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How your Career Training and experience could create a high-income consultancy business.

Business owners get bogged down in a myriad of every day problems and things to do. They find there just aren’t enough hours in the day to handle everything that should be taken care of to take the business forward. This is where your career experience may help.

Proper management and planning are basic ingredients to success in business; and most small businesses just don’t have these ingredients in the proportions needed to attain their greatest profit potential. This may be an area of opportunity based on your career training and experience.

Why should this be so? Remember we are talking about small businesses. Very often a person with a particular skill and contacts will ‘start a business’ using their career experience! But what really happens is they have become ‘self employed’.

Which means they are still employed using their career training and experience doing the work, for themselves rather than working as an employee. They may employ others but they are not running a business.

Check this.

If in this scenario the ‘business’ owner stopped work, would the business continue? The answer must be no.

So the real definition of a business is ‘if the owner stops working in the business, can the business of the business continue’. If the answer is no then it is not a business.

Understand that fundamental and you will come to realise that if you have some skill from your career training, past experience, work, hobby or whatever you have the attributes to set up in business as a consultant matching your particular skills to the market.

But you will say that is not a business if you apply the above criteria. Yes that’s correct. But where you will be different is that as a consultant you have an opportunity to develop your business.

Initially you will work in the business, self-employed. You will be busy completing assignments, gaining yet more career training and experience and building case studies.

One of the traps we can easily fall into is assuming that just because we know how to do something, everyone else knows how to do that same thing, too. In many cases, the opposite will be true. So there is a market.

This can start with the most simple of skills.

Can everybody swim?

Can everybody ride a bike?

Can everybody ride a horse?

Can everybody operate a computer?

Etc., right through to the highest of skills.

The skills, training, tools and experience you use in everyday activities give you the ability to do things that others simply can’t fathom.

While you might assume that everyone knows how to use a computer, you’d be wrong.

In fact, even now a small minority of the population is computer literate. Which means that even fewer people understand the various creative programs now available.

And that’s why there will always be a market for consulting, how-to reports, books, videos, DVD’s and training workshops. Everyone has not had the same career training and experience and therefore cannot know what we know. Some people recognise they need and want help and are willing to pay to learn.

Look at the skills you use every day. Many of those are the basis for training products you can create. Do a swift inventory, you will be surprised.

Look at your career training, work and business experience. That is a basis for consulting, training and product creation.

Teach people to swim.

Teach people ride – bike or horse.

Etc., right through the spectrum of your expertise.

Go on to; Write Manuals, Books. Create Videos, DVD’s.

As a consultant with your completed assignments and case studies you will create ‘How to’ products which you can sell. You will develop training courses, which you will present. At these courses you will sell your ‘How to’ products and soon you will employ other consultants to do the presentation on your behalf.

They will be only too pleased to do this for you because they are looking for self employed work while you continue to create more time to create more ‘How to’ products, develop more training courses and do more assignments which fit with your business strategy.

So it’s like this; the overworked small business owner does not really have a business, s/he needs your help. You start as a consultant selling your time. But you’re going to create your own business and you start to implement your strategy to construct your business so that you work ‘on it’ not ‘in it’.

Eventually, properly set up the business will carry on without you. Maybe you think all of this is over simplified, but if you follow this strategy with discipline you will develop a sound growing high income consulting business based on your career training, skills and experience.

Setting consulting fees and hourly rates for a new consultant can be a challenging process. If you set the hourly rate too high, you won’t get business, set the hourly rate to low and you’ll not make money.

There are several factors that determine the correct hourly rate for flat consulting fee. The most important is quite simply, how much do you need? There is a formula for setting this rate and you’ll be surprised how closely the result parallels what others charge.

X = hourly consulting rate

To find X

X=y+H+M+P+F

How do we find X?

First we need to define a few constants. We’ll start with our base rate which is Y.

A= is the salary you desire
B= the number of hours you can realistically bill in one year.

To define the base rate (Y) A/B
So for example if you desire a salary of $80,000 per year and you can bill 1500 hours as an IT consultant you are left e rate of $53 per hour. This is not your base rate, you still have one more calculation.

Next we have to add in the self employment tax. This is the tax for Social Security and Medicare for a self employed or small business owner. This rate is 15.3% Add this to the $53 (53 * .153)

Now we have a base hourly rate (Y) of $61.

At this point many independent consultants set their rate and hang up the shingle. This is why many of them are out of business within a year or two. You must consider all of the other things you’ll need that your employer paid on your behalf, and money to grow your business.

H = Health insurance costs

The first and most costly is health insurance. If you have a family of four you can count on at least $500 per month. Health insurance for self employed can be very expensive. Check with several brokers do get the best price and then divide the total yearly cost by the number of hours you will bill. Taking a rate of $500 per month, or $6,000 per year, at 1500 hours your rate will need to increase by $4 per hour to cover health insurance.

M= Marketing and sales costs

For an independent consultant your business is only as strong as your next engagement. We recommend a minimum of 5% of your first year estimated sales to keep the pump primed. $2.6 would be our hourly rate at this salary.

P= Professional fees.

This is the cost for your accountant, attorney fees, answering service, and any other monthly or quarterly fees you’ll need to pay throughout the course of the year. We’ll use a figure of $2400 for this example, so P= $1.6 ($2400/1500 hours)

F=Fudge factor.

The fudge factor is the small things that are going to come up from time to time. Stamps to mail out invoices, a one time cost for your accounting software (QuickBooks, or Microsoft money) and the dozens of other items that pop up from time to time. As your business grows the F factor will have other expenses like rent, and overhead for non-billing employees, extracted and divided by the number of employees and the number of hours worked. For now just use your best guess. If you need starting point $200 per month is not unreasonable. F=$1.6

Since my “Death of the OD Practitioner” article was published about a month ago, I have been asked whether Organizational Effectiveness (OE) consultants will experience the same fate. My answer is “no.” Of course, that assumes that OE consultants do not follow the same destructive path that Organization Development (OD) practitioners chose.

OD practitioners made the mistake of not partnering with their clients to produce business results. OD practitioners looked at business executives (their clients) with disdain.
They saw business men and women as bourgeois money-grabbers who didn’t care about their workers. Their anti-business, anti-capitalism, anti-management rhetoric has led to their own demise. (You can’t look down your nose at your business client and expect to stay in business yourself.)

OE consultants, who share a different mindset, will share a different fate. OE consultants respect their clients and serve as business partners. Let me make the following predictions about the future of OE consulting:

1. OE consultants who serve as strategic business partners will rise in status and recognition in their organizations. Salaries will rise too as the value of their expertise becomes more widely recognized. (A value-added approach will be critical to fulfilling this prediction.)

2. The title of Chief Learning Officer (CLO) or Director of Organizational Effectiveness will become commonplace at leading corporations. These positions will be responsible for all organizational learning and change efforts.

3. The role of OD practitioners will continue to decline in importance for two reasons: (a) OD practitioners have not adopted a strategic business partner approach, and (b) many OD practices have already been adopted by mainstream American businesses.

4. OE consultants will become more responsive to the needs of senior management. OE consultants will become a valuable in-house (or independent) source of guidance on tough management issues such as succession planning, the creation and transfer of tacit knowledge, and the development of organizational talent.

5. OE consultants will develop higher levels of consulting skills to increase their value to their clients.

If you are an OE consultant, there are several things you should keep in mind:

Bob Pike has said, “Deliver what is needed, not just what is requested.”

David Ulrich predicts, “Business organizations in the future will compete aggressively for the best talent.”

I have predicted, “In the years ahead, senior executives will be looking for high-level tacit knowledge and experience that will add to their organizations’ core competencies and competitive advantage. These core competencies, in the form of highly developed human capital, will become the organization’s most important form of sustainable competitive advantage.”

How are you going to add value to your organization’s (or your clients’) core competencies and competitive advantage? You can’t stand still in a fast-moving world!

Want to hear some good news? Your chances of success are better than most people think. According to the Bureau of Labor Statistics, the survival rates of all new businesses started between 1998 and 2002 find that 66% of them are still open two years after they started.

A Cornell University study of restaurants in three major markets showed a first year failure (or closure) rate of 27% with only a minor (4%) difference between franchised and independent restaurants.

Regardless of how you crunch the statistics, and I might add that quality statistics for the restaurant industry are hard to find, approximately 30% of all new, first year restaurants go out of business on the average. This means you have a 70% chance of first year success if you have a viable, well thought out concept in a worthwhile location. It is important to note that of the 30% of restaurants that close during their first year, most of those operators were under-educated, under capitalized (most common reason), or were not willing to make the time commitments necessary to get the job done.

Why am I concentrating on the first year aspects of survival? Because statistics and logic both say that if you make it past your first year, the percentages are in your favor beyond year one. How can you minimize the risk in your first year?

These Top Tips listed below will aid in insuring your survival:

Tip #1.
Know your market. The easiest and fastest way is to get a Feasibility Study done! I know of a restaurateur who was looking at placing a Mexican restaurant into a major metro area. His Feasibility Study revealed that a quickly expanding localized chain was inevitably going to greatly diminish his potential success, so he changed his concept, thereby avoiding an expensive potential failure. You too can avoid major failure by knowing your market, and concentrating strongly on your biggest competitor. If you can’t or don’t want to fight for market share, reconsider your concept niche or location.

Tip #2.
Find your niche. We have all heard this before, but you can’t be everything to everyone, and do it well. Select the market you enjoy and have experience in. If you know everything about the burrito business, and know for a fact that your burritos are superior in quality, then chase down that great location, know your market, and fill that niche. It’s important to minimize the competition in your chosen niche, and done right, you can own the entire niche market. Why compete when you can own the market?

Tip #3.
Have a plan. Don’t shoot in the dark with your capital resources. Pay for a quality business plan, and have a qualified restaurant consultant do it. You pay for legal and accounting advice because they’re professionals in their industry. Same thing with your Restaurant Consultant. A business plan is not cheap, but it will guide you on the path to growing your business profitably, and you’ll find that your business plan will quickly pay for itself.

Tip #4.
Know the industry, or pay for the knowledge. Just a few pieces of quality advice at the right time can save you thousands of dollars. Did you know that if your Restaurant Consultant negotiates your pricing with your foodservice vendors, you’d get better pricing than if you had negotiated the prices yourself? The author of this article was Director of Business Development with a large foodservice distributor, and is able to lower your food cost significantly by representing your interests with your vendors.

Tip #5.
Your menu is your number one tool in insuring a profitable operation. By costing out each menu item and placing it in the correct menu location, you can bring more dollars to the bottom line. Operators are so concerned with food cost percentages, but fact of the matter is that you take dollars and not percentages to the bank. It costs a little bit, but your reward is great when you have your menu professionally designed. Regardless of the size of your operation, you can’t afford not to have your menu evaluated. Why miss out on lost profits?

Tip #6.
The menu controls everything. From what you serve, to what equipment you need, to your signage design and concept name–everything revolves around the menu. What are you serving, and what is your position in the market? If you don’t know, get help immediately.

Tip #7.
Build your team. You need a few good players on your team, and the team members are as follows: An attorney with restaurant experience, an accountant with a list of restaurant clients, a banker that understands the restaurant industry, and Restaurant Consultant that understands startup ventures. When interviewing your Restaurant Consultant, know in advance that there is only one proper way to figure your food and beverage cost percentages. If you are told that you take your total costs and divide that number by your sales, you are getting inferior advice-keep looking. May I humbly suggest our services? If you would like to know the correct formula for computing food and beverage costs, please contact the author of this article, Kevin Moll, at 1-800-961-6005 for some insights.

Tip #8.
Cover your business bases. This includes: Insurance, corporate formation, business registration, company structure, funding, design, architecture, location, building codes, health department regulations, permits, and others. These will all have to be factored into your plans for opening and staying open!

Tip #9.
Understand your marketing and have a plan. You may, “Own a niche”, you may serve the highest quality products, and you may be the best in your market. But if nobody knows where you are located or what you offer, how will you pay the bills? A big part of the business plan is a high quality marketing plan. Has this convinced you to consider having a business plan done?

Tip #10.
Go forward. Until you are open, you will be faced with many obstacles that may be new to you. Use your team, stay focused on the goal of not only getting or staying open, but excelling in your brand management, delivery of product, and above all, listen to your advisors. As they have nothing to loose by telling you the unvarnished truth, they’re in your court more than you know!

In a 2009 survey of its members, the American Association of Grant Professionals (AAGP) found that grant consultants made an average of $90,000 per year while grant writers made an average of $53,010. This article will expose 4 reasons why consultants make 70% more than salaried grant writers.

Reason 1 – Charge More Per Project

While grant consultants are freelance professionals who charge for services rendered on a project by project basis, professional grant writers typically work for one agency on salary. Consultants can therefore charge more on a project that grant writers who are salaried and do not have the flexibility to charge more for projects. Grant writers get paid a salary and cannot charge more per grant.

Reason 2 – Include Bonuses

Consultants may include bonuses into their contracts. The AAGP code of ethics allows for performance-based compensation like bonuses “provided such bonuses are in accordance with prevailing practices” used by the agencies and “are not based on a percentage of grant monies.” On the other hand, few salaried grant writers ever negotiate bonuses into their contracts. So, they are not paid bonuses.

Reason 3 – Increase Number of Grants You Submit

Since consultants are paid per project, if they want to make more money, they simply increase the number of grants they submit. In other words, the more grant proposals they submit, the more money they make.

They are not paid from the grant once awarded, as is thought by the average American. Being paid out of a grant is a myth. Consultants are paid up front regardless of whether a grant is funded or not.

By increasing the number of grants submitted, you can raise the amount you make. However, salaried grant writer are paid the same rate regardless of the number of grants submitted, unless specified otherwise in the contract.

Reason 4 – Convert Benefits Into Income

To their advantage, salaried grant writers make an additional 30% (or $16,039) in benefits annually. For many, this is a huge advantage of being on a salary. Consultants do not typically include benefits in their contracts. Therefore, they do not have this luxury.

On the other hand, consultants can argue that “no benefits” is a significant savings to the agency and justify asking for more money either on an hourly or project basis. They can instead seek covering health and retirement costs by other less-costly means.

For example, I was working on salary with benefits for a college. I discovered that if I billed per hour and took myself off salary with benefits, I could actually make more and work less than half the time. The amazing part is that it cost the college and grant less, too! Go figure.

In summary, consultants make 70% more than grant writers on salary for 4 main reasons: consultants can charge more on a grant, may include bonuses, can increase their pay by increasing the number of grants they write, and may convert benefits into income by showing a savings in benefits.