ALIVE and WELL!

Personal – Spend time with the grandchildren, along with reading, writing, and more travel in our little RV. Restart the weight loss program from maintenance mode. A goal is to eventually lose another 60 pounds so I can join the centennial weight loss club.

May move back to our house, due to disappointments with the patio home “experiment.” Lesson learned – beware of dysfunctional HOAs (home owner’s associations.)

Wishing you all the best in 2015! And THANK YOU for reading my blog.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Seven Steps in Selling…

The lead generation worked… the phone rings… now what?

Let the sales process begin… This is where the rubber meets the road — or where the consultant finally meets the client. Many people see sales as mysterious at best, and manipulative at worst. Neither are true for selling consulting services.

Consulting is a helping profession…

You’re not peddling products, or trying to meet a quota. You’re not manipulating, or being sleazy. Rather, you are simply trying to help your clients.

Like a doctor, you are solving problems. Or like an architect, you are turning dreams into reality. Either way, your helping improve your client’s life!

Looking at it this way makes it worthwhile, right?

Sales is a process…

If you’ve never been in sales, it may seem mysterious – even scary at times. But you can learn to sell– just as you can learn to paint, play a musical instrument, or write software.

Once you understand the process and the underlying principles, it all starts to make sense. It’s simply not a big deal. So don’t let the fear of learning a new skill stop you. And once learned, you may even start to enjoy the process. I certainly do.

But I’m an introvert, you say – not some back slapping extrovert. So what? Most consultants and professionals are at least somewhat introverted. After all, we live in a world of dreaming, pondering, diagnosing, creating, and reflecting. We’re thinkers!

As an aside, some of the most successful sales people I’ve known are introverted – some even highly introverted. They are also highly professional, with a passion for helping their customers. Just like good consultants.

Selling consulting is different…

–First, you’re not selling a tangible product — you’re selling an intangible service. As such, you typically need to develop a higher degree of trust with potential clients.

Your goal is not to sell another car this month and move on — rather, your goal is to be a trusted adviser, and hopefully for the long haul.

–Second, you need to deliver what your client bought. Remember — nobody likes to be sold — but we all like to buy — so make it pleasant!

And unlike product sales, the sales process does not stop when you get the order. You still need to deliver, and your long term business success depends on how well you execute this part of the process.

My seven steps in selling…

Hundreds of books have been written about selling, and most include a simple multi-step process. I’ve read dozens myself, plus I’ve been subjected to numerous sales training classes as a former sales engineer.

Some books and classes were better than others, but all helped form my ideas.

One drawback of many of these books and classes is their focus on products. (An exception is Rainmaking Conversations, reviewed here.) Most have four or five steps, and most assume the sales process is over once the order is received.

So I decided to expand things. I’ve used the popular AIDA model (Attention- Interest – Desire – Action) and added three additional steps – Delivery, Follow-up, & Referrals.

(1) Attention (Establish Rapport) – This is the initial contact phase, and the time to build rapport. It is also the time to address any client concerns or fears. These are particularly important if the client has not or does not use consultants on a regular basis.

I usually begin by asking about the problem, followed by asking how they heard about us. The latter gives me some insight into the trust level.

If it is a referral, the trust is already high. If they’ve found us on a web search, it may be lower, so some reassurance may be needed.

(2) Interest (Qualify) – The next step is to determine if you can help, and can they buy. In the former, don’t be afraid to turn business away if you don’t feel comfortable with it.

If the fit looks good, ask about schedule. If asked, you can also provide a budgetary estimate (go on the high side), subject to change pending more details.

(3) Desire (Diagnose & Prescribe) – At this stage, you may be able to offer preliminary diagnosis and recommendations. If not, ask more questions.

For example, I may say, “Based on what we’ve discussed, I suspect XXX, which we’ve seen before. We can handle this several ways… ”

(4) Action (Quote/propose) – The next step is to ask for the order! This is where many consultants fall down, due to fear of rejection. This is also known in the sales world as closing.

For simple projects, I usually just ask if they would like a quote or proposal. If they agree, I quickly review the tasks and schedule for consensus, and then provide a one-two page quote. Often, a purchase order will be issued based on the quote.

For more complex projects, we may decide on an additional meeting for further explorations. This may also mean detailed contracts, which we’ll discuss later.

(5) – Deliver – Time to provide what you promised. If working on-site, show up as scheduled and suitably attired. The latter depends on your client, but business casual is usually safe. If unsure, ask ahead of time. Be professional!

Check with client as you progress – don’t wait until the end of the project to find out you were going down the wrong path. Keep the appropriate management in the loop.

An important part of delivery is getting paid. For simple projects, we accept purchase orders, For more complex projects, we may request progress payments or retainers.

(6 )- Follow up – Assuming a successful consultation, ask if there are other things you might help with.  Specific projects? General training? Don’t assume the client is aware of your other services.

As any experienced sales person will tell you, subsequent sales are always easier than the first.  Assuming you’ve done a good job, you’re now a preferred vendor/adviser.

As a minimum, get permission to add you client to your mail list for periodic follow-up. Newsletters work great for keeping in touch.

(7) – Referrals
– Ask for permission to share their name with future prospects. To protect confidentiality, we do not list clients on our brochure, but we do list past projects. If a personal reference is needed, we still call to confirm as a courtesy. (Our business can be sensitive.) Never been turned down.

Depending on your business, written testimonials are great marketing tools — particularly on your web site. And don’t hesitate to ask if there are others who might benefit from your expertise.

So now you have Uncle Daryl’s Seven Steps in Selling. We’ll examine each of these in more depth in future blog posts.

Please comment or write if you have specific questions! Happy selling…

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Setting up shop… some questions…

From the mailbag: Just last week an engineering colleague (and reader of this blog) announced he was making his own JumpToConsulting. Way to go, Glen!

His announcement e-mail also had several specific questions. After addressing them, I decided to share my comments here.

(1) Quotations & Proposals

We use a two page format. The first page defines the project and tasks, and the second contains “boiler plate” such as terms, rates, etc. That makes it easy to respond – just fill in the blanks on page 1.

Here is a sample, which we send on a letterhead:

****** Quotation ******

Client: XYZ Corp.
1234 Main Street
Somewhere, AZ XXXXX
ATTN: John Smith

Purpose: The client designs and manufacturers military doodads, and is failing MIL-STD-461 radiated emissions tests.

Tasks: The consultant, an electrical engineer specializing in EMI/EMC design and troubleshooting, will assist XYZ as follows:
— On site troubleshooting and reviews at XYZ facility in Somewhere, AZ
— Optional summary report (4-8 pages typical)

Schedule: By mutual agreement (or actual date if scheduled)

Budget: $XXXXX, based on 5 days (4 days on site plus 1 day travel time) plus estimated travel expenses of $2,500. Add $XXXX for optional report.

Please note this is a budgetary estimate. Actual time and expenses will be invoiced. Quotation will not be exceeded without prior client approval.

Terms: Net 30 upon invoice. Purchase order and advance travel retainer of $2500 prior to travel. Quotation valid for 60 days.

Daryl Gerke, PE                                                              April 3, 2014
Kimmel Gerke Associates, Ltd.
EMC Consulting Engineers

I don’t believe in lengthy contracts (keep it simple.) But if you are doing a longer term project, more detail might be needed such as progress payments, etc.

Some companies will have their own consulting agreements. Don’t hesitate to change them if there is something you don’t like.

For example, we remove any limitations on working for others. There is nothing proprietary about what we do. If we limited ourselves to one computer company/one medical company/etc. we’d be out of business in a year.

We do sign standard NDAs (Non-Disclosure Agreements) as long as they do not contain any non-compete restrictions.

(2) Business Insurance

You will probably need a General Liability insurance policy, which most companies now require. We got ours through an insurance broker – about $800/year for two of us. Your accountant or attorney can recommend a broker.

You may or may not need Errors and Omissions insurance. Also known as malpractice insurance, it depends on your area of expertise. Although we are engineers, we don’t carry O&E as our area has little risk of litigation. If we were civil engineers or architects, however, we’d carry it.

(3) Business Bank Account

You also need to set up a separate business bank account. You may need to wait until you have incorporated depending on the bank.

Incidentally, I recommend having an attorney handle an incorporation. Don’t do it yourself to save a few bucks. The attorney will recommend the best legal structure for you – LLC, Sub-Chapter S, C Corporation, etc. The attorney can also handle filings, registrations, and tax documents and IDs.

Finally, these administrative details are pretty simple. The big issue is the marketing – getting the business. But for smooth operations, now is the time to get these details in place.

P.S. Got a question? Drop me a line through the ASK DARYL page.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

Hi tech shifts to independent workforce…

So says a recent article in Computerworld — Your next job, next year, may be self employment.

According to Emergent Research (a firm focused on small businesses trends) approximately one million IT (Information Technology) workers today are self-employed. This represents about 18% of the IT workforce.

Not only that, the independent IT workforce is growing at about 7% per year (versus 5.5% for all independent workers – which is still not too shabby.)

According to Steve King, a partner at Emergent, this growth is driven by companies that want to stay ahead of the game. “In today’s world, change is happening so quickly that everyone is trying to figure out how to be more flexible and agile, cut fixed costs and move to variable costs,” said King.

These statistics bode well is you have the itch to hang out your shingle – particularly for my fellow high tech colleagues. All this sounds like fertile ground for new consultants!

King goes on, “For people with skills… there is there is a lot more opportunity to find part-time employment and set up your own shop and work as a consultant and contractor than there has been in the past.”

This last comment suggests a side hustle strategy, particularly if you are not ready to go full time.That is how we made our JumpToConsulting. It is also a good insurance policy -and certainly better than depending on luck.

Personally, I’d rather my income and financial well being depend on my own skills/experience/contacts rather than on some impersonal bureaucracy. But being laid off twice in my pre-consulting career has no doubt affected my perspective.

So stick around here and I’ll share my ideas and encouragement -geek or not- on how to make your own JumpToConsulting.

Copyright © 2015, jumptoconsulting.com. All rights reserved.

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