The Consulting Solution

8/8/2019 The Consulting Solution

1/33


2/33

Introduction...........................................................................................................4About Me.................................................................................................................5

Getting Started ....................................................................................................6The Hours...............................................................................................................6Accounting Skills...................................................................................................6Bill Collector..........................................................................................................7Skill Set..................................................................................................................7

The Process............................................................................................................9Selling ....................................................................................................................9The Proposal ........................................................................................................14Pricing..................................................................................................................15Return on Investment (ROI) ................................................................................16Landing the Deal..................................................................................................17Delivery................................................................................................................18The Reference ......................................................................................................19

Housekeeping .....................................................................................................20Sure Fire ways to earn over $200 per hour ...........................................22

The Simple Discovery that woke me up to Fixed Fee pricing .........................22Our First Fixed-Fee Engagement.........................................................................23What factors went into this project earning us so much? ....................................24Another Fixed-Price example ..............................................................................25The Formula for Success .....................................................................................26

Fixed fee pricing ..........................................................................................26

Speed of Execution ......................................................................................26Perceived Demand .......................................................................................26Time Constraint ...........................................................................................27Customer Service .........................................................................................27

The 5 Step Action Plan to Earning Over $200 per hour......................................27Step #1: Decide what type of work suits a fixed pricing structure ..............27Step #2: Improve your Perceived Demand ..................................................27Step #3: Speed of Execution........................................................................28Step #4: Develop your Time Constraints.....................................................28Step #5: Improve on your current level of Customer Service. ....................28

Failure is not an option usually................................................................29

Billing ..................................................................................................................29Not Meeting Deadlines ........................................................................................29Cash Flow ............................................................................................................29

Fresh Leads..........................................................................................................31Tools .......................................................................................................................32A Big Step ............................................................................................................33

2


3/33

The author, Cam Forbes, and publisher Architech Ventures make no representation or warranties of anykind with regard to the completeness or accuracy of the contents of this book. They accept no liabilityof any kind for any losses or damages caused or alleged to be caused, directly or indirectly, from using

the information contained in this package.

The Consulting Solution your source for all the information you need to start or revive your

Consulting business. 2005 All Rights Reserved Worldwide.

Second Edition 2005

No part of this publication may be stored in a retrieval system, transmitted or reproduced in any way,including but not limited to digital copying and printing without prior agreement and written

permission of the publisher.

Cam ForbesArchitech Ventures

PO Box 9022Temecula, California

92589-9022

3


4/33

I n t r o d u c t i o n

First I would like to thank you for purchasing my program and in the nearfuture you will likely be thanking yourself for purchasing it also. I would

suggest getting comfortable because once you get started you wont wantto stop!

Since youve purchased my product Im assuming you have some level ofbusiness expertise and want to build on that experience to take you to thenext level. You may also be contracting or on a contract-to-hire projectright now. I put this information kit together for you.

What I will show you with this program is how you can strike out on your own be your own boss not have to worry about someone else profiting from YOUR work be able to replicate this process over and over again

But be forewarned. It takes more than a business card and someorganizational skills to start your own consulting business. As one of mycolleagues said it requires skills from accounting to time managementand theres more than a few hurdles in your path.

4


5/33

A b o u t Me

I have been in the Consulting business for 13 years and have earnedmillions of dollars by following the steps I describe in this program. I

started working for Oracle Consulting when I got out of college in 1993.After working on many successful projects in a variety of technical roles, Ijoined PriceWaterhouseCoopers where I parlayed that success to hugefinancial and knowledge gains. Since leaving PwC, I have been with a fewsmaller software and consulting companies where my success continued.This led me to create Architech Ventures, ltd. an independent consultingorganization serving the small to medium sized business (SMB) market.This is a market that is drastically underserved by the larger consultingorganizations and is therefore a veritable hunting ground for newbusiness.

I earned my Oracle Certified Professional (OCP) and Oracle Master indatabase administration and developer suite in January 2000. Im amember of OAUG, AppsNet, Oracle TechNet and a regular fixture in manyof the Software-related website forums and newsgroups. My papers andideas have been presented at Software conferences and publicationsworldwide.

I have a lot of experience with major corporations across many industries.Throughout all of these clients Ive worked with various softwareprograms covering areas such as database, graphic design, webdevelopment and office productivity. Ive participated in or managed 12

full-lifecycle Software application implementations for Fortune 1000customers where the project consulting expense was $1 Million or more the largest was $30 million! Along the way I also worked on projects withlittle or nothing to do with software performing tasks like OrganizationalChange Management (OCM), Business Process Re-engineering (BPR),Knowledge Management and Continual Process Improvement (CPI). Thesetypes of projects can be performed by ANYONE with any slight bit ofbusiness experience. There is so much information available to you in thispackage and on the internet that you can literally go out there and pull allthe information you would need to successfully complete entire projects!

Now as I move on to new ventures I want to share the success that Ivehad with you.

5


6/33

Get t ing Sta r ted

Management consultants are among the highest paid independentconsultants and earn an AVERAGE of $130/hour or more (at one point I

was earning $240/hour). Large management consulting firms such as Bain& Co., McKinsey & Co., and Boston Consulting Group start their ENTRYLEVEL EMPLOYEES at up to $130,000/year in base salary! Partners andManaging Partners at these firms make $1M to $5M per year! How canthey do that, you ask?

Its easy Businesses need help. Now more than ever. Downsizing,restructuring, the dot-bomb explosion, mergers & acquisitions, and otherbusiness forces have left ALL companies in need of outside, unbiasedadvice on how to make sense of the new business landscape. Weve allheard about all the massive layoffs that have happened over the last few

years. This has left an enormous void in business processes,organizational management and day-to-day operations at mostcompanies. They need your/our help! Not only that, they are willing topay TOP DOLLAR to get this advice!

Luckily the information Im making available to you is universal and hasworked across all these organizations and will work at any clients youcome across. Ill make your success feel like a no-brainer.

Before you leave your well-paying job or shell out big bucks for stationeryand office space, you need to do a gut check. You need to determine

whether youre willing to work long hours, your basic accounting skills,take inventory of your selling skills and most importantly what skills youare going to bring to market.

The HoursConsulting generally requires some long hours, especially at the outset.Most consultants I have worked with know about long hours. I believe thisis because most consultants initiate a consulting business by doing part-time work while working a full-time job. I began this way. I started aproject working after normal business hours and have been doingsomething on the side ever since.

Accounting SkillsEvery consultant needs to be able to do some basic accounting in order tokeep track of your hours billed, monitor your expenses and client billing.You dont need a full time accountant at the outset. If you get into asituation like me where youre managing 20-30 consultants on multipleprojects then you will definitely want an administrative assistant of somesort as well as an accountant. It may sound fun to have $400K - $500Kflowing through your personal bank account each month to pay yourcontractors, but trust me its not. People notice the people you dontWANT to notice! Lets just leave it at that

6


7/33

Back to the point. You need to keep track of the hours you spent workingon your client projects and have them sign off on the hours you plan tobill them BEFORE you send them an invoice. This is important becauseyou dont want clients that are happy with your work until you send theman invoice. If you have signed paperwork detailing how much time you

have worked on a project, your client wont have a leg to stand on when itcomes time to pay your invoice.

Bill CollectorYou need to be very professional about billing your clients. You need tosetup one day a month (or two if you do bi-weekly billing) to generatebills and track who hasnt paid on time. Some of the best clients can bereally bad at remitting payment. Usually accounts payable is handledoutside of the department you will be working with so you will likely noteven know the person who is (or is not) cutting you a check. Latepayments by clients can kill your business before you even get it off the

ground.

However, if you have a solid business plan (well discuss that in a minute)you can get enough small business funding to get you through the firstfew months while youre trying to get up-and-running and working withyour clients to make sure they pay on time.

Skill SetThis is important. In consulting you are marketing yourself. So decidingwhat skills youre going to market is the key to being successful. Imassuming if youre reading this that you have some type of skill that is in

need by someone else otherwise you wouldnt be able to step into thismarket with ease.

The areas that have been hot and remain hot are process-focused efforts.For example, look at Server Consolidation. Someone can manage a serverconsolidation effort working with the system administrators andengineers. Eliminating 1 NT or UNIX server can save a company $12,000or more per year through reduced support/maintenance/licensing fees,power, and day-to-day system management. You dont have to be aserver expert - thats what the server experts are there for!

Looking at other areas, think of Quality Assurance. 90% of the calls to acompanys help desk are typically related to problems caused by poorinternal controls in the IS department. If you could help a large companyimprove the quality of the products coming out of IS (through processredesign, increased testing, whatever) you will drop the number of callscoming into the help desk (saving time and money) and improve customersatisfaction.

If you want to market your computer/software related skills, the hot areasright now are Siebel ($100/hour), Oracle ($90-$150/hour), SAP($125/hour), Network/Security Engineering ($100/hour). Hot categoriesare supply chain planning (inventory control systems), Wireless (802.11technologies and rolling them out in the Enterprise), Graphic/Web design(Macromedia Studio MX skills can get you $85-$95/hour on contract). But

7


8/33

still, the high dollar skills are the soft skills - organizational changemanagement, process analysis/improvement, quality assurance, securityprocesses. If you can mold yourself into that kind of consultant the worldwill be your oyster.

For example, a woman (lets call her Dawn) worked with on a project withme and had never seen Oracle Applications in her life. Dawn managed thetesting and change management processes and was being paid over$200/hour. Along the way she picked up some of the Oracle Appsknowledge. Now she markets herself as a change management directorspecifically for Oracle Applications and SAP (similar product) projects! LastI heard she was still commanding over $200/hour, had a corporateapartment in San Jose, and flew back and forth to home (to Utah) everyweek all on the clients dime. So believe me when I tell you that it can bedone. It just takes the will to make it happen and the ability to sellyourself. Which leads me to

8


9/33

The Process

Selling

This is basic. No matter what business you get into, you need to sell to

make money. Whether you own a mom and pop bakery or a multi-milliondollar consulting practice, you need to sell yourself. Every business needsmarketing to gain exposure and clients, and you need to be willing to sellyourself. This is one of the top issues that can kill a business. Lets face it consultants arent always the best salespeople. You need to keepmaking new contacts to get more business. Its imperative that youconstantly ask current clients for more work and also ask them if theyknow of other similar businesses that can use your skills. This is anongoing networking process that you need to develop to establish a long-term business. So let me get you jump-started on finding your first fewclients. This is so easy youll be mad that you didnt think of it yourself

(well, maybe you already did and if so, good for you!).

The first thing youll need to do is scout out different organizations anddetermine what services they need. There are many ways to do this. Hereare a few of my secrets:

Go to the job sites like HotJobs (http://www.hotjobs.com ), Monster(http://www.monster.com ), CareerBuilder(http://www.careerbuilder.com) even Americas Job Bank(http://www.ajb.dni.us/). Search for the kinds of companies you want totarget use their names if you want. You can also go directly to the

companies websites to see their open job listings. While youre there youshould also review their recent headlines/news/press releases. Companynews and filings can be a gold mine of information you can use this tobuild the business case for your services and submit it back to them.Since it will be in their words and directly touch THEIR pain, you alreadyhave a foot in the door. Another way to gather information about whatsgoing on at your target organization is through web searches and SECfilings. You can register at FreeEDGAR to view real time SEC filings(http://www.freeedgar.com ).

Also check business to business portals and websites. Have other people

generate leads for you. Here is a listing of popular sites that Ivebookmarked and used myself in scouting out new clients:

RyzeBusiness Networking site that links you with other business people withsimilar interests. A good source for lead generation, project prospecting,and staffing.http://www.ryze.com

infoUSA: Mailing Lists, Sales Leads & DatabasesOffers sales leads and mailing lists of 14 million businesses, 200 million

people, 15 million new movers, and more. Includes a 30% discount.http://list.infousa.com

9
http://www.hotjobs.com/http://www.monster.com/http://www.careerbuilder.com/http://www.ajb.dni.us/http://www.freeedgar.com/http://www.freeedgar.com/http://www.ajb.dni.us/http://www.careerbuilder.com/http://www.monster.com/http://www.hotjobs.com/


10/33

Accurate Leads: Sales LeadsProvides lead generation services including mailing lists, telemarketinglists, mail lists, business lists, specialty lists and consumer lists.

http://www.accurateleads.com

Pioneer I nformation & Marketing: Lead Generation ResourcesOffers mortgage, business, and consumer mailing lists, informationsources, and databases specifically designed to support marketingprograms.http://www.pioneerinfo.net

Lee Marc Stein: Direct Marketing for Sales Prospecting

Provides direct marketing consulting and creative services to improvebusiness-to-business lead generation programs.http://www.leemarcstein.com

Hoover's Online: Business Intelligence For Lead GenerationProvides in-depth business and public/private company information,including profiles, industry overviews, financials, officers, competitors andnews.http://www.hoovers.com

Cerida: Sales Prospecting A B2B contact center that qualifies leads and profiles audiences to delivertargetted prospects. Lead, pipeline, and sales development specialists.http://www.cerida.com

D.E.I. Management Group: Sales Prospecting Provides sales prospecting and lead generation services, includingqualified lead lists, telephony services and optimizing trade showeffectiveness.http://www.dei-sales.com

Unicall International: Lead GenerationOffers a wide array of outbound telemarketing services including leadgeneration, product sales, and customer surveys.http://www.unicallinc.com

Prospects I nfluential: Direct Marketing List BrokerProvides targeted business and consumer prospect lists for mailing,faxing, telemarketing, sales prospecting and opt-in email in the US andworldwide.http://www.prospectsinfluential.com

10


11/33

InTouch, Incorporated: B2B Sales Lead GenerationSpecializes in providing highly qualified sales lead prospects. Utilizes realworld experience, best practices, and proprietary tools for rapid ROI.

http://www.increasemysales.com

Harris InfoSource: Prospecting Database for Sales LeadsOffers online prospecting database for finding new sales leads. Downloadtargeted lists to import into contact management programs. Free 7-daytrial.http://www.harrisinfo.com

VendorSeek: Lead Generation P rice Quotes

Connects business consumers to pre-qualified vendors for a variety ofservices. Provides price quotes on lead generation and call centeroutsourcing.http://www.vendorseek.com

Tele-SalesForce: Lead GenerationOffers an eight-step program to help increase tele-sales effectiveness.Outbound and inbound call center used across all verticals and industries.http://www.tsfcallcenter.com

Business Beanstalk: Lead GenerationCall center solutions for small and medium sized businesses. Appointmentsetting, cold calling, telephone surveys, lead qualifying and telemarketing.http://www.businessbeanstalk.com

TJ Telemarketing: Lead Generation Offers pre-qualified life and major medical health insurance prospectsgenerated by telemarketing. Leads are exclusive & personalized.http://www.tjtelemarketing.com

Estrela Marketing Solutions: Lead ProspectingProvides a real-time, customizable lead acquisition, management, anddistribution platform.http://www.estrelams.com

Performance Telemarketing, Inc: Telemarketing LeadsOffers call center outsourcing consulting services at no charge. Providesmultiple quotes for IB/OB teleservices from professional call centeragencies.http://www.performancetm.com

11


12/33

Know ledgeStorm: Sales Lead Generation I T SolutionsBusiness technology search site offering software, service, reseller andhardware information on thousands of IT solutions.http://www.knowledgestorm.com

Once you determine which companies are in need of your expertise puttogether a proposal or if its too early for that, at least a brief emailexplaining what you have to offer (see the next section) and email it tothem.

You can also contact them directly. You can get their contact informationfrom places like A9 (http://www.a9.com), Alexa (http://www.alexa.com)or Google (http://www.google.com). Call the main number for thecompany you found (can usually be found on the contact us section of

their corporate website). Talk to the receptionist, tell them that you wouldlike to speak with someone in the Marketing, Finance or Procurementdepartment. Ask for the Manager or Director of the department.Sometimes you can even get this information from their SEC filings (ifthey are a public company). Use the following script:

Hi ______, this is ______________ calling. Im anindependent consultant specializing in ______________. Iwanted to know who I could talk to in your organization todetermine if there may be a need for my services. If so, Iwould like a chance to submit a proposal. You will find that Iam (insert information about your work ethic, charm,

personality and skill set), and my prices are extremelycompetitive with what you are currently paying otherservices organizations.

(If you get voice mail, add this)

Please call me back when you have a chance. I am basedlocally in your area. It is easiest to reach me at

______________. You can also leave me a voice mail at______________ if I am personally unable to take your call.

I look forward to hearing back from you soon.

Take care.

As you gain success and clients this will become natural to you and youwill develop your own script.

If you are interested at all in Technology Consulting (PC, Computer, WebDesign, Development, Marketing, etc) there are a lot of Tech-specific sitesthat offer jobs such as Dice (http://www.dice.com ). Be careful though alot of the jobs offered on these tech sites are entered by recruiters orheadhunters. Any deals you land through them will require that you pay

them a percentage of your hourly bill rate. That can get costly for you(and lucrative for them!) on a long term engagement.

12
http://www.a9.com/http://www.alexa.com/http://www.google.com/http://www.dice.com/http://www.dice.com/http://www.google.com/http://www.alexa.com/http://www.a9.com/


13/33

This will get you a long way to landing deals. Once you have someoneinterested in your services, its time for the proposal

13


14/33

The Proposal

Heres where youre going to lay out all the services youre going toprovide your new client. I have included some top notch templates thatIve used to propose on work as part of this package. They are pretty self-

explanatory. In the Contracts and Proposals section you will find aProposal Template, Consulting Services Agreement (CSA) and Statementof Work (SOW).

Since many proposals may require a formal presentation, I have providedmy TOP SECRET presentation helper (Powerpoint). Most BusinessProfessionals arent very polished when it comes to presenting. This littlehelper presentation has saved me more times that I can count!Presentations I have given have even received applause!

Keep the proposal pretty high level and detail exactly what you will

provide in the SOW - including your proposed start date. By including thestart date, you are pointing out that they will get results quicker bymoving faster to bring you in. As things drag on you can use this asleverage saying I could already be working on this project. Now weregoing to have to revise the SOW to reflect the new dates!

Please dont forget the Consulting Services Agreement! Ive used this onmany occasions to hold my clients feet to the flame. You need to getthem to sign a services agreement to protect your own liability.

14


15/33

Pricing

Pricing can be a touchy subject but it needs to be addressed. Dependingon the type of work youre going after you need to price your servicesaccordingly. Ive included a thorough discussion of fixed-fee/fixed-bid

arrangements at the end of this document (see Sure Fire ways to earn$200/hour). Nonetheless, if you are charging by the hour, here are somebasic ballpark rates:

Business Strategy: $120-150/hourMarketing Consulting: $80-100/hour,

$10,000-$35,000 per campaignOrganization Change Mgt: $110-$130/hourQuality Assurance: $70-$120/hourBus. Process Re-engineering: $90-$130/hourProject Manager: $240/hour+

Its very important to specify in the Statement of Work (SOW) whetheryour expenses will be included in the rate. One trick Ive used successfullyis to quote an hourly rate, then add another line saying Expenses not toexceed 10% of Billing. This effectively increases your bill rate by 10%! Ifyou will be traveling long distances or staying overnight in a hotel, this isnot an unreasonable request. If the client site is 2 miles from your houseit is. Use your own discretion here. It also gives the client some wiggleroom without having to negotiate your rate down. For example, if yousubmit a proposal for $100/hour + 10% expenses its easy for the clientto say Ill pay $100, but your expenses will be included. At that point

you concede your expenses (which you may or may not have incurredanyway), and still get your proposed rate!

You should also include information in the Statement of Work regardingyour expectations for the client. For example, you may want to includethat you expect them to provide you with a desk, a computer workstationand a telephone. If you will be doing technical work add that all necessarydevelopment tools and system access will be provided by the client. Makesure this is all in place before you begin work. You dont want to show upand have nothing to do. This will turn them off and make you bored! Onething Ive done over the years is include a pre-arrival checklist with the

statement of work. This reminds the client that they should make sureyou have a place to sit and work and all your system accounts are setupbefore you show up. Its a classy touch.

One of the important pieces of the proposal is the

15


16/33

Return on Investment (ROI)

Ever since the dot-com bubble popped, ROI has become an increasinglyimportant part of corporate budgeting and overall performance evaluation.In order to get approval for new projects or to bring in consulting

expertise, Business Managers will most likely need to provide some sort ofreturn on investment calculation. The key is to anticipate this and add itinto your proposal. That will make the approval process go faster and getyou in the door quicker. Ive included some very powerful ROI calculatorsin the section entitled Return on Investment Calculators. You will likelyneed to tailor these to your clients specifications and your skill set, butthey will put you miles ahead of the competition. Be realistic in youranalysis. Make sure the savings are tangible.

16


17/33

Landing the Deal

Okay, if youve gotten this far youre golden. Youre almost in the door! Allyou need to do is continue communicating with the client. Also you maywant to allow the client to negotiate a bit on the scope of work, your fees

or whatever else they feel like negotiating. Stand firm and keephighlighting your strengths and what you bring to the table that theyrelacking, but give them concessions if it will help you win the deal. At thispoint you need to keep in DAILY CONTACT with the key individuals youvebeen talking to in the target organization. During the sales process youwill have made yourself look like a team player and they are nowenvisioning you as part of their group. You need to portray to them that iswill be lose-lose if this doesnt come through. Be confident and act likeyoure trying to arrange your schedule to make the project work for YOU.By giving them the impression that you are going out of your way forthem, they will do the same for you.

If you will have access to company-sensitive information you will likelyneed to sign a Non-Disclosure Agreement (NDA) with the client company.This is no big deal, just make sure you stick to the agreement and dontprofit from any information you happen to come across. This is more of aprotection for THEM than you, and signing it shows your commitment tobe responsible.

17


18/33

Delivery

This is what youve been waiting for. Once you get on site and start thedelivery phase, keep referring back to the SOW to make sure you keep onschedule. If youre smart (and I know you are because youre reading

this!) you will have built a little bit of buffer into your SOW to make sureyou dont overextend yourself and allow yourself to make a bit moreprofit. Thats fine, and its not unethical as long as you dont gouge yourclient or take advantage of them. Keep in mind that you are the expertand they are hiring you because they lack your expertise. Just be sure notto use that too much to your own advantage.

Ive included some templates that will help you with documentation ofyour solution. These templates are derived from a universal softwaremethodology (the SDLC, or Software development Lifecycle) and arepretty much the de facto standard in the Software world especially on

large projects. I have modified them a bit and added or removed certainsensitive information. Using these documents will show professionalismand attention to detail. They will also serve as the record of what youaccomplished with the client, open/closed issues and future opportunities.These will be part of your project and should be left behind after you leaveso that the client can understand what you have done for them. You willalso have a tangible reference for when the project finishes. This will helpyou win future work with the client.

Heres an insider secret for you once youre in, youre in. Once you get acontract with someone, they will want to keep you around. Ive had

customers literally beg for me to stick around and found meaninglesswork for me to do while they looked for other projects for me. The reasonfor their behavior is simple you now have insider expertise. Youveproven yourself to them and they wont want that knowledge to walk outthe door!

Another tip during delivery Keep busy with what theyre paying you for!Dont surf the web, talk to your friends on the phone, or use the clientsequipment for anything other than client work. Ive been to client siteswhere they took apart computers after consultants left and found all kindsof stuff on them (pornography, other clients work products, web site

cookies, etc). This could lead to lawsuits and non-payment for yourservices. Keep in the back of your mind Would they be paying me $XXXper hour if they knew I was doing this? If your answer is no, stop doingit. If you really have to, use your discretion. This is all pretty obvious, soIll stop there.

18


19/33

The Reference

Assuming you successfully complete the project on time and on budget,and the client really likes you, its time to market that win. There are twoavenues you can take.

First, you can go back to your client and determine if there is any follow-on work or services you can provide. If so, go back to the beginning andsubmit a new proposal and statement of work. As I mentioned in theprevious section you should now have an inside champion to help you putit all together and upsell your success on the last engagement. The goodnews is once a client signs a CSA you dont need to have them do thatagain.

Second, you can go out and find a new client leveraging your success atthe last. You should include in your new proposal a description of the work

you did at your last client so that the new prospect can more easilyenvision you working in their environment. You may want to get theprospect on the phone with your last client so that they can hear aboutthe work youve done just be sure not to violate any non-disclosureagreements you may have signed.

I cannot stress enough how important references are in the consultingbusiness. Whatever you do, dont burn any bridges.

19


20/33

Housekeep ing

Once revenue begins to float in, its time to setup basic businesshousekeeping. If you are planning on working from home to begin with,

that is fine. As a matter of fact, I recommend it. One of my colleagues gotall setup in her new executive suite (rented office space shared with otherbusinesses). It was beautiful! She had a receptionist, hot coffee, colorcopiers, a mail department all the amenities you would expect in aprofessional office environment. She paid a fortune to keep up this image.She had a prospective client come visit for an afternoon meeting and theclient said It nice to see that your customers are paying you enough thatyou can afford all these nice surroundings. Unfortunately we will not.Harsh, huh?

There are multiple business types: a sole proprietorship, a partnership, a

limited corporation and a corporation. Most people start out as a soleproprietorship and then change business entities as they grow. If youneed to start a corporation, I highly recommend register.com. They canusually get you all setup for less than $500.

You will next need a business name and some basic tools of the trade: A business phone number with an answering machine or service Mobile phone with voicemail A quality printer (preferably color) Errors and omissions insurance (optional) Business letterhead and invoice statements (hint: Excel has some

nice Invoice templates!!!) A website once your business is up and running A business email address Business cards with your contact information A brochure detailing your business focus and skills

This is a minimum list of needs just for starters. I personally cant livewithout my Apple Powerbook, but then again Im a Mac fan and some willsay were strange. As you grow and get more clients the quality of yourbrochures and business cards should increase. You can go to Kinkos andget 100 copies printed in color for about $20. Your clients and prospects

will take you more seriously if you present yourself professionally.

A note about transportation. If youre opening up shop somewhere thatwill required you to drive to visit your clients, I recommend somethingthat will not be too flashy. Personally I drive a mid-sized SUV to and frommy client sites, but have a nice little sporty number that I take out onweekends and after hours. When youre making a couple hundredthousand a year its tempting to go out and get that Porsche 911, but ifyou drive that to the client site they will likely think theyre paying you toomuch. If youre lucky enough to be consulting in an industry where theparking lot is full of exotic cars, go ahead and drive it to work. And also be

sure to give me a call when you need extra help!

20


21/33

Above all, try to maintain your level of professionalism in all client-facingsituations.

21


22/33

Su r e Fi r e w a y s t o e ar n o v e r $ 2 0 0 p e r h o u r

Over $200 per hour?Sounds impossible, doesnt it? Or perhaps not impossible, just unlikely.

Especially since youre not the foremost expert in your field, right?

Wrong!

Your hourly rate doesnt depend on your reputation, your brand image,your credentials or whether you have launched a thousand press releasesor written umpteen books.

And Ill prove it.

Thats not to say these things arent useful. I would be a fool if I claimed

otherwise.

At this point, you may be thinking, Yes, of course Id like to maximize myhourly rate but can I believe this guy? If so, thats fine. Because Idexpect you to be thinking that. I certainly would.

In fact Im a complete cynic when it comes to believing extravagantclaims from self-proclaimed gurus. I want to believe what they say, buttheres something deep down inside myself that just doesnt click. Theirclaims can sound false, too generalized or a little muddy.

Not here. Ill give you real live examples of what I said, my mentalprocess when speaking to the client, how I structured the deal and theoutcome. Then how I raised my rates over and over again. I wont leaveanything out.

I cant promise that this information will be useful for you I dont knowyour skill set, what kind of consulting you plan to do, or your marketplace.I just want to relate what worked for me so that you can maybe applythese techniques to your own business.

Lets get started...

The Simple Discovery that w oke me up to Fixed Fee pricing

One day I was reading an excellent book by Alan Weiss called MillionDollar Consulting. The title was eye catching and Id read some goodreviews of it on amazon.com, so I bought it.

I was skimming through some of the chapters thinking, Finally someone has taken the consulting marketplace and applied some scienceto it!

Then I came across a chapter on pricing. This hit me like a ton of bricks.

22


23/33

It said that youd never earn much money if you charge an hourly rate.Hmmmm. Makes sense, I thought. It went on to say that you only have alimited number of hours in the day, so an hourly rate must be shelvedwhere possible. This meant fixed fee pricing for a project.

Fixed fees Of course! This was a technique that I had used in myprevious consulting life to make tons of money for my former employers but I hadnt yet applied it to our small practice!

Now this wouldnt have suited some of our work, as we had alreadyestablished good relationships with existing clients at comfortable hourlyrates. However, it did open the door to a different pricing structure fornew clients or smaller engagements.

The reason I hadnt adopted this technique for our practice was simple. Iwas afraid of losing business.

I had to come to terms with the following issues: When we quote by the hour, it seems less than quoting some big

sum of money for the whole project. Clients might prefer us to do everything on an hourly rate. The prices we were quoting seemed like a lot of money to us, so

surely they would think the same?

As it transpired, THIS was the reality: Quoting by the project helps a company decide how it fits into their

budget.

Quoting a fixed price limits their financial risk. Hourly rates result inan open-ended agreement and this exposes them to projectoverruns. Something companies strive to avoid.

Companies are used to dealing with larger numbers, so theirperspective is different to yours or mine. Additionally, most of thetime its not the employees money that is being spent. Its thecompanies.

I decided to give it a go and try to make it work.

What follows is a discussion of my experiences using this new pricingmethodology.

I know it helped me and I hope it will help you.

Our First Fixed-Fee Engagement

A fried referred me to a potential client that was looking to expand theirIT infrastructure and needed a roadmap to get them from where theywere to where they needed to be. We had a meeting and they werecomfortable with us performing an assessment to determine the overallcost of the initiative.

23


24/33

We ended up with an estimate of 2 people for 5 weeks. Our blendedhourly rate for 2 consultants (one senior, one junior) was $180 each,making the daily rate $2,880.

2880 (rate/day) x 25 days = $72,000

I quoted an even $80,000. The client negotiated me down to $78,000.

The assessment took us 23 days from start to finish.

Lets calculate the earned rate:23 days x 8 hours/day = 184 hours$78,000/184 = ~$424Divided by 2 consultants $212 dollars per hour!

Not bad, Ill say.

If we had worked at an hourly rate (or daily rate), we would have earneda blended rate of $180/hour per consultant for 23 days or:

$180/hour x184 hours x 2 consultants = $66,240.

Wow! This was a revelation. And we didnt do anything differently.

What factors w ent into this project earning us so much?

1. Fixed fees need fixed scope. As part of the Statement of Work,we outlined exactly what we planned to provide and stated that anyadditional work outside of the SOW would be quoted on a time andmaterials basis.

2. Quoting a price that adds some buffer to your estimated projectlength. This is a form of insurance that covers you for unforeseendifficulties. If you do have a project over-run, you will still getdecent hourly rates.

3. Working fast. We placed two of our best consultants on theengagement and they had been working well together for 6

months. Since this was a high visibility project we needed to useour best resources. We wanted to earn additional business from thisclient. Luckily, these two consultants worked well together - andquickly.

4. Using in-house time saving procedures that cut development time.We had done some similar engagements for other customers, so wealready had much of the documentation we needed.

5. Using the internet to search for answers or posting to forums. Sincewe were working against the clock and didnt understand 100% oftheir environment, we ended up doing a lot of research to come up-to-speed. A fast solution is to pick the brains of others. The result?No problems, no delay, fast completion.

24


25/33

6. Quoting a price that assumes you are developing everything from

scratch, with no help from internal procedures or projects.

7. Helping the client believe this is a realistic price for such a project.Another Fixed-Price example

One of my partners brought me in to work on a sales campaign to gainsome new business.

I discussed their needs and established that it was a competitive bid.There were at least 3 other firms competing for the business.

Before long, there were two left: us and the other guy.

Our presentation wasnt the best, but we were able to convey themessage that we were the firm to choose, provided a list of references,and worked the relationship angle (since we had worked with them in thepast).

I asked my usual question, How much is in your budget for this project?They said, We dont really know, we just need it done. We have moneyfor consulting, but not a lot. We would like to spend under $25,000.Wow! They actually told me, without resistance. Maybe my competitorhad already quoted a price in that region.

After our meetings, we tried to scope the project realistically assuming theresources we wanted to use would be available, despite the competition.

We gave them a rough quote of $26,120, to be revised after more in-depth discussion if they decided to use us. They signed within 2 weeks.

We had another (3 hour) meeting and it transpired that some of thedetails were left out of the original discussion. So we had to adjust theprice accordingly.

My revised price was $28,200, over $3,000 more than their maximum

budget.

They gave us the immediate go ahead.

Its strange, once someone has decided to work with you, thats it. Themomentum has fallen your way and they are increasingly unlikely tochange their mind. They dont want to agonize again over who to chooseand have to have all those complicated, mind taxing meetings again.

They just pay the extra, if it arises, and get on with fighting fires in theirbusiness.

The project took us about 115 hours.

25


26/33

Thats $245 per hour.

The Formula for Success

Heres the simple formula for earning over $200 per hour:

Fixed Fee Pricingx Speed of Executionx Perceived Demandx Time Constraintx Customer Service

Ive broken down each element below.

Fixed fee pricing

Avoid an hourly or daily rate when doing project work. This is pretty selfexplanatory and Ive discussed this in detail already.

Speed of Execution

Halve the time it takes you to do a job and you double your hourly rate.Perhaps Im stating the obvious but its a simple fact.

There are many ways to slash project times.

They include:

Improving your skill set. A low skilled consultant may take 5 timeslonger than a highly skilled pro. There is that big a difference.

Create in-house procedures to cut project (and admin) time. Createa knowledge repository of pervious client deliverables. Create alibrary of ready-to-use templates and so on.

If you are stuck on something, seek help from others usingdiscussion forums. Or search on the internet. Chances aresomeone, somewhere has run into the same issue you are dealingwith and they may have an easy solution/workaround.

Perceived Demand

People want to deal with people who are busy.

So act busy. It makes you look successful and reduces their negotiatingpower on price, because they will think They are so busy they may notwant to take on my project if I quibble on price.

Sprinkle your conversation with comments such as Were so busy at themoment or This is the busiest month weve had since we started orWere getting so much work in at the moment were having difficulty

finding the time to employ more skilled staff.

26


27/33

Do this before you even get close to discussing price. It sets the stage forsuccessful negotiation.

Time Constraint

Apply subtle pressure to get them to sign quickly. I use phrases such asIf you want us to do this work we really need to know quickly. We havequite a other projects in the pipeline and we want to make sure weprioritize your project accordingly. Alternatively, you could use somethinglike Weve got a great consultant that would be perfect for this project.He/Shes scheduled to go out to another customer next week, but if yousign before then perhaps we can assign him/her to your project instead.

This ties in nicely with the busy comments mentioned under PerceivedDemand.

Customer Service

Respond to client requests as fast as possible. Exceed their expectations.

The result?

They want to deal with you and you alone.

They decide, often before being hit with a price, that you are the personfor the job. So many companies fail to deliver that youll get noticed whenyou offer outrageously good customer service.

The 5 Step Action Plan to Earning Over $200 per hour

Step #1: Decide what type of work suits a fixed pricing structure

If you are just training home users, this may be a little early for you. Butwhen you are dealing with a business, look very carefully.

They want a technical support hardware installation? Quote a fixed fee.One hundred dollars and the job is done. It may only take you half anhour but they dont know that until it is done.

Need a website? Quote for the entire project. Forget an hourly rate. Youwont earn enough.

Software development? Fixed price. And so on.

Step #2: Improve your Perceived Demand

Are you giving off the impression of being busy? Invent 10 ways to makeclients believe you are the busiest consultant around.

Use these simple techniques for starters:

27


28/33

Every bit of work that comes in, make it seem as though you are trying toslot it in with a lot of other business.Dont act as though you are about to go under if you dont get thebusiness. Desperation is a big turn off.

Step #3: Speed of Execution

Create an educational program to transform your skills. Block out time inyour schedule now for the next three months, and keep it free for self-study.

Next, think up 5 ways to cut your project work time even if it onlyinvolves using a macro program to cut down on keystrokes, such as MacroExpress.

Step #4: Develop your Time ConstraintsMake up a list of 10 time constraints you can use to apply pressure toyour clients.

Before you start applying these techniques, you must fully understand theclients situation. Don't shoot yourself in the foot by overstating yourclaims or by applying too much pressure.

If I said to a client, "Give us the go ahead today or it will be another threeweeks before we can start", knowing they can't start until at least twoweeks out, then you have a problem.

Step #5: Improve on your current level of Customer Service.

Take into consideration factors such as

How quickly you return phone calls and email How easy is it for your Clients to get in touch with you? How you manage your time effectively

Once rated, creates an action plan to improve on each area. Thecumulative effect will impress clients.

28


29/33

Fa i lu re i s no t an op t ion u sua l l y

Failure is often just one more step you have to complete before youresuccessful. I hope that isnt the case in your situation, and I hope that Ive

given you enough tools to avoid the pitfalls. However, I would be remiss ifI didnt point out some of the most common failures in the consultingbusiness. You should think of these failures as items you shouldconstantly be revisiting to make sure you dont make them yourself.

BillingLets face it. Most people hate to ask for money. And most consultantshate to deal with any extra paperwork. You need to document every houryou work, keep meticulous records of your activities and make sure youget a signed statement from your client confirming them. Then, once (ortwice) a month, send them an invoice along with copies of the signed

statement. By doing this up front you will be sure that you get paid andyou can halt any projects for a client who has a problem with your work.Experience shows that clients have no problem trying to put off payingyou if they think they can get away with it. This is part of the real world,and part of doing business. By holding fast to your professionalappearance and standards, and billing them monthly or bi-weekly, yourclient will know that you mean business and that your work does havevalue. Not to mention the Statement of Work and CSA will already haveall this stipulated!

Not Meeting Deadlines

Another problem comes when you are unable to meet a deadline for somereason or another. If you see this happening, alert your client as soon aspossible, and definitely dont make it a habit. You may even have to(gasp) do some free work to make sure you get anything at all. Thishappens to all of us at some point. It isnt always your fault, but it issomething you will have to learn to deal with.

Cash Flow Last but not least, is cash flow. You need to know how much cash youneed to keep your business going. The tools I provide will help. Mostbusiness fail because they dont have enough cash to fund daily

operations. Dont let this happen to you.

Some business experts say you need at least three months of funds to geta business going; others say you need six months of cash in the bank. Idont know your personal situation, but my sample business plan has$30,000 built in which should supply a small consulting practice with 3months of cash flow (depending on location and your level of frugality). Ifyou are starting while you still have a full-time job then you likely wonthave these cash flow pressures that you would have if you went out onyour own immediately. After you get a feel for what you can make, youcan decide how much cash you need in the bank before you break out on

your own. As an ongoing measure I personally keep at least 10% of mybillings as a backup precaution for any unforeseen circumstances.

29


30/33

Tips & Tr ick s

Assessments One trick that Ive been using very successfully lately isto ask prospects to let me do an assessment. You can negotiate whetherthis will be paid or unpaid. It also helps break your engagements into

smaller pieces and increase the chances of follow-on work. An assessmentcan be as easy as a couple hours work discussing customer requirementswith stakeholders or as elaborate as a few days or a week of working withthe stakeholders to design a solution that you will then turn around andprovide to them for a fee. If you do an assessment try to get it to be paidso that they have a stake in the results, and also include the results inyour formal proposal. Usually you wont need a proposal or CSA for anassessment, a Statement of Work should do the trick.

Networking Once you get in the door, work it! Try hard to understandthe organization and its structure, build rapport with your counterparts

and their managers, and make yourself indispensable. This ultimatelyleads to more follow on work as well as a sense of loss when you leave.

Internal Champions I dont want to harp on this, but it really isextremely important. Ive seen so many projects go south because aconsultant was aligned with the wrong internal champion. Throughnetworking you will gain an understanding of who has power and whodoesnt. I know it sounds mean, but no matter how much you like theothers you MUST align yourself with someone powerful enough to be yourchampion. This is paramount to the survival of your business and yourfinancial well being.

30


31/33

Fresh Leads

Use your internal network and friends to stay on top of trends and otherpotential clients. Since I specialize in Oracle software, Ive pulled email

addresses from Oracles web forums (http://otn.oracle.com,http://appsnet.oracle.com ) as well as Yahoo! Groups (search for oracle theres a ton although many dont have much activity). Ive used theseto make cold calls and send generic proposals, and have had incrediblesuccess with it. Go to google groups and search for your areas ofexpertise. Get in contact with the people you see posting a lot ofmessages. Typically these people are well connected and can put you intouch with clients in your area. Be sure not to post a personal want ad outthere. You dont want or need to sound desperate. Finally, with theexplosion of instant messengers and blogs, do some searches to see ifanyone is saying anything that might lead to a proposal.

Always be looking for your next gig, just dont do it from your currentclients office!

31
http://otn.oracle.com/http://appsnet.oracle.com/http://appsnet.oracle.com/http://otn.oracle.com/


32/33

Tools

Theres a ton of freeware, shareware and open source tools that will helpyou in the delivery of your projects. The best places to go to find them are

http://www.download.com (for shareware and freeware), andhttp://www.gnu.org, http://www.sourceforge.net or ftp://sunsite.dk foropen source.

Since Im a techie, my favorite tools are of the technical variety

My favorites:WinVI (vi emulator)Fink a package manager for DarwinWget scrapes information from websites and stores it locallyWinZip file compression

dbXpert Oracle database managementScriptRunner run multiple scripts against a database

32
http://www.download.com/http://www.gnu.org/http://www.sourceforge.net/ftp://sunsite.dk/ftp://sunsite.dk/http://www.sourceforge.net/http://www.gnu.org/http://www.download.com/


33/33

A Big St ep

Ive encapsulated 12 years of my personal experience in this document.This can be a lucrative business. Its definitely a way to become self-

employed and make a good income, but it can be hard work and hassome pitfalls.

The best way to avoid these pitfalls is to set aside some time weekly toreview what you need and have planned for the next two weeks. My listgoes something like this:

Are there any problems I need to address with my current clients? Do I need to make and sales calls or visits this week? Are there any critical lunch or dinner meetings I need to schedule

in?

How is the cash flow forecast for this week and the next month? What deliverables and/or milestones to I need to prepare for this

week and next?

Good Luck with it all and Happy Selling!

Documents

The Consulting Solution