Consulting Made Easy

What Are Some Key Points I Need to Know?

Like any job, being a consultant gets easier the longer you spend at it. I have been consulting for 25 years and I’m still learning, that’s part of the fascination. On the other hand there are a few points I would have liked to learn right at the start. So here are a few to be going on with.

Cash is king

I’m sure you’ve heard this before. It’s true for any business and particularly so for consulting. Let’s face it, you are consulting to earn a living and most of us like to be paid for the work we put in. Given that, and the fact that you should have a professional relationship with your client, it seems strange that so many people are coy about raising the subject when there is a money (or lack of it) problem. Generally the situation is that you’ve done the work, invoiced, and not received a payment. Excuses I’ve heard to avoid bringing the subject up include:

“I don’t like to talk about money, it sours the relationship.”

and

“Well, it’s kind of tacky to bring it up.”

I couldn’t disagree more. It’s a business relationship. If your client takes offence (unlikely) then he or she shouldn’t be hiring consultants. Try ignoring the plumber or garage mechanic’s bill and see what happens!

Clients buy perceived value

When I started as a consultant in a consulting company many years ago, they assigned me an hourly fee rate. I was supposed to work 80% of my billable hours at this rate. I remember being shocked at the time that anyone would ever consider me to be worth so much (I’m more confident now). It took me a long time to learn that whatever value I think I’m worth is completely irrelevant; it’s the value that the client perceives he or she is getting that counts. And when you work as a consultant for a company, the client isn’t just hiring you, he or she is hiring the company with all its reputation, body of expertise, track record etc. 

The fact that perceived value is critical is never more appropriate than when selling consulting projects. Much more about that later but it leads me on to my next key point.

Clients who insist on quotes of hourly rates are generally to be avoided

Many may disagree with me on this but this is my experience. I’ll first explain then describe exceptions. If a client wants a project completing, a defined piece of work, then to my mind it’s none of the client’s business how many hours I put in. Let’s say a proposal for $10,000 is accepted by the client, then so long as it is completed to standard and within the timescale, why should the client care if I do it in 10 hours or 100? Do I care how many hours my decorator takes to paint my house? No, I just want him to do a good job and I’ll pay what we agreed.

Once you get into quoting hourly rates it opens up all sorts of issues such as (all of which I’ve had thrown at me):

You’ll need more hours than that!

How can you justify charging so high?

I was expecting a much lower rate than this!

And the worst to my mind:

I wish I earned that much an hour (conveniently forgetting that they don’t have to pay for healthcare, sales time, vacation time, insurance etc etc).

So avoid quoting hourly rates if you can.

Having said all that, I worked for a large consulting company once who specialized in getting big companies out of environmental disasters. The client’s lawyers would call them up and say things like, ‘We’ve had a leak and polluted the river, help!’ In cases like these where the client wants a get out of jail free card (literally) you can charge what you like. The company would charge very high hourly rates and the job would last as long as it lasted, sometimes years. Nice work if you can get it.

And one more thing:

Client communication is critical.

Consider two scenarios:

                     A client sends you an e mail with a complicated request. You know it will take at least a week to collect the data and compile it, so you e mail him back ten days later and wonder why he seems annoyed.

You’ve just started a project and the final report is due in a month. You work away for over three weeks and all is well – you’re confident that you’ll have the report to your client on time. But he calls you and sounds irritated until you assure him that everything is on track.

Both of these scenarios show lack of attention to communication. In the first the client doesn’t even know that you received his request, let alone that you’re working on it. In the second, he is left to assume that you’re working on it, that everything is going ok and that you’ll deliver on time.

In each case all that is needed is some thoughtful communication. In the first, respond to his e mail and tell him that it will take a few days and that you think you can get him what he needs by a certain date. If he’s not happy with that, he’ll let you know and you can discuss it. In the second, all it needs is a weekly update e mail or call. Something along the lines of:

‘ Just a quick update. We have everything we need and the work is going to plan. We should have the final report with you by the agreed date. If you’d like any more information at this stage, please get in touch.’

Easy, huh? But those little things make a world of difference and you wouldn’t believe how many consultants fall down in the area of communication. Make sure you’re not one of them.