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Please click on each question to view answer.

Should I become a consultant?

A major trend in today’s work world is flexible staffing. To supplement core staff, companies are hiring consultants or specifically qualified people to work on a temporary or as-needed basis.

A consultant is someone whose expertise adds specialized skills to a client’s workforce. Clients use consultants to handle unique assignments, such as manage projects as contract specialists or financial experts, develop and/or install advanced systems, rescue efforts gone astray, supervise and train in-house staff, or solve a variety of challenging business problems. Assignments can be short, medium or long term. Many can lead to permanent positions.

There is a demand for professionals with skills in Finance, IT, HR, and Legal to name a few.

The value of a consultant in these disciplines depends on the length of experience, technical depth, and on how well the individual keeps skills and knowledge up to date (classes taken, certifications received, technical journals/trade magazines read, articles published).

High-demand skills will command higher rates than generic skills. These high-demand skills change from time to time as the market (i.e., the need for certain skill sets) changes. A consultant is always vigilant of trends and willing to retrain for new technologies.

If you feel that your skills are sufficient to meet client needs through consulting assignments, click on the topic below to see which employment status would work for you.

Which employment status would work for me?

Temporary Employee for a Company (such as Mindbank) that specializes in providing qualified professionals to fill specific job requirements

Under this approach, you are viewed as an independent consultant who has affiliated with an employer/staffing firm. This company markets you and places you on assignment as a consultant. The client pays your employer who then pays you based on an hourly consulting rate for your services.

During your assignments, you receive paychecks on a regular basis from your employer and a W-2 at the end of the year for tax purposes. Deductions taken are the taxes required by law and insurance premiums or other benefits, if offered.

Working on this basis offers the flexibility and “look and feel” of being in business for yourself without having to incur the risks, costs and responsibilities of owning and managing your own business. You may be selective in your assignments, work periods, hours, and location. You may be able to telecommute. You are paid for the hours you work, which may enable you to earn more than you would with a fixed, annual salary.

Unless another assignment has been arranged, a temporary employee/consultant goes off the payroll when the project ends. However, a project end date is a known factor, and you can plan for time between projects. Also, the higher hourly rate you command as a consultant will usually compensate for holidays, vacations and time between assignments. A job well done is the best insurance for another placement. In addition, partnering with a company such as Mindbank keeps you networked in the consulting community. Often Mindbank consultants transition from one project to the next with no down time.

Establish your own business

Under this approach, you must consider the expenses of opening your own office and the sales effort in securing clients. These costs can include phones, fax, copier, email/internet services, insurance, legal costs, record/bookkeeping costs and marketing costs (business cards, stationery, brochures and easily 20% or more of your time). A major advantage is that you can deduct certain expenses from pre-tax income. Another advantage is that you are building an asset in starting your own business. Providing you are not the only revenue-generating person in the company, there is the potential of selling the business asset as well.

Should I work with a staffing company?

One of the most significant problems encountered by independent consultants is promoting and marketing their skills. Most consultants are extremely competent in their technical specialties; however, many are reluctant to be involved in the sales process, and this can limit their business opportunities.

If you feel comfortable doing your own selling and marketing, have a lot of contacts in the high-tech arena, and have some significant skills, there is probably little need for the services of a staffing firm. On the other hand, if you feel you may not have the marketing prerequisites to get – and keep – your business going, you may want to consider using a staffing company.

Some Pros

• The staffing firm can help you establish your consulting business.

• A good staffing firm can have far-reaching business contacts and can find work that you might not be able to find, particularly when your time is consumed with handling an assignment and getting the job done.

• The staffing firm can reduce the amount of down time you may incur if you were doing your own marketing.

• The staffing firm can provide a strong marketing presence with a client that you may not have time to develop. This can help you get in the door.

• As a temporary employee, you are on the staffing firm’s payroll and receive regular paychecks during your project assignment. Even if the client is late in paying the staffing firm for your services, you still receive your paycheck on time.

Some Cons

• You are working for a staffing firm as well as for the client. Therefore, you must keep both informed as to project status, absences, and so forth.

• The main concern expressed by most consultants is that their services are provided to a staffing firm at a “wholesale” rate as opposed to the rate they would charge directly. You need to weigh the opportunity to work as many hours as you can through a staffing firm versus the cost of your time without income to secure your own projects.

The ethics and technical competence of many staffing firms should be evaluated before you register with the firm. For instance, some staffing firms will submit your resume to a client without even informing you. At Mindbank, we make a strong effort to treat our consultants as true professionals, and to consider them part of a team effort. If Mindbank handles the business relationship professionally, and the consultant delivers the same professional job technically, then we both have a winning combination.

You can check Mindbank’s reputation as a strong, ethical and technical leader. We have been in this business over 22 years and the owner of the business has worked as a technical consultant himself.

How do I determine what rate to charge for my skills?

This issue sounds complex, but there are some straight-forward answers.

The bottom line is that the “Market” determines what the rate should be. There are rates for your skills which a client will determine to be excessive. On the other side of the coin, there is a rate at which you will not be fairly compensated. In between is a fairly large range of numbers. How do we get to a more precise figure?

Since there are many factors which affect an hourly rate, the approach used here is to (1) calculate a “consulting equivalent” of your present employee rate and then (2) factor in a number of intangibles which are discussed later in the document.

BASIC RATE CALCULATION:

As a starting point, use your current or most recent full-time annual salary to begin to determine the basic rate. For example:

Beginning annual salary =$60,000

(2080 hours/year X $28.85/hour)

However, if you are striking out on your own, you will have to cover your own benefits that are presently handled by your employer. This includes insurance, and withholding taxes. This can amount to 30 percent of your annual wage:

30 percent = $18,000

(2080 X 30% = 624 hrs X $28.85)

Vacation days usually total 10 working days, holidays another 8, and sick days about 5. This totals 23 days which must be figured into your pay plan:

Total days off = $5,308

(23 days X 8 hrs X $28.85)

Allowance of 2 weeks per year down time between projects:

Down time = $2,308

(10 days X 8 hrs X $28.85)



Total annual salary = $85,616

($60,000 + $18,000 +$5,308 + $2,308)

If you choose to use a staffing firm and not deal with most of the marketing/sales issues and costs (down time for prospecting and selling, brochures, phone calls, offices, E&O and liability insurance, legal, etc.) these costs would not be included in the calculation. Since there are 2080 working hours in a year, divide $85,615 by 2080 which gives you:

Hourly wage rate = $41.16 per hour.



ADDING INTANGIBLES

Once your basic rate is determined, it can be adjusted by other, less tangible factors. These factors might include:

- The condition of the market for consulting talent – high demand? Low demand?

- The number of months or years of current technical experience that you, the consultant, have.

- Are you considered a true expert in your field? Do you have publications to your credit? How current are you on new technologies and trends?

- How much should be added to the annual figures discussed above to compensate for risk and additional take-home salary?

- Will the proposed project enhance your technical credentials?

- What is the location of the project? What is the expected duration?

- What is the client willing to pay? The client determines this number according to the company’s overhead, contractual obligations, the “going rate” for other consultants, and from alternatives such as hiring full-time employees.

- What is your “wholesale” rate? If you are considering a staffing firm to help you locate projects, you need to make your services available to the staffing firm on a “wholesale” basis. Basically, what you are removing from your full rate are the business costs to you of doing everything yourself – costs the staffing firm now assumes for you. The acceptable “retail” rate a staffing firm charges the client, therefore, covers your earnings and includes an amount that covers staffing firm expenses and margin of profit.

The 10 guiding principles of consulting

If you have received great service and value from an auto repair establishment, would you return in the future? Of course! So, too, must you consider the same fundamentals when establishing a consulting practice.

There is no substitute for providing ethical, reasonable pricing and the ability to solve client problems on a timely basis.

Value

Value can be defined as receiving excellent quality, on time, for a reasonable price. When you think of it, that is what you must provide to your client! Your assignment is to help the client achieve his or her business objectives. You must do anything you can to help. In effect, it is applying the Golden Rule to the business environment. Treat your client as YOU would like to be treated, and you will find your client will be pleased with your consulting services.

The Commandments:

1. Review expectations up front. When starting an assignment, find out what the client expects to achieve. It is difficult to meet goals and deadlines if you do not know what they are.

2. Be prompt and prepared. Show up for meetings on time or a little early, and be prepared for the meeting.

3. Start early, finish late. Get to work a little early and don’t turn off your computer exactly at quitting time. Give the client a little at the end of the work day. Clients notice it, and they feel comfortable with you because of it. They may not say much if you shave 5-20 minutes off of each day, but they do notice and you will not be invited back.

4. Be as good as your word. If you do not know the answer to a technical question, don’t improvise – tell the client that you will look it up and do so! When you improvise, you have no idea who else the client is asking for answers and you may easily be exposed. When this happens, there is no way to restore lost credibility.

5. Meet your deadlines. If you say you are going to finish a project on a certain date, make sure that you deliver on that date. It is better to indicate that you will finish a project “within certain dates.” That way you have given yourself time to cover unforeseen delays. If you encounter a situation where the client insists on a specific date and you don’t think you can make it, let your client know EARLY so the issue can be addressed properly. If you are working through an employer/staffing firm, notify your account manager as soon as possible so that all parties can work together toward a favorable outcome.

6. Patience, patience. Never reveal impatience with a client at how slowly the client picks up issues or new concepts.

7. Dress professionally. When you become a consultant, it does not mean you have earned the right to dress casually. A professional consultant dresses-to-impress in proper business attire. Dressing inappropriately or in a bizarre fashion can reduce professional acceptance. Even in an informal work environment, wait until the client invites you to wear casual attire.

8. Listen and learn. Take your clients to lunch and let them talk about what interests them, not what interests you. Ask them about their challenges and goals. You’ll benefit from the answers!

9. Review and revise. When completing an assignment, spend some time with your client to hear what they have to say about your strengths and weaknesses. Mindbank does it, but you can too. It lets the client know you care and that you have a personal commitment to doing things right. It will leave the client with a positive sense of your dedication to client satisfaction, and you may learn some valuable pointers.

10. Ethics, ethics, ethics. A strong sense of ethics is the basis for success and longevity in the consulting business. An individual that is lacking in this area will soon run out of clients and will not be invited back. Some examples: Do not talk about the client company or individuals within the company. Don’t spend client time making personal calls. Do not change rates once you have committed to a rate with a client, and don’t “shave” time on time sheets. The consulting community is a close-knit network and your reputation within that community is your most valuable commodity.

The Golden Rule:

Again, treat the client the way you want to be treated. This is common sense, but as a consultant, you must be constantly aware of it. If you keep this in mind and display a positive work attitude, you will create the strongest possible case for getting repeat business from a client!

Unless another assignment has been arranged, a temporary employee/consultant goes off the payroll when the project ends. However, a project end date is a known factor, and you can plan for time between projects. You can carry independent insurance or be covered under a family member’s insurance plan. Also, the higher hourly rate you command as a consultant will usually compensate for holidays, vacations and time between assignments. A job well done is the best insurance for another placement. In addition, partnering with a company such as Mindbank keeps you networked in the consulting community. Often Mindbank consultants transition from one project to he next with no down time.


 
Contact us

Mindbank Consulting Group, LLC

Virginia (Headquarters)
10780 Parkridge Blvd., Suite 150
Reston, Virginia 20191
Toll Free: 1-800-444-2234
Fax: 1-703-761-3049

Denver Office
15000 West 6th Ave
Suite 400
Golden, CO 80401
Toll Free: 1(888) 942-4700
Fax: 303-278-2237


Did you know?

Mindbank Consulting Group, a Woman-Owned Small Business (WOSB), has been serving the Washington, DC Metropolitan Area with IT consulting solutions for over 29 years!

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