How to Succeed as an Independent Consultant, 3rd Edition

410 Pages·1993·5.196 MB·English

by  Herman Holtz

How to Succeed as an
Independent Consultant
Third Edition
Herman Holtz
John Wiley & Sons, Inc.
New York • Chichester • Brisbane • Toronto • Singapore
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Copyright © 1993 by HRH Communications, Inc.
Published by John Wiley & Sons, Inc.
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Library of Congress Cataloging-in-Publication Data
Holtz, Herman.
How to succeed as an independent consultant / Herman Holtz.—3rd
ed.
p. cm.
ISBN 0-471-57581-X
1. Business consultants. I. Title.
HD69.C6H63 1993
001 '.068—dc20 92-36040
Printed in the United States of America
10 9 8 7 6 5 4 32
Contents
PREFACE xi
Why a new edition is needed now. A needed response to great
changes. The general economic atmosphere and its influence.
New areas to be addressed. The IRS versus the on-site contractor.
The plight of today's retirees. The explosion of pertinent
technology. The need for enhanced marketing. New information
in this edition.
INTRODUCTION 1
Increasing need for consultants. How consultants specialize.
How definition relates to consulting (marketing) success. The
consulting market has grown and changed. The more important
view: that of the client.
WHAT DOES (SHOULD) A CONSULTANT DO? 10
Computers and data processing. The aerospace industries. The
consultant organization. The consultant company. Hybrids. The
consultant as a self-employed independent. A few exceptions.
Suitable fields and services.
SEIZING OPPORTUNITY 27
Your consulting specialty versus your marketing needs. What
does it take to be a consultant? The skill of a consultant. The
avenues of specialization.
CONSULTING AS A SECOND CAREER 38
What is a "second career"? Almost any skill/knowledge/
experience can be the basis. Marketing—getting clients. What
kinds of clients to pursue. Marketing your services. Plowing new
fields. Consultants as temporaries. Finding assignments.
Companies for seniors.
vi • Contents
4 WHY DO SO MANY CONSULTANTS FAIL?
HOW TO SUCCEED 53
The roots of failure. The common mistakes of neophyte
consultants. The basic trade-offs. How specialized should
you be? Having it both ways in specializing. Marketing. The
ten laws of survival. The consultant's image.
5 A FEW KEYS TO SUCCESS 66
The art of listening. Deciding what business you are in. The
key to the definition. The two basic sales situations. The
independent consultant: specialist or generalist? Do's and
don'ts, especially for the first year.
6 FOUNDING THE CONSULTING PRACTICE 83
If you had it to do over. General considerations such as
licensing. The matter of a business name. What type of
business organization should you use? Do you need a lawyer?
Do you need an accountant? Do you need a business plan?
Some general observations about business plans.
7 FINANCES, TAXES, AND RELATED PROBLEMS 97
Using what your accountant tells you. The information you
need. Some common mistakes. Some basic rules. Basic cost
centers and cost definitions. Insurance. Taxes: Avoidance
is legal.
8 MARKETING AND SALES: FINDING LEADS AND
CLOSING THEM 112
Success in marketing is always a tonic. What is marketing?
Discovering what clients wish to buy. "I know it when I see
it." Creating needs. Face-to-face closing. Qualifying prospects.
9 RELEASES, BROCHURES, AND OTHER MATERIALS 130
Marketing and messages. Releases and newsworthiness.
Brochures as marketing tools. Other sales materials.
10 THE NEW MARKETING 143
Recession or "adjustment." The good news. What's wrong with
the "old" marketing? Is mass marketing dead? Why consulting is
not sold via mass marketing. The marketing database. Networking
for clients. Miscellaneous marketing considerations. Brokers, job
shops, subcontracts, and the IRS. Technical services firms.
Contents • vii
11 MARKETING TO THE PUBLIC SECTOR: FEDERAL,
STATE, AND LOCAL GOVERNMENT 155
A brief glimpse of government markets. What governments buy.
How governments buy. The procurement system. Market research.
Subcontracting and other special marketing approaches. Forms.
12 PROPOSAL WRITING: A VITAL ART 170
The evolution of modern proposal practice. What proposals call
for. Why proposals are requested. The ingredients of the RFP.
Kinds of information an RFP asks for. What is a proposal?
Proposal scenarios. Who must you sell? Public- versus
private-sector proposals. The evaluation system. The protest
process. Sole-source procurement. Proposal formats and rationales.
Format and general rationale. The necessary impact. Strategy and
its evolution. Functional flowcharts. A few odds and ends.
13 THE INITIAL MEETING WITH THE NEW CLIENT
OR PROSPECT 199
Rule number 1: Have a clear understanding from the beginning.
Rule number 2: Be a dignified professional—always. Rule number
3: Sell without hype. Selling is consulting. Pricing problems. Where
to conduct initial meetings. Things to settle at the initial meeting.
Follow up.
14 NEGOTIATIONS, FEES, AND CONTRACTS 213
Fees, costs, and profits. Standard rates. Calculating overhead.
What should your overhead rate be? Private-sector parallels.
Government contract negotiation. Private-sector contract forms.
What is a contract? Potential hazards. Alternatives to formal
documents. The informal contract or letter of agreement. Annual
retainers. Negotiating tips, tactics, and gambits.
15 CONSULTING PROCESSES AND PROCEDURES 231
The art of listening. The art of hearing. Hearing as a salesperson.
Listening as a hired consultant. A basic approach to all analysis:
Function.
16 FINAL REPORTS, PRESENTATIONS, AND OTHER
PRODUCTS 254
Written reports: Products of the consulting project. Verbal reports
and presentations. Other products. Finding a measuring stick.
viii • Contents
17 FEES AND COLLECTIONS 270
Cash flow is a problem for everyone. Warning flags. Credit
card convenience—and inconvenience. Collections.
Collecting from government clients.
18 SKILLS YOU NEED: MAKING PRESENTATIONS 280
Consulting: Business or profession? Public speaking. The
notion of born speakers. Planning the presentation. A few
presentation principles.
19 SKILLS YOU NEED: WRITING 292
Writing skills for the consultant. Research and data
gathering. The draft.
20 ADDITIONAL PROFIT CENTERS: WRITING FOR
PUBLICATION AND SELF-PUBLISHING 315
Consulting means different things to different consultants.
What are profit centers? Why other profit centers? The
common denominator. Writing for profit. Publishing your
own book. Marketing books. Other publishing ventures.
21 ADDITIONAL PROFIT CENTERS: SEMINARS AND
PUBLIC SPEAKING 337
Speaking for profit. The public speaking industry. The
seminar business. Marketing the seminar.
22 CONSULTING AND NEW TECHNOLOGIES 355
The new meaning of independent. Desktop computers. Significant
differences and advantages. The most popular functions. Desktop
publishing. Database and spreadsheet functions. Communications
software. Macro generators. Graphics developments. Printers.
Modems. Facsimile machines. Tape drives and backing up. The
computer as a general aide.
23 BUSINESS ETHICS IN CONSULTING 365
A standard of conduct. Conflicts of interest. Fees and related
ethical considerations. A recommended code.
24 THE REFERENCE FILE 372
Books on retirement and second careers. Books on writing and
publishing. Books on public speaking. Other books of interest.
Periodicals of direct interest. Wholesalers and distributors.
Contents • ix
People and organizations in public speaking. Convention
managers and planners. Speakers associations. Mailing list
brokers. A few tips on writing direct mail copy. Associations
of consultants. Miscellaneous resources. Consultant labor
contractors. For retirees and older workers. A few seminar
tips. Proposal do's and don'ts. Outline for the preparation of
a business plan.
INDEX 393
Trademark Acknowledgments
CP/M is a trademark of Digital Research Corporation.
Hercules is a registered trademark of Hercules Computer Technology.
IBM, IBM Selectric, IBM PC, PC-DOS, Personal Computer XT, and Personal
Computer AT are trademarks of International Business Machines Corporation.
Macintosh is a trademark and Apple a registered trademark of Apple
Computer, Inc.
Microsoft and MS-DOS are trademarks of Microsoft Corporation.
Sidekick is a trademark of Borland Corporation.
SmartKey is a trademark of FBN Corporation.
WordPerfect is a trademark of WordPerfect Corporation.
WordStar and MicroPro are registered trademarks of MicroPro International
Corporation.
Preface
WHY A NEW EDITION IS NEEDED NOW
Not every author has the good fortune to create a second edition to his original
work, much less a third. Nor does every author have his book reviewed by a
group such as the computer consultants forum of CompuServe. The members
of a forum opted to review How to Succeed as an Independent Consultant as
the first choice of their new special Study Group section—a distinct honor.
I monitored the study and discussions as best I could and recorded the com
ments. Most of those comments are reflected in the third edition of this book.
A few comments, however, merit special notation. One set of thoughts that
struck me as especially rewarding were those of a man who is employed as an
internal consultant by his firm. He reported that he did not aspire to launch his
own, independent consulting venture, but he found certain principles enunci
ated "made the lights go on" for him and were "liberating eye openers." These
are the specific items that were such eye openers for him:
• Consulting is not of itself a profession, but how one practices a pro
fession.
• Consultants need to market their services proactively as a planned part
of the business, not as an afterthought.
• The client's perception defines the "truth" or reality of a consulting
situation.
• Consultants need to make a profit in addition to making a living—pay
themselves a salary.
• A consultant must be a specialist and a generalist at the same time.
• A proposal is a sales presentation. (Too often we write proposals as dis
plays of erudite technical knowledge and clever phrasing.)
This praise does not mean, of course, that everyone thought everything I
wrote in the earlier editions of this book was wonderful. Far from it, I got my
share of brickbats from consultants who did not agree with my admirers or
with many of the things I said in those earlier editions, and I bear the scars
and remember the pain of the wounds yet.
xii • Preface
What is more important, I learned more about consulting from other expe
rienced practitioners, and this third edition includes input from real live,
practicing consultants whose comments reflect practical experience, rather
than theory. I also learned of the problems independent consultants are en
countering today, and what help they need to cope with these new problems in
a changed world.
A NEEDED RESPONSE TO GREAT CHANGES
With all respect to Ben Franklin and his observation about the inevitability of
death and taxes, I must point out that he neglected to mention another thing (at
least directly) that is inevitable in this world; it is change. Change is inevitable,
it is constant, and, in the broad view, beneficial, although the immediate ef
fects may not appear to be so. Many things about consulting have remained the
same since the second edition of this book was published, but much has
changed. This edition will reinforce that which is constant, but will also focus
on the significant changes that must be taken into account if you are to con
tinue succeeding as an independent consultant.
Some of the changes are minor, while others are of great importance, critical
to success as a consultant. The third edition responds to these major changes
and offers solutions for the problems arising from them.
THE GENERAL ECONOMIC ATMOSPHERE AND
ITS INFLUENCE
In late 1992, government economists are pointing to what they believe are
signs of an economy recovering from over two years of slowdown and decline.
Many major industries, especially manufacturing and heavy industries, have
closed down in liquidation and in bankruptcies. For the first time since the
thirties, we see vacant store fronts, as small retailers are forced to close their
doors. We read every day of new bankruptcies of both small and big business.
Government officials have been assuring us almost from the first symptom of
economic bad news that this recession will linger for only a short time
and then dissipate, as we return to the boom times of the eighties. I am no
economist. I can offer no technical arguments for my own convictions. I confess
to being influenced by the haunting personal memories of the desperate days of
the thirties, when I was myself among the thirteen million victims. That may be
why I have difficulty in accepting these cheerful prognostications of economic
recovery. I am truly not sure what that term means. I have a deep-seated feeling
that we are not in a recession, but in an economic adjustment of quite another
kind, an inevitable settling down from a peak and unusual—perhaps even unnat
ural—boom condition to a normal economic condition of sharp and intense
competition. I think we must learn to compete, once again, and adjust to a
new kind of economy, with somewhat different rules of economic behavior and