How do I transition from being a contracted staff member providing business development services to a freelance consultant?
I've been hired over and over again to come in to small businesses and help them reorganize and positioned for growth. I want to start consulting full time instead so I can help several clients at the same time. But I'm lost at starting my own business model as I'm unsure of how to price myself and what services to offer... And even if I can make enough money at it for it to be worth it. I'm looking for resources, a mentor, guidance, something.
It would seem that you have relevant experiece and success in hand. You ARE then a consultant. You have to brand and market yourself as such. Let the businesses and managers you have done contract work for know you are now available for consulting work. Use them as references. Build your sales collateral amd website around the successful experiences you have enjoyed. Most importantly FOCUS. The biggest mistake entry level consultants is to try to be all things to all entities. Present yourself as the expert in your strongest area of competence. I only work in the consumer product space. When I am approached with technologies, services, software, science projects, etc. I decline. Like Dirty Harry said, "A man has got to know his limitations".
Contact me if you want to discuss.
How is what you are doing any different from being a "freelance" consultant? Only that you are allowing your clients to come at you one at a time. It's probably not even that cost-effective for them to pay you full-time if it doesn't really require a full-time effort.
As to pricing, start from what you are getting paid now and add 50% to represent what an employer is really paying to have you on board. Divide by 1800 to get a "fair" hourly rate that will end up costing your employer less. (maybe even divide by 1500 to represent months when you have no income ["marketing time"!]).
You should always be three to four times your present hourly wage or $120 USD an hour whichever is higher. Don't start by charging low as you will end up staying there. You have to realize that you aren't going to be working full time and build that factor in as you will have down time.
I would also start speaking to groups as a way of establishing myself as an expect.
I can only suggest that you have strong belief...belief in you!!!!, give to clients what you know is missing from your past experiences, they were the things that validated the idea to begin your on company in the first place....I wish you luck!!
YOUR INTUITION IS THE BEST JUDGEMENT!!
What is your profession, if you have any, start charging low but not too low.
1- make up a complete list of your own core competencies i.e. what do you have that companies are willing to pay for?
2-Locate other professionals with the same skillsets: Google "management consultants";
3- Consider joining one of them as an affiliate in order to find out what the ground rules are, and how much to charge. At least get pay scale from them as if you were a potential client - and find out SPECIFICALLY what they're being paid for.
4-This should provide both a game plan and a mentor.
5-Finally: the best-paid consultants charge on a percentage-of-improvement - NOT an hourly rate.
A year from now you will have a game plan, a specific prospecting system, a specific set of skillsets to showcase, a pricing plan, and maybe a new car.
As the old saying goes: "physician heal theyself!" Look at your own situation as a business you are responsible for helping to grow.
Look at the companies that have placed you and see how they go to market. You may not be able to afford thier type of marketing and sales but it should give you an idea how they get their contacts and contracts.
If you are just starting out, think "cash flow" and spend as little as possible on materials and facilities. Spend you time and money building a network by going to business venues in your area. You will need some minimum "marketing" assets like a business cards (<$35) and maybe a website (<$100/yr).
Also, be sure to join key social media/blogs/forums related to your target market's businesses - not yours - it's like selling to yourself! Develop you profiles completely on these networks so people can see you as someone who knows thier problem and can solve it (don't mention Money!)
A tip: think in what you do best, build a short story to tell about that, and find a customer that belives in you. This is the begining.
The market will drive you then.
I share the same dilemma with you however, in my case I don't have pipeline business and hence often take a bit of some time between one assignment and another. On a lighter note though, remember that start consulting on a fulltime basis you have to brand yourself. For instance, do you have a company or personal website where you can exhibit work you have done previously including recommendations received. You may also want to set up offices . for example the virtual offices type at a relatively good address.
Hi friend. That was exactly my case. First of all, remember that the difference between knowledge and wisdom is: Knowledge: know what to do....Wisdom: do it.
I am not anyone to advise you. I can tell u my experience, but it's my experience, with "my glasses", not yours.
I changed from staff member to freelancer consultant for (now) six companies, in different areas: BDM, Proccess, etc...
I contracted a agency services for my "legal issues" (payments to State, legal status of freelance...)
Then, I signed a contract with every company that asked for my services (written by the agency).
About the price...A price in relation to the market and the value...the different value you offer. Do you know what r u offering, different to the rest? Are you able to generate business for your clients? Are you, not only a freelancer but a business angel? After your years of experience: can you offer not only know how but "client list"? What else do you offer?
Apart of it. What would be the salary of a person of your profile in a Full Time Employed model? Have you calculated price/hour, with all the hidden costs? I.E. A person of 75.000€/year has a really cost for the Co (in Spain) of aprox 120.000€ (salary + assurance + taxes + equipment + desk, power, network, water, vacancy...) Dividing among 160 hours per month you have a cost.
Your speech: As a freelance, I have hardly hidden costs...(I pay my assurance, my taxes, my equipment, I only make an invoice if I work...
So my cost per hour is...for example: 75€/hour, or 500,00€/complete day...or 2.000€/week. or 3.500€/two weeks, or 6.500€/month and so on...much cheaper than a staff member...
And....for results of a company, is much bettter a external frelance that a person with payroll...You are not in the passive of the company.
So, let's go. Jump and do it.
If you need a mentor, contact with me and my Co.(email@example.com)
Dear Mandy you have already got advice's from adept seasoned professionals there is noting much I can say here but yes as for pricing for services that you offer, you can calculate per hour basis that you are being paid now charge proportionately as per the hours that you would spend to your client for consultation X 1.3 times for checkis fresh waters
Mandy I noticed that you already work for your clients as a contract staff. What would happen if you let your clients know that instead of being on their payroll as a contract staff you would like to submit an invoice for providing your services?
You may wish to be registered as an individual doing business or as a full company and let them know that you have launch your own business.
They should also know that this decision will save on their resources/costs.
You can determine how much you want to make per year and work out an hourly rate from there. This is will provide you with an indication of how many clients you need to have on a daily /weekly basis. Some people charge per job and also ensure they are in line with what their industry is charging. You may want to keep the prices of the current clients as close as possible to the contract pay with the option to increase any new requests and use your calculated price for the new clients.
About your services - you are helping small businesses reorganize and position themselves for growth. There are lots of services within this business area and that is your expertise. You can break it out further but this is what you should consider offering. Of course you need systems (some were already covered in the discussion) to fuel the growth of your business.
If you need help let me know.
There are so many ways to get started! I put together a business plan outlining my services, approximate start-up costs, and initial resources I needed, attended B2B networking events to meet my potential clients or get referrals, determined a fair price to charge (and what the market would bear), and kept refining all of this until the picture got clearer and my message was heard. Mostly, it took self-directed research and talking to trusted fellow professionals. I also found some guidance at SCORE.
Local colleges often offer classes on business start-ups. Business incubators do, too, and many people find co-working spaces a great place to bounce ideas around. There are also many types of business coaches who guide others through the process of starting, maintaining, or exiting a business.
You have a perfect opportunity to do some market research with your current client base. One recommendation is to simply ask a few of those small businesses that you have been contracting with - to lunch. Start networking with those people and ask what they are currently paying for hour for your services. Share one at a time - (not all at once) with them that you are thinking about accepting some side consultant jobs on services outside of your current contract house.. Ask them if they would be interested in information on your new side consultation services. (You will be able to offer lower rates than the contract house, because you won't have the same overhead).
In regards to what services to offer - stick with the services that are aligned with your talents, passions and skills. And ask your current clients what additional services would they be interested in. You may find that your current clients would be interested in some functions/services that you can provide that are not in competition with your current contract house. You may find that you can serve several clients and build up your reputations while still providing service through your contract house (as long as you are not in direct competition).
Just start gathering data through your current client contacts. You may find that as you collect more focused data - the answer will become more clear.
I have some worksheets on how much to charge based on the income you want to make. If you want to talk more about that - please reach out.
I read through the responses and there are some great business model ideas in their answers.
I started my service business the same way. I had a full time position in a similar business with no competition clause. I in no way bit the hand that was feeding me. I never crossed that line of taking from my position, I simply did the services they wouldn't take.
I started building my business then eventually took over the business I worked for. I started and grew two other branches off my original offering different services and widening my customer base. They supported my main business new avenues that increased my service with my clients. You have to have a clear vision of what your business model is, who is your ideal client. Then look at the of services you can offer. Look for the uncommon services. When I started my first, I realized there were so many people doing the same thing I was doing. I had to quickly find a niche in my market and focus on that. I studied my competition, what people were saying about them. Then emulating the good things and trying to improve the processes. I was able to grow my business to the top of my area fairly quick. Always changing my process to better my services and allowed flexibility to my customers always changing needs.
You start your business on a part time basis until you gain experience and clients and them move to full time Business. I did work full time and after work I went to the Business. and work with one employee until I leaned and grew the business to a multimillion business. You have to be dedicated to the idea and the business. It is not an 8-5 job.
This is a very difficult decision to just make in a day. It also depends on what is going on outside of your working life.
Advice I got that I never took was don't quit your day job until your night job starts paying.
But more seriously, if you want to be a freelance consultant look into being an independent contractor, by no means is that your long term goal, but it is a way of getting what you want done.
Do you want to start your own company? Do you have the time? Are you ready to deal with the nitty gritty of being your own secretary?
Your question leads me to a lot of other questions. if you want you can private message me and we can discuss further.
I will keep on recommending this book because it really changed my life - Business Model Generation - it is about the Business Model Canvas and how important it is to constantly be questioning your business model.
They have another book that I haven't really gotten a chance to examine as closely but looks great - Business Model You. You might find that book helpful.
Good Luck! Either way you are going to need luck.
Like others have suggested, start to build your business in parallel with your full time job so you do have some income while trying to establish yourself. One thing you also need to consider is to be sure you will not be creating a "conflict of interest: with your current employer.
As far as starting your business, many libraries can connect you to SCORE, an organization of retired executives which can offer you business advice and what you need to set up your business. Since you will need a business licence, you need to decide if you are going to start a business DBA..... or form an LLC or a corporation.
Seek out other consultants who are doing the type of business you are looking to start and visit their websites and even join your local chamber of commerce group or other business associations and start networking.
You then need to also decide, if you intend to provide services locally, state-wide, nationally or internationally. Each level requires some additional requirements.
Learn about what insurances you may be required (i.e. exclusion insurance) if any. You will need to set up the appropriate bank accounts (checking, savings, etc) and you will probably need to have registered your business first with the town/city you live in to do this. Most banks need to know that you have a business license.
Get yourself an accountant who can help you set up the financial side of your business and guide you on the required taxes you need to be aware of.
I am an international seminar company who provides public speaking and presentation skills training along with internet marketing consulting and have provided over 2700 programs to clients from over 178 countries.
In fact, I am currently in Abu Dhabi, UAE for 4 weeks. If you intend to do international business, find out any additional requirements in those countries.
If you intend / need to set up a merchant account to accept credit cards, you will need to do that as well.
www. LJLSeminars. com
Mandy, here's my consulting practice start up advice.
My first rule is “Spend no overhead before its time.” So first, get a client or two. Don’t worry about incorporating, naming, branding, or any other such things till you have some revenue-producing clients. Your initial clients will likely come from referrals, so these things will be less important.
If you operate under your own name, you won’t need to register a name initially. More important to choose a URL and register it—even if you’re not ready to build a website yet.
Once you get a couple of clients, then get a business license, DBA, etc. You’ll be a sole proprietor, I’m sure.
Never call yourself a free-lancer. (I agree with Barbara Saunders.) A freelancer is an underpaid contract employee. Be wary of calling yourself a consultant. Nobody wants to hire a consultant. What label addresses the benefit you bring to your desired clients? I call myself a “small business growth advisor,” because I only focus on small businesses that are on a growth track. This is the beginning of branding.
Pricing. Independent consultants get paid much more than in-house contract employees. Double or triple. Once you understand, and can communicate, the benefit you bring to your clients, ask yourself how much they would have to pay someone else to do that for them. Charge at least that much.
Small business owners typically underprice their services. The irony is, if your rate is too low, people will think you’re not very good.
The higher rate you charge, the better clients you’ll get. People who look for low rates don’t want to spend money, and they will nickel and dime you. They will also want you to do lower-level jobs for them. These clients will take up your time and keep you from going after more lucrative ones.
I see you are near Boise, so rates may be lower than where I am near San Francisco. But I have a client near Spokane, and he’s able to charge almost the same rates I charge. (Maybe I should raise mine!) My hourly rate is $175, but I normally charge a monthly rate for a given level of support—say $500 to $1,000 per month.
I don’t want to do work for clients that isn’t worth $175 an hour for them.
Marketing. Build a low-cost website using Wordpress, then get your face out there. People will hire you based on face-to-face contact, not based on any online profile. Go talk to local Chamber groups or Rotary luncheons so people get to know you. People want to see you, then check out your website.
I haven’t had a brochure in ten years. I rely on website, online profiles, and business cards—and talking to people.
Be wary of networking groups that are full of chiropractors, insurance agents, and acupuncturists. These are not your target clients, and they probably won’t be good referral sources for you either.
Boulders, rocks, or pebbles. Don’t take on any client that requires more than a quarter of your time. You don’t want to be a contract employee. You don’t want to be in a situation where if you lose one client, you’re out of business. Avoid the boom and bust cycle by going after a handful of medium-sized clients. Also, don’t rely on tiny clients. It takes almost as much time to market to them and to service them as it does for larger clients. Too much churn.
The huge, dominating client is a “boulder;” the tiny client is a “pebble.” You want good, solid mid-sized “rocks.”
This is a start.
A couple of somewhat random thoughts:
Check out the Small Business Administration http://www.sba.gov/
Lots of real good information; such as, how to create a business plan, finding events to attend and sizing up your competition. Might as well use it, we pay for it.
Create a website. Get on LinkedIn. People will find you.
Develop your own methodologies/tools for solving problems. My clients like it when I show them a logical but simple to follow approach.
I like fixed pricing as well but, it really depends on the project and what part of the country you are in. For example, the East coast, where wages and costs are a bit higher, you can typically charge more than the Midwest. But, it still depends on the project.
I do both contract work for an accounting firm with manufacturing and distribution clients as well as with my own company. Also, consider the point about needing time to do marketing, administrative and consulting work when you are on your own. Set aside enough cash to live lean for a few months.
Also, consider joining an organization like APICS, ASQ, Supply Chain Council, etc. They are always looking for volunteers to help with programs, education, meetings, conferences, etc. Great way to network and develop business opportunities.
You may also want to develop a free assessment based on your expertise to get a foot in the door to be able to present findings and recommendations. Getting in front of a client is much better that an email or letter, etc.
Hope this helps. Good luck.