General Consulting
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, https:. All rights reserved.
Do you sell like an engineer???
This post is for my fellow geeks. It was inspired by a recent post at LinkedIn Pulse titled “Do You Buy Like an Engineer? Probably Not.”
The author points out that many A/E/C (architectural/engineering/construction) firms stumble in their sales efforts when they assume their clients think just like them.
If the client is another engineer, that may be true. But if not (such as a government entity or even general management), there can be a serious misfire.
She points out that engineers are different. We engineers know that – see this post. 🙂 But she also points out that one must adjust the sales message to the client.
Here is my comment:
Very good article, and excellent comments. As a consulting engineer (30+ years) and former sales engineer (10 years), I agree.
But the reverse is true. If you are selling to engineers, you better give them details. If you try to “fluff and bluff” they will eat you alive.
As a young engineer preparing a capital equipment request, I was advised to limit the digits to two for managers ($20K, not $19,767.55.)
The joke was their brains could not handle larger numbers. But I quickly learned managers had a broader view. Both views are often needed.
So I use different approaches for engineers and managers in my business dealings. Your point is well taken – one must adjust the sales message to the audience. Don’t talk French to a German.
Thanks for sharing your insights!
Selling consulting services is all about communications. It is NOT about manipulation, like “overcoming objections” — how I hate that term!
Rather, it is having conversations about client problems and/or aspirations, and helping craft appropriate solutions. Like being a doctor or architect — not just another peddler.
But you must speak the client’s language. That was the author’s original point.
© 2016, https:. All rights reserved.
Some comments on travel expenses…
Had a recent inquiry on how I handle travel expenses. Here are my policies:
- Travel expenses are billed at cost – no markup. Some consultants mark up the travel, but I feel this is cheesy.
- Air fare purchased is normally refundable/changeable. Saves problems if the schedule changes.
- Out of town travel time is billed at one day anywhere in the continental US. Keeps it simple. Overseas travel time is negotiated, usually two or three days.
- Local travel time is billed portal-to-portal for less than a full day. Four hour minimum. No extra travel charge for a full eight hour day.
- I make my own travel arrangements. If the client does, they are subject to my approval.
- A $2500 advance is required prior to any travel. Lost money once on a bankruptcy – won’t happen again.
These details are included in my “Terms and Conditions” – a single page of boiler plate attached to quotations. Here is the verbiage:
Expenses – All expenses will be billed at actual cost, with no markup. These expenses include all travel costs, test lab and subcontractor fees, and other expenses incurred for the client.
State or local withholding taxes, if applicable, will be treated as an expense and added directly to the invoice.
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.
-Outside Contiguous United States – To be determined.
-We normally make our own travel arrangements, but if made by client, they are subject to approval. Overseas travel is “business” class.
Hope this helps.
© 2016, https:. All rights reserved.
Follow your passion… NOT…
Too many “entrepreneurial” bloggers suggest you simply “follow your passion.”
Unfortunately, that alone is not enough. You better be able to make money at it! Here are two stories that illustrate the point:
The Ice Cream Store…
At a professional meeting some years ago, one of my colleagues said to ask Dick about his ice cream store.
“Ice cream store?” I responded. “We’re a bunch of consulting engineers. What’s with the ice cream store?”
“Just ask,” he responded with a twinkle in his eye.
So I did. As engineers, we often like to twist our colleagues’ tails, and I was pretty sure that was what this was all about. But it turned out there were some valuable lessons in the story.
Dick told how his daughter had long wanted to have her own business. Being a good dad, he agreed to help her. With stars in her eyes, she decided to open an ice cream store. Not a franchise, but an independent store, that she could decorate and run how she saw fit.
How cool is that?
Unfortunately, this was her first business venture. No customer surveys, no location research, no marketing of any kind. Build it and they will come, right?
With some luck, the store was moderately successful. Enough so that soon a second ice cream store opened up down the street. Another would be entrepreneur with stars in her eyes also thought it was a cool idea, and jumped in.
The net result. Neither store now made enough to break even. Within a year both stores went bankrupt.
There are a couple of lessons here:
- Make sure there is a want or need for your products or services.
- Make sure there are some barriers to entry.
- Make sure there are enough customers able and willing to pay.
Just because it looks cool, doesn’t mean it is a viable business!
Roto-Rooter isn’t particularly cool, nor was our consulting practice. Like Roto-Rooter, we fixed problems that others did not care to handle.
And while our consulting practice was not as cool as an ice cream store, we enjoyed it — and we made a darn good living at it.
The Country Doctor…
In an earlier post, I told of my great-uncle’s medical bag, and how a few simple tools coupled with the right knowledge and experience saved lives in the early 1900s. His medical practice spanned a half century. A successful professional consulting career.
His first passion, however, was music. As a young man, he dreamed of being a concert violinist. But he realized the odds of making a decent living playing the violin were not good.
So he made a career out of a second passion. Healing people through the practice of medicine. Music became an avocation, not a vocation.
He found great satisfaction in both. He was an accomplished physician, and also an accomplished musician. Thanks to his decision, he lived life well.
I heard this story years later from his wife, my great aunt, who was also his nurse. Since he passed away when I was young, I hardly knew him. But I always found his decision to be very wise. Find something you like to do, AND with which you can make a living.
You can always make a hobby of other passions.
So before you quit your job to follow your passion, make sure there is a need, there are barriers to entry, and there are clients willing/able to pay. Otherwise it is just a hobby.
© 2016, https:. All rights reserved.
How we sold 130,000 books in one day…
For many years, this was a “trade secret,” but now the story can be told.
Simple — we gave them away — for FREE — as a supplement to a leading engineering magazine. And did it ever pay off!
The original plan was a twelve part series in Engineering Design News (EDN) in 1994. The editor would not run it until we had six articles ready to go. Fair enough. So I wrote one article a month – after all, we still had an active engineering consulting practice to run.
Upon submitting the first six articles, the editor suggested bundling them all together as a book supplement to the magazine. At first, I balked. The initial strategy was a year long exposure (one article a month). Drip marketing…
But the more I thought about it, the more I liked it. So I agreed, and even offered to help procure advertisers. EDN jumped at that offer — we were in a niche market, and we knew the key advertisers.
We contacted those we thought would be most interested, and ever so gently twisted their arms. Those who did sign up later thanked us. Original copies still sit on bookshelves.
The supplement immediately went into reprints. In 2001, EDN asked us to update the material, and then they did subsequent reprints. I added two chapters and updated the a time-sensitive chapter on regulations. The rest stayed pretty much the same.
In 2005, EDN decided not to continue with the reprints. So they returned the copyright, and we then offered printed books for sale on our website and for handouts in our classes.
Several thousand copies later, we added a PDF version for download. Although not free, both versions continue to be popular.
When the original book hit, the phone rang off the hook. Overnight, it propelled us from a small local consulting firm to one of national prominence in our field.
The book ruffled a few feathers – a few complained it was not technical enough. But I was not writing for the academics or experts. Rather, I was writing for the design engineer who had just encountered his or her first electromagnetic interference problem — and a likely candidate for our services.
Overall, our first book* was a great (if somewhat accidental) success. We were paid a nominal amount for writing it, but not nearly enough to pay for the time. In retrospect – I would have done it for free, given the exposure it gave us and the business it brought in. Probably in excess of $10 million over the years.
Some additional information. I’ve been mixing “I and we” for a reason. While I wrote the bulk of this book, my late business partner (Bill Kimmel) edited and added his comments.
At the same time, he was writing a book on medical devices, which I edited and added my comments. Later, we collaborated on a third book. So both names appear on all three books as co-authors.
Writing a book is a big challenge. An even bigger challenge is getting it into the hands of prospective clients.
Realizing our primary business was consulting — not writing — we elected to give away our first book. It was a huge marketing successes!
P.S. In addition to the books, we wrote over 200 technical articles (for free,) and published a free client newsletter for over 20 years. It has all been a lot of work, but also a lot of fun. And it greatly enhanced the visibility and credibility of our consulting firm.
Don’t be afraid to share your expertise – for FREE. The pay off is there!
* Read the first chapter of the “EDN Magazine Designer’s Guide to EMC” here.
© 2016 – 2023, https:. All rights reserved.
2015 Annual Review…
Another year about gone, and once again it is 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 as always, I’ll review three categories:
- JumpToConsulting (www.jumptoconsulting.com)
- EMI-GURU aka Kimmel Gerke Associates, Ltd. (www.emiguru.com)
- Personal (www.linkedin.com/in/darylgerke)
But first, a quick overview…
The JumpToConsulting project is now FIVE years old. The catalysts were questions by my older son, questions by 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 is now almost FORTY years old, which 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 young engineer.
The EMI-GURU project 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 almost 40 years in the consulting business!
LOOKING BACK on 2015…
Jump-to-Consulting – The blog is up to 185 posts. Had planned on more but got sidetracked with my business partner’s cancer. Now back on track, with at least one post per week. Still have well over 100 ideas for new posts.
Not many readers (it is a pretty tight niche), but it has helped several Jumpers. So don’t be bashful — your questions and feedback mean a lot, and they inspire me to keep going.
EMI-GURU – Sad news here. My good friend and business partner of almost 40 years passed away in April from pancreatic cancer. It was a total surprise. Some days I feel like Laurel without Hardy, or Mutt without Jeff. I usually advise against partnerships, but ours was special. I’ll address partnerships in a future post.
As a result, I’ve ceased most consulting, and refer business to select colleagues. I remain involved with the technical classes, something I always enjoyed. Not ready to totally quit. More details at EMIGURU.
Personal – Although a crazy year, still put on about 8000 miles in the RV, with trips to visit grandkids in MN and CT. Also had several weekend trips with friends.
Moved back to our house, after the less than successful patio home experiment. Lesson learned – beware of HOAs (home owner’s associations.)
Sami the rescue mutt continues to bring joy, along with daily exercise as my “personal trainer.” But due to the stress, the weight crept up about 15# as I fell off the SEC (Stop Eating Crap) diet. You just can’t fool Mother Nature.
LOOKING FORWARD to 2016…
Jump-to-Consulting – Keep on blogging, with at least one post per week. Also considering several other enhancements that were sidetracked in 2015. Watch my blog for more details. Better yet, sign up for the newsletter, or drop me a line!
EMI-GURU – Continue teaching technical classes, but not more than once month. There is nothing like seeing a younger engineer (and even an old timer) suddenly “get it.”
Personal – Spend time reading, writing, and traveling in our little RV. Restart the SEC diet. Get back into ham radio. Play with the mutt, and just goof off more!
Wishing you all the best in 2016! And THANK YOU for reading my blog.
© 2015, https:. All rights reserved.
Ten Tips For Better Technical Writing…
Writing technical articles (or white papers) can be very effective marketing methods. They create both credibility and visibility at low cost, and can produce high results. With over 200 articles, it certainly worked at Kimmel Gerke Associates!
Getting articles published, however, takes time and effort. It may seem mysterious at first, but help is on the way — thanks to Bob Bly, an engineering colleague turned very successful copywriter. (Click here to see Bob’s “success story.”)
I just purchased his recent e-book “Marketing with Articles” and found it filled with practical nuts and bolts information on both writing and publishing technical articles. Even though I’m no novice, I consider it $29 well spent.
Here is an excerpt from this 129 page guide. Print this out and review it the next time you write anything technical — article, white paper, report, or…
TEN TIPS FOR BETTER TECHNICAL WRITING
by Robert BlyI. Know your readers. Are you writing for engineers? managers? laymen?
2. Write in a clear. conversational style. Write to express – not impress.
3. Be concise. Avoid wordiness. Omit words that do not add to your meaning.
4. Be consistent … Especially in the use of numbers. symbols. and abbreviations.
5. Use jargon sparingly. Use technical terms only when there are no simpler words that can better communicate your thoughts.
6. Avoid big words. Do not write “utilize” when “use” will do just as well. (My personal pet peeve…)
7. Prefer the specific to the general. Technical readers are interested in solid technical information and not in generalities. Be specific.
8. Break the writing up into short sections. Short sections. paragraphs. and sentences are easier to read than long ones.
9. Use visuals. Graphs, tables, photos, and drawings can help get your message across.
10. Use the active voice. Write “John performed the experiment,” to “The experiment was performed by John.” The active voice adds vigor to writing.
As a bonus, you can start doing this NOW – even if you have not yet made your own JumpToConsulting. Done right, it poses no threat to current employers, and may even enhance your credibility with your bosses.
So read it, and then get busy with YOUR articles. Yes, you can do it!
And thank you, Bob, for sharing your wisdom, and keeping it so economical!
“Marketing with Articles”, an e-book by Bob Bly (Copywriter/Consultant), 2014, $29
Order Here: www.getfamouswritingarticles.com
Disclosure – I have NO affiliation with Bob, and receive NOTHING in return – other than the satisfaction of sharing a valuable resource.
Past articles you may find of interest:
-Lead Generator #1 – Write Articles
-Lead Generator #2 – Develop White Papers
© 2015, https:. All rights reserved.
Avoid snarky political comments…
Time for a mini-rant.
With the political season in full swing, the snarky comments flow on the Internet. But as a consultant, not a good idea to publicize your views, no matter how tempting.
This post was inspired by a recent comment on a popular business blog. One guy took a cheap political shot totally unrelated to the discussion. Not only did it contribute nothing, it made him look like an immature fool.
Just out of curiosity, I visited his web site, thinking it might explain things. The site (a book store) was not political, so he unnecessarily alienated half his prospective readers/buyers.
As a strategy, leaving snarky comments might make sense if you were trying to attract those who share your views. For example, if you were selling a political book or raising political funds. Or perhaps as a political “consultant”…
But if not, why take the risk?
Best to avoid politics, religion, and other volatile topics. And just good manners not to dump on another person’s website.
End of mini-rant.
P.S. I considered commenting on this breach of etiquette, but decided not to feed the trolls. Suggest you not feed them either 🙂
© 2015, https:. All rights reserved.
Do you need a public office???
It depends… If your clients come to your office, it probably makes sense… If you go to your clients, it probably just wastes money.
In the first case, a public office adds a level of professionalism, and keeps you out of trouble with home owners associations or zoning boards. But don’t get carried away – a modest space will do just fine for the solo practitioner.
In the second case, a spare bedroom works fine. You should, however, set aside a dedicated space for your office. Working on the dining room table gets old very fast. It can also be disruptive to family life.
Some people, however, simply need a separate place to work – regardless of client contact. And some need the outside human contact that an office brings. This is often true for those migrating from the larger corporate environment.
The most important thing when starting out is to conserve resources. You don’t need fancy digs with a prestige address — you just need a safe quiet place to work with adequate resources (desk, computer, telephone, file cabinets, etc.) You are selling your capabilities, not fancy brick and mortar.
Here are some examples I’ve seen over the years:
(1) Kimmel Gerke Associates (yours truly) – Since we almost never had clients visit us, my business partner and I set up separate offices in spare bedrooms.
While we once considered sharing an office, we were both traveling so much it didn’t make sense. Besides, the telephone and the Internet worked fine to stay in contact. And we both liked our twenty foot commutes.
Our “office managers” were our wives, so we truly ran a “mom and pop” operation. Not for everyone, but it worked very well for us.
(2) Advertising – A one person agency, this consultant leased about 100 square feet of space from a print shop. I used her services with good success many years ago after a misfire with a fancy downtown agency. Hire the person, not the office.
That was all the space she needed, plus the shop provided a phone line with a receptionist. It was mutually beneficial, as the print shop now could offer additional services. Besides, she did all her printing with her landlord.
(3) Sales consultant – Another one person firm, this friend leased space in a restaurant, which I found quite clever.
His office had a separate entrance on a lower walk out level. The rent was very attractive, as this was bonus income for the restaurant, and parking was never a problem. And he always had a place to take clients for lunch.
(4) Attorney – My estate attorney is located in building with other small professional firms.
He has about 300 square feet, divided into two rooms. The back room is his legal office, with the appropriate lawyer’s desk, credenza, and meeting table. The front room is the reception area with the requisite legal library, with a desk for his office manager (his wife.)
The office is nicely appointed, but not pretentious. His fees reflect the lower overhead too. I discovered him after being gouged by a large law firm with fancy digs and high overhead.
(5) Web design – My web designer is also located in a building with other small firms.
He has about 200 square feet with a couple of desks for he and his office manager (once again, his wife.) He has a back office in Nepal (where he grew up) so this space is modest but more than adequate. He recently became a US citizen, and is doing very well – the classic immigrant success story.
He started out working from home, but with the birth of two children, he got “kicked out” of his office. He is still close to home, but is not distracted by family activities.
(5) Consulting engineer – Now, a not so successful example story from many years ago.
When we started out as consulting engineers, this refugee from a large government agency told us we MUST get an office. After all, HIS office was located downtown with a prestigious address. He even chided us for working out of our homes.
Within the next year, he went bankrupt.
So, as you consider YOUR JumpToConsulting, do YOU need a public office? Weigh the decision carefully. Unless you are seeing outside clients (or you simply need the private space,) I generally advise against it. But if you do decide on a public office, I’ve shared some clever (and inexpensive) solutions.
Conserve those resources — you can always move to a public office later. Unless you are like me, and just love that twenty foot commute!
P.S. – I once asked a fellow consultant sitting next to me on a cross country flight where he had his office. He looked out the window, grinned, and replied, “Well, today it is about 30,000 feet over Denver…”
© 2015, https:. All rights reserved.
Pursue the Fortune 500…
Here is a response I sent to a newsletter from Bob Bly, the direct-mail/copywriting guru. Bob is a fellow engineer turned successful marketing consultant many years ago.
I subscribe to his free newsletter (and have also bought some products) and find them useful and interesting.
The topic that promoted my response was Bob’s recommendation to pursue Fortune 500 clients. When starting out, you may be intimidated by the “big guys.” Don’t be — they often make the best clients. As Bob pointed out they have deeper pockets… pay higher fees… and have more repeat assignments. They are loyal, too.
Here is my reply:
Hi Bob,
The Fortune 500 companies have been the best clients for our engineering consulting business too.They pay their bills, and bring you back again (assuming you do a good job in the first place.)
Sorry to say that the worst clients have been fellow consulting firms. Had to wait almost a year to get paid by one – their cash flow was abysmal as they were waiting on their clients. After that, we got advance payments from consulting firms.
Smaller firms were somewhere in the middle. If over about 200 employees, they were usually safe. One such smaller firm, however, was owned by a well known “politically connected” equity firm, and stuck us for $10K in a phony bankruptcy.
So I agree with your recommendations. Just because you are an independent practitioner, doesn’t mean you can’t play with the big boys. And once in, they can become very good clients.
Bob was featured here as a past success story – read it here. You can subscribe to his free newsletter here.
P.S. The Fortune 1000 is pretty safe too. Even the bankruptcy was an anomaly, but I am still cautious of privately held firms. (Once burned – twice shy.)
© 2015, https:. All rights reserved.
Be approachable…
This post was inspired by a popular RV blog I’ve followed and enjoyed for several years. The author added this to a recent blog post:
PRIVACY POLICY AT OUR CAMPS: NO VISITORS, NO DROP-INS, NO PHOTOS, NO EXCEPTIONS. THANK YOU.
This accompanied a terse reply to an RV newbie who expressed hope in meeting her, as our blogger had inspired and informed the newbie with her blog. I found it hurtful.
While there is likely something that precipitated this, I still respectfully disagree. Anyone who RVs knows the culture encourages cordiality.
No, you don’t have to become best friends, but being friendly is the order of the day. We’ve had many a pleasant conversation with our RV neighbors. Found great places to eat,visit, and camp too!
Unfortunately, I’ve seen similar behavior with consultants – to their detriments. It may be unintended, but such behavior can come across as arrogance. Not good. Remember, people buy from those they know, LIKE, and trust.
In our case, we long had a formal policy to be approachable. As older engineers, we were particularly worried about intimidating younger engineers, so we took positive steps.
- We responded right away to email or phone questions (at no charge.)
- We welcomed newbies at trade shows or other events (always good for a beer.)
- We shared advice on becoming consultants (several have joined the ranks – yea!)
We knew it worked one day when I ran across a quote on a professional forum. Asking for a referral, the response was “Call Kimmel Gerke Associates. Not only do they know what they are doing, but they are very easy to work with.” You can not buy advertising like that!
Later, that sentiment was expressed when my business partner passed away early this year. He was a quiet introvert, yet praise came in from around the world (see eulogy.) I’m still hearing from colleagues who treasured his friendly humility, grace, and approachability.
So be approachable — and work at it too. Keep your ego in check. Not only is it good business, but it is also just being a good human being!
© 2015, https:. All rights reserved.
Five Things to Consider for a New Practice…
Here are five questions to ask yourself when starting a consulting practice — or any small business. This post was inspired by an answer to a business post on franchising vs independence. Good advice for new consultants too.
(1) Is it interesting and motivating? There are consulting opportunities everywhere, but you will do much better and be more productive if you enjoy what you are doing. Done right, it won’t even seem like work – at least most of the time 🙂
(2) Is the market big enough? I’ve emphasized identifying your niches, but make sure the niches are not too narrow. Can you identify multiple potential clients, not just one or two? On the other hand, are there too many players in your niches? You don’t want to get lost in the crowds. (We started with two part-time contract clients, and ramped up from there.)
(3) What make you different and unique? Even if you are in a generic area like accounting, what is special and unique about your practice? What sets you apart from the competition, and why should clients choose YOU? (Think about those niches...)
(4) Will the need/market endure? You don’t want to jump in just as the bubble is about to burst. Ask where the market going, but be prepared for changes. Watch for changes, and adapt as needed. (My consulting practice today is very different from 30+ years ago.)
(5) Last, but not least, can you make money? Maybe this should be first, since if you can’t make money, why do it? This is true for non-profits too, where you still have expenses that need to be met. (Consulting is a business, not a charity.)
Five simple questions, but worthy of serous consideration. Unlike the inspiration post, franchising is not an option. If you are making a JumpToConsulting, you are almost always starting from the ground up. But if successful, it is worth it!
© 2015, https:. All rights reserved.
How much is enough?
How much IS enough? The question still haunts me…
Here are three stories. All three affected my thinking. Perhaps they will affect yours.
Story 1…
The question of enough was posed by a fellow consultant several years ago. His wife had just been diagnosed with cancer, and we were talking after a professional society meeting. He was doing some serious introspection, and as a friend and colleague I lent an ear.
“How much is enough?” he mused. He had worked hard, was successful, and had enough in the bank. His immediate priority was enjoying whatever time his wife might have.
So he backed off on the business, and they went on some cruises. She responded well to treatment, and happily, she recovered. But it did reset his priorities on what was enough.
(Update 7/19 – Sadly, she recently passed away, but he reiterated how glad he was that the last several years were well spent on time together rather than gaining a few more dollars.)
Story 2…
My first encounter with enough goes back 45 years. My new boss hosted a Christmas party at his new house on a lake. It was a beautiful place in a beautiful setting. Being recently married, I thought how nice it might be to someday have similar digs.
Later, I thanked him for the party and complimented him on his new house. He smiled, and then offered some fatherly advice.
“Thank you,” he said. “It is nice. It makes my wife happy too. But there is a downside. We put all our money in the house, and as a result, we can’t do anything else.” He continued, “You are just starting out. Be careful about committing to a big fancy house.”
I decided that our modest house was enough. Each time we moved we stuck with enough. And today we have still have enough.
Story 3…
My next encounter with enough came 12 years later. I was working for a successful entrepreneur, who net worth somewhere around $50 million.
An old German who had escaped Hitler, he came to America and worked as an engineer. Following a dream, he started a business in a garage. A combination of working hard and being in the right place at the right time with the right product led to phenomenal success.
But he was still an old engineer at heart. One evening at a trade show, he hosted a bunch of us for dinner. After a few beers (after all, he was an old German), the subject of how much was enough came up.
He said, “You know, a couple of million is probably enough for most of us. How can you spend it all? After that, you are only keeping score.”
Finally, how much is enough for you? Thanks to starting my own consulting practice combined with prudent living, today I can say I have enough.
© 2015 – 2023, https:. All rights reserved.
Join the CBM Club…
I was first introduced to the CBM Club in 2012. What a novel concept!
In August 2011, we bought a small motorhome from Born Free in Humboldt, IA.
At a rally in 2012, I met John Dodgen, the 85 years old founder of Born Free back in the 1960s. What a delightful man, with a continual twinkle in his eye. Over the years, John and his family built the company into a small but highly regarded RV manufacturer.
At one point, I had the chance to talk with John over hamburgers. Always curious about small businesses, I asked him how he got started.
He smiled, and told me his story that went something like this:
After my brothers and I returned to Iowa after World War II, we realized that we could not all share the family farm. Liking the area, I decided to start a small company to manufacturer farm machinery.
One of our most successful products was a special trailer for feeding livestock. A niche product, we we eventually saturated the market. Furthermore, we made them so durable they didn’t wear out.
So I went to my board. I told them I wanted to take the company in a new direction. After much deliberation, I wanted to join the CBM Club.
At this point, John waited for my puzzled response. OK, so what is the CBM Club???
Corn, Beans, and Miami. You see, I’d noticed many farmers buying our machinery grew corn and beans, and then they headed to Miami for the winter. I wanted to do that too.
So I suggested making an RV. A highly durable RV, using the knowledge and experience gained making farm machinery. The first model was a slide in on a pickup truck. It was pretty heavy, so we added a tag axle for support. That was unique to the industry.
Not long after, we added roll bars. This was based on hearing of a fatal RV accident. I directed my design team to figure out how to add this important safety feature.
A few years later, we started building motorhomes. We focused on small truck based units (Class C), and built them with very high quality. Including the roll bars – never been a fatal accident in a Born Free, of which I am proud.
So what lessons can we glean from this for consulting?
— Pick a niche. Don’t try to be everything to everybody
— Be flexible. Be ready to change direction, but try to leverage on past experience.
— Deliver high quality. The market may be smaller, but your customers will love you.
— Don’t compromise. On safety, ethics, or anything else. Your reputation is key.
— Have fun. I will always treasure the story of the CBM Club.
John recently passed away, and will be missed by all — his family, his company, and his customers. What better legacy to leave behind. Our condolences – RIP John.
P.S. –Yes, we love our little Born Free “Built for Two!” Heading back in it from Minnesota (where there are some grandkids) to Arizona (where this is no snow.)
Our version of the CBM Club –joined as a consultant.
© 2015 – 2020, https:. All rights reserved.
Consulting lessons from Pope Francis…
Like many others, I was enchanted by the Pope’s recent visit. And I even gleaned some consulting lessons. To wit:
(1) Be likeable — Pope Francis radiates likeability. Nobody wants to listen to a jerk.
As consultants, this means being genuinely interested in your clients. It means really liking them, and not being mean, snarky, or vindictive.
(2) Be approachable –-Pope Francis rode in simple vehicles, rather than fancy limos.
Remember the auto CEOs and their jets? Many are angered by power when it is abused.
As consultants, we must be careful not to intimidate or annoy. Early on, we realized that as older engineers we might intimidate younger engineers. So we made it a formal business policy to be approachable. It works.
(3) Be honest — Pope Francis spoke truth to power — to Congress — and to the United Nations. Some people didn’t like it, but he let the chips fall where they may.
As consultants, that is what we are paid to do. To speak the truth. To identify and fix problems, not to praise or to suck up.
(4) Be flexible — Pope Francis made changes, even in the face of resistance. He didn’t just talk about it – he did it.
Change is often hard – particularly cultural change. Lot’s of inertia, not to mention politics. Those who enjoy advantages (fair or otherwise) don’t want to give them up.
As consultants, we are often called to be the agents of change.
(5) Be forgiving — As Pope Francis would tell you, nobody’s perfect. Those genuinely seeking forgiveness will be forever grateful.
As consultants, accept those imperfections (including your own), forgive, and move on. You will be a better person for it.
(6) Be humble — Probably the Pope’s the most important lesson. Stories are that he was not always so humble, but worked to learn humility. That speaks volumes about this man.
As consultants, keep your ego in check – you are not the center of the universe. I’ve seen too many cases where a felllow consultant’s ego killed the relationship.
No, I’m not Catholic, but I sincerely respect this man. He is a breath of fresh air. I think he’d be one fine consultant. But maybe he already is!
© 2015, https:. All rights reserved.
Buy Lunch for a Vendor…
Want some quick insight and exposure into a market? Offer to buy a vendor lunch. After all, they spend their lives out in the marketplace.
This is particularly effective in niche markets. You have identified your potential niches, right? If not, review this post.
A new consulting colleague in Phoenix did this with good success.
Upon hanging out his shingle, he took a local sales engineer to lunch to pick his brain about the market. In return, he offered to help the sales engineer with technical support (gratis.)
It was, and is, a win-win situation. As the old saying goes, one hand washes the other.
On a personal note, I had that happen to me as a new sales engineer.
When a customer called about lunch, I figured I was going to hear about our delivery problems. It had been a hard slog and some of his key projects were in jeopardy.
I planned to buy lunch.
But instead, he insisted on buying lunch. Then he and his boss thanked me for my efforts on their behalf. What a pleasant surprise!
As a result, guess who got VERY fast response to future questions and concerns? We all like to be appreciated.
So treat vendors and sales people in your market with respect. And if you get the chance, offer to buy lunch!
P.S. Know someone who might benefit from JumpToConsulting? Please forward a link. Thanks!
© 2015 – 2017, https:. All rights reserved.
Small town living – a path to financial independence?
Here is a reply I left recently at my favorite financial blog, Mr. Money Mustache. Pete, a fellow engineer, spent the last several years challenging and cajoling people to become financially independent.
He “retired” at age 30, and now does what he wants with no financial worries. Lives a nice lifestyle in nice digs, too.
His formula is simple — cut consumption and increase savings. When your income from investments equals your expenses — viola — you are now financially independent. He did it in seven years, and you can too.
So what does this have to do with consulting? You don’t need to be fully financially independent to make your JumpToConsulting, but you DO need some reserves. Assume at least six months with no income.
So if you are overconsuming and living pay check to pay check. you can’t make a JumpToConsulting, or any other jump. You first need to cut your expenses and change your mindset and your lifestyle!
One way to do this is to move to a small town. That is what my older son (the inspiration for this blog) did this year. Here is his story:
Don’t overlook small towns – particularly those about 100-150 miles from a major city.
After living in the city, my older son recently moved to a small town in Minnesota – population 5000. About 100 miles from Minneapolis, it is beyond commuting distance so it is no longer a suburb. But it still close enough for city resources (hospitals etc.) or a big city “fix” if needed.
They bought a nice house for 1/2 the cost in the city. The grade school and a park are across the street, and the high school is a few blocks away. The kids love it – they can bike all over town with their new friends. His commute is under ten minutes of country driving. His wife works in the high school as a teacher’s aide, and loves it.
They were concerned about leaving the city, but have been pleasantly surprised. Small town festivals –wineries — microbreweries — parks with uncrowded campgrounds. It may be rural, but there is still plenty to do. And the big city is still only two hours away.
Looking for a job change, he stumbled – almost by accident – on an executive opportunity with a small medical manufacturer. The company was delighted to get someone with his talent and experience, and they pay him accordingly. The school was delighted to hire his wife too. Big city wages with small town cost of living — how great is that? Plus the quality of life.
These opportunities abound, but you must seek them out. So if you are not yet financially independent, consider this as one way to speed things up — and enjoy the journey immediately. My son admits he never dreamed they would live like this.
A few more details on my son. After taking a company through a complex acquisition, he no longer had a job. Small thanks for helping grow the firm by 10x in a couple of years as their financial guru.
So he took his MBA in finance, his experience, and his proceeds and hung out his shingle as a consultant. The early discussions with him were the catalyst for this blog.
Although he was building the business, it was going slower than hoped. When one of his clients make him an offer he couldn’t refuse as the VP of Finance for a start-up, he jumped at it. Besides, like his dad, he has a love of small business.
But after a couple of years, it became obvious the start-up was stalling. Furthermore, there was friction with the founder, who was unwilling or unable to make necessary changes. (Been there myself.) So rather than wait for the axe to fall, he started a job search.
One interesting opportunity was with a medical device manufacturer in a rural community. As both he and his wife grew up in the city, there was some reluctance to purse it. Still, the job sounded interesting, so they decided to go in a new direction. So far, so good.
I’m proud of my son for taking that chance, and for working hard, like a good consultant, to make a positive impact on the world.
I’m also proud of his brother. A financial attorney in a large Manhattan firm, he recently took a chance and initiated a special project on alternate currencies. As their “Bitcoin-guru”, he too is working very hard to make a positive impact on the world.
Well done, both of you!
P.S. Thanks to the Internet and Fed-X, one can easily consult from small towns. And depending on your niche, you may even find plenty of clients right in you own backyard.
© 2015, https:. All rights reserved.
Thought Leadership – Is is really necessary?
The short answer — NO!
But you DO need to be able to help your clients. Time for a mini-rant.
If you are like me, you are probably weary of hearing about how you MUST become a though leader to succeed in business. Unless, of course, you are pitching books or programs on thought leadership.
But let’s back up. Just what is thought leadership, anyway? Wikipedia says a thought leader is “an individual or firm recognized as an authority in a specialized field, and whose expertise is sought and often rewarded.” Gee – that sounds like a consultant to me.
My big concern is the concept may hold people back. As in, “If I’m not a thought leader, how can I break into consulting?” Don’t let this business jargon bamboozle you.
Think about it. You doctor has specialized expertise that can help you. But do most doctors consider themselves thought leaders? I doubt it. Most just consider themselves professionals doing their jobs — helping their patients.
Now some doctors, such as specialists, may be considered thought leaders. When my wife had an unusual kidney condition, we consulted with one of the world’s experts at the Mayo Clinic. He fit my definition of a thought leader. Even then, he was modest to a fault. (Incidentally, he quickly diagnosed the issue, while ruling out any serious problems.)
There is nothing wrong with aspiring to and becoming a thought leader. But it doesn’t happen overnight, and you DON’T need it to get started as a consultant.
You DO need to identify your niches, and you DO need to be competent and experienced in those niches. In certain areas, you may need to be licensed.
OK, so I don’t need to be a thought leader to start, but how can I eventually become one anyway? Writing and speaking are two good avenues.
Magazine articles and white papers are a good start. A book is even better, preferably published by recognized publisher.
Speeches and seminars also good avenues. All these take time, however, so don’t expect to be vaulted overnight into a thought leadership position.
But don’t overlook just doing a good job for your clients. Experience is a big part of becoming a thought leader, and the only way to get experience is to DO it — over and over.
Malcom Gladwell says it takes 10,000 hours to really master a subject. Some pundits dispute the numbers, but the fact is it takes time and effort to become an expert – or a thought leader.
As an example, we started Kimmel Gerke Associates almost 30 years ago as a couple of reasonably competent engineers. To market ourselves, we started writing magazine articles and doing technical presentations. At that time, we did not consider ourselves though leaders.
Over time, this eventually led to 200+ articles, three books, hundreds of consultations, and training 10,000+ students through public and in-house seminars.
At some point, I suppose, we became thought leaders in our field – not that it really mattered to either of us anyway. But that came later, not right away.
NO, you don’t need to be a “thought leader” to make your JumpToConsulting. But the sooner you do make the jump, the the sooner you can become a thought leader – if that is even your goal in the first place.
© 2015, https:. All rights reserved.
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.
© 2015, https:. 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.
© 2015, https:. All rights reserved.
