ConsultingBuilding Your Own Consulting Business

Business Organization

Sole Proprietorship/Partnership

Advantages Easy and Cheap to Start All profits go directly to owner or 50/50 partners Complete control

Disadvantages Unlimited liability All NET income taxed as personal income Potential loss of tax deductions Self employment tax

Limited Liability Company (LLC)

Advantages Easy to setup Owner(s) have limited liability protection

Disadvantages Taxed like Sole Proprietorship/Partnership Annual paperwork Potential for extra state taxes

S Corporation

Advantages Owner(s) have limited liability No Self Employment Tax Salary distribution can be coupled with profit distribution

to avoid higher tax rate. “Reasonable Salary” Additional Tax advantages

Disadvantages Significantly more paperwork (legal and accounting) More expensive setup More complex operation

Insurance

Errors & Omissions

Protection from legal action related to poor decisions or bad advice Helps cover any award made against you Helps cover cost to defend a legal action Only good while policy is in effect, legal action in future

without a policy means you are not necessarily covered

Industry standard is $1,000,000 coverage Deductible affects the Premium

AKA Professional Liability Insurance

Disability Insurance

Protects your earning capacity in the event of an accident or fatal illness Difficult to obtain for Freelancers/Consultants due to fluctuation in

income and lack of supervision Workers compensation can be a viable alternative Check on how the insurance company defines disability

Standard coverage would be 60% of NET income Waiting period affects the Premium (like Deductible on other

policies). Waiting periods usually break down in 30 day increments. 30, 60, 90, 120 or 365 day

Length of Coverage Period is how long they will pay you while disabled. Standard terms are 1, 2 and 5 years, but longer terms are available. This also affects the premium

Insurance for You

Life Insurance

Only necessary if you have dependents

Policy Types Term Policies vary widely, but some policies will return all

premiums at the end of the Term. This affects the premium, but a great payday if you make it to the end

Whole Life and Universal Life are not recommended as they are less coverage for a higher premium

Standard recommendation is 70% of your earning power to provide a minimum of 5-10 years income for your dependents.

Don’t forget to have a will too

Insurance for Others

Other Insurance

Auto Policy Talk to an agent about coverage differences for a car used

for your business in comparison to your personal auto policy.

Home Office Coverage Talk to an agent about this coverage since business

liability coverage is not part of a homeowner’s policy.

The Company

Company Presence

Name Keep it memorable Convey a message Be careful when using unique spelling Check domain name before final decision

Logo Think about use in print materials

Business cards Invoices

Simple concepts are best Focus on positive vibrant colors

Blue is most commonly associated with productivity

Communication

Office Phone Cell Google Voice

Vanity Phone Number Voicemail FREE

Email NEVER use Hotmail, Gmail, Yahoo, ISP account, etc… Google Apps (custom domain)

E-mail Calendar Documents FREE option

Marketing Tools

Business Cards Overnight Prints (http://overnightprints.com) Vista Print (http://vistaprint.com)

Social Media Twitter LinkedIn Facebook

Website Various hosting options Content Management Systems can save time

Marketing Opportunities

User Group meetings

Speaking opportunities

Chamber of Commerce or Technical Council events

Networking events

Blog

Home Office Tips

Separate space from living area

Know your square footage

Keep recreational items out of area

Invest in a desk and comfortable chair

Getting to Work

Resume

Highlight Technologies Types of Applications Industries Metrics of contribution Be sure to never violate Non-Disclosure (stay generic)

Remove High School and non technology related jobs Irrelevant comments “I code like a girl” NO Third person bullets “Caleb developed a …”

Subcontracting

W2 Employee like benefits

Taxes, Medical, etc… Preferred by recruiting companies

Corp to Corp Must have Liability Insurance Improves Rate negotiations

Base rate Overtime rate

Professional relationship

What’s my rate

52 weeks (in a year) * 5 week days = 260 days

260 days – 10 major holidays = 250 days (2000 hours)

250 days – 15 days vacation = 235 days

235 days – 5 days (off contract) = 230 days

230 days * 8 billable hours per day = 1840 billable hours

1840 * $50 per hour = $92k

1680 * $50 per hour = $84k ( 25 days off contract versus 5)

The 2000 hour myth

“Never confuse the size of your paycheck with the size of your talent." Marlon Brando

Contracts on your own

Master Service Agreement (MSA) Agreement between your business and client to outline

responsibilities and obligations each company has to one another. Your rates for service would be included here.

Statement of Work (SOW) References the MSA for authority on those areas. Outlines the deliverables, timelines, etc… for a specific

activity

Find a good lawyer

Getting Paid

Payment terms can be a great or terrible thing. Net Due - Difficult to get any company to pay Net Due, so don’t plan

on getting paid that quickly. Net 10 – Get paid 10 days from receipt of invoice by customer. This

is optimal, but not always possible. Plan on a 30 day deliver, just in case.

Net 30 – Get paid 30 days from receipt of invoice by customer. Standard for most companies. Don’t go higher than Net 30

When the client doesn’t pay you have minimal avenues Send additional invoice as Net Due STOP WORKING FOR THE CUSTOMER Send certified or registered letter with copy of invoice stating

payment not received and legal action will take place

Tools

Project Management

ProjectTurf (http://projectturf.com) Full featured, no FREE option

activeCollab (http://activeCollab.com) No Free option

Basecamp (http://basecamphq.com) Free option

Lighthouse (http://lighthouseapp.com) Free option

“Trying to manage a project without project management is like trying to play a football game without a game plan.” K. Tate

Accounting

FreshBooks (http://freshbooks.com)

QuickBooks (http://quickbooks.intuit.com)

PeachTree (http://peachtree.com)

GET AN ACCOUNTANT FOR TAX SEASON

“There's no business like show business, but there are several businesses like accounting.” David Letterman

Time Tracking

Toggl (http://toggl.com) Windows, Mac, Linux, iPhone, Android, Web Works with BaseCamp, activeCollab, FreshBooks, QuickBooks

Klok (http://getklok.com) Desktop, Android (BETA) Works with BaseCamp and Harvest

Tick (http://tickspot.com) Web and iPhone Works with BaseCamp

Harvest (http://getharvest.com) Desktop, Web

Task Management

SCRUM VersionOne (http://versionone.com)

https://github.com/versionone/git-hooks Rally (http://rallydev.com)

Lean LeanKit (http://leankitkanban.com) AgileZen (http://agilezen.com)

Source Control

GitHub (http://github.com) Public and Private git repositories Free option

Bitbucket (http://bitbucket.org) Private mercurial respositories Free option

Subversion

TFS

Prime Time

What is a Consultant

Architect

Developer

Project Manager

Business Analyst

Salesperson

Marketing person

Everything in between

“Consultants have credibility because they are not dumb enough to work at your company.” Scott Adams

Consulting is not for everyone

Clients will not always treat you with respect It isn’t personal

Clients may cut you loose for stupid reasons Have an emergency fund of 3 months expenses (minimum)

Clients will sometimes use you as the scapegoat for their mistakes Be prepared, document everything to be ready You may have to take it, but you can protect yourself from legal

action

Clients can ignore your recommendations Again, it isn’t personal

“It's just a job. Grass grows, birds fly, waves pound the sand. I beat people up.” Muhammad Ali

Accountability

Seriously evaluate any major task to ensure you can accomplish it DO NOT accept any task if you cannot get it done

CORRECTLY

Own up to mistakes and accept the consequences It is worse to be known as seedy and deceitful

Avoid giving dates without a firm understanding of requirements Always send a follow-up e-mail confirming what was

communicated and your understanding

“No snowflake in an avalanche ever feels responsible.” George Burns

Politics

DO NOT participate in office politics

DO NOT speak negatively of any consultant(s) directly

DO NOT be afraid to speak, if you know you are right

Know who the REAL client is and serve them as such

Remember as a consultant you can ALWAYS leave

“Hard work is rewarding. Taking credit for other people's hard work is also rewarding... and faster.” Unknown

Client Interaction

Conduct yourself in a professional manner with everyone and in all situations

Work on your ability to translate complex information into simple terms or analogies

Try to have alternative options available, in case the client decides against a recommendation

Remember metrics are crucial for communicating benefit, measure and share

Don’t be afraid to say “I don’t know”, but don’t let that be the last thing you say. As a consultant you learn for a living

“… a professional is someone who can do his best work when he doesn’t feel like it.” Alistar Cooke, journalist

Client Interaction (cont.)

Develop your ability to speak intelligently on a number of topics, but don’t misrepresent your abilities

Be a contributor, not just an order taker

Break up work into phases Allows the client to see progress Protects you from unexpected requirements impact

Be clear about your style/approach and how deviation from best practices can impact timelines.

Questions