Welcome to the Consulting Crash Course.
This course teaches how consulting works from a practical and legal standpoint. It covers topics like choosing your legal structure, accounting & bookkeeping, setting your rates, finding clients, and signing contracts.
If you run a consulting / freelance business, or want to run one, this course is for you!
Course Modules
Introduction to Consulting
Start a Consulting Business
Consulting Pricing Strategies
Accounting for Consultants
Contracts for Consultants
How to Find Consulting Clients
Managing Consulting Projects
Introduction to Consulting
In this section we're going to cover:
First off, just a disclaimer. I'm not an accountant, attorney, or business advisor. I run a software consulting business in California.
This is general consulting advice I wish someone told me when I started out. It lays out how consulting works from a legal and practical standpoint.
Do your own research and understand which laws affect you at a local level. If you have specific questions about your business, you should seek out a professional that can help you.
What is a Consultant?
Google's definition is a person who provides expert advice professionally.
My definition is a person who sells their skills and time for money.
The important part here is you must already have a valuable skill that you can charge for. It should be easy to convince clients to pay you for your skill. For example, no one is shocked that I charge money for software development.
Pros and Cons of Consulting
Let's start with the pros.
Now the cons.
Independent Contractor
If you're in consulting, you're going to hear the term independent contractor.
An independent contractor is a person that provides services under a contract. Unlike employees, independent contractors don't work regularly for an employer but work as required. They are usually paid on a freelance basis and work through a limited company that they own themselves. Contractors do not have income taxes withheld like regular employees.
You can read more about this on Wikipedia.
For this course, we are going to assume you're starting or running your own consulting business and will be reffered to as an independent contractor by your clients.
However, a consultant doesn’t necessarily have to be an independent contractor. For example, you could be an employee of a larger consulting firm and still act as a consultant for the company’s clients. Likewise, an independent contractor does not necessarily have to be consultant. Independent contractor is just a legal term that means you’re providing services but are not an employee of the company.
Going forward, “contractor” will refer to “independent contractor”.
Contractor vs Employee
Let's look at the differences between a contrator and an employee.
Contractors and employees are treated differently from a legal standpoint.
For employees:
For contractor:
If you’re going to be a consultant, it's very important to make sure you’re classified as a independent contractor by the IRS and your state. If you only have one client all year, work for them for 40+ hrs a week and they control when you work. You are not a independent contractor. You're an employee, which creates all kinds of problems and legal implications.
Now if you’re just starting off and only have one client, that’s fine. The point is you should eventually serve more than one client and act like an independent contractor or you’re in danger of being a misclassified employee.
Here are some things that help prove you’re operating as an independent contractor:
The laws on independent contractors can vary from state to state. Search “independent contractors [your state]” to find the rules that pertain to your local area.
The IRS is one of the best resources to read up on the differences and tax obligations of independent contractors and employees. Here are a couple links where you can read more.
Contractor or Employee
Contractor Tax Forms
Keys to Getting Started
That's all for this lesson. In Start a Consulting Business we'll cover choosing your business name, logo, legal structure, and more.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the 2nd lesson in the Consulting Crash Course.
In this section we're going to cover:
Before getting into it, I'm going to say right from the start that you technically don't need any of this stuff to start consulting. Finding clients and making money is the most important goal when starting your business. You can start doing business without business cards and a website and an LLC and everything else. However, assuming that you're trying to run a decent consulting business, these are the things that are going to help you be perceived as more professional and protect yourself legally.
Business Name & Logo
One of the first items you’ll want to decide is what's your business name and logo.
You can use your own name or choose a different name for your business.
Choose something that is likely to have the domain and social accounts available. For example, our business name is D&M DevCo. We added D&M because they are our initials and it makes our name unique. DevCo.com and @devco weren’t available, but dmdevco.com and @dmdevco were. We still go by DevCo for short.
Once you have a name, you’ll want a logo that displays 2 - 3 versions of it. You'll want a long version, a square version, and an icon.
Business Cards, Website, & Resume
Business cards and a website help validate your business and build trust with potential clients.
When you meet with clients and they look you up, you want to have something that shows off your work and what you do. Your website should clearly state what you do and showcase previous or sample projects. It's common for clients to ask for a resume or a list of work, especially if you're new.
It’s important to have a professional and cohesive presence. All items should feel similar in design. Check out Canva for well designed templates.
Here are a couple resources to help set these things up:
Logo design - Looka, 99designs, Fiverr
Various well designed templates - Canva
Business cards - MOO
Website builder - Carrd, SquareSpace, Weebly, or Wix (Compare here)
Free images for commercial use - Pexels, unDraw
Example site - DevCo
Business Structure
The correct legal structure depends on what you want to do with your business. The main options for consulting that make sense are a LLC (limited liability company) or sole proprietorship.
We recommend a LLC because it limits your liability to the amount invested in the business. It separates your personal assets (car, house, cash) from your business assets so one can take your car/house if the business is sued for a large amount of money.
You can file an LLC yourself through LegalZoom. If you start the process and it doesn't make sense, it may be smart to talk with an attorney to make sure that you set it up correctly.
Sole Proprietor
A sole proprietor means that you're just doing business under your own name and don't have a business as a separate legal entity. You are a sole proprietor by default if you haven't set up a business at all. Meaning if you make money through business means you are a sole proprietor. The big difference is that you and your business are treated as the same entity and your personal assets are not protected. This means if the business goes under and you owe somebody $2 million they can come after your personal assets like your house and car. There's no paperwork or filing fee. You can file a DBA or doing business as so that you don't have to use your own name for business. A D.B.A. ensures that no one else is doing business under your name and allows you to open bank accounts and other vital business services under your business name.
LLC - Limited Liability Company
LLC stands for limited liability company and means your liability is limited to your investment in the LLC. Basically, your business is viewed as a separate entity and your personal assets are not intertwined with the businesses assets. So if your business is getting sued for $2 million they can't come after you personally and take your house, car or other assets. Having an LLC is generally a good idea because protects your personal assets and holds more market credibility. However, there is a fee to file and it varys by state. It's $800 in California.
Document Storage
Document storage is another area you'll want to set up.
You will need a place where you can save various business documents and easily find them online. We use and recommend Google Drive and the rest of the G-Suite. It allows us to view, upload, or download all of our docs from any device.
Dropbox and Microsoft OneDrive are similar options.
Accounting & Bookkeeping
Accounting is the process of summarizing, analyzing, and communicating financial transactions to gauge the financial health of the company and report to relevant authorities (IRS, state).
Bookkeeping is the process of recording financial transactions, usually by entering them into accounting software or a physical set of “books.”
You want to handle the basic day-to-day bookkeeping tasks so your accountant can prepare your financial statements (balance sheet, income statement, cash flow statement) and file your tax documents.
You should be using some accounting software, like QuickBooks Online, for bookkeeping. I recommend the QuickBooks online essentials plan ($40/month) or simple start ($25/month). They usually they have deals going on for when you first sign up so it's only like $10/month. I've heard transferring from QuickBooks Self-employed is a huge pain if you need to upgrade to another plan. If you have a chance of growing, then you'll probably want a typical QuickBooks Online plan not QuickBooks Self-employed.
If you're new to this, you might be saying exactly why do I need something like QuickBooks?
QuickBooks allows you to track your customers, time, invoices, payments, and expenses. It also helps generate tax documents at the end of the year. Basically, it helps you to keep track of all things related to your business to handle your accounting and file your taxes. Plus if you ever get audited, you'll have something that you can point to where everything is saved digitally.
More on this in Accounting for Consultants.
Bank Accounts
Once you have an LLC set up you want to open a business bank account.
You'll need your EIN or employer identification number to open a business account. You get this after successfully filing for your business. You may need additional documentation to prove that your business is valid. Most of what they ask for should be included in the documents you filed through LegalZoom.
If you're sole proprietor you're not legally required to open a business bank account. However it's probably smart to open a separate checking account so you can track money from the business seperately from your personal account.
We bank with Chase. Their technology is awesome and we've had no issues. Bank of America and Wells Fargo are other options but choose the bank that is right for you.
Insurance
Getting errors and emissions insurance, also known as e&o, is a very good idea.
It covers you from mistakes bad advice and copyright issues and more. It cost roughly $500 to $1,000 a year per employee.
You'll want to do your research to choose an insurance provider and here's a link for some general information on errors and emissions from progressive.
That's all for this lesson. In Consulting Pricing Strategies we'll cover various pricing models and setting your rate.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the 3rd lesson in the Consulting Crash Course.
In this section we're going to cover:
Pricing Models
There are various ways to set your rates and fees.
The model you you should choose depends on your industry and experience.
The main pricing models are:
If you're just starting out I'd recommend hourly because it is easy to implement and common for most clients. Over time you should experiment with different rates and pricing schemes to figure out what works best for you. The natural progression is to start hourly and increase your rate over time or switch to value based.
How Much to Charge
This is a simple formula to tell you how much you should charge to make your desired salary.
[Desired salary] / 10 months / 4 weeks / 35 hours = $ / hr
Ex. 100k / 10 months / 4 weeks / 35 hours = ~$70 / hr
*Note: this is just a starting point and simple calculation. It assumes ~75% of your hours are billable. You will need non-billable hours for finding new clients, time off, admin work, etc.
10 months x 4 weeks x 35 hrs = 1400 hrs
12 months x 4 weeks x 40 hrs = 1920 hrs
1400 / 1920 = ~73% billable time
How much you can charge is going to vary by industry, experience, and location. You want to know the entry, mid-level, and senior rates for the work that you're providing. Another good strategy is to figure out how much your competitors are charging and use that information accordingly.
Consultants normally charge more than employees because they are not given employment benefits (like healthcare, dental, vision) and pay additional tax (self-employment tax).
One piece of advice I give to anyone starting out is to always charge more than you think that you're worth. If you're going to go through the hassle of running your own business and doing everything yourself, you want to make sure that you get paid and aren't doing a bunch of work to make less than your previous job.
Payment Terms
You want to sure your payment terms are well understood and are included in your contracts and invoices.
Payment terms refer to:
How often to bill
Twice a month is a good place to start. Once a month or longer may be good for larger invoices. I try to bill on the 1st and 16th. This splits the month into 1st - 15th and 16th - end of the month.
Period of time the client has to pay
Due immediately is the best situation. This is also known as COD (cash on delivery) or “due upon receipt”.
Net 10, 15, 30, or 60 are other options. This means the client has X amount of days to pay the invoice. For example, net 15 means they have 15 days to pay the invoice. As a general rule, the larger the invoice, the longer the client has to pay.
I set my invoices to “due upon receipt”, but allow the client up to 7 days to pay it before bugging them.
Acceptable payment methods
ACH (automated clearing house), check, or credit card are the typical payment options.
ACH is an electronic money transfer between 2 financial institutions. It is a small fee or free and deposits the money in your account within 1-3 days. You’ll have give your client your accounting and routing number so they can enter it in their payment system. You can also set up QuickBooks to receive ACH transfers.
Check is a good option to avoid any fees but is slower than other options. You have to wait for the check in the mail, take it to the bank, and have it clear before you can access the funds.
Credit card is another option to get paid quickly but there is a fee. ~2.9% is the standard fee. This can be significant over the course of the year. $100,000 x 0.029 = $2,900 in fees.
Late fees or discounts
Some people give discounts for early payment or additional fees for late payments. This is usually a small percentage (2-5%). I recommend specifying late fees or discounts if you consistently have issues getting clients to pay your invoices on time.
More info on payment terms can be found here and here.
Talking Price with Clients
It's a good idea to practice how and when you tell clients your price. Discussing price can feel awkward so you want to sound confident and prevent stumbling over your words.
Generally, you want to disclose price later or last so you have time to understand the client’s needs and build a relationship with them. It’s smart to create a list of questions that you ask clients to help you understand their needs.
When a client asks you your price, your answer should vary based on the situation.
If you’ve already had multiple interactions with the client and understand their needs pretty well, feel free to discuss price.
If it’s the first interaction with the client and they ask your price, it may be a good idea to redirect the conversation and say something like “It depends. I need to understand exactly what you need before I can answer that. Can you tell me a little more about ...”. This gives you more control in the negotiation rather than just saying a price and waiting for a yes or no.
If you’re in the middle of a client conversation and aren’t ready to give them your price, give them a low/high range. This allows you to move the conversation forward and gauge their reaction.
Also, don’t beat around the bush for clients that “just want to know the price”. Every situation is different. The general point is you want to understand their needs, the scope of the project, and the timeframe first. Then you should discuss price.
For price delivery, say your price, then shut up and listen.
It’s common for new consultants to start rambling at this point. Just tell them the price, then see what they say.
“I charge X per hour. Are you comfortable with that?” … Then silence.
Handling Objections
In sales, when a potential client turns down your offer, this is called an objection. However, just because someone says no, doesn’t mean you’ve lost their business forever.
Many prospects will give an excuse or lie to you when they say no. You need to understand the real reason they said no rather than always taking their words at face value.
The 4 steps to objections are listen, understand, respond, and confirm. You need to truly listen and understand the real reason they said no. Then form a response that handles the objection. If done correctly, you’ve given yourself another shot at getting a “yes”.
Some common objections are “it’s too expensive”, “I’m too busy”, or “I’m not interested”.
Here’s more on handling common sales objections - HubSpot
Good follow ups to use are:
That's all for this lesson. In Accounting for Consultants we'll cover accounting, bookkeeping, QuickBooks Online, and taxes.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the 4th lesson in the Consulting Crash Course.
In this section we're going to cover:
Accounting & Bookkeeping
Accounting & bookkeeping are related but not identical terms.
Accounting is the process of summarizing, analyzing, and communicating financial transactions to gauge the financial health of the company and report to relevant authorities (IRS, state).
Bookkeeping is the process of recording financial transactions, usually by entering them into accounting software or a physical set of “books.”
You want to be able to handle the basic day-to-day bookkeeping tasks so your accountant can prepare your financial statements (balance sheet, income statement, cash flow statement) and file your tax documents.
Accounting
Accounting comes down to tracking debits and credits.
Debits are transactions that increase an asset or decrease a liability.
Credits are transactions that increase a liability or decrease an asset.
Assets are things that you own (equipment, property, cars, cash).
Liabilities are things that you owe (loans, supplier invoices, employee salaries).
The amount of debits always equals the amount of credits. They are equal but opposite transactions. For example, if you buy a laptop, the asset gained is tracked as a debit. The expense/payment is tracked as a credit.
Equity is your assets minus your liabilities and represents how much is left over after you’ve paid off your creditors. This is the net worth of your business.
Equity = Assets - Liabilities or Assets = Liabilities + Equity
Accounting is responsible for correctly tracking all your transactions and using them to make business decisions, generate financial statements, and determine tax obligations.
Here are some resources where you can learn more on accounting:
https://www.accountingtools.com/topics-index
https://bench.co/blog/accounting/
Bookkeeping
Account - “In the world of bookkeeping, an account doesn’t refer to an individual bank account. Instead, an account is a record of all financial transactions of a certain type, like sales or payroll.”
There are five basic types of accounts:
Bookkeeping starts with setting up the necessary accounts. You won’t have the same exact accounts as other businesses, but many accounts are common.
Here are some common accounts:
Once your accounts are set up, you want to track every business transaction and log them to the correct account. Recorded transactions in your accounting system are known as journal entries.
It’s important that each debit and credit transaction are recorded properly in the correct accounts. Otherwise your accounts won’t match and you won’t be able to close your books.
For example:
You buy some software for $1000 in cash.
This transaction affects 2 accounts, cash and equipment. You record a $1000 debit for the equipment account (increased asset) and a $1000 credit for the cash account (decreased asset).
After all transactions have been recorded for a set period of time (monthly or quarterly), it’s time to balance and close the books.
Your total debits should match your credits. This means the books are “balanced”. If the totals do not match, you’ll have to go through your journal entries to find errors and correct them.
At the end of the year, your books should be balanced and ready to prepare financial and tax documents.
Here are some resources where you can learn more on bookkeeping:
https://www.business.org/finance/accounting/small-business-bookkeeping-basics/
https://bench.co/bookkeeping-basics/
QuickBooks Online - QBO
If this feels overwhelming, don't worry!
Accounting software, like QuickBooks Online (QBO), helps automate many of these tasks. QBO creates a basic/default chart of accounts and helps organize your bookkeeping. Their interface allows you to enter transactions and handles the debits and credits behind the scenes.
It allows you to track your customers, time, invoices, expenses and more. Once you set up your QuickBooks account you want to connect it to your bank account. From there you can match your payments from your bank account to your invoices in QuickBooks.
I'm not going to go in detail on how exactly to use QuickBooks to do your accounting. If you need help with QuickBooks there are tons of tutorials online and very helpful QBO groups through Facebook groups. If you have a specific question that you can't find online, most people are happy to help. Here's a link to a basic tutorial if you're new to QuickBooks.
Finding an Accountant
It's highly recommend that you find someone that you can ask for accounting and bookkeeping advice.
Referrals are one of the best ways to find a trusted accountant. Ask your friends, family, and colleges if they can recommend anyone. You can also get referrals by attending small business events and asking there.
If you can’t get a referral, you can find a local CPA (certified public accountant) using the American Institute of Certified Public Accountants (AICPA). The AICPA has a directory of CPAs, accounting companies, and local accounting organizations.
You can use Google but use it mostly for research and reviews to help you find someone. There are so many options on the internet it can be hard to know what is the right choice.
You’ll want to do your research and evaluate your accountant before you start working with them.
Good questions to ask are:
More info on finding an accountant - Fundera
Taxes & Benefits
You should set aside about 30 to 35% of your revenue to pay your taxes. This mainly covers your income tax and self-employment tax. More info on that here.
You're supposed to pay your taxes quarterly throughout the year so you don't have a lump sum of taxes to pay at the end of the year. However the fee is minimal if you don't do that. It's only like a $100 or $200.
Healthcare is the only benefit that may be legally required in your state. Research your state laws to see if it’s required for you.
Health insurance plans vary widely based on your location, health condition, and dependents. Assume plans without financial assistance will be a few hundred dollars a month. Here's a link that shows the average healthcare cost in the US.
Life insurance, dental insurance, vision insurance, and retirement benefits are common employee benefits you will not receive. If you want any of these services, you must research and set them up yourself.
Process of Getting Paid
Let's talk about the process of how to get paid.
First off, while you're working you need to keep track of work you're doing. Once you're ready to bill the client you should put together an invoice. The client should receive the invoice and be able to pay you electronically through QuickBooks or via check. Checks should be made out to your business name. Once you receive payment in your business bank account, pay yourself roughly 65-70%. That means, you can transfer that money into your personal account and use it for anything you need. The remaining 30-35% is aside for taxes and other business expenses. Then match the payment to the invoice in QuickBooks.
Since you need to keep track of your work I highly recommend using some sort of software to keep track of how much you're working and what you're doing. We conveniently have an app that tracks time, creates invoices and syncs them to QuickBooks so if you need something for that check out HoursLogger.
Invoices
Invoices should be simple and straightforward.
They should include:
Most states don’t require you to pay sales tax on your consulting services.
Search “consulting services sales tax [your state]” to see if you’re required to include sales tax on your invoices.
Here is an example of a PDF invoice.
Business Expenses
Since you have to pay all your own taxes you want to try to minimize the amount that you're paying. The main way to do that is using business expenses.
Business expenses can be deducted to reduce your taxable income. A very simple example is if you buy a $1,000 QuickBooks subscription for your business and you made $100,000 for the year, You can deduct that $1,000 from your taxable income so it's now $99,000. You save money on the taxes you owe because you only have to pay tax on $99,000, not $100,000.
There are rules that govern what a valid business expense is and how much it affects your taxable income. One of the best places to read up on this is the IRS. Here are a couple links that cover what are business expenses and what are the common ones for your business.
IRS General Business Expense Info
Investopedia Reference
List of deductible business expenses
That's all for this lesson. In Contracts for Consultants we'll cover the various contracts used by consultants.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the 5th lesson in the Consulting Crash Course.
In this section we're going to cover:
Consulting Agreement
It's important to sign a consulting contract so there are no disputes over billing and engagement.
The main points you want to cover are:
Here are some sample consulting agreement templates.
DevCo Consulting Template
PandaDoc Independent Contractor Template
DocSketch Independent Contractor Template
Note that the contract is usually biased toward the party that wrote it. If possible, get clients to sign your contract. Rather than you signing their contract.
If you have to sign their contract, read it carefully and make sure things like rate, frequency of billing, and project completion are well understood. If you disagree or don’t understand something in the contact, discuss it with the client.
Minor modifications can be made before signing by clearly indicating the change and initialing it. If the client agrees, the should sign their initials too.
NDAs - Non-Disclosure Agreements
An NDA stands for non-disclosure agreement and is used to make sure you or the client won't share secrets or sensitive information about the project. Many clients will want you to sign one of these before starting work.
NDAs will vary from project to project but here are some NDA templates.
PandaDoc NDA Template
Various Industry NDA Templates
SOWs - Statement of Work
SOW stands for statement of work and it's similar to a consulting agreement but covers the specific work you'll be providing. This helps determine what the billable work is and can be used to settle any disputes. It helps you manage expectations so you're not on the hook for something you didn't agree to or something you think you should be paid for.
SOWs vary from project to project but here are some templates.
PandaDoc SOW Template
Word Templates Online SOW Info & Template
General Advice
It isn't a good idea to create legal documents from scratch. Unless you really know what you doing. Start with a template or ask to see a colleagues contract and modify it for your needs.
Various contract templates can be found at PandaDoc.
It's a good idea to find an attorney if you need help drafting a document that is specific to your industry. You can find an attorney through referrals or online research. More on choosing an attorney from WikiHow.
That's all for this lesson. In Contracts for Consultants we'll cover ways to find contracts and consulting clients.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the 6th lesson in the Consulting Crash Course.
In this section we're going to cover:
Ideal vs Non-Ideal Clients
This is very, very important.
The clients that you work with will literally make or break your consulting business.
If you consistently take bad projects with not enough money you won't be motivated to continue working on your business and will struggle to make ends meet. You want to work with people that you enjoy working with and have the money to pay you.
Let's take a look at the differences between ideal and non-ideal clients.
Ideal clients:
Non-ideal clients:
A lot of this can be based on your gut feelings from your first couple interactions with the client. How much work do they ask you to do for free in the beginning? Do you know their budget or how much they're willing to spend? Do they have good communication on phone calls and email? These are the types of questions you want to be asking yourself during your first interactions with a potential client.
Clear Understanding of Ideal Client
To go looking for the right client, you need a clear understanding of the ideal client.
You'll have to answer these questions:
For example, in my case I do software development.
What problem do they have?
Businesses I talk to want to build or maintain an app using Ruby on Rails, React, or other web technologies, but don’t have the resources to get it done.
What solution do you provide?
I provide extra hands and experience to help get these projects done on time and under budget.
Where do your clients hang out? In person and online?
Lots of the clients I talk to find a project are usually a CTO or involved in the development process. Therefore lots of them hang out at technology meetups and online groups. Lots of tech jobs are on job boards too.
What will you say to them when you meet them?
The first time I talk with them I don't necessarily try to sell them on my development skills.
I introduce myself and try to have a good interaction. I ask questions about what they do and try to learn more about their business. I try to qualify them to make sure they need help, work in the technologies I have experience in, and have the budget to hire me. After that I try to get their contact info and follow up again later.
I put together a worksheet so you have a place to answer these questions yourself. I find it really helps to have these things literally written down so that way when you meet with potential clients you know exactly what to say.
Finding Clients & Work
So how do we actually find potential clients?
Networking
The more people you know in the industry, the more likely it is that you'll get a referral from a friend that can't take the work. Referrals are the best leads because they're typically easy to close since they come from someone you know. The problem with referrals from your network is it's hard to automate that process.
Action item: Find 2-3 networking events and add them to your calendar. Check Meetup or search “[your city] [your industry] events”
Automated Online Postings
There are multiple online job boards that you can use to set notifications based on certain filters. There's Google jobs, LinkedIn, Indeed and other platforms. I really like using Google Jobs. If you search for "jobs" in Google, you'll see a section labeled jobs that pulls up relevant listings based on your search criteria. From here you can set up filters so that you get emails as new jobs become available.
For example, I set up a filter for Ruby on Rails contract and react JS contract and get emails every couple of days of new results that fit that criteria. These types of leads are usually harder to close, but it's a good way to get some potential contracts coming through your pipeline. The idea is you want to get in contact with somebody first and then try to sell them on your skills and price.
Action item: Set up job alerts on 3 different sites.
Work with a Recruiter
This can be a good option depending on your industry. In software, recruiters are always looking for talented developers. So getting in contact with a good recruiter can help you find projects where companies are already looking. It can be hard to negotiate the price you want using this method because the recruiter is essentially a middleman but it's a good way that qualifies clients before you speak with anyone. Normally companies that work with recruiters have the budget to pay your industry rate.
Action item: Research “[your city] [your industry] recruiters” and email or send a LinkedIn message to 3 recruiters stating that you’re looking for contract work.
Email Decision Makers
Through networking and online search, you will can get people's emails. You can send these contacts a well written email that includes your services and contact info. Here is an example of what I would send a potential client.
Action item: Make a spreadsheet or document to list all the contacts you’ve found through networking or online sites. Reach out one by one and see if there is any way you can help.
Teaching and Public Speaking
Teaching and public speaking is another good way to land clients. This is more of a long-term play and falls into the networking category but it is definitely helpful and helps frame you as an expert in your industry.
Action item: Find an event that is likely to have potential clients or referrals to potential clients. Reach out to an organizer and ask if you can speak on an interesting topic.
LinkedIn is still one of the top website for professionals. Make sure your profile is up-to-date and try to get recommendations from your colleagues. Then, look for companies that commonly hire your skill set and try to connect with somebody at the company to get a conversation going.
Action item: Verify your LinkedIn is up-to-date. Find 5-10 potential businesses you could work for and reach out to someone. If you don't have any connections at these companies, you can use LinkedIn Premium.
Craigslist
Another interesting idea that I've heard is creating a well-written post on craigslist. Most posts on Craigslist aren’t well done. If you have a detailed, well-written post for your services, it’s easy to stand out. Again this can be dependent on your industry and who's looking for the services you're providing.
Action item: Make a detailed Craigslist post.
Create Content
My last piece of advice for finding clients is creating content that they are already looking for. The only reason clients come to you is because they get stuck and don't know how to move forward. If you can create content that targets specific questions on where they're getting stuck, clients can find you before you even need to reach out to them. This is one of the best ways to get consistent leads coming in. However it's also one of the hardest to set up and do correctly.
Action item: Identity a topic that people consistently ask you for help on. Explain the topic in a blog post, infographic, or video. Post the content to your website or social platforms and use it to generate traffic or collect emails.
Here are some links for more ideas on finding clients.
https://briandownard.com/get-more-consulting-clients/
https://tiiny.host/75-ideas-freelancers-agencies/
https://foundr.com/how-to-get-consulting-clients
Contract Types
When searching for work, there are a few different options you’ll see.
Contract C2C - C2C stands for “corp to corp”. It means that the contract is between 2 businesses working with each other. This is the option you want as an independent contractor.
Contract W2 - Contact W2 means your a temporary employee for a company. Under a W2 contact, you’ll receive employment benefits but they usually aren’t as good as benefits for regular employees.
Full-time - This is full time employment.
You want to be clear with decision makers and recruiters that you are looking for C2C Contract work.
Know > Like > Trust > Client
All clients go through a process that starts with learning who you are to trusting/paying you. I’ve seen this simplified as know > like > trust > client. The idea is these are the steps you take someone through until they decide to work with you.
Whether you realize it or not this is generally how humans work with each other.
Remember that you don’t always have to try and sell to potential clients the first time you meet them. Focus on multiple interactions that build trust, then try to sell your services.
Also, just because someone doesn’t need your help today, doesn’t mean they don’t need it in the future. Keep people’s contact info and follow up again later.
Closing the Client
Nothing is official until a contract is signed and you have a start date.
Once you understand the project and client’s needs, it’s time to close them. You could say something like, “Great. I think I have everything I need. The next step to move forward is to get a contract signed, then I can start work. I can send it over today. Does that work for you?”
Here are a few other phrase to help you close clients - HubSpot.
If you get a “yes”, awesome. If not, it’s time to switch to handling objections. We discuss handling objections and talking about price in Consulting Pricing Strategies.
That's all for this lesson. In Managing Consulting Projects we'll cover how to start, manage, and finish projects.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
Welcome to the last lesson in the Consulting Crash Course.
In this lesson, we're going to cover:
Starting the Project
We've already covered alot around finding clients, negotiating price, and signing contracts in previous lessons.
As a review, here are the simple steps to start a new project:
When you start the project make sure that you save everything. This means the contracts, SOW's, any tax forms, etc. I recommend using Google Drive or something to organize all the documents for the client. If it's on something like Google Drive then you always have access to you documents on any device.
During the Project
Once the project has started, it's important to get to work and focus on your soft skills.
If you've been hired, the client already assumes you can do the work from a technical standpoint. The soft skills are what determines if they enjoy working with you. Here are a few things to keep in mind during the project.
Under promise and over deliver
Generally you want to under promise and over deliver. It doesn't look good when you promise the client all these bells and whistles and you can't deliver them. So it's better to start small and then "wow" them with your work.
Great Communication
Nothing beats good communication. It's really frustrating to get an email from someone and you literally can't figure out what they're asking. Do your best to write clearly and concisely. Nobody will stop a contract due to bad spelling and grammar, but consistent errors look bad. You can use a spell checker like Grammarly to avoid errors.
Everyone's writting style is different, so adjust accordingly. If you consistently get emails that are short and to the point from the client. Your emails should also be short and to the point. If they write lengthy detailed emails, consider adding more detail to your emails. You want to match their writing style while still keeping your unique writing style.
Good communication goes a long way, so take it seriously.
Cross the Finish Line
Make sure you actually do what you said you'd do. Keep your focus on what is agreed to in the contract.
Work Well with Others / Be Flexible
As a consultant, companies aren't required to keep you on and don't have laws against hiring and firing you. You want to be easy to work with and stay flexible to changing requirements. That doesn't mean you should just let people walk all over you. But it does mean you should be open to other people's opinions.
Keep the Client Happy
This is one of the most important rules. Usually if the client's happy, then you're happy and it makes the whole project a lot easier. That doesn't mean you should bend over backwards for everything the client wants. However you want to do your best to go above and beyond to make sure that they're happy with your work.
Have a Reasonable Work Schedule
I'd say plan to work 20 to 40 hours a week. Even though the client doesn't have full control of your time, I'd try to make yourself generally available during the work day (9am-5pm). You're going to have some non-billable hours, so you want don't want to work more than 40 billable hours a week. Plus, the whole reason you're doing this is to get control over your time and make enough money to provide for you and your family.
Completing the Project
When the project is wrapping up, there are a few things you want to be aware of.
You want to start looking for work 2 to 4 weeks before your contract is ending. Also, you'll want to have some savings for any gaps between projects.
You always want to try to leave on good terms and make sure that the client is happy with the work that you did.
If the engagement went well, get a LinkedIn recommendation when you're done. This will help give you something to point to on your portfolio site and give new clients some reassurance that you're easy to work with.
That's it!
It's time for you to put this into practice.
Remember that success takes time & practice. Set goals and keep your head up.
If you found this useful, please share it and try HoursLogger if you need time tracking and invoicing for your business.
“Want to go out tonight?"
“I can’t. I’ve got to work this weekend. I’m super busy and have to finish X, Y, and Z before Monday.”
“Okay. How about next weekend?”
“Nope. I want to, but I still have to [rambles off todo list].”
If you’re in business, I’m sure you’ve had this conversation. You awkwardly dance your way around invitations and make up excuses for why you can’t give up your time.
Being busy is a good thing. It means you’re focused and know what needs to get done. However, being “too busy” is an excuse for not correctly prioritizing and allocating your time.
Too Busy
People that are “too busy” are usually seen as ambitious and driven. Really, they are anxious, tired, and stressed out. They run on motivation and often end up burnt out after a few years.
If you're always busy, that means you're also always tired. Being tired hurts your productivity because you aren’t working at full efficiency. You'll end up wasting time instead of using it wisely. The mind needs time to decompress so it can recharge to solve challenging problems. There is truth in the old adage, “work smarter, not harder”.
Many people wear “too busy” as a badge of honor. It’s not.
It’s not cool or impressive to work long hour days. What is impressive is planning your day and getting everything done in the allocated amount of time. There’s no such thing as “not enough time”. Everyone gets the same amount of time in a day. It’s a matter of what you prioritize and how you spend it.
Health, Wealth, Love, and Happiness
Life isn’t just about work and professional goals. It’s about health, wealth, love (social relationships), and happiness. Work only makes up the wealth portion of the equation.
A good life comes from the balance of these four core categories. If you’re a millionaire, but are dying because you didn’t take care of your body, the money won’t do you very much good. If you’re in great health, but can’t afford to pay rent every month, you probably won’t be very happy.
People who are “too busy” often have these areas of life out of balance. They work 10-12 hour days and don’t allocate enough time for their family, friends, cooking, eating well, exercising, and/or doing whatever makes them happy.
If you allocate your time correctly, you’ll see that these categories all build on each other. Rather than pouring all your time into one bucket and letting the others fall apart, focus on allocating the correct amount of time in each bucket and watch your life improve.
How to Properly Allocate Time
One of the biggest problems I had in my past was trying to accomplish too much in one day. I was someone who was “too busy”.
I’d make a todo list and load it with all the high priority tasks I could think of. At the end of the day, I’d feel bad because I could never accomplish tasks as quickly as I could write them down. Not only did I not finish everything, I wasn’t allocating enough time to the other aspects of my life like hanging out with friends and taking care of family.
Since then, I’ve developed a strategy to make sure I don’t run into this problem. I’m sure there are many ways to properly allocate time, but here is the solution that worked for me.
The biggest criticism I get from this method is it’s too rigid. I hear, “I wouldn’t want to be tied down to an hourly schedule” all the time.
I want to be clear that you don’t have to follow the schedule exactly as it’s written. It’s more of a guideline to help you avoid planning too much in one day. If you choose the hour of when you’ll work on something, it makes sure you won’t overbook your time because you can’t do two things at once.
Here is an example of what the schedule looks like. It's not pretty, but it gets the point across.
Conclusion
Life isn’t “too short”. We are given plenty of time to accomplish our goals and spend time with our friends and family. The trick to is to properly allocate your time and constantly ask yourself, "am I using my time wisely?"
As Seneca wrote in On the Shortness of Life:
"It is not that we have a short time to live, but that we waste a lot of it. Life is long enough, and a sufficiently generous amount has been given to us for the highest achievements if it were all well invested. But when it is wasted in heedless luxury and spent on no good activity, we are forced at last by death’s final constraint to realize that it has passed away before we knew it was passing. So it is: we are not given a short life but we make it short, and we are not ill-supplied but wasteful of it… Life is long if you know how to use it."
So stop being "too busy" and take some time to enjoy the human experience.
Simple (adjective) - easily understood.
Easy - (adjective) - achieved without great effort.
Last week, I had a friend of mine say, “Why did you build a time tracking app? Somebody can copy it so easily. It seems so simple.”
I had to explain to her why “simple” does not mean the same thing as “easy”. Sure, many people can build a small time tracking application, but making it simple is actually the hard part.
Easy
Easy implies that building a software application is “achieved without great effort”. This is far from the case.
Building software that is flexible, intuitive, and maintainable is one of the hardest trades in the modern world (along with accounting, investing, law, medicine, etc). We’ve been studying software engineering for many years to get to the point where we could build and deploy a stable application. This includes database architecture, server performance, various programming languages/frameworks, responsive design, UX/UI (user experience and user interface), and the list goes on. After many years of professional software development, I would argue that the hardest thing to get right is the user experience.
When we first used other time trackers, we were amazed at how many applications forced you to set up things before getting started. Some of the main screens were way too cluttered, had useless calendars, multiple windows, or confusing interfaces. I said, “It’s a time tracking app! All I want is a simple start and stop!”
The problem these apps ran into is time tracking is actually a complex problem. There are customers, projects, invoices, billing rates, and other objects you must implement. If you’re not careful about how you present these features, you can drive away users through bad design.
Building an application is the “easy” part. Making it “simple” is difficult.
Simple
Simple means it’s “easily understood” and this was our goal from day one.
When we first had the idea of HoursLogger, we intentionally wanted to do less than other apps. We wanted to build “simple” into the product through great design. Most apps have too many features that are unnecessary. They have too many buttons, settings, and fluff to make the app seem bigger.
We REALLY pride ourselves on the things our app doesn’t do. If we add a feature to our app, it’s because we truly believe it is NECESSARY for consultants to do their job well. It takes careful planning and implementation to make sure we aren’t straying away from this core value. This keeps us from adding too much that could potentially confuse new users.
We spent countless hours selecting smart defaults so users can hop in and start right away. Clients, tasks, and other objects can all be created on the fly so you don’t have to navigate to a different screen to create related objects. This is not as easy as it sounds and requires addition programming effort to get correct.
So, PLEASE!
Do not confuse simple with easy.
When something is done well, it’s hard to see how difficult it really is.
If you say business isn’t about money, you won’t be in business very long. Deciding how, when, and what to charge clients is very important for consultants.
Money is an indicator of how much value you bring in the form of currency. It’s not some evil thing that you should feel bad about. When clients are happy to pay, it’s a good sign that you’re doing your job well.
Here are some of our guidelines to think about when negotiating payment.
1. CHARGE MORE!
Seriously, always try to be charging more! You run a business to have control AND MAKE MONEY. Don’t charge too little and scrape by. It’s always better to start high and negotiate down.
As a consultant, you don’t get the same benefits as employees do, so you’ll have to charge more to compensate for this. If a client question your rate, this is a great topic to bring up during negotiation.
You pay all your own taxes (~30% of your income), healthcare, dental, vision, cell phone, laptop, internet, and more. In total, benefit packages typically add up to about $10-15k per year. Incorporate this into your price when you are estimating how much you want to make for the year.
Also, make sure you raise your rates regularly. You’re skills and experience grow over time; your rates should reflect this. We think raising your rates every year or two is a good pace.
2. There are multiple ways to bill: Hourly, Lump sum, Value based
Most consultants I know use a combination of lump sum and hourly. Typically, they estimate how much work there is and bill hourly against the estimate. Once they are close to reaching the end of the project or budget, it's time to renegotiate.
Lump sum by itself can be dangerous. If your estimate is off or unexpected circumstances occur, you can easily lose money on a project. On the flip side, if you overestimated and get the project done quickly, you can make a lot more money. This is a high risk, high reward strategy.
Value based is the holy grail for consultants, but it’s harder to negotiate. This means you bill the client based on the value you provide. Most clients don’t like this option unless you are REALLY performing and generating excess profits.
3. How much should I charge?
This depends on your skills, experience and how much value you bring. At a minimum, you want to charge enough to make a livable wage ($6-10k+ per month).
Here is our general guideline for hourly rates, regardless of industry:
Minimum of $50 per hour if you’re just starting out.
~$80 per hour if you’re mid-range or confident in your skills.
$100 - $150 per hour if your experienced.
$150+ per hour. You’ll know if you’re in this category.
One important note:
A higher hourly rate DOES NOT always equate to more money. We've had clients that were paying $100 an hour, but were VERY cautious about how many hours they wanted to pay for. Whereas, we charged other clients $80 an hour and they were happy to pay for more hours. We made much more money on the second client based on the number of hours they wanted to pay for.
4. How often should I bill?
Twice a month was our usual schedule. We’d bill on the 1st and the 15th. This worked really well for us and kept money coming in consistently. Once a month also works for larger contracts. However, this is less desirable in my opinion.
When possible, make your invoices “due upon receipt”. This means invoices should be paid as soon as clients get them. Net 15 is next best option if you have to give them time to make the payment. We dislike Net 30 or more because it feels like forever until you get paid for work that was done a month or two ago.
Again, this is something that is different per client. Try to be flexible with them and settle on something that works for the both of you. The business relationship is more important than deciding when you get paid.
5. How should I bill them?
You should be using software to generate your invoices. Keep track of your times and what you worked on, then use software to generate the invoice.
This will save you tons of time and makes it easy to look at what you did if you’re being audited.
We highly recommend integrating your billing system into an accounting system like QuickBooks. For example, you should track your time, generate the invoice, sync the invoice to your accounting system, and send the invoice from your accounting system. That way, when it’s paid, it should be logged and easy to book in your accounting system.
P.S.
We built software that does this for you!
