Consulting ? Is it in YOUR Career Future?

Wes Bucey

Prophet of Profit
Re: Consulting – Is it in YOUR Career Future?

Besides the obvious (See a CPA for advisement) can anyone tell me some of the pro's and con's of your personal experiences while working full time and having side work ie; QMS development, procedure writing etc...)

I'm wondering what the tax implications will be and I'd like some first hand feedback from fellow covers who have been down this road before.

Example,

Say I work full time with a current employer @ $50K.

I get some side work at varying rates. I know the 1040 SE tax is 15.3% of self-employed income.

How has the tax laws impacted your self employment endeavors when you're just starting out and have not really made a big commitment yet?

Thanks.
Thanks for rejuvenating this thread with a new aspect of the main theme (running a consulting operation as a BUSINESS.)

Part of planning is looking forward to the time when your business will be self-sustaining.

If you aim at being a consultant (using MY definition above), then why not create a subchapter S corporation (for USA tax laws) and let the corporation be the actual beginning of the business you will grow? A competent tax accountant (even one of those storefront franchise guys) can walk you through this. That way, the only thing the client has to do is write a check, not create Form 1099 PLUS a check when he hires your service. If you need to hire help, YOU hire the help through your corporation, not have the client write separate checks.

If you aim at being a contract worker (using MY definition above), you will probably remain a single individual worker, never hiring or expanding the scope of your business, limited to only the hours you, physically, can work. Many contract workers attach themselves to agencies which do all the spadework of finding and negotiating with clients and the contract worker just works the number of hours at the rate he is willing to settle for and all the paperwork, tax deducts, etc. are taken care of by the agency as part of the fee they retain from what the client pays for the contractor's work. (As an aside, I am aware of some agencies which take 50% of the total fee from the client for compensation for these functions.)

Everything I have written in post 1
I suggest folks who either already call themselves consultants or who think they want to become consultants give themselves a basic reality check by looking at the Small Business Administration (https://sba.gov/) suggestions for planning and operating a small business and performing a gap analysis between their own ideas and those offered by the combined experience of thousands of small businesses.

Here’s just a brief item I see omitted by many would-be “independent consultants:”
SBA has a “readiness assessment tool” (https://app1.sba.gov/sbat/index.cfm?Tool=4) I think the questions are very fair and realistic. However, I’m willing to bet many folks holding themselves out as “consultants,” but complaining they can’t get bookings, have never taken even the small step of working through this assessment to see if they have some of the stuff it takes to be on one’s own SUCCESSFULLY.

This one question alone would be a knockout for many:
Do you know how to prepare a marketing strategy for your business?
still applies whether you intend to start full-time or part-time. Part of your business plan and your marketing strategy will be "WHAT will make life easiest for your clients in hiring and paying you?"
 
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Jim Wynne

Leader
Admin
Re: Consulting – Is it in YOUR Career Future?

Besides the obvious (See a CPA for advisement) can anyone tell me some of the pro's and con's of your personal experiences while working full time and having side work ie; QMS development, procedure writing etc...)

I'm wondering what the tax implications will be and I'd like some first hand feedback from fellow covers who have been down this road before.

Example,

Say I work full time with a current employer @ $50K.

I get some side work at varying rates. I know the 1040 SE tax is 15.3% of self-employed income.

How has the tax laws impacted your self employment endeavors when you're just starting out and have not really made a big commitment yet?

Thanks.

I haven't made enough money from side work (writing, mainly) for this to be an issue with me, but there is some good information on a few freelance writing (and other) sites that apply to almost any sort of self-employment. Have a look here, for example, and here. One thing that's often overlooked is the need to pay the IRS quarterly (as your regular employer does on your behalf). That said, the Internet is not an especially good place to get tax advice, as I'm sure you're aware.
 
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MarkBrad52

Re: Consulting – Is it in YOUR Career Future?

Thanks Wes. i appreciate the post. I too am one who has been asked by many "So when are you going to go into consulting?". I am one of those "Quality Geeks" that loves to teach and consult, but lack the business knowledge. I have decided to do just as indicated in your first post, learn how to run a business before i take off into the dark and scary businesss world.

Thanks again,
Mark:thanks:
 

phxsun2001

Involved - Posts
Re: Consulting – Is it in YOUR Career Future?

I left a good paying job with a big defense company to start auditing for a registrar two years ago. I also started a consulting business at the same time. I find the consulting jobs a good fill-in and it pays 50 to 100% more than auditing. Last year 1/3 of my income came from consulting. Most of the work I picked up were 2-3 days gap audits, internal audits and Internal Auditor training. I did pick up a medium term assignment (35 days) setting up QMS system form a startup company. I did 50% of the work at home writing procedures for them. I like to get one or two of this type of assignments a year. I would not go full time as a consultant because I like the steady income from auditing for a few registrars.

I got most of the work from my website. The key is to make sure that it comes on the first 2 page when clients serach for "ISO concultant Chicago", as an example. I also got work from companies I audited. I have to tell my registrar that I can't audit this company once I start provide consulting service.

So this is my 2 years experience with my part time consulting business. It took some planning to get started. It has been rewarding.

-TY
 
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MarkBrad52

Re: Consulting – Is it in YOUR Career Future?

Thanks. That was very interesting. that is exactly what I would like to do. I am presently working full time for a company as Quality system Administrator, and part time for the local university doing classes for local companies in Internal Auditing, Problem Solving etc. I just haven't had the guts to say goodbye to my full time job yet. I think i might check out becoming an auditor for a registrar. That wuld leave me more time to do the consulting on the side.
Thanks again,
Mark
 
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David DeLong

Re: Consulting – Is it in YOUR Career Future?

I have been in the consulting/training business since 1986 and have to say that it has been the best vocational time of my life. When I say this, I don't mean that that the $$ I earned created this feeling but it is the satisfaction that if I didn't like the customer or could not obtain support, I didn't have to work there. No whipping boy on quality issues anymore.

Prior to that I was in Quality Management with the frustration level extremely high and job mortality rate usually came in about 5 years. I really disliked the politics too. How many Quality Managers have worked until retirement if they are in the automotive supplier base? Not many for sure.

I don't know if I would suggest that a person enter this field at the present time since our economy in the USA and Canada is not what I would consider booming but if the time is right for the individual, go for it.
 

Wes Bucey

Prophet of Profit
Re: Consulting – Is it in YOUR Career Future?

I have been in the consulting/training business since 1986 and have to say that it has been the best vocational time of my life. When I say this, I don't mean that that the $$ I earned created this feeling but it is the satisfaction that if I didn't like the customer or could not obtain support, I didn't have to work there. No whipping boy on quality issues anymore.
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As a consultant for over 20 years, what can you tell us about the nitty gritty of the BUSINESS of consulting?

  1. Do you get new clients by advertising or word of mouth?
  2. Do you have a narrow or broad range of services you provide?
  3. How did you decide on the range - from the beginning or did the range evolve over time?
  4. How do you determine your pricing?
In essence, we're lookng for tips or cautionary tales about the BUSINESS of being a consultant.

When I catch up with a colleague for a dinner and drinks, it seems we rarely brag about our successes, but often have tales (easier to tell after the passage of time to heal the wounds) about some disaster in which we allowed ourselves to become enmired in some endless soap opera of FUBAR executives at a client organization. Usually, getting out with a whole skin is more a matter of divine intervention than clever innovation on our part. Got any tales like that?
 
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David DeLong

Re: Consulting – Is it in YOUR Career Future?

As a consultant for over 20 years, what can you tell us about the nitty gritty of the BUSINESS of consulting?

  1. Do you get new clients by advertising or word of mouth?
  2. Do you have a narrow or broad range of services you provide?
  3. How did you decide on the range - from the beginning or did the range evolve over time?
  4. How do you determine your pricing?
In essence, we're lookng for tips or cautionary tales about the BUSINESS of being a consultant.

Although I have developed over 50 quality systems as a Consultant, I have presently discontinued in that area and now provide seminars in the quality field along with GD&T.

I started out by developing a brochure and sending it out appropriate companies and then got a "hit". I had an appointment in one company and didn't even have a business card. I sure hustled to get one made. Anyway, I would suggest that if your initial effort in a company has been successful and appreciated, then ask if the company would know of any other companies who could benefit from your service. This is the best way of developing a business.

As far as narrow or broad, I would suggest keeping to the area one is most comfortable. I remember one time I was suggested for stats training at a hospital. I was uncomfortable in this environment and did not pursue it.

The range of service did develop over time. The second customer I had in 1986 asked if I could train in SPC since the automotive requirement at that time dictated that 80% of each segment in the workforce must have formal SPC training. I came up with a training programme and they liked it. I then began selling private seminars in SPC.

In 1988 I developed GD&T but I must say that I was a bit apprehensive the first time that I presented it. I had a good background in measuring and used it. Now, I think that I have presented this subject to more people in Ontario than anyone else (excluding the colleges).

I started public seminars in 1989 after I went for training in Detroit. It was awful with the people presenting subjects never really working in industry. My wife asked me what I learned and I told her that I learned that I should start presenting public seminars.

Pricing - Seminars are easy - flat rate.
Consulting is not as easy and here is what I did. I figured out how much I would make as a Quality Manager, divided the value into an hourly figure and doubled it. I worked on an hourly rate with a estimate of the total cost. Don't get sucked into guaranteeing a company will absolutely achieve ISO 9000 on a flat rate price. Most of the effort must come from the company and not the Consultant. I always charge travel time and costs but one must have integrity. Perform the task as quickly and as efficiently as possible. Don't drag it out since you have nothing else on the plate.

Make sure that you get paid quickly and low values on the invoice. I would always generate invoices weekly and expected to be paid the following week. No pay - no play until I was paid.

I hope this will help someone thinking about consulting but I must admit, it was really tough at times. I remember sitting in my home office with no customers and nothing on the horizon. I kept wanting the phone to ring but it just didn't. Somehow, everything did work out well.

Good luck!
 
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MarkBrad52

Re: Consulting – Is it in YOUR Career Future?

Thanks Dave. Very informative.
Mark
 

Wes Bucey

Prophet of Profit
Sustaining yourself when business is slow

One of the difficult lessons for folks making the transition from a steady paycheck to the wild and wooly world of free-lance consulting is building up an adequate "working capital" base to cover those fallow periods when the phone just won't ring, no matter how hard you stare at it.

A lot of folks ease into consulting as a part-time moonlighting gig while they try to build up a backlog of work so they can make a clean cut and go into consulting full time. Some never cut the string. In fact, a number of my colleagues have been full time college instructors and professors who use their full-time job as a continuous "launching pad" for both credibility and contacts in getting consulting jobs while they enjoy the security of a regular paycheck and the prestige conferred by their association with an institution of higher learning.

Some folks take a long time to grasp the idea the gross fee collected from the client has to be apportioned into funds for

  • operating expenses
  • marketing expenses
  • personal income
  • reserves for taxes
  • reserves for slow periods
  • reserves for expansion
  • etc.
Marketing and advertising has a lot lower buy-in today (percentage-wise) than twenty years ago. With the advent of desk-top publishing and modern color printers, a practitioner can design and print business cards, brochures, client materials, and other hard-copy documents for a fraction of the inflation-adjusted cost from 20 years ago. Certainly, the instantaneous nature of the internet, where on-line documents can be updated and distributed 24/7, versus being a slave to production schedules of hard copy print houses, helps even a one-man operation look as big and as well organized as any of the giant consulting firms.

If the individual practitioner is not savvy enough to host a website or design brochures, there are always OTHER free lancers who CAN do so, for a relatively modest fee.

Probably the most important thing for the beginning or established consultant to understand is that he does not need to operate in a vacuum. The most successful consultants have a wide band of colleagues and experts to call on for help with a necessary piece of expertise (for their own consulting business or for the client of the consultant.) In the days when I was spearheading an IPO drive two to three times a year for different clients, I had literal armies of attorneys and accountants on call to review and critique my firm's activity on behalf of each client.

I would suggest every consultant spend some time finding an attorney who is familiar with the situations small businesses encounter. Once the attorney is found, use him/her to network to find a compatible accountant who can steer you through the legal, accounting, and tax labyrinth you may encounter as well as together to help you create firm and binding contracts, and, even better, COLLECT what you are owed!

Often, you, your attorney, and your accountant may have a form of synergy where you can each refer clients to each other.
 
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