General Consulting

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Consider an Engagement Letter…

When dealing with individuals or small companies, an Engagement Letter may make more sense than submitting a formal proposal or quotation.

It also makes it easy for the client to buy no purchase order is needed – just sign the letter. For this reason, Engagement Letters are widely used by attorneys and accountants.

Such was the approach I recently suggested to my Apple computer consultant. Yup, I finally decided to move on from the old XP machines that have served us so well.

After getting our new computers up and running, we talked a little shop. New to consulting, he had some questions – and frustrations. One was getting paid. Been there – done that 🙂

After the work was done, he would submit an invoice. Terms were net due, but many were taking 60 days or more to pay. One client was even arguing about work completed.

So I suggested an Engagement Letter, combined with an advance deposit. My accountant has used this method for years (although no deposit.) I recently needed some legal help, and my lawyer did the same.

Here is a sample. It is based on my standard quoation/proposal described in an earlier post.

XYZ Client
123 Main Street
Somewhere, AZ

We appreciate the opportunity to work with you regarding your new Apple computer system.

In order to ensure an understanding of our mutual responsibilities, we ask our clients to confirm the following arrangement:

Tasks: Consultant will perform the following (on-site as needed):
— Discuss needs and recommend system configuration
— Arrange for purchase of hardware and software (to be paid directly by client – not consultant)
— Install Windows as a virtual machine, and port data to new computer
— Install virus and backup software
— Set up e-mail accounts
— Provide basic training and answer questions
Additional services can be provided for additional fees.

Schedule: By mutual agreement.

Budget: $XXXX, based on 16 hours. Please note this is not a fixed price proposal. Actual time and expenses will be billed. Budget will not be exceeded, however, without client approval.

Payment: $1000 deposit, with remainder due upon completion of above tasks and presentation of invoice.

If the foregoing agrees with your understanding, please sign the enclosed copy of this letter and return it to our office. Thank you.

————————————————– —————————
Joe Consultant                                                   Date

PLEASE SIGN ON THE LINE BELOW THAT YOU HAVE READ THIS ENGAGEMENT LETTER AND AGREE TO ITS TERMS.

————————————————– —————————
John Client                                                         Date

Policy Statement & Business Practices

Our clients often have questions about our business practices and policies. This document addresses common questions. Our intent is to help you understand our practices, so that we can better serve your needs.

Rates -Our rates are $XXX per hour ($XXXX per eight hour per day), plus expenses. On-site time is billed portal-to- portal while office time is billed at our regular hourly rate.

We do not charge a premium for overtime, night shift, weekends, or holidays. Our rates are subject to change, but engagement letters or purchase orders received within the quotation validity date will be honored as quoted.

Expenses – All expenses incurred for the client will be billed at actual cost, with no markup. Consultant will not purchase hardware or software. Client will pay vendors directly.

Travel – Travel time is charged at our regular rates, as follows:
-Local – No travel charge for full day consultations. For less than a full day, time will be billed portal-to-portal.
-Out of town (Air Travel) – One full day labor is added to consultation fee for travel within the contiguous 48 states.

Travel expenses will be invoiced at actual costs. We normally make our own travel arrangements, but if made by client, they are subject to our approval. We normally purchase “no-penalty” coach airline tickets.

Quotations – Quotations are valid for 60 days, unless otherwise stated. All quotations are budgetary – not fixed price – and actual time and expenses will be billed. The quotation will not be exceeded, however, without client authorization.

Terms – We can proceed upon receipt of a signed engagement letter or purchase order and a $1000 deposit for clients with established credit. Balance due upon completion and presentation of invoice. We accept checks, credit cards, or bank transfers.

Confidentiality and Non-Disclosure – All client information and communications are held in strict confidence. Client Non-Disclosure Agreements to this effect are normally acceptable, provided they do not contain clauses restricting our right to do business with others.

In addition, client names are not released without prior approval , nor do we use client names in our marketing materials.

Certifications and Insurance – If information disclosure, certifications, or insurance are required by the client, these must be forwarded to us for evaluation prior to issuing a quotation.

Conditions transmitted subsequent to the start of work will invalidate the quotation, and subject the client to any incurred expenses. Specifically, the following conditions apply –
(1) we do not disclose names or information (technical or financial) about any client without express consent of that client,
(2) we do not submit to financial audit to any agency, public or private.

Performance and Cost Guarantees – Due to the uncertain nature of most consultations, we are unable to precise estimates. When troubleshooting, we can not guarantee success. Often the extent of the problem is not known until an initial evaluation has been made.

As such, all cost estimates are based on a level of effort, but estimates will not be exceeded without your prior approval. You will always, however, receive our best professional efforts and advice in any consultation.

Thank you for the opportunity to work with you.

Like my quotations, the first page outlines the tasks, schedule, and budget. The second page is the “boilerplate” that remains the same. Keeps things simple – always a good idea.

P.S. If you are signed up for my newsletter, watch your mail box for Issue # 1.

 If not, sign up here, and get my FREE white paper “So You Want To Be a Consultant?”

© 2017, jumptoconsulting.com. All rights reserved.

Saving for retirement…

Time for a financial rant – based on a recent news article.

One of the first things to do upon making your JumpToConsulting is to set up a retirement account. Trust me — years later you will be glad you did. I am!

According to a recent on-line article by CNBC, about half of US families have ZERO retirement savings. Nearly 70% of adults have less than $1000 in retirement accounts. Not good…

So take this important step right away, even if you are moonlighting. You can do it as part of setting up your business bank account, with automatic transfers to savings.

Better yet, set up automatic transfers to an IRA with Fidelity or Schwab.

We did this soon after starting EMIGURU. We first set up Fidelity IRAs. Several years later, our accountant suggested a Keogh, which let us put aside up to 25% of our income.

The best part is that 25% is tax deferred. In the meantime, compounding does its magic.

We use a financial planner with who manages the Keogh (and other investments) through Schwab. Fees are based on a per-centage of the portfolio, which in my opinion is the only way to go. As such, he is a fellow consultant and fiduciary, which means (unlike a broker) he puts my financial interest first.

Why not do it yourself? You can, but I prefer having a professional manager, letting me concentrate on making more money at what I do best. The same reason I use an accountant, lawyer, and other professionals.

Here are some savings guidelines/suggestions from the article:

  • By age 30, have your annual salary saved.
  • By age 35, have twice your annual salary saved.
  • By age 40, have three times your annual salary saved.
  • By age 45, have four times your annual salary saved.
  • By age 50, have five times your annual salary saved.
  • By age 55, have six times your annual salary saved.
  • By age 60, have seven times your salary saved.
  • By age 65, have eight times your salary saved

Fidelity simply recommends salary saved by age 30, and ten times your salary by age 67.

When younger, I must confess I was lax about this myself. Fortunately, my business partner insisted we do this. We started at age 45 for me. Never missed the money, and after 25 years at 25%, we both ended up with nice nest eggs.

Now at age 70 and starting to draw on the Keogh, I’m so glad we did this!

It is never to early (or late) to start. Do it TODAY – whether you are consulting or not!

End of rant. Remember, Uncle Daryl wants YOU to find your freedom too!

P.S. Stay tuned. The long promised Newsletter is about to launch, along with a free white paper based on a recent magazine article. If you have not done so, sign up now.

© 2017, jumptoconsulting.com. All rights reserved.

Sales Step # 7 – Referrals…

Referrals are the life blood of professional services. Think about it — what do you do if you need a lawyer, doctor, accountant, or other professional? You get a referral!

So make this the last step of your sales process (along with your lead generation process.) What better time to request a referral than when you just finished a project?

Building a consulting practice is all about credibility and visibility. Referrals provide a very high level of credibility, especially when they come from a trusted source.

Many consultants ask for written testimonials from clients for their web sites.

When I recently switched from PCs to Macs, I found a consultant on an Apple directory web site. In addition to being vetted by Apple, several past clients had written brief testimonials.

I hired him and it worked out very well, and even wrote a testimonial (at his request) myself.

If your clients are not comfortable with this, ask if you can use them as a reference. We did this rather than written testimonials, as our consultations were often sensitive. It was also easier than getting something written, and nobody ever refused.

Always call first before giving out a name (and then only when someone asks for a reference.) You don’t want to abuse this courtesy.

Another option is to list past clients. Be sure to ask before doing so. Non-Disclosure Agreements (NDAs) often prohibit this. Although many consultants do this, we chose no to.

Rather, we compiled a list of projects. Most potential clients don’t care who you worked for — rather they want to know what problems you have worked on. Although anonymous, it still makes an effective referral. And many clients appreciate your being discrete.

 Don’t overlook referrals! The time you spend cultivating referrals can pay big dividends in future business from future clients.


This concludes the seven part series on selling consulting services. I hope this overview has helped. It is based on my 10 years in technical sales/marketing, and 30 years as an independent consultant. We could have covered more, but I wanted to keep it simple.

Feel free to contact me if you have questions. They are often fuel for future blog posts.

Finally, remember selling is a process — and critical if you are to succeed as a consultant. For without customers, you don’t have a business!

© 2017, jumptoconsulting.com. All rights reserved.

Sales step #6 – Follow up…

Don’t neglect this step! Making a second sale (or third or…) is always easier than making the first sale. You are now someone your client knows, likes, and trusts.

So how do you do this? Pretty easy.

Here are some suggestions:

– Phone calls – A week or two after the consultation, call to check. Keep it brief and friendly. Offer to clarify or answer questions. This is particularly important if you submitted a report

Our vet does this after every pooch visit, and we appreciate it. It is also smart business. I’m surprised more professionals don’t do this.

– E-mail – While not as personal, an e-mail can also be effective. A quick thank you, along with an offer to clarify.

Take it a step further and make it a short survey. After every trip, I get a survey from both the airline and hotel. Although usually ignored by me, I appreciate the chance to comment.

It shows concern and provides for feedback. If your feedback is bad (shudder), never fear – this is a chance to fix issues – create good will – and retain a client.

— Newsletters – These are particularly effective as your client list grows and/or there is a time gap between consultations. Newsletters can be printed or electronic. I like both.

After a few years in business, we started our printed newsletter. Later we added e-mail, but made it an option. About half preferred the hard copy, and half the electronic version With the passing of my business partner, I now only do a e-mail version – just to stay in touch.

This worked well as our clients often did not need us for a long period. The newsletter reminded them we were still in business. But it sometimes led to immediate business and even referrals (to be covered in Sales Step #7.)

My accountant uses a commercial newsletter imprinted with the company name and contact information. Even though I am not an accountant, I always enjoy the business and tax tips.

— Invitations – Doing webinars or seminars? Invite past clients. After all, they already know who you are, and may well be interested in your educational offerings.

This works for both paid and free events. For years, our engineering seminars generated a substantial part of our revenues. Our mail list of past clients was most effective.

— Other – For years we sent holiday greetings to the previous year’s clients, with a short note thanking them for their business. Often got responses in return – in addition to future business.

For clients who are electronically connected, Twitter/LinkedIn/Facebook can be effective. My financial advisor (consultant) Tweets business tidbits, which I always enjoy and appreciate.

Don’t overlook dinner with past clients. We often did this when in town. Even if you don’t meet, the invitation is appreciated. If do meet, you are not dining alone.

Finally, don’t overlook beer. As most engineers like beer, we had a trade show beer policy where we always offered to buy a beer. An enjoyable way to spend a few minutes with past, present, and future clients. 🙂

So don’t neglect this important sales step. In closing, I’m reminded of the childhood jingle:

Make new friends, and keep the old– one is silver, and the other gold.

True for clients too!

© 2017, jumptoconsulting.com. All rights reserved.

Sales Step #5 – Deliver…

In traditional sales, step # 4 is the final step. Once you get the purchase order or signed contract, your job as a salesperson is complete.

Of course, you follow up with customers to make sure they are happy, but its time to move on to the next sale. (We’ll address that for consultants in Step 6.)

Not so with the small consulting practice. You just “sold” yourself, and now it’s time to deliver. This is the fun stuff — doing what you wanted to do in the first place!

As a small businessperson, you are still in sales mode, albeit lower key. Not only do you want to have a happy client today, but you want to pave the way for future business and referrals tomorrow. .

Here are some suggestions, particularly for a first time consultation.

(1) Show up as scheduled. As a colleague once said, “If you are not ten minutes early, you’re already late.”

If you run into problems, such as a traffic jam, call your client right away. Thanks to cell phones, there is no excuse for not doing so.

If out of town, don’t take the last flight out. If things get screwed up, you may be able to recover. This is particularly important if you have a meeting with several people.

If you’ve never been to the client location, map it out ahead of time. If out of town, make a dry run the night before. (You did take an earlier flight, right?)

You never get a second chance to make a good first impression.

(2) Show up suitably attired. This depends on your client, but business casual is usually safe. But ask – you don’t want to show up casual if the company norm is suit and tie.

For years, I struck a happy medium with a sport coat, slacks, and tie. If nobody was wearing a tie, I quickly removed it.

But times change. Since I’m dealing with fellow engineers, I now wear slacks, a short sleeve dress shirt, and carry a tie with me if needed. If we’re going to a test lab or on the factory, I usually go with jeans and a golf shirt – just in case we need to get down and dirty.

Don’t be like one client I met. He showed up in the lobby wearing torn jeans, a cartoon T-shirt, and sandals. His boss, however, was wearing a tie. He may have been a good engineer, but I fear he was limiting his career advancement.

How you dress can be as important as how you perform. 

(3) Involve your client. Review the situation, and ask preliminary questions. Don’t jump to conclusions, even if you are pretty sure of the diagnosis. Keep an open mind.

Find out if there is a preferred approach. In my business, I asked “Do you prefer a circuit board fix, or a box level fix?” If the circuit board was purchased, that often precluded making changes. On the other hand, if they were about to redesign the board, we’d start there.

Check with the client as you progress. Nothing worse than getting to the end of a project to find you were going down the wrong path.

Keep the appropriate management in the loop.

(4) Offer a summary report. Done right, this is an effective sales tool. Not only does it document your efforts, but it remains long after the consultation. We had calls years later based on an earlier report, so make sure you contact information is on every page.

Our policy was to charge a flat fee (one day) for a report. They typically ran 5-10 pages.

The first page was a title page (contact information), and the second was a ONE PAGE summary. This summary is important, as it is what management will read. Keep is simple.

The remaining report contained the details. If test data was involved, we included that in appendices. Recommendations were in bullet form, to make them easy to follow.

Your report is your LAST impression – every bit as important as the FIRST impression.

(5) Getting paid. As my late business partner said, “The project isn’t complete until the check clears the bank.” We’ll discuss this more in a later post, but make sure you have a purchase order or contract before proceeding. For larger projects, you may want progress payments or retainers.

Next up – Sales Step #6 – Follow Up – and how to facilitate the next sale (and the next one after that.) Remember, a happy client is happy to buy additional services!

© 2016, jumptoconsulting.com. All rights reserved.

Sales Step #4 – Quote/propose…

The next step is to ask for the order! This is also known in the sales world as closing.

This is where many consultants fall down, due to fear of rejection. You are not alone – even full time sales people don’t like rejection. But they face it and deal with it – one reason why sales people are paid so well.

For simple projects, just ask if they would like a quote or proposal. If they agree, quickly review the tasks and schedule for consensus, and then provide a quote. A purchase order will often be issued based on the quote.

For more complex projects, you may need additional meetings for further clarification. This can happens when approval from a committee or higher management is needed.

In our practice, simple quotations worked most of the time, but we did have occasional contracts for larger scale projects.

Quotations

As a small specialty (boutique) consulting firm, we generally used quotes. Most of our projects were between a week and a month long.

As such, the budget was usually well within a manager’s signing authority. Seldom did our projects need to go to the CEO or a board.

Our typical project schedules were either immediate (troubleshooting or design reviews) or longer term (training.) The former led to a purchase order, and the latter often led to being put in a future budget. Neither required detailed contracts.

So keep it simple! We used a two page format. The first page contained a short description of the objectives, responsibilities, schedule, and cost. The second page contained the “fine print” that did not change from project to project.

With this simple format, we could prepare a quote in minutes. Clients appreciated the quick response, and our quote was often attached to the client purchase order. No need to get the lawyers involved in simple projects.

Here is a sample quote for a short consultation. The second page includes the “fine print.” We used a similar quote for training projects with minor changes.

****** 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 + 1 day travel) plus estimated travel expenses of $2500. Add $2000 for optional report .

Please note this is a budgetary estimate. Actual time and expenses will be invoiced. Quotation will not be exceeded without 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
Kimmel Gerke Associates, Ltd.
NARTE Certified EMC Engineers

December 13, 2016


Policy Statement & Business Practices
(Consulting & Troubleshooting)

Our clients often have questions about our business practices and policies. This document addresses the most common questions.

Our intent is to help you understand our practices, so that we can better serve your needs as professional consulting engineers.

Thank you for considering us to help you.

Rates -Our rates are $XXX per hour ($xxxx per eight hour per day), plus expenses. We have a four hour minimum for local work, and an eight hour minimum outside for non-local work.

Our rates are subject to change, but purchase orders received within the quotation validity date will be honored as quoted.

Expenses – All expenses will be billed at actual cost, with no markup. These expenses include all travel costs and other expenses incurred for the client.

Travel – Travel time is charged at our regular rates, as follows:
-Local – No travel charge for full day consultations. For less than a full day, time will be billed portal-to-portal with a 4 hour minimum.
-Out of town (Air Travel) – One full day labor is added to consultation fee for travel within the contiguous 48 states.
-Outside Contiguous United States – To be determined.

Travel estimates will be provided in quotations, but all expenses will be invoiced at actual costs. We normally make our own travel arrangements, but if made by client, they are subject to our approval.

We normally purchase “no-penalty” coach airline tickets. Overseas travel is “business” class.

Quotations – Quotations are valid for 60 days, unless otherwise stated. All quotations are budgetary – not fixed price – actual time and expenses will be billed. The quotation will not be exceeded, however, without client authorization.

Terms – Our efforts can proceed upon receipt of a purchase order or letter of authorization., plus an advance travel retainer of $2500. Payment terms are net 30 upon invoice for clients with established credit.

Confidentiality and Non-Disclosure – All client information and communications are held in strict confidence. Client Non-Disclosure Agreements to this effect are normally acceptable, provided they do not contain clauses restricting our right to do business with others.

In addition, client names are not released without prior approval , nor do we use client names in our marketing materials.

Certifications and Insurance – If information disclosure, certifications, or insurance are required by the client, these must be forwarded to us for evaluation prior to issuing a quotation.

Conditions transmitted subsequent to the start of work will invalidate the quotation, and subject the client to any incurred expenses.

Specifically, the following conditions apply – (1) we do not disclose names or information (technical or financial) about any client without express consent of that client, (2) we do not submit to financial audit to any agency, public or private.

Performance and Cost Guarantees – Due to the highly uncertain nature of most EMI problems, we are unable to provide guarantees of success, nor are we able to provide precise pass/fail guidelines.

Often, the extent of the problem is not known until an initial evaluation has been made. As such, all cost estimates are based on a level of effort, but estimates will not be exceeded without your prior approval.

You will always, however, receive our best professional efforts and advice in any consultation.

December 2016

Contracts

For larger projects, a contract may be appropriate. On average, we did several contracts a year. In the simplest form, the contract could be an expansion of the two page quotation.

It might include milestones, deliverables, progress payments, and contingencies. Even so, try to keep it simple and clear.

You may need legal advice, but rather than ask your lawyer to prepare a contract, do a rough draft yourself. Include all the details discussed above. Then have your lawyer review it for proper legalese. You will save money, and your lawyer will appreciate it too.

As an alternate, your client may send you a multi-page contract with all kinds of stipulations and restrictions. This is more likely with large companies with a legal department that needs to justify its existence.

If offered a contract, review it before signing. If complex, run it by your own lawyer first. As my lawyer told me may years ago, “If you have a questions, ask me before you sign anything.” He continued with a grin , “I’d rather keep you out of jail, than get you out of jail.”

Either way, don’t be afraid to remove or change things you don’t like.

One stipulation we always removed was a non-compete clause. Our projects were short and generic – if we agreed to serve only one computer company or one military contractor, we’d be out of business in a year.

A non-compete clause, however, may be appropriate for a long term project. If the client is paying you for unique results, they want to protect that. The same is true for nondisclosure, designed to protect proprietary information.

Don’t be afraid to question the need for a contract. A client once send me a twenty page contract for a five day troubleshooting consultation. When I questioned it, he apologized and sent me a simple non-disclosure agreement. Seems his office administrator sent me the wrong paperwork.

Finally, if you are doing business with the government, expect detailed contracts. Accept it as part of the business. Bureaucracies thrive on paperwork – the reason many of us left corporate or government jobs to become consultants in the first place 🙂

This sales step isn’t complete until you receive a purchase order or contract!

So be prepared to follow up. Ask for an anticipated date, and if you don’t have the requisite paper work by then, call and find out the status.

You MUST do this. Don’t let the fear of rejection stop you. Yes, maybe the project has been sidetracked or dropped, but you need to know.

But don’t be a pest. Our policy was two phone calls. If no answers after two calls, we decided it was time to move on.

Finally, if rejected, be polite. Over the years, many “lost” clients came back for future help After all, the client was interested in us in the first place.

Next up – Sales Step #5 – Deliver. Unlike product sales, the sales process for consultants does not stop with a purchase order or contract. Done well, you can turn a project into a long term client, and in some cases, even a long term friend.

© 2016, jumptoconsulting.com. All rights reserved.

Sales Step #3 – Diagnose and Prescribe…

Now that you have qualified the prospective client, you are ready to provide a preliminary diagnosis and prescription.

The goal is not to actually solve the problem, but to create the desire to have you help. You want to reinforce your credibility, while suggesting a course of action.

Here are three theoretical examples:

  • A doctor might say, “Based on your symptoms, I suspect XXXX. The next step would be a CAT scan, perhaps followed by surgery. I’ve done this surgery many times before with good success. But we’ll make a final decision after the CAT scan. Would you like me to schedule the CAT scan? “
  • A lawyer might say, “Based on our brief discussion, it sounds like you have a case. The next step would be an in-depth meeting in the office. I’ve handled these cases many times before. But we’ll make a final decision after the meeting. Would you like to set up a meeting? “
  • As a consulting engineer, I often said, “Based on our discussion, I suspect a problem with XXXX. We can handle this several ways. The best would an on-site review. I’ve done this many times for others. Based on the review, we will either solve the problem, or provide a course of action.”

Note than all three examples, you have not actually solved the problem In fact, at this stage that might not be possible anyway. But you have moved the sales process forward.

Here are three steps:

Reinforce credibility“Based on XXXX, I suspect YYYY” shows you have listend to the client. Later, “I’ve done this many times before” reinforces that you are capable and have experience in dealing with the problem at hand.

Course of action“The next step…” shows you have a recommended solution, pending further action by the client. It also leaves you wiggle room if you need to change your preliminary diagnosis at a later time. This may well happen when you dig into the problem.

Trial close –Would you like to proceed?” If the client says yes, then move forward. If no, you need to ask why not? Perhaps questions remain that need to be answered. Perhaps the client is just shopping. Perhaps there is a schedule or budget concern. Ask why.

But don’t be manipulative! This is where traditional sales training says you must “overcome objections.” I disagree. Selling professional services is about helping, not manipulating.

What if the problem is very simple — something you can handle easily over the phone? Should you give away free advice, or should you hold back to sell your advice?

In those cases, our policy was to make those simple suggestions – at no charge. (Take two aspirin, but call back if the pain persists…) If the simple solutions worked, it created tremendous good will, and virtually guaranteed future calls as well as references. We looked at those cases as cheap and very effective marketing.

Others may disagree. An alternative would be to bill a nominal amount for your time, or set up a set fee for quick questions. Me – I always wanted to be approachable, and didn’t have the guts to charge thousands of dollars for very simple advice.

One final example of giving away free advice. Several months ago a call came in for some in-house training (which I still do.)

No hassles – they just wanted to know when I could come to their facility, and how much would it cost so they could issue a purchase order. What an easy sale!

Upon arriving, my client told how my late business partner had given free advice several years ago. When the advice worked, Bill would not accept payment for his few minutes of time (our standard policy.)

So when the client wanted a training program, he called nobody else, and he told me how much he appreciated our business practices. You can’t buy advertising or references like that!

Next up – Step #4 – Asking for the order. We’ll discuss the mechanics of quotations and proposals, and how to keep them simple and effective.

P.S. When selling professional services, think like a doctor, not like a used car salesman. Diagnose, prescribe, and never manipulate!

© 2016, jumptoconsulting.com. All rights reserved.

Sales Step # 2 – Qualification…

There are two simple goals in this sales step:

  • Can YOU help?
  • Can THEY buy?

It is just as important to disqualify as it is to qualify. Your time is valuable, and you don’t want to waste it chasing low probability leads.

We already touched briefly on the first goal in Sales Step #1.

Now you need to dig a bit deeper. At this point, you are not trying to solve the problem, but rather to make a quick assessment.

As already mentioned, don’t be afraid to turn business away. If it out of your area of expertise, it may be better to refer to someone else.

On the other hand, don’t be afraid to stretch yourself.  You can back fill with books, colleagues, or an on-line search. This is also how you grow your experience bank account.

So ask more questions. You want to probe deeper.

Here are some typical questions/answers from my own engineering consulting business:

  • What is the problem? (Equipment malfunctions.)
  • How does it manifest itself? (System resets or hangs up.)
  • Any idea why it happens? (Not sure, but we suspect a power glitch.)
  • How often does it occur? (About once a month)
  • How bad is it? (The power supply once caught fire. Ouch!)
  • How much is it costing you? ($10,000 every time it fails. Double Ouch!)
  • Anything else? (Yes, a major customer is pissed. Triple ouch!)

Assuming you can help, you now know the situation is critical, and the problem is expensive. Since it is intermittent, it may not be super urgent, and it may also be a challenge to isolate.

If you are a business consultant, your questions will be different, but you still want to determine if you can help your client, how much it “hurts”, and how urgent things are.

Now that you have qualified YOURSELF, you are ready to qualify the CLIENT.

Are they willing and able to buy your services?

So probe some more. Here are three client qualifying questions I use:

— Schedule? When do you want to proceed? (Can you come yesterday? If you get this answer, close the deal!)

— Budget? Offer a budgetary estimate. The client is usually dying to know anyway. Don’t ask “How much do you have to spend?” as is sounds manipulative.

In situations like this, I usually quote 4-5 days of time, with the stipulation that the budget will not be exceeded, and that if the problem is still not resoled, we’ll mutually decide on the next step. The latter is like exploratory surgery — we may not know how bad things are (or are not) until we dig deeper.

Give a single number (a not-to-exceed, like $10K..) Don’t be vague or quote a range — the client will assume the lower number.  And never ask for an open checkbook.

— Quote? Offer a quotation. We’ll discuss quotations in more detail later. But at this point in the process, you want to know how serious the client is about fixing the problem.

If they say yes, proceed with the sales process. But don’t quote yet — rather gather more information. The quote should be a summary of what you both agree needs to be done.

If they are reluctant, ask why. But don’t be pushy, and don’t waste a lot of time trying to “overcome objections.” It is OK, however, to ask why several times. Doing so often uncovers the real reason for reluctance.

Offer to follow up if they need to “discuss with the boss.” While some “sales experts” suggest you should only talk with the final buyers, the boss often delegates the initial search to a subordinate. (Very common in the technical world.)

So be polite — while this person may not be able to approve, they can often disapprove. Also, this may be the person with whom you will work.

Assuming you have not disqualified yourself or your client, you are now ready to move on to Sales Step #3 – Diagnose & Prescribe.

P.S. Don’t fret if you disqualify. As a professional, your time is valuable and there is never enough of it. You need to focus on the opportunities with the best chances of sales success.

© 2016, jumptoconsulting.com. All rights reserved.

Sales Step # 1 – Establish Rapport…

Time to revisit Uncle Daryl’s “Seven Steps of Selling” and to expand upon them.

Yes, I know — you want to be a consultant — a revered oracle — not a peddler. Sharing all your wisdom, and being paid handsomely for it.

All you need to do is hang out your shingle, right?

Wrong, of course. You need customers. Paying customers. And enough paying customers to pay the bills. Because consulting is a BUSINESS, and business means SELLING.

As a wise mentor once said, “If you don’t have customers, you don’t have a business…”

So first you market. You create the necessary visibility and credibility for your services in the market place. You strategize. You define your markets. You generate leads. (Check here for twenty ideas on leads.) But you are still not selling.

Sooner or later you will need to actually TALK to a prospective client. That is when the sales process begins! And often the fear — usually the fear of the unknown.

But selling is simply a process you can learn. Like riding a bike, or playing the piano. Don’t expect to be an immediate expert, but with practice you can hold your own. And you will get better with time — I promise.

It all begins with establishing rapport. Here are some thoughts:

  • Relax, and smile. Even if you are on the phone. It will calm you.
  • Ask about their problem. Think like a doctor when he/she says, “What brings you in today?”
  • Listen carefully, and ask for more details. “Can you fill me in? How does the problem manifest itself? How long has this been going on? What else is going on?”
  • After you have enough preliminary details, simply say “That sounds like something we might help with.”

Assuming, of course, you CAN help. If not, you may want to refer the person to someone else. Don’t worry – they will appreciate you candor and will likely call you again based on the trust you just created.

Before proceeding further, ask how they heard about you. That give you some insight into the trust level.

If a referral, the trust level is already high. Ditto an article or talk. If simply a web search, additional reassurance may be needed.

Such as, “We’ve solve similar problems for others.” But don’t share specific client details, lest you raise concerns about protecting their confidentiality.

Next, ask if they have worked with a consultant before. This gives you some insight into their experience with consultants. If YES, simply proceed. If NO, more reassurance may be needed.

In either case, potential clients often have two fears:

  • Can you help them? Done right, you have already initially reassured them.
  • Can you work together? This is why a pleasant demeanor is so important. As the old saying goes, “You never get a second chance to make a first impression.

Note that Step #1 takes but a few minutes. The focus is on asking questions.

This is NOT time to go into a sales pitch, or to talk about how smart and capable you are. Rather, it is all about the client. Think like a doctor, not a used car salesman.

At this point, you are ready for Sales Step #2 – Qualifying. This is where you dig deeper, to see if you truly can help, and to see if they can buy your services. To be covered in a subsequent post.

P.S. Like many of you, I once feared selling.  But after I jumped in (first as a Sales Engineer, and later as a consultant) I came to enjoy the process.

The best part is that as a consultant, you are usually talking to friendly colleagues in the first place – and helping them solve their problems and/or improve their lives.

© 2016, jumptoconsulting.com. All rights reserved.

How big is the GIG economy???

Bigger than you think. According to a recent study by McKinsey & Company, between 20-30% of the working population in the US and Europe are free lancers (doing gigs.)

That translates to over 160 million people. Not too shabby, I’d say.

Rather than wade through the 148 page study, check out this latest post at Consultants Mind, a favorite blog of mine on consulting.

Although aimed at management consultants in both large and small firms, I find this blog well written and useful for solo-professionals too (including us technical consultants.)

To distill the data even more, here are some key points from the blog post:

  • Most consultants CHOOSE to work independently. More than 70% surveyed do so because the want to — not because they have too. This group is happier too — no great surprise.
  • One in six traditional workers say they would like to go independent. But many don’t because they lack the ideas, ambition, or grit. (If you have the ambition and grit, stick around and I’ll help you with ideas…)
  • Digital platforms enable freelance work. Thanks to the Internet and computers, it is easier than ever today to start and run a consulting business — from anywhere in the world. But you do need to develop your on-line presence to make this work.
  • This is NOT new. According to the author, 100 years ago 45% of the population was self-employed. As small farmers in rural Nebraska, all my grandparents and great-grandparents fell into that category. Furthermore, the author predicts the percentages will rise again in the next century.

The author was pretty critical of the original McKinsey report, saying the 148 page report was about 100 pages too long. He’s right – brevity is always better.

So save yourself some time and hop over here for more details.

Finally, the author challenges “retirees, students, and caregivers” to jump back into the economy – even if partially. If consulting is YOUR gig, follow me at JumpToConsulting and I’ll share my ideas on how to make your jump.

Consulting is a great life for those who choose it. I’m glad I chose it almost 40 years ago!

© 2016, jumptoconsulting.com. All rights reserved.

Don’t cut your fees… cut the scope…

Sooner or later you will be asked to cut your fees. The reason may be legitimate (budget constraints) or your client may just be testing you (particularly if you are new.)

Either way, do NOT cut your fees. Rather, cut the scope…

  • If the budget is truly limited, this may salvage the project and allow you to still help your client, albeit in a more limited fashion.
  • If you are being tested, it sends a message that there is no “fat” in your proposal. This testing tactic is quite common with purchasing agents, who are tasked to get the “best deal” for their employer.

Don’t fret about doing this, and NEVER buy the business. Your time is better spent finding a client who is willing and happy to pay for your services.

This is the voice of experience speaking. Prior to consulting, I was a sales engineer for ten years. On two occasions I spent considerable time to round up “demo” equipment at substantial discounts for some “needy” customers.

Both turned out to be very poor customers, demanding extra support and hand holding while grousing all the time. Not a good deal.

As a result, this lesson was learned prior to starting my consulting firm. Good clients appreciate your value, and are willing to pay for it. If they don’t, move on.

Another example. I once put together a proposal for an overseas training project, which involved several extra tasks. Upon submission, the purchasing agent asked for a reduction, so I asked for a target price. Based on that, I revised the proposal – no small task in itself.

The purchasing agent’s response was, “We like the new price but we still want everything in the original proposal.” My response was to withdraw the proposal. I no longer felt comfortable working with the client.

I found out later that the engineering manager who initiated the project was unhappy — but not with me. Apparently this purchasing agent had done this to other consultants. While I didn’t like losing the business, at that point I felt justified in my action.

The best part was some good business came in, which I would have passed up had I gone with the bad business. Karma anyone?

Finally, the late Howard Shenson advised setting your fee at the minimum amount you would accept. That way there is no fat, and if you lose the business, you don’t end up second guessing yourself. Good advice – I’ve followed it for years!  

P.S. Now back in Arizona, and hope to be posting again on a regular schedule. It was the “Lost Summer” with my sister-in-law. Alzheimer’s is a cruel disease.

© 2016, jumptoconsulting.com. All rights reserved.

Writing magazine articles… an interview with the Blue Penguin…

Recently did a half hour interview on writing magazine articles, on of my favorite (and successful) marketing methods. The interviewer was Michael Katz, the founder/owner of Blue Penguin Development, a one man firm that teaches solo professionals how to better market their practices.

Earlier this year, Michael formed the Blue Penguin Content Club. For $9.95/month, you get two 30 minute group calls each month — a weekly 48 second marketing tip — membership in a private Facebook group — and access to all the past recordings. Given Michael’s expertise and experience, this is one a heck of a deal.

Michael graciously allowed me to include the LINK to the interview HERE. So grab your favorite beverage, sit back, and enjoy Micheal and me discussing the ins and outs of getting your own magazine articles published. (30 minutes.)

Finally, if you enjoyed this, sign up for the Content Club – you won’t regret it. Full disclosure–no remuneration for me, and no penguins were harmed making this recording.

PS –  Michael has a free newsletter that I have been reading for years, along with numerous short courses and more.

PPS – Listen to the interview here.

© 2016, jumptoconsulting.com. All rights reserved.

Visit me with the Blue Penguin…

As the “featured guest” of the Blue Penguin next Tuesday (August 23, 2016). I’ll be sharing insights on writing articles to build your credibility/visibility as a consultant. Join the Blue Penguin Content Club, and you can catch the session too.  Click here.

Way back in 2013 I wrote about the Blue Penguin and the Likeable Expert Gazette. In 2000, Michael Katz launched Blue Penguin Development, a one man firm that teaches professional service providers how to position themselves as “likeable experts.” Much of his emphasis is on newsletters (a favorite technique of mine) and social media.

More recently, Michael formed the Blue Penguin Content Club. For $9.95/month, you get two 30 minute group calls each month, a weekly 48 second marketing tip, membership in a private Facebook group, and access to all the past recordings.

Trust me — this is a great deal! And Michael is funny (and bald, which always sets well with me.) If you don’t want to invest $9.95/month, you can still get Michaels’ free newsletter.  As his newsletter name suggests, he is simply a likeable guy (and an expert in what he does.)

Hope to see some of you next week. Well, I can’t “see” you, but you know what I mean 🙂

P.S. Been a little slow on the posts here. It’s the dog days of summer. We’ll pick up the pace again in the fall.

P.P.S. Had 31 attend the consulting session at the IEEE EMC conference in Ottawa. Several were already consulting, and several more were on the verge of making their own JumpToConsulting. Way to go, my fellow geeks!

© 2016, jumptoconsulting.com. All rights reserved.

Presentation – So You Want To Be A Consultant?

If you are attending the IEEE International Symposium on Electromagnetic Compatibility (EMC) in Ottawa next week, you are invited to join me for this live presentation on Friday morning.

My talk is part of a career workshop (EMC Consultant’s Toolkit) where four of us share advice on consulting with our engineering colleagues.

Mine is the last talk, so I’ll be bringing up the rear. We will conclude with a Q&A session.

Here are some details:

  • What – So You Want To Be A Consultant? (EMC Consultant’s Toolkit session)
  • When – Friday, July 29, 2016 – 8:30 AM – Noon
  • Where – Room 215

Consulting opportunities abound in this esoteric area of electrical engineering.

  • New problems continue to emerge, driven by advances in the state of the art.
  • Old timers like me are retiring (or sadly, worse.)
  • Many companies prefer consultants, not wanting to maintain a full time EMC engineer on staff.
  • The result? A “perfect storm” for those with the right experience who want to make their own JumpToConsulting.

Please join us if you are at the show. Our goal is to help new consultants (or those considering consulting) in the field of EMC.

This is an excellent opportunity to learn from some of those most experienced in EMC!

P.S. Can’t join us? Then read my recent article by the same title in InCompliance magazine.  Or watch JumpToConsulting, as I plan to make this presentation available on line in the future.

© 2016, jumptoconsulting.com. All rights reserved.

Just Published – So You Want To Be A Consultant?

The industry magazine “InCompliance” just published my article “So You Want To Be A Consultant’?

The article addresses the four key questions I’m often asked about consulting:

  • How Do You Get Clients?
  • How Do You Decide What To Charge?
  • How Do You Decide What To Consult About?
  • How Do I Get Started?

The article coincides with a presentation (same title) later this month at the IEEE International Symposium on Electromagnetic Compatibility in Ottawa, Canada.

My secret goal at the symposium is to instill confidence and inspire any engineering colleagues considering their own JumpToConsulting. My consulting journey for the past forty years has been a blast!

But this secret goal extends to all of my readers. So if you are itching to set yourself free, or even just curious, check out the article. I hope you enjoy it!

Best Wishes, and a belated Happy Independence Day,

Uncle Daryl

P.S. Been busy here, so the posts have slowed – as they often do during the summer. But I still have plenty of ideas to share, so please stick around. 

© 2016, jumptoconsulting.com. All rights reserved.

From the mailbag – Do I need client insurance?

This question arrived today from a friend and engineering consulting colleague.  Once in a while a company will request a “General Liability” insurance certificate.

Hi Daryl,

I’ve run into this requirement (client insurance) a handful of times. Most companies don’t ask for it, but some are asking to be named on my insurance policy. Do you know the reason why they might want that?

Here is my response. The beautiful irony is that just today my “General Liability” insurance was cancelled, after 20 years with no claims, and zero probability of a future claim.

As far as I know, there is no good reason (but I’m not an attorney.)  Rather, it is the result of good lobbying by the insurance industry.

We ran into that a few times. The request was usually for “General Liability”, not “Professional Liability.” The former covers things like driving you car into their lobby. The latter covers “errors and omissions.”

If you have a GL policy, ask for a certificate naming the client. It’s just a piece of paper, and should cost nothing.

Do you really need a GL policy?  I don’t think so. We went without a policy for many years.

But after fighting it a few times and to save time, Bill and I caved in and got a GL policy — about $1000/year for both of us. Upon our attorney’s advice, we never carried PL, since EMC has such a low risk.

If we had been doing product safety, we would have carried PL too.

The IEEE has both, but when I last checked, they would not sell the GL alone. We got our policy through a broker.

When Bill passed away, they reduced the premium to $500, so I renewed it. A total waste of money in my opinion, but still easier than fighting about it. Haven’t had a request for several years now.

As a coincidence, just today I got a certified letter canceling my General Liability insurance.

Seems some underwriter visited my web site, and panicked when they saw “medical devices, vehicular electronics, military systems, industrial controls, etc.” Even though the web site clearly states I no longer consult, but only do training.

My guess is some bureaucrat with no common sense did this. Probably their chance to make a “big decision.” But a stupid decision, as it was easy money for them.

As an side, my older son started with Hartford (the carrier) right out of college. He left in less than a year. Like his dad, he has a low tolerance for petty bureaucrats.

My plan is to forget the insurance. If somebody insists on it, my response will be to either waive the requirement of find somebody else.

Before getting insurance, I did that several times with success. I found that engineering VPs/directors/managers can and will override purchasing if they really want you, and need to do so.

And if they don’t want you, do you really want to do business with them?

Don’t want you to think I’m a jerk about these things. As a rule, I go out of my to be polite and professional.

But at the same time, I don’t let petty bureaucrats intimidate me. Neither should you.

As always, check with your attorney and/or accountant.  We carried General Liability insurance for many years, simply because it was easier to do so than argue about it.

But other than saving time, it was a waste of money. We never lost any business when we did not have it.

© 2016, jumptoconsulting.com. All rights reserved.

My retirement status… and what it means…

So is Uncle Daryl retired, semi-retired,  or what? Yea, I’ve been confused too, but I finally figured it out.

I’m retired three weeks out of every four.

One of the beauties of running your own consulting firm is no mandatory retirement date. And when you do retire, you don’t need to come to a complete halt.

You can taper off, pick and choose the stuff you still like to do, and hand the rest off to colleagues. But you can still be engaged with interesting work.

This is exactly what I’ve done. For the last several years, I pulled back from consulting (aka fire-fighting) but remained involved with training and publishing.

That worked well until my business partner passed away last year. He enjoyed the panic situations — in fact, his idea of a good time was when the call came in at 9 AM and he was on a plane at 4 PM. Me? Not so much.

So when Bill passed, I was left wondering what to do.

The solution was to set up a stable of vetted consultants, and then pass the leads along.

To keep it simple, no money changes hands. The goals are simply to help our clients, and to help our younger colleagues (and a few not so young) with their businesses. So far it has worked well.

At the same time, I remain active with training – which I consider “group consulting.” With only one engineer now in the firm, the training load went up. But to keep my sanity (and to keep my wife happy) I limit classes to not more than one per month.

So far that has worked well too. April was the first month in a long time with no class, and I’m almost fully booked through 2016.

How long will this continue? I don’t know, but I’m flexible.

I’ve always enjoyed training. There is nothing quite like seeing the “light go on” a student’s eyes. Even Warren Buffet agrees — when asked how he would like to be remembered, he answered, “As a teacher.” Plus training allows one to set a schedule well in advance – no panic calls at 9 AM.

What about the three weeks per month of retirement? Pretty busy there.

  • I’m still winding down Kimmel Gerke Associates, the consulting firm. A new web site now archives much of our IP – articles, newsletters, books, and more. Much is free.
  • The JumpToConsulting project remains a high priority. I’ve got some ideas that I’m about to roll out, so if you are interested in consulting,  please stick around.
  • The rest of the time I plan to spend goofing off — playing with the grandkids, the dog, and traveling in the RV with my bride of almost 50 years.

Retired three weeks – working one week – it works for me. The consulting life is great!

© 2016, jumptoconsulting.com. All rights reserved.

Afraid of selling? Don’t be…

This post was inspired by “Fear and Loathing in Sales” at Trusted Advisor. The author addresses the irrational fear that professionals often have about selling.

I once shared that fear. But realizing that if I wanted to be in business for myself, I needed to overcome that fear – or at least get some experience. So I sought out -and landed – a job as a sales engineer (Tektronix.) And did it again later for another company (Intel.)

What a pleasant surprise. I quickly realized that technical sales was different – in spite of some canned sales training programs to which I was subjected. I discovered it was not about manipulation, bur rather about helping the customer or client.

I found it to be fun –another set of engineering problems to solve. Not unlike consulting. 

It was really about having pleasant conversations with technical colleagues — about what they were doing, and how my company might help them. Sure, I had to deal with contracts and purchasing agents, but by the time they got involved, the buying decisions had been made. They were there to handle the business/legal details.

As a professional, you are like a doctor, not a car salesman. You are there to diagnose and prescribe, not to wheel and deal. You are there to help.

If you are still unsure and want to build your confidence, consider spending a year (or more) in sales as I did. No, you don’t need to be an extrovert. Many of the best sales engineers I’ve known were quiet introverts who were genuinely interested in their customers and their problems (and/or aspirations.) Just like good consultants.

But there is a process, which I first outlined in the Seven Steps of Selling. I’ll soon expand on each of those steps in a short series on selling consulting services.

Finally, don’t fear the selling process — embrace it. It is the essence of professional consulting. And remember FDR’s advice, “The only thing we have to fear…is fear itself.”

© 2016, jumptoconsulting.com. All rights reserved.

Opportunities Abound When Ecosystems Collapse…

This post was inspired by a 2011 post by Pam Slim (Avatars, Ecosystems, and Watering Holes), where she discusses creating you own healthy business ecosystem.

But what happens when an ecosystem collapses? Most people panic, but a few recognize the opportunities — often excellent for starting a consulting practice.

Scientists tell us every major extinction event was followed by an explosion of new life. A prime example is the asteroid that destroyed the dinosaurs, which gave rise to the mammals and ultimately the naked apes known as homo sapiens.

When an ecosystem collapses, the balance of nature is upset. Those at the top of the food chain (the huge dinosaurs) are displaced, and new opportunities explode (for the tiny mammals.) But eventually a new equilibrium is reached, and evolution resumes its slow grind.

So it is with business. Sudden changes give rise to new opportunities, at least to those willing to pursue them. The inertia of the dinosaurs often prevents them from doing the same. In fact, the dinosaurs usually fight the changes and thus miss the opportunities.

A minor engineering ecosystem collapse helped launch our consulting firm.

  • Thanks to the personal computer explosion, by the early 1980s electronic interference problems to radios and televisions were increasing exponentially.
  • As a result, the Federal Communication Commission issued new regulations.
  • But there were few engineers that understood the problems, and how to fix them.
  • Most of those engineers were well entrenched in the defense industry, and not interested in tackling commercial electronics.
  • Thus, the engineering ecosystem for addressing these problems collapsed.

Recognizing the opportunity, we jumped in with both feet. But the economy was teetering too, and the first day in business the stock market crashed (October 1987.) A double whammy. But thanks to multiple opportunities with very limited competition, we did very well.

A second collapse occurred in the mid-1990s. Driven by the same interference problems, the European Union passed strict laws on interference on a wide range of electronic devices. If you could not demonstrate compliance, you could not export to the EU.

  • Once again, many big players (the dinosaurs) missed the changes (the asteroid.)
  • Once again, the engineering ecosystem suffered a minor collapse.
  • Once again, the little guys (the tiny mammals) like us did very well.

This is when we launched our training business, which took off like a rocket. This time, people were hungry for both help and knowledge. We often joked that while the consulting paid the bills, the training funded the retirement.

Would we have the same quick success today? Probably not, unless the ecosystem again collapsed. The growth would be much slower under today’s more stable conditions.

So, don’t fear the changes. Rather, seek them out. Remember, when the ecosystem collapsed, the mammals proliferated and the dinosaurs died out.

© 2016, jumptoconsulting.com. All rights reserved.

Avoid Tax Audits… Keep Your Books Clean…

Just finished gathering my annual tax information, so taxes are on my mind. It gets shipped out tomorrow to my accountant, who (as a consultant) will do the financial magic.

Years ago my accountant advised me to keep good records and to keep them clean. One never knows when one might be audited. Sometimes it is purely random, and sometimes it is the result of an abnormal condition that flags your return. .

According to a recent news article, 1 % of IRS tax returns are audited. It is slightly higher for small businesses. It seems some business owners can’t resist the temptation to fudge the numbers, either through questionable deductions or hiding income.

My advice — do NOT do this! An audit can easily cost you thousands of dollars — fees, lost time, and lost revenues. And while you can deduct the legal/accounting expenses, you can’t deduct or recover lost revenues — they are gone forever.

Furthermore, once you fail an audit, expect to be audited again. I know one small business colleague who learned that lesson the hard way. His audits went on for several years.

More advice — use a CPA! Even if you can do the taxes yourself. Nothing like having a CPA (Certified Public Accountant) sign your tax return for credibility with the tax agencies. Or at least signal them that you have a professional tax advisor in your corner.

To keep the costs down, I keep my own books. Nothing fancy here — I used Quicken for years. Although a simple check register system, it can generate various reports. Such as the P&L (profit and loss) statement, which my CPA uses to prepare my taxes.

My CPA has helped in several other ways. Setting up a chart of accounts, sharing general business advice, filing other reports, and providing vetted referrals for insurance and financial management. It has been money well spent.

If you do get audited, don’t despair. I’ve been audited twice — once by the IRS, and once by the great state of Arizona.

The IRS audit was supposedly “random.”

The conversation went something like this:

Auditor – Which is better for you? To come into our office next Tuesday or next Wednesday?

Me — Neither. But can my CPA handle this? He prepared the return.

Auditor — Uh… yes… I guess that would work.

I suspect the audit was not random at all. But the issue got resolved, whatever it was.

End of audit.

The Arizona audit was supposedly due to high medical expenses one year.

The conversations went something like this:

Auditor – I need to verify all your medical expenses.

So I sent copies of all the bills.

Auditor – Now I need to verify all your insurance payments.

So I sent copies of all the payments.

Pretty sure the auditor thought I did not save these statements. I also included a list of expenses I had missed — a couple of drug charges, plus mileage for the various medical appointments.

I then asked if I should file an amended return to get money back.

End of audit.

Thanks to a CPA, clean books, and good records, I passed both times. And I didn’t lose any sleep over either one. In fact, it felt pretty good to put a stop to any fishing expeditions.

Keep your books clean too — it is just good business to do so!

© 2016, jumptoconsulting.com. All rights reserved.

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