1. Becoming an Independent Consultant

2. Contents Making the decision Positioning your practice Marketing plan
Where to locate
Setting up the office
Now you’re lonely
Contractual Relationships with associates
Managing your finances
Setting fees
Legal, insurance and contractual

3. Making the Decision Consider these changes:
Phone contact vs. direct relationships
Need for self-discipline & time management
Acquire more knowledge of admin & financials
Have patience (and resources) in closing new clients
Have a sharply focused marketing strategy
Learn to operate office equipment/computers
Maintain the highest ethical behavior

4. Positioning Your Practice
Identify your unique experience & skills
Your competitive advantages
What has unusual value to potential clients
Can this be communicated effectively
Test out ideas with friendly clients
Consider your marketing strategy:
Types/sizes of clients/industry/geography
Commodity service on an outsourced basis
Convenience, flexibility, cost control
Ideally, narrowly focus in a specialty that is in demand, but has few practitioners

5. Marketing Plan Systematic Marketing is critical
Successful techniques include:
Regular personal letters with clipping or book review
Referrals/testimonial letters from satisfied clients
Make speeches, do seminars or workshops
Write articles as mailing pieces
Publish a newsletter (burdensome on one person)
Develop a web-site
Marketing brochures (can do them w/MS Publisher)

6. Where to Locate Many work effectively out of their homes
Need a pleasant, dedicated room
If an outside office:
Look into office condo or shared space
Avoid renting a conventional office – too costly

7. Setting up the Office Communications is the consultant’s life blood
Have 2-3 dedicated phone lines (one for faxes)
Office equipment includes:
Desk, chair bookcases/shelves, many file cabinets
Good computer, large monitor, UPS, media safe fire proof storage box, scanner, laser printer, CD burner, good fax
Office software:
Microsoft Office, Quicken (or QuickBooks)

8. Now You’re Lonely Schedule informal lunches during the week
Join a health club – and use it!
Plan an errand each day away from the office
Join a service club (Rotary, Lions, etc.)
Develop network of consulting colleagues
Local chapter of The Institute of Management Consultants
Have to work hard at this (overcome jealousy)

9. Contractual Relationships with Associates
Mostly simple letters of understanding defining mutual obligations
Compensation vehicles:
Agree on a per diem or per hour rate – agree via a detailed task plan how many hours/days each will get
Agree on a split of the total fees based on roles with the client (ex – “x” percent for selling the job, “y” percent for managing the client, proportioning balance based on est. hours each is to work on the project
Confidentiality agreement if one party has proprietary technology

10. Managing Your Finances
Maintain meticulous financial records
Obtain a separate tax ID
Keep separate business checking account
Have separate business credit card
Estimate and pay self-employment taxes
Consider self-employed retirement funding:
SEP’s, Keoghs
Defined Benefit Pension Plan for good years
Be careful of the relationship with alliance associates (they could become employees)

11. Setting Fees
Do NOT start out with low fees to speed up client acquisition
Low priced consultants not taken seriously
Potential or actual contributions not valued
Fees depend on:
Nature of the practice
What competition charges
Size and nature of prospective client organizations
In general, base per diem rate is no less than 10-15% less than fees charged by large established competitive consulting firms for similar work
If possible, estimate the total effort and quote a fixed price
Be careful of quoting to “fit client’s budget” – this is discounting

12. Legal, Insurance and Contractual
Need reasonable level of commercial insurance
Includes professional and personal liability
Includes protection of office equipment and records from loss
May need “errors and omissions” insurance
Carefully consider disability insurance
This may be more important than life insurance
With client proposals:
Clearly list deliverables
Basis of fees and invoicing a must
Protect proprietary technology; copyright all written consulting tools, training materials and forms