Start & Run a Consulting Business
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Start & Run a Consulting Business

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174 pages
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Description

Consulting has become a multimillion-dollar industry in North America.
Understand why people will pay you for your opinion
Learn from the author of 15 bestsellers
Convert your knowledge into income
A bestseller through nine editions and 24 printings during the past 25 years!
As society becomes more complicated, people in business, healthcare, education, government, and other fields are calling on specialists to provide answers to complex problems. This practical step-by-step success guide shows how anyone can turn knowledge and experience into a profitable consulting business. Concerns unique to the consulting industry are covered in detail, including:
Assessing yourself and your skills
Determining market opportunities
Regulations and laws affecting the consulting business
Selecting business and professional advisers
Preparing your business plan
Setting fees and billing clients
Keeping records
Minimizing taxes
Avoiding professional liability and preventing losses
Writing a successful proposal
Maintaining healthy client relations
Running your office smoothly
Hiring sub-consultants
INTRODUCTION xix
1 UNDERSTANDING THE CONSULTING BUSINESS 1
1. WHAT IS A CONSULTANT? 1
2. WHO GOES INTO CONSULTING? 4
3. WHY DO ORGANIZATIONS USE CONSULTANTS? 4
3.1 Temporary assistance 4
3.2 Objective review 4
3.3 Third-party request for problem identification and resolution 5
3.4 Surviving a crisis 5
3.5 Initiating change 5
3.6 Obtaining funding 5
3.7 Selecting personnel 5
3.8 In-house education 5
3.9 Dealing with internal personnel difficulties 5
3.10 Delay tactics 5
CONTENTS
vi Start & run a consulting business
3.11 Executive assistance 6
3.12 Government regulatory compliance 6
3.13 Socio-economic and political changes 6
3.14 Government excess funds 6
4. REGULATIONS AFFECTING CONSULTANTS 6
2 SELF-ASSESSMENT 7
1. INTRODUCTION 7
2. ATTRIBUTES OF SUCCESSFUL CONSULTANTS 7
3. ASSESSING YOURSELF AND YOUR MARKETABLE SKILLS 8
4. RESOURCES FOR IDENTIFYING CONSULTING OPPORTUNITIES 8
4.1 Consulting newsletters and websites 8
4.2 Newspapers and magazines 8
4.3 Consulting and professional associations 9
4.4 Government agencies and publications 9
4.5 Public and university libraries 9
4.6 Continuing education courses and seminars 9
4.7 Competitors 10
3 SETTING UP YOUR BUSINESS 13
1. START-UP COSTS AND MONTHLY EXPENSES 13
1.1 Start-up costs 14
1.2 Monthly overhead expenses 14
1.3 Personal expenses 14
2. SELECTING A NAME 15
2.1 General considerations 15
2.2 Fictitious name 18
3. SELECTING AN OFFICE 18
3.1 Home office 18
3.2 Office outside of home 19
3.3 Equipping an office 22
3.4 Office supplies 24
3.5 Personnel 25
Contents vii
4. SELECTING A TELEPHONE SYSTEM 26
4.1 A separate phone at home 26
4.2 Business line terminating at answering service 26
4.3 Business line terminating at home and answering service 27
4.4 Overline 27
5. SPECIAL TELEPHONE FEATURES 27
5.1 Call waiting 27
5.2 Call forwarding 27
5.3 Three-way calling 27
5.4 Speed calling 27
5.5 Phone/fax 27
5.6 Call display/name display 27
5.7 Call return 28
5.8 Call again 28
5.9 Call answer 28
6. SAVING MONEY ON LONG DISTANCE PHONE CALLS 28
6.1 Charging long distance calls to clients 28
6.2 Calling cards 28
6.3 VoIP 28
7. OTHER COMMUNICATION OPTIONS 29
7.1 Voice mail 29
7.2 Generic telephone number 30
7.3 Pager 30
7.4 Cellular phone 31
7.5 E-mail 31
7.6 The Internet 31
8. DEVELOPING YOUR WEBSITE 32
8.1 Pitfalls to avoid 32
8.2 Keeping the website interesting 33
8.3 Designing an effective web page 33
viii Start & run a consulting business
4 LEGAL FORMS OF BUSINESS STRUCTURE 35
1. INTRODUCTION 35
2. SOLE PROPRIETORSHIP 35
2.1 Advantages 36
2.2 Disadvantages 36
3. PARTNERSHIP 37
3.1 Advantages 37
3.2 Disadvantages 37
3.3 Partnership agreement 38
3.4 Kinds of partners 38
4. CORPORATION 38
4.1 Advantages 38
4.2 Disadvantages 40
4.3 Corporate purposes 40
4.4 Shareholders’ agreement 40
4.5 Maintaining the corporate protection 41
5. S CORPORATION (SUB-CHAPTER OR SUB-S) (UNITED STATES) 43
6. LIMITED LIABILITY CORPORATION (LLC) (UNITED STATES) 43
5 SELECTING BUSINESS AND PROFESSIONAL ADVISERS 45
1. GENERAL CRITERIA FOR ADVISER SELECTION 45
1.1 Recommendations 46
1.2 Credentials 46
1.3 Clientele 46
1.4 Fees 46
1.5 Technical competence and industry knowledge 47
1.6 Style and personality 47
1.7 Confidence 47
1.8 Communication 47
1.9 Commitment 48
1.10 Availability 48
1.11 Length of time in practice 48
Contents ix
1.12 Ability to aid growth 48
1.13 Small firm versus large firm 48
1.14 Comparison 48
2. LAWYER 49
3. ACCOUNTANT 49
4. BANKER 50
5. INSURANCE BROKER 51
6. CONSULTANTS 51
6.1 Private consultants 51
6.2 Consultants subsidized by the government 51
6 PREPARING YOUR BUSINESS PLAN 53
1. WHY PREPARE A PLAN? 53
2. FORMAT 54
2.1 Introduction 54
2.2 Business concept 54
2.3 Financial plan 54
2.4 Appendixes 57
3. ESTIMATING YOUR START-UP FUNDS 57
3.1 Assessment of personal monthly financial needs 57
3.2 Estimated business start-up cash needs 57
4. SUMMARY 57
7 HOW TO OBTAIN FINANCING 71
1. TYPES OF FINANCING 71
1.1 Equity 71
1.2 Debt 72
2. SOURCES OF FINANCING 74
2.1 Equity 74
2.2 Debt 75
3. COMPETITION BETWEEN LENDERS 75
4. TIPS ON APPROACHING YOUR LENDER 76
5. WHY LOANS ARE TURNED DOWN 77
x Start & run a consulting business
6. TYPES OF SECURITY A LENDER MAY REQUIRE 78
6.1 Endorser 78
6.2 Co-maker 78
6.3 Guarantor 78
6.4 Promissory note 79
6.5 Demand loan 79
6.6 Realty mortgage 79
6.7 Chattel mortgage 79
6.8 Assignment of accounts receivable 79
6.9 Postponement of claim 79
6.10 Pledge of stocks or bonds 79
6.11 Assignment of life insurance 79
8 KEEPING RECORDS 81
1. ACCOUNTING AND BOOKKEEPING 81
1.1 Separate record-keeping 82
1.2 Double-entry and single-entry bookkeeping 82
1.3 One-write accounting system 83
1.4 Cash or accrual record-keeping 83
2. BASIC ACCOUNTING RECORDS 83
2.1 Sales journal 83
2.2 Cash receipts journal 83
2.3 Accounts receivable ledger and control account 84
2.4 Accounts payable journal 84
2.5 Cash disbursements journal 84
2.6 Payroll journal 85
2.7 General ledger 85
3. NONFINANCIAL RECORDS 85
3.1 Personnel records 85
3.2 Tax records 85
3.3 Service records 86
Contents xi
4. OFFICE SYSTEMS 86
4.1 Handling new clients and projects 86
4.2 Time records 86
4.3 Standard form letters of agreement or contracts 86
4.4 Billing, credit, and collection 87
4.5 Calendars 87
4.6 Filing systems 87
9 HOW TO LEGALLY MINIMIZE PAYING TAX 91
1. TAX AVOIDANCE AND TAX EVASION 91
2. CASH OR ACCRUAL METHOD 92
3. FISCAL YEAR-END 92
4. CORPORATIONS, PROPRIETORSHIPS, OR PARTNERSHIPS 92
5. MAXIMIZING DEDUCTIBLE EXPENSES 93
5.1 Home office 93
5.2 Automobile 94
5.3 Entertainment 94
5.4 Travel 94
5.5 Bad debts 95
5.6 Insurance 95
5.7 Education and professional development 95
5.8 Salaries 95
5.9 Equipment 96
5.10 Furnishings 96
10 INSURANCE 97
1. OBTAINING INSURANCE 97
1.1 Agencies 97
1.2 Insurance brokers 97
1.3 Clubs and associations 98
2. PLANNING YOUR INSURANCE PROGRAM 98
3. TYPES OF BUSINESS AND PERSONAL INSURANCE 99
3.1 General liability 99
3.2 Products or completed operations liability 99
xii Start & run a consulting business
3.3 Errors and omissions liability 99
3.4 Malpractice liability 99
3.5 Automobile liability 99
3.6 Fire and theft liability 100
3.7 Business interruption insurance 100
3.8 Overhead expense insurance 100
3.9 Personal disability insurance 100
3.10 Key person insurance 100
3.11 Shareholders’ or partners’ insurance 100
3.12 Business loan insurance 101
3.13 Term life insurance 101
3.14 Medical insurance 101
3.15 Group insurance 101
3.16 Workers’ compensation insurance 101
11 PROFESSIONAL LIABILITY 103
1. CONTRACT AND TORT LIABILITY 103
1.1 Contract liability 103
1.2 Tort liability 104
2. REASONS FOR CLAIMS 105
2.1 Counterclaims 105
2.2 Conflict of interest 105
2.3 Conflicting interest of clients 105
2.4 Delegation of part of contract to employee or subconsultant 105
2.5 Third party damages 105
2.6 Unclear expectations by client 105
3. HOW TO AVOID PROFESSIONAL LIABILITY AND PREVENT LOSSES 105
3.1 Client control 106
3.2 Cost estimates 106
3.3 Carefully drafted contracts 106
3.4 Free opinions 106
3.5 Law 106
3.6 Subconsultants 106
Contents xiii
3.7 Records, systems, and procedures 107
3.8 Continuing education 107
3.9 Quality control 107
3.10 Communication 107
4. PROFESSIONAL LIABILITY INSURANCE 107
4.1 Increasing deductibles 107
4.2 Comparing prices 108
4.3 Changing the type of coverage 108
5. PRACTICING WITHOUT INSURANCE 108
12 CREDIT, BILLING, AND COLLECTION 109
1. DISADVANTAGES OF EXTENDING CREDIT 109
2. ASSESSING THE CLIENT 110
3. AVOIDING CLIENT MISUNDERSTANDINGS ON FEES 111
3.1 Communication 111
3.2 Written contract 111
3.3 Invoice 112
4. MINIMIZING RISK OF BAD DEBTS 112
4.1 Advance retainer 112
4.2 Prepaid disbursements 112
4.3 Progress payments 112
4.4 Regular billing 112
4.5 Billing on time 112
4.6 Accelerated billing 113
4.7 Withholding vital information 113
4.8 Holding up completion of important stage of project 113
4.9 Personal guarantee of principals of a corporation 113
4.10 Monitoring payment trends 113
4.11 Follow-up of late payments 113
4.12 Involving client in assignment 113
5. BILLING FOR SERVICES 113
6. WHY CLIENTS PAY LATE 114
7. COLLECTING LATE PAYMENTS WITHOUT LEGAL ACTION 117
xiv Start & run a consulting business
8. LEGAL STEPS IF ACCOUNT REMAINS UNPAID 118
8.1 Collection agency 118
8.2 Small-claims court 118
8.3 Lawyers 118
9. BAD DEBTS AND TAXES 119
13 SETTING FEES 121
1. DAILY BILLING RATE (PER DIEM) 121
1.1 Labor 121
1.2 Overhead 121
1.3 Profit 122
2. HOURLY RATE 123
3. CALCULATING A FIXED PRICE QUOTATION 123
3.1 Determining a fixed price estimate 123
3.2 Tips on preparing fixed price estimates 124
4. FIXED PRICE PLUS EXPENSES 126
5. CONTINGENCY FEE 126
6. PERCENTAGE FEE 127
7. PROJECT VALUE FEES 127
8. RETAINER FEES 127
9. EQUITY FEES 127
10. UTILIZATION RATE 128
11. VARYING YOUR FEES 128
12. INCREASING FEES 128
13. INCREASING PROFITS WITHOUT INCREASING FEES 129
14 DETERMINING MARKET OPPORTUNITIES 131
1. PRIVATE SECTOR 131
1.1 Individuals 132
1.2 Small businesses 132
1.3 Medium-size businesses 132
1.4 Large companies 133
Contents xv
2. PUBLIC SECTOR 133
2.1 Making contacts and obtaining information 133
2.2 Understanding the government approval system 135
3. GRANT CONSULTING 135
15 MARKETING YOUR CONSULTING SERVICES 137
1. WHAT YOU NEED TO MARKET YOUR SERVICE 137
2. MARKETING PLAN 138
3. MARKETING TECHNIQUES 138
3.1 Newspaper 139
3.2 Trade or professional journals 139
3.3 Directories 139
3.4 Brochures 139
3.5 Direct mail 140
3.6 Contact network 142
3.7 Membership in professional, trade, or business associations 143
3.8 Donating your services 143
3.9 Attending public and professional meetings 143
3.10 Lectures 143
3.11 Teaching 144
3.12 Seminars and workshops 144
3.13 Free media exposure 145
3.14 Radio and television talk shows 145
3.15 Letters to the editor 145
3.16 Writing articles 146
3.17 Writing a book 147
3.18 Have articles written about you 147
3.19 Announcement columns 147
3.20 Newsletters 147
3.21 Website 148
16 THE CLIENT INTERVIEW AND CLIENT RELATIONS 149
1. PURPOSE OF INTERVIEW 149
2. BEFORE THE MEETING 149
xvi Start & run a consulting business
3. DURING THE INTERVIEW 152
4. AFTER THE INTERVIEW 153
5. WHY YOU SHOULD TURN DOWN BUSINESS 153
6. HOW TO TURN DOWN UNWANTED BUSINESS 154
17 CONSULTING PROPOSALS 157
1. WHAT IS A PROPOSAL? 157
2. PUBLIC VERSUS PRIVATE SECTOR PROPOSALS 157
3. SOLICITED VERSUS UNSOLICITED PROPOSALS 158
4. SIMPLE AND FORMAL PROPOSALS 158
4.1 Simple proposal 158
4.2 Formal proposal 158
5. GUIDELINES AND FORMAT FOR A SUCCESSFUL PROPOSAL 159
6. PRESENTING YOUR PROPOSAL 159
7. PROPOSAL FOLLOW-UP 162
8. WHAT TO DO IF YOUR PROPOSAL IS NOT ACCEPTED 162
9. HOW TO AVOID GIVING AWAY FREE CONSULTING 162
9.1 Potential client interview or discussion 163
9.2 Analysis of client’s need 163
9.3 Detailed advice in the written proposal 164
9.4 Potential future benefit 164
9.5 Additions to the original fixed price contract 164
9.6 Follow-up consultation 164
9.7 Relatives, associates, and friends 165
18 CONTRACTS 167
1. ESSENTIALS OF A VALID CONTRACT 167
1.1 Offer 168
1.2 Acceptance 168
1.3 Consideration 168
1.4 Competency 168
1.5 Legality 168
2. WHY A WRITTEN CONTRACT IS NEEDED 168
3. STRUCTURE OF FORMAL CONTRACT 170
Contents xvii
4. TYPES OF CONTRACTS 170
4.1 Letter of agreement 170
4.2 Letter of agreement with general terms and conditions appended 174
4.3 Formal contract 174
4.4 Subconsulting agreement 174
4.5 Agency agreement 186
4.6 Letter of retainer agreement 187
5. PREPARING YOUR OWN CONTRACT 187
19 TIME MANAGEMENT 189
1. KEY STRATEGIES 189
1.1 Set priorities 189
1.2 Be organized 190
1.3 Delegate 191
1.4 Be decisive 191
2. AVOIDING TIME WASTERS 191
2.1 Use voice mail effectively 191
2.2 Avoid too many telephone calls 192
2.3 Avoid overscheduling 192
2.4 Avoid too much paper 192
2.5 Follow meeting agendas 193
2.6 Avoid perfectionism 193
20 EXPANDING YOUR PRACTICE 195
APPENDIX — PROPOSAL EVALUATION CHECKLIST 197
BIBLIOGRAPHY 203
xviii Start & run a consulting business
CHECKLISTS
1 ARTICLES IN A PARTNERSHIP AGREEMENT 39
2 GOVERNMENT CONTRACT 184
TABLE
1 MAJOR CONSULTING SUBJECT AREAS 2
SAMPLES
1 START-UP EXPENSES 14
2 BUSINESS PLAN FORMAT 59
3 GENERAL INVOICE 115
4 DETAILED INVOICE 116
5 FIXED PRICE COSTING SHEET 125
6 PROPOSAL FORMAT 160
7 CONTRACT FORMAT 171
8 LETTER OF AGREEMENT (PREPARED BY CONSULTANT) 175
9 LETTER OF AGREEMENT (PREPARED BY CLIENT) 176
10 STATEMENT OF GENERAL TERMS AND CONDITIONS 178
11 FORMAL CONSULTING CONTRACT 180
WORKSHEETS
1 SELF-ASSESSMENT 11
2 ESTIMATING START-UP EXPENSES 15
3 MONTHLY EXPENSES 16
4 MONTHLY PERSONAL EXPENSES 17
5 OPENING BALANCE SHEET (NEW BUSINESS) 65
6 INCOME AND EXPENSE FORECAST STATEMENT (NEW BUSINESS) 66
7 CASH FLOW BUDGET 67
8 PERSONAL NET WORTH STATEMENT 68
9 STATEMENT OF ACCOUNTS RECEIVABLES 69
10 PROSPECTIVE CLIENT SHEET 88
11 NEW CONSULTING ASSIGNMENT SHEET 89
12 TIME AND SERVICE RECORD 90

Sujets

Informations

Publié par
Date de parution 24 février 2012
Nombre de lectures 4
EAN13 9781770408005
Langue English
Poids de l'ouvrage 1 Mo

Informations légales : prix de location à la page 0,0032€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

Exrait

START & RUN A CONSULTING BUSINESS
Douglas Gray, BA, LLB
Self-Counsel Press (a division of) International Self-Counsel Press Ltd. USA Canada

Copyright © 2016

International Self-Counsel Press All rights reserved.
Contents

Cover

Title Page

Introduction

Chapter 1: UNDERSTANDING THE CONSULTING BUSINESS

1. WHAT IS A CONSULTANT?

TABLE 1: MAJOR CONSULTING SUBJECT AREAS

2. WHO GOES INTO CONSULTING?

3. WHY DO ORGANIZATIONS USE CONSULTANTS?

4. REGULATIONS AFFECTING CONSULTANTS

Chapter 2: SELF-ASSESSMENT

1. INTRODUCTION

2. ATTRIBUTES OF SUCCESSFUL CONSULTANTS

3. ASSESSING YOURSELF AND YOUR MARKETABLE SKILLS

WORKSHEET 1: SELF-ASSESSMENT

4. RESOURCES FOR IDENTIFYING CONSULTING OPPORTUNITIES

Chapter 3: SETTING UP YOUR BUSINESS

1. START-UP COSTS AND MONTHLY EXPENSES

SAMPLE 1: START-UP EXPENSES

WORKSHEET 2: ESTIMATING START-UP EXPENSES

WORKSHEET 3: MONTHLY EXPENSES

WORKSHEET 4: MONTHLY PERSONAL EXPENSES

2. SELECTING A NAME

3. SELECTING AN OFFICE

4. SELECTING A TELEPHONE SYSTEM

5. SPECIAL TELEPHONE FEATURES

6. SAVING MONEY ON LONG DISTANCE PHONE CALLS

7. OTHER COMMUNICATION OPTIONS

8. DEVELOPING YOUR WEBSITE

Chapter 4: LEGAL FORMS OF BUSINESS STRUCTURE

1. INTRODUCTION

2. SOLE PROPRIETORSHIP

3. PARTNERSHIP

CHECKLIST 1: ARTICLES IN A PARTNERSHIP AGREEMENT

4. CORPORATION

5. S CORPORATION (SUB-CHAPTER OR SUB-S) (UNITED STATES)

6. LIMITED LIABILITY CORPORATION (LLC) (UNITED STATES)

Chapter 5: SELECTING BUSINESS AND PROFESSIONAL ADVISERS

1. GENERAL CRITERIA FOR ADVISER SELECTION

2. LAWYER

3. ACCOUNTANT

4. BANKER

5. INSURANCE BROKER

6. CONSULTANTS

Chapter 6: PREPARING YOUR BUSINESS PLAN

1. WHY PREPARE A PLAN?

2. FORMAT

WORKSHEET 5: OPENING BALANCE SHEET (NEW BUSINESS)

WORKSHEET 6: INCOME AND EXPENSE FORECAST STATEMENT (NEW BUSINESS)

WORKSHEET 7: CASH FLOW BUDGET

WORKSHEET 8: PERSONAL NET WORTH STATEMENT

WORKSHEET 9: STATEMENT OF ACCOUNTS RECEIVABLE

3. ESTIMATING YOUR START-UP FUNDS

4. SUMMARY

SAMPLE 2: BUSINESS PLAN FORMAT

Chapter 7: HOW TO OBTAIN FINANCING

1. TYPES OF FINANCING

2. SOURCES OF FINANCING

3. COMPETITION BETWEEN LENDERS

4. TIPS ON APPROACHING YOUR LENDER

5. WHY LOANS ARE TURNED DOWN

6. TYPES OF SECURITY A LENDER MAY REQUIRE

Chapter 8: KEEPING RECORDS

1. ACCOUNTING AND BOOKKEEPING

2. BASIC ACCOUNTING RECORDS

3. NONFINANCIAL RECORDS

4. OFFICE SYSTEMS

WORKSHEET 10: PROSPECTIVE CLIENT SHEET

WORKSHEET 11: NEW CONSULTING ASSIGNMENT SHEET

WORKSHEET 12: TIME AND SERVICE RECORD

Chapter 9: HOW TO LEGALLY MINIMIZE PAYING TAX

1. TAX AVOIDANCE AND TAX EVASION

2. CASH OR ACCRUAL METHOD

3. FISCAL YEAR-END

4. CORPORATIONS, PROPRIETORSHIPS, OR PARTNERSHIPS

5. MAXIMIZING DEDUCTIBLE EXPENSES

Chapter 10: INSURANCE

1. OBTAINING INSURANCE

2. PLANNING YOUR INSURANCE PROGRAM

3. TYPES OF BUSINESS AND PERSONAL INSURANCE

Chapter 11: PROFESSIONAL LIABILITY

1. CONTRACT AND TORT LIABILITY

2. REASONS FOR CLAIMS

3. HOW TO AVOID PROFESSIONAL LIABILITY AND PREVENT LOSSES

4. PROFESSIONAL LIABILITY INSURANCE

5. PRACTICING WITHOUT INSURANCE

Chapter 12: CREDIT, BILLING, AND COLLECTION

1. DISADVANTAGES OF EXTENDING CREDIT

2. ASSESSING THE CLIENT

3. AVOIDING CLIENT MISUNDERSTANDINGS ON FEES

4. MINIMIZING RISK OF BAD DEBTS

5. BILLING FOR SERVICES

SAMPLE 3: GENERAL INVOICE

SAMPLE 4: DETAILED INVOICE

6. WHY CLIENTS PAY LATE

7. COLLECTING LATE PAYMENTS WITHOUT LEGAL ACTION

8. LEGAL STEPS IF ACCOUNT REMAINS UNPAID

9. BAD DEBTS AND TAXES

Chapter 13: SETTING FEES

1. DAILY BILLING RATE (PER DIEM)

2. HOURLY RATE

3. CALCULATING A FIXED PRICE QUOTATION

SAMPLE 5: FIXED PRICE COSTING SHEET

4. FIXED PRICE PLUS EXPENSES

5. CONTINGENCY FEE

6. PERCENTAGE FEE

7. PROJECT VALUE FEES

8. RETAINER FEES

9. EQUITY FEES

10. UTILIZATION RATE

11. VARYING YOUR FEES

12. INCREASING FEES

13. INCREASING PROFITS WITHOUT INCREASING FEES

Chapter 14: DETERMINING MARKET OPPORTUNITIES

1. PRIVATE SECTOR

2. PUBLIC SECTOR

3. GRANT CONSULTING

Chapter 15: MARKETING YOUR CONSULTING SERVICES

1. WHAT YOU NEED TO MARKET YOUR SERVICE

2. MARKETING PLAN

3. MARKETING TECHNIQUES

Chapter 16: THE CLIENT INTERVIEW AND CLIENT RELATIONS

1. PURPOSE OF INTERVIEW

2. BEFORE THE MEETING

3. DURING THE INTERVIEW

4. AFTER THE INTERVIEW

5. WHY YOU SHOULD TURN DOWN BUSINESS

6. HOW TO TURN DOWN UNWANTED BUSINESS

Chapter 17: CONSULTING PROPOSALS

1. WHAT IS A PROPOSAL?

2. PUBLIC VERSUS PRIVATE SECTOR PROPOSALS

3. SOLICITED VERSUS UNSOLICITED PROPOSALS

4. SIMPLE AND FORMAL PROPOSALS

5. GUIDELINES AND FORMAT FOR A SUCCESSFUL PROPOSAL

SAMPLE 6: PROPOSAL FORMAT

6. PRESENTING YOUR PROPOSAL

7. PROPOSAL FOLLOW-UP

8. WHAT TO DO IF YOUR PROPOSAL IS NOT ACCEPTED

9. HOW TO AVOID GIVING AWAY FREE CONSULTING

Chapter 18: CONTRACTS

1. ESSENTIALS OF A VALID CONTRACT

2. WHY A WRITTEN CONTRACT IS NEEDED

3. STRUCTURE OF FORMAL CONTRACT

SAMPLE 7: CONTRACT FORMAT

4. TYPES OF CONTRACTS

SAMPLE 8: LETTER OF AGREEMENT (PREPARED BY CONSULTANT)

SAMPLE 9: LETTER OF AGREEMENT (PREPARED BY CLIENT)

SAMPLE 10: STATEMENT OF GENERAL TERMS AND CONDITIONS

SAMPLE 11: FORMAL CONSULTING CONTRACT

CHECKLIST 2: GOVERNMENT CONTRACT

5. PREPARING YOUR OWN CONTRACT

Chapter 19: TIME MANAGEMENT

1. KEY STRATEGIES

2. AVOIDING TIME WASTERS

Chapter 20: EXPANDING YOUR PRACTICE

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ABOUT THE AUTHOR

NOTICE TO READERS

Self-Counsel Press thanks you for purchasing this ebook.
Introduction

This book is designed primarily for the beginning or potential consultant, but consultants who have been in practice for a considerable time should also find it helpful. The purpose of this book is to provide essential information and practical step-by-step guidelines to assist you in starting and developing a successful and profitable consulting business. All the information necessary to set up and maintain your own business is included in this book.
The book is organized to reflect a typical consulting business, from getting the original idea to generating income sufficient for your needs and expectations. You will assess your consulting potential and determine your marketable skills in Chapter 2. In Chapters 3 through 13 you will learn all the basic steps you have to consider before starting your business. Chapters 14 and 15 deal with the marketing techniques essential to success. Without effective ongoing marketing, you simply will not succeed. Chapters 16, 17, and 18 inform you how to negotiate a consulting assignment from the first interview to the proposal to obtaining the contract. Chapter 19 shows you ways of effectively managing your time. Chapter 20 discusses ways of expanding your practice.
The checklists, samples, and worksheets have been provided to make the text as meaningful as possible. There are many good reference books that can assist you further; these are listed in the Bibliography and have been divided into various section headings for easy reference by subject area. Directories of consultants and consulting organizations which can be found in your local library contain up-to-date information on addresses and phone numbers. Consulting is basically a knowledge industry, and access to ways of improving your knowledge should assist you in marketing your business more effectively.
Each chapter in this book stands independently but is linked to the others. If you know little about consulting or being in business, you should read the chapters sequentially to appreciate the need for dealing with basic business considerations. Understanding and managing the business side of consulting is as essential as performing the consulting service.
Every year the demand for consultants increases as our society becomes more complex. Business, education, health care, government, military, labor, social service, church, and volunteer organizations employ consultants on a regular basis. Consulting in North America has become a multi-billion dollar industry.
Consultants are people who are determined to succeed, who thrive on challenge, and who believe in themselves.
Consultants are entrepreneurs in the knowledge field. Consultants are individuals who believe that they are competent and capable of rendering a worthwhile service to others.
Consulting offers a continual challenge and can present opportunities for freedom, growth, and satisfaction far beyond those of employment or other forms of business. This book will increase your chance of capitalizing on the opportunities and assist your business to success.
Chapter 1
UNDERSTANDING THE CONSULTING BUSINESS


1. WHAT IS A CONSULTANT?
A consultant is someone who has expertise in a specific area or areas and offers unbiased opinions and advice for a fee. The opinion or advice is rendered exclusively in the interests of the client and can cover review, analysis, recommendations, and implementation. A consultant generally works in conjunction with the resources personnel of the client, but uses employees, sub-consultants, or others as required for the specific project and in accord with the agreement. A consultant is not an employee but an independent contractor, usually self-employed, contracted to perform a short-term or long-term task and paid on an hourly, daily, or project basis or other fee arrangement.
There are numerous consulting opportunities in the private and public sector. Table 1 provides a brief summary of some of the major consulting areas. The consulting profession has grown extensively over the past 15 years and is now one of the major service industries in North America. The outlook for continued growth of consulting is very positive. Demand exceeds the projected supply.
The consulting industry prospers in most economic conditions. The amount of income that a consultant can earn is, of course, related to many factors, including the field of knowledge and level of expertise in that field. The degree of profit is also directly related to how effectively time is managed and how efficiently the business is administered. New consultants spend a large portion of time managing the task, researching their field of expertise, improving on techniques, and marketing their expertise. Most of these tasks are essential but unbillable hours.

TABLE 1: MAJOR CONSULTING SUBJECT AREAS



2. WHO GOES INTO CONSULTING?
Basically, a consultant is a person with a marketable skill, a perceptive mind, a need for independence and challenge, an ability to communicate with others and persuade them to follow advice, a desire to help others in an effective way, and a wish to be an agent of positive change. In general, the people who go into consulting include:
• People frustrated with their current careers, who see the solutions to problems but are unable to effectively influence decision-makers
• People who want a stimulating, dynamic, growing career that satisfies the need for personal development
• People dissatisfied with the lack of challenge, opportunity, or creativity in their existing jobs
• People graduating from school with training but little experience who wish to work for a large consulting firm
• People who are between jobs and seeking new opportunities and careers
• People who see that they may be laid off and wish to establish themselves in a business to earn a living; these people may start on a part-time basis while still employed
• Retired people who have expertise and wisdom to offer
• People who wish to supplement their present income by using their managerial expertise, or technical and academic skills
• People with work experience and industry knowledge or other skills who want to combine a family life with work at home
• People who understand government operations and the contract process, or who have built up contacts in government, politics, or industry over the years

3. WHY DO ORGANIZATIONS USE CONSULTANTS?
There are many reasons why the private and public sector need consultants for problem solving. Some of these reasons are discussed below.
3.1Temporary assistance
Clients frequently wish to supplement skills in their organization by hiring trained, proven, motivated consultants on a short-term or long-term basis. Consultants may be hired on a project, seasonal, or new funding basis.
By hiring consultants, clients do not have to contend with the training, instruction, and long-term commitment for salaries and fringe benefits entailed in hiring a skilled employee. Recruitment costs alone for a skilled employee can be considerable and cannot be justified for short-lived or cyclical need. Consultants are independent contractors and therefore no tax deductions or fringe benefits are involved.
3.2Objective review
Consultants are retained as impartial advisers without any vested interest in the outcome of the recommendations. Internal staff may not be able to see the problems or may not be sufficiently objective. A consultant can perform a competent and thorough analysis of the issues. It is easier psychologically for personnel to adapt to external advice rather than the internal advice of someone who may be acting out of self-interest.
3.3Third-party request for problem identification and resolution
For example, banks are naturally concerned about any signs of a problem that might put their investment at risk. A bank may need to know whether the organizationís problems are related to administrative, personnel, financial, market, or product difficulties and how the problems can be solved. Only an outside consultantís opinion would be credible.
3.4Surviving a crisis
A business owner suffering from serious business problems may seek an outside consultant to investigate the causes and recommend solutions.
3.5Initiating change
A consultant can act as a catalyst for stimulating ideas in a highly structured organization that otherwise might be resistant to change due to its size, bureaucracy, and institutionalized nature.
3.6Obtaining funding
Many nonprofit organizations or small- and medium-size businesses need assistance in obtaining grants or loans for their continued survival. They may lack the expertise, ability, or time to research the availability of funding and prepare a persuasive application. Consultants with an expertise in this area act as advisers or agents.
3.7Selecting personnel
A client might hire a consultant for recruitment of key executives. The consultant is looked upon as being independent and unbiased with the expertise and time to selectively screen and recommend prospective candidates.
3.8In-house education
Consultants are hired to provide in-house training to keep staff informed of new management and supervisory techniques or technical knowledge and to improve employee morale.
3.9 Dealing with internal personnel difficulties
Outside consultants are retained to review and make recommendations on internal structure, for example, consolidation of departments or services or elimination of redundant employees or executives. The consultantís report provides the rationale for making the decisions. The consultant then leaves and is not affected by the decision.
Consultants can also be used to resolve conflicts between various levels of management. The consultant plays an arbitrating or mediating role that permits frustrations to be expressed so that energy can be directed toward constructive resolution.
3.10 Delay tactics
Consultants can be hired to perform research studies which take the pressure off a company that is being exposed to public or government scrutiny. This also permits the organization to use the excuse of a consultantís study to justify a delay in decision-making. The consultant is frequently asked to be the contact person, which reduces media attention toward the organization concerned.
3.11 Executive assistance
An executive who is aware of his or her personal limitations may request that a consultant review a problem situation, provide advice on how to deal with it, and possibly follow up with implementation.
3.12 Government regulatory compliance
Government regulations at all levels are constantly changing, and companies are frequently not prepared or trained to comply. Consultants may be retained to provide expertise to assist a company in complying economically, efficiently, and with the least amount of trauma to the organization.
3.13 Socio-economic and political changes
Socio-economic and political matters are always in a state of flux. These changes present opportunities for consultants. For example, pollution problems create a need for environmental protection experts, and fuel shortages create a need for energy conservation experts.
3.14 Government excess funds
Consultants benefit considerably from the expenditure of large amounts of government money. The government may be funding the private sector with the hope of stimulating the economy; there may be political reasons before an election; there may be a balance in a departmentís budget that must be spent before the end of the budget year so as not to reduce the allotment requested by that department the following fiscal year. Governments also frequently hire consultants to assess needs, provide solutions, and to conduct in-house training.

4. REGULATIONS AFFECTING CONSULTANTS
Some professional organizations are empowered by legislation to exercise rights of practice, membership, and discipline. However, there is no government control or regulation of consultants as such. The term consultant is similar to the term accountant: anyone can use the word to describe his or her activity without credentials, experience, competence, or accountability.
There are many organizations for specific areas of consulting, but membership is voluntary. These organizations or associations have little power or authority to investigate complaints.
Management consultants can apply to become a member of the Institute of Management Consultants (www.imcusa.org). This group provides guidelines for professional practice.
The benefits of membership in a consulting association include:
(a)Certification status if the consultant meets minimum acceptable standards of skill and knowledge
(b)Opportunities for self-development in seminars and workshops
(c)Interaction and networking with other consulting professionals
(d)Representation of the membershipís areas of interest to government and other professional bodies
(e)A code of ethics and code of conduct
(f)Keeping current on issues in the area of consulting by means of newsletters or other publications
Chapter 2
SELF-ASSESSMENT


1. INTRODUCTION
Many consultants never do a thorough, honest appraisal of their strengths and weaknesses. If you haven’t identified your skills, attributes, and talents, how can you determine your specialty areas and the target market? How are you able to package and sell your services and take advantage of opportunities? Without this awareness it is difficult to project the self-confidence necessary to operate your business and respond to questions a potential client might ask you.
Most consultants never go through the steps outlined in this chapter, and that gives you a distinct competitive advantage. To know yourself — your strengths and weaknesses — is to have power and a prescription for success.

2. ATTRIBUTES OF SUCCESSFUL CONSULTANTS
Various studies have found that successful consultants often possess certain attributes:
• Good physical and mental health
• Professional etiquette and courtesy
• Stability of behaviour
• Self-confidence
• Personal effectiveness and drive; that is, responsibility, vigor, initiative, resourcefulness, and persistence
• Integrity; that is, the quality that engenders trust
• Independence, self-reliance, and ability to resist conforming to the opinions of others
• Intellectual competence
• Good judgment; that is, the ability to provide sound, objective appraisals in their areas of competence and experience
• Strong analytical or problem-solving ability
• Creativity; ability to see the situation with a fresh perspective
• Articulateness and persuasiveness, with above-average oral, written, and graphic communication skills
• Psychological maturity; readiness to put people, things, and events in perspective and act calmly and objectively without being diverted from a sound, logical, and ethical course by outside pressure
• Interpersonal skills for building client relationships, such as gaining trust and respect, involving them in solving problems, applying principles and techniques of change, and transferring knowledge
• Receptiveness to new information and the points of view expressed by others
• Oriented to the people aspect of problems
In addition to these attributes, consultants also require an all-encompassing know-ledge of the business. They must recognize where they lack skills and seek to acquire those skills or employ people who have them.

3. ASSESSING YOURSELF AND YOUR MARKETABLE SKILLS
Worksheet 1, a self-assessment exercise at the end of this chapter, will help you determine the direction you should take in your new consulting business. For the maximum benefit, take all the time you need to complete each step. The information you are preparing is for your information and benefit only. Worksheet 1 is included on the download kit in Word and PDF formats.

WORKSHEET 1: SELF-ASSESSMENT


After you have completed the exercise, you will have a comprehensive guideline for your successful consulting business. Review it, update it, and modify it on a regular basis. If you have taken the time to thoughtfully complete the exercise, you should feel confident that you have developed a realistic framework for the next important stages of your business development.

4. RESOURCES FOR IDENTIFYING CONSULTING OPPORTUNITIES
Increase your awareness of additional consulting opportunities by using the Bibliography and links on the download kit, and the resources outlined in this section.
4.1Consulting newsletters and websites
There are many free information sources that you can use to stimulate new ideas on managing your business and marketing your skills. The directory website http://consulting.about.com is a good place to begin your search for websites and newsletters designed to keep you up to date on consulting opportunities and events related to the consulting industry.
4.2Newspapers and magazines
Read as much as you can about current events relating to your specialty. In addition to local daily newspapers, read The New York Times , The Washington Post , and the Wall Street Journal ; in Canada, read the Globe and Mail and the National Post . These national newspapers provide interpretations of trends and important events that could affect your business.
There are numerous excellent business magazines that can stimulate further ideas and provide sources of contacts and information. Visit an international news outlet for an indication of the publications available. Public libraries are also good places to find free, current business magazines and international newspapers. You should also subscribe to trade journals related to your area of interest, and subscribe to any free mailing lists relevant to your specialty area.
4.3Consulting and professional associations
To find professional associations related to consulting in your local area, look for the reference book Consultants and Consulting Organizations Directory in public libraries. It lists consultants in various specialties throughout the United States and Canada. If there is a local association of consultants, either of a general or a specialized nature relevant to your needs, try to attend a number of meetings and ask a lot of questions.
Contact with the associations will provide you with an opportunity to obtain information on your specialty from newsletters, publications, meetings, or other consultants.
4.4Government agencies and publications
Depending on your specialty, you may want to sign up for free or low-cost publications distributed to the public by government organizations or departments.
Various levels of government are the major purchasers of consulting services; very large sums of money are expended each year directly and indirectly for that purpose. FedBizOpps is the US government’s portal site for information on federal contracts. The Business to Government Market website allows you to search for local, state, and federal contracts. State and local contracts can also be found at www.govcb.com . In Canada, Merx provides access to opportunities in both the public and private sectors.
4.5Public and university libraries
There is a vast amount of current, accessible research and information at your public or university library. A wide range of information sources are available through library websites; get a library card in order to access online databases for free.
4.6Continuing education courses and seminars
Universities and colleges offer continuing education courses and programs on many subjects related to business. Government agencies may also offer courses and workshops. The Small Business Administration (SBA) in the United States, and the Business Development Bank of Canada (DBC) offer small business seminars and workshops on an ongoing basis.
For more personalized assistance, you may wish to look into programs that offer expert help to beginning consultants.
The SBA sponsors SCORE , an organization that provides consulting for beginning businesses without charge. In Canada, the DBC offers consulting services to those starting out in small business. They offer one-on-one coaching and mentoring services, as well as business and financial consulting.
4.7Competitors
Attempt to identify the competitors in your area and specialty. Study their style and method of operation, how long they have been in business, their marketing strategy, what they charge, and their clientele. If they are successful, try to ascertain why and use this information to determine how you can best distinguish yourself and find your niche in the market. You want to know what makes your style unique if a prospective client were to compare you and your competitors.
Chapter 3
SETTING UP YOUR BUSINESS

You have now assessed your skills, attributes, and abilities and have determined your area of interest and expertise. Various administrative matters have to be understood, considered, and dealt with before embarking on your road to success.
This chapter and the next ten chapters deal with the administrative fundamentals. The challenging and fun part — that is, successfully marketing your consulting business — is explained later.
Before setting up your office and opening your doors to the public, many matters have to be considered. Your fee structures, marketing plan, and business plan, which includes your cash flow projections, will all determine how much revenue you must generate to pay your overhead. It is wise to be conservative when estimating anticipated revenue and the lead time it will take to reach a break-even point. Your legal, tax, accounting, and financial advisers will influence your initial decisions. These important aspects are covered in other chapters.
This chapter discusses how to establish the basics of an office while controlling your expenses. With thorough review and comparison of the costs of the key overhead areas, you should require minimal capital investment and keep your overhead and risk at a safe level.

1. START-UP COSTS AND MONTHLY EXPENSES
There are many factors that determine what your costs and expenses are going to be, such as whether you are going to use your own home or rent an office, whether you are going to buy, finance, or lease new or used furniture and equipment, and whether you intend to hire staff or do the typing yourself. Your individual finances and needs and your shrewdness and negotiating ability will clearly affect your overhead.
1.1Start-up costs
Start-up costs vary widely depending on your choices and circumstances. Sample 1 lists average start-up expenses. Worksheet 2, which is also on the download kit as an Excel spreadsheet, is designed to help you estimate the initial costs of your business. It is important to keep a record of your estimated and actual costs for overhead expenses as well as for your cash flow projections during the start-up and first year of operation. The date to pay column should assist you in scheduling your cash flow or other funds to meet the initial expenses. You should be able to fill in the estimated costs after you have done your research thoroughly. Further details on aspects of start-up costs are covered later.

SAMPLE 1: START-UP EXPENSES


WORKSHEET 2: ESTIMATING START-UP EXPENSES

1.2Monthly overhead expenses
Naturally, monthly expenses will vary widely depending on the type of consulting service you are planning to operate. Worksheet 3 should assist you in planning and budgeting for your possible overhead expenses.

WORKSHEET 3: MONTHLY EXPENSES

1.3Personal expenses
Personal monthly overhead expenses obviously influence your cash flow needs and the amount of resources available to invest in your business. When you prepare your business plan (see Chapter 6), you will take into account your personal needs. It will be helpful, though, to consider your personal cash flow needs while planning your business expense outlay. See Worksheet 4 as a guide for detailing your personal expenses.

WORKSHEET 4: MONTHLY PERSONAL EXPENSES


2.SELECTING A NAME
Selecting your name is an important decision both from an image and a legal perspective. It is essential to be aware of the implications of selecting your name from the outset.
2.1General considerations
Many consultants do business under their own names: for example, “David R. Jones, Educational Consultant.” The business card and letterhead stationery would also show the address and telephone number (with area code) and a brief description of the service. The description could read, for example, “Research studies and project management.”
Many consultants prefer to use their own name because they are offering a personal service and promoting and selling themselves. The drawback of using your name is that it implies a one-person operation; this could cause a client to doubt your capacity to complete a project if you are ill or injured. For this reason, and by personal choice, some consultants prefer to use the phrase “and Associates” after their names. This implies a business with more than one person and a resource base of skilled consultants.
Many consultants contract with sub-consultants as required, depending on the job project. This cuts down on overhead, provides depth and flexibility, and expands consulting contract opportunities. Other name variations include “Jones Educational Associates” or “Educational Consulting Associates.”
It is important to describe the nature of the services you are offering and not limit the future development of your consulting service. For example, if you are a hospital consultant, you may not want to state on your letterhead or business card “specializing in personnel development” if you could receive other spin-off consulting work outside the limits suggested by personnel development. Don’t use the word “freelance,” as it may not project the professional image you want to create.
Some consultants prefer not to use their own name in the firm’s name for a number of reasons. One reason is that the consultant does not want an employer to be aware that a consulting business is being operated part time. Another reason is that if goodwill is developed under a company’s name rather than an individual’s, a higher price might be obtained if the consulting practice is sold.
If you decide to incorporate your business, you must have the name approved by the responsible government department and the name must end in Ltd. or Limited, Inc. or Incorporation, or Corp. or Corporation. Advantages and disadvantages of forming a corporation are discussed in Chapter 4.
2.2Fictitious name
If you are operating your proprietorship or partnership business under a name other than your own, you are required in most jurisdictions to register your fictitious name. Filing for fictitious names does not apply to corporations.
The procedures vary from area to area. The costs generally range from $10 to $75. Ask your lawyer about the requirements for your area. The procedure generally is to fill out forms disclosing the people behind the name and, in some cases, to place an ad in the local newspaper or legal gazette outlining the information in the filing documents.

3.SELECTING AN OFFICE
Most beginning consultants operate out of their homes. As the business grows, the decision might be made to move into outside office space.
Normally consultants go to the client’s office, but occasionally clients wish to meet the consultant at the consultant’s place of business.
3.1Home office
There are several advantages to operating out of your home. You save money on gas and rent. The stress of commuting to work is reduced. You are able to deduct from income tax the portion of your home you are using for business purposes. (The tax deductions you can use when you have a home office are covered in Chapter 9.)
Being close to the family is an important consideration for some consultants.
There are also disadvantages to having a home office. You may be distracted by your family members during the work day, or your presence may be distracting to family members. The mix of home and office dynamics could negatively affect your private life. You could turn into a workaholic due to the proximity of your office. Your home might be distant from your clients’ offices, which would make it difficult for your clients to visit you. If clients come to your home office on occasion, you would want your home to present a positive impression and not to detract from your professional image. Your home address on your stationery and business card could present a questionable image to prospective clients who may wonder about your business competence. Clients may view you as a freelancer and be more likely to question your fees.
Due to the limitations of working out of your home, you may wish to consider a professional identity package provided by various office service businesses. This includes a mail drop address and telephone answering service, as well as other features you may desire.
The mail drop means having an address that is recognizable as a business and, depending on the location, as a prestigious address. The staff at this location are able to receive or send out courier packages for you and receive envelopes or messages from clients who may stop by “your” office.
These services can generally be found under “Secretarial Services” or “Stenographers — Public” in the Yellow Pages telephone directory. A post office box number has a negative effect in terms of your credibility and business reliability, and should be avoided if possible. However, if you look in the Yellow Pages under “Mail Box Rentals” you will see companies providing a wide range of other services such as fax transmissions, email, courier, word processing, desktop publishing, photocopying, etc. If you work out of your home, it may be an advantage to rent a mail box. For security and marketing reasons, you may prefer to keep your home address confidential.
Having a personalized telephone answering service connected to your telephone at home lets you know your telephone calls are being handled in a professional manner whether you are at home or out making calls. By keeping the answering service informed of your schedule for the day, your callers will receive the appropriate response and know when the call might be returned.
Generally, it’s not a good idea to use an answering machine; it doesn’t present a professional image, callers get the impression that you are a one-person operation (which, of course, you are), and you may be perceived as a freelancer, which has a negative connotation to some.
3.2Office outside of home
You may wish to get an office outside your home when circumstances and finances justify it. Having your own office address increases credibility and stature when dealing with clients or prospective clients. Studies have shown that consultants are able to collect higher fees for performing the same work when operating out of an office.
When considering an office location, factors such as expense, image of business address, your proximity to clients, and referral possibilities should be examined.
Try to look at your long-range goals over two years and imagine what your office needs might be. It is costly to pay for new office stationery and other start-up costs, and several moves may create an image of instability.
3.2aOffice sharing arrangement
You may wish to look for an office with complementary professional or business tenants and prospective business clients. You have your own office and generally supply your own personal office furniture, but the rent expenses of the office and the receptionist’s salary are shared on a proportional basis by the tenants. The secretarial expenses are negotiated depending on use.
If you do seek out a pooling arrangement, try to have a minimal notice period to leave the premises. You may wish to leave due to expansion, inability to pay the rent, or personality conflicts. It is fairly common to have a three-month notice provision. Make sure that the terms of your rental relationship are in writing and signed by the necessary parties before you begin your relationship.
As a general caution, avoid sharing space with a client. You could have a falling out or the client could attempt to use your time for free or look on you as staff.
3.2bSharing same private office
Two or more people may use the same office space. The parties agree on the costs of furnishing the office, unless it is already furnished, and an agreement is worked in terms of the hours and days of use. Costs of this arrangement are negotiated on a per use basis.
3.2cOffice rental package
There are firms in the business of renting packaged office space. There can be anywhere from 5 to 50 tenants or more. Each tenant has a private office, and there is a common reception area.
The office package arrangement is a good source of potential contacts for networking or prospective clients, depending on the mix of the tenants.
Telephone answering and office furniture are frequently included in the package price as well as a nominal number of hours of secretarial time per month. The rental arrangement may be a minimum two- or three-month notice to vacate, or a six-month or one-year lease arrangement. Prices and terms of various office package arrangements may be negotiable if there is competition in that marketplace in your community.
There are several other advantages of an office package arrangement. Other services that might be available to save you considerable money on staff and equipment include:
(a) Street mailing address — not a post office box number
(b) Postage metered mail for prompt delivery and a professional appearance
(c)Typing and desktop publishing — a variety of typestyles available on computer for letters, reports, invoices, statements, etc.
(d)Secretarial services, including letter composition and editing using correct business language and form
(e)Photocopying — a bond copier with various features including collating could be available to produce quality copies on your letterhead, transparencies, or address labels
(f)Word processing services with the advantage of speed, efficiency, and storage and retrieval capacity
(g)Data management and bookkeeping
3.2dOccasional office
You can rent a boardroom or an office for as short a time as an hour, a half day, or a day. The cost is negotiable. The occasional office space can be found through office rental package services described earlier. Some firms require that you have a telephone answering or professional identity package arrangement with them before you are able to rent occasional office space.
3.2eLeased space
Leasing space does have its advantages, and it is most important that you consult your accountant and a competent lawyer familiar with commercial leases before signing anything. You should shop around for space to make sure you have the best arrangement for your needs and to assist you in negotiating.
Leases are generally for a period of one to five years. There are three basic types of lease payment formulas. The terminology may vary, but the concepts are the same. The first type, called a “net” lease, means that the base rent is the total rent. In other words, the flat negotiated rate is the only monthly payment you have to make.
The second type of rent, “double net,” is similar to the first except you have to pay a pro rata share of any tax increases over the base tax period outlined in your lease. If the taxes increase substantially, you could have extra overhead you had not anticipated.
The third type, “triple net” rent, can be very expensive. The base rent is just the beginning. All other landlord costs, such as taxes, insurance, maintenance, repair, improvements, management, and administration fees, are passed on proportionately to the tenants. This could increase your monthly rent by 50 percent to 100 percent. The other problem with this type of rent structure is the resulting uncertainty when you try to budget for your rental overhead expenses.
A variation of this third formula involves paying the landlord a percentage of your gross revenue. Naturally, for a professional consultant, this is an unacceptable arrangement.
Some of the clauses to be wary of when you are considering a lease include ones that restrict your ability to sublet or assign your lease, that restrict the use yo

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