BSTR: START & RUN A CONSULTING BUSINESS
This book is designed primarily for the beginning or potential consultant, but consultants who have been in practice for a considerable time should also find it helpful.
The purpose of this book is to provide essential information and practical step-by-step guidelines to assist you in starting and developing a successful and profitable consulting business.
All the information necessary to set up and maintain your own business is included in this book. The book is organized to reflect a typical consulting business, from getting the original idea to generating income sufficient for your needs and expectations.
You will assess your consulting potential and determine your marketable
skills in Chapter 2.
skills in Chapter 2.
In Chapters 3 through 13 you will learn all the basic steps you have to consider before starting your business.Amazon in your place
Chapters 14 and 15 deal with the marketing techniques essential to success. Without effective ongoing marketing, you simply will not succeed.
Chapters 16, 17, and 18 inform you how to negotiate a consulting assignment from the first interview to the proposal to obtaining the contract.
Chapter 19 shows you ways of effectively managing your time.
Chapter 20 discusses ways of expanding your practice.
There are many good reference books that can assist you further; these are listed in the Bibliography and have been divided into various section headings for easy reference by subject area. Directories of consultants and consulting organizations which can be found in your local library contain up-to-date information on addresses and phone numbers.
Consulting is basically a knowledge industry, and access to ways of improving your knowledge should assist you in marketing your business more effectively.
Each chapter in this book stands independently but is linked to the others.
If you know little about consulting or being in business, you should read the chapters sequentially to appreciate the need for dealing with basic business considerations.
Understanding and managing the business side of consulting is as essential as performing the consulting service.
Every year the demand for consultants increases as our society becomes more complex. Business, education, health care, government, military, labor, social service, church, and volunteer organizations employ consultants on a regular basis. Consulting in North America has become a multi-billion dollar industry.
Consultants are people who are determined to succeed, who thrive on challenge, and who believe in themselves.
Consultants are entrepreneurs in the knowledge field.
Consultants are individuals who believe that they are competent and capable of rendering a worthwhile service to others.
Consulting offers a continual challenge and can present opportunities for freedom, growth, and satisfaction far beyond those of employment or other forms of business. This book will increase your chance of capitalizing on the opportunities and assist your business to success.
Understanding the Consulting Business
1. What Is A Consultant ?
A consultant is someone who has expertise in a specific area or areas and offers unbiased opinions and advice for a fee.
The opinion or advice is rendered exclusively in the interests of the client and can cover review, analysis, recommendations, and implementation.
A consultant generally works in conjunction with the resources personnel of the client, but uses employees, sub-consultants, or others as required for the specific project and in accord with the agreement.
A consultant is not an employee but an independent contractor, usually self-employed, contracted to perform a short-term or long-term task and paid on an hourly, daily, or project basis or other fee arrangement.
There are numerous consulting opportunities in the private and public sector.
The consulting profession has grown extensively over the past 15 years and is now one of the major service industries in North America.
The outlook for continued growth of consulting is very positive.
Demand exceeds the projected supply.
The consulting industry prospers in most economic conditions.
The amount of income that a consultant can earn is, of course, related to many factors, including the field of knowledge and level of expertise in that field.
The degree of profit is also directly related to how effectively time is managed and how efficiently the business is administered.
New consultants spend a large portion of time managing the task, researching their field of expertise, improving on techniques, and marketing their expertise.
Most of these tasks are essential but unbillable hours.
2. Who Goes Into Consulting ?
Basically, a consultant is a person with a marketable skill, a perceptive mind, a need for independence and challenge, an ability to communicate with others and persuade them to follow advice, a desire to help others in an effective way, and a wish to be an agent of positive change. In general, the people who go into consulting include:
• People frustrated with their current careers, who see the solutions to problems but are unable to effectively influence decision-makers
• People who want a stimulating, dynamic, growing career that satisfies the need for personal development
• People dissatisfied with the lack of challenge, opportunity, or creativity in their existing jobs
• People graduating from school with training but little experience who wish to work for a large consulting firm
• People who are between jobs and seeking new opportunities and careers
• People who see that they may be laid off and wish to establish themselves in a business to earn a living; these people may start on a part-time basis while still employed • Retired people who have expertise and wisdom to offer
• People who wish to supplement their present income by using their managerial expertise, or technical and academic skills
• People with work experience and industry knowledge or other skills who want to combine a family life with work at home
• People who understand government operations and the contract process, or who have built up contacts in government, politics, or industry over the years
3. Why Do Organizations Use Consultants? There are many reasons why the private and public sector need consultants for problem solving. Some of these reasons are discussed below.Amazon Amazon
3.1 Temporary assistance Clients frequently wish to supplement skills in their organization by hiring trained, proven, motivated consultants on a short-term or long-term basis. Consultants may be hired on a project, seasonal, or new funding basis.
By hiring consultants, clients do not have to contend with the training, instruction, and long-term commitment for salaries and fringe benefits entailed in hiring a skilled employee. Recruitment costs alone for a skilled employee can be considerable and cannot be justified for short-lived or cyclical need.
Consultants are independent contractors and therefore no tax deductions or fringe benefits are involved.
3.2 Objective review Consultants are retained as impartial advisers without any vested interest in the outcome of the recommendations. Internal staff may not be able to see the problems or may not be sufficiently objective.
A consultant can perform a competent and thorough analysis of the issues.
It is easier psychologically for personnel to adapt to external advice rather than the internal advice of someone who may be acting out of self-interest.
3.3 Third-party request for problem identification and resolution
For example, banks are naturally concerned about any signs of a problem that might put their investment at risk.
A bank may need to know whether the organization’s problems are related to administrative, personnel, financial, market, or product difficulties and how the problems can be solved.
Only an outside consultant’s opinion would be credible.
3.4 Surviving a crisis
A business owner suffering from serious business problems may seek an outside consultant to investigate the causes and recommend solutions.
3.5 Initiating change
A consultant can act as a catalyst for stimulating ideas in a highly structured organization that otherwise might be resistant to change due to its size, bureaucracy, and institutionalized nature.
3.6 Obtaining funding
Many nonprofit organizations or small- and medium-size businesses need assis assistance in obtaining grants or loans for their continued survival.
They may lack the expertise, ability, or time to research the availability of funding and prepare a persuasive application.
Consultants with an expertise in this area act as advisers or agents.
3.7 Selecting personnel
A client might hire a consultant for recruitment of key executives.
The consultant is looked upon as being independent and unbiased with the expertise and time to selectively screen and recommend prospective candidates.
3.8 In-house education Consultants are hired to provide in-house training to keep staff informed of new management and supervisory techniques or technical knowledge and to improve employee morale.
3.9 Dealing with internal personnel difficulties
Outside consultants are retained to review and make recommendations on internal structure, for example, consolidation of departments or services or elimination of redundant employees or executives.
The consultant’s report provides the rationale for making the decisions.
The consultant then leaves and is not affected by the decision.
Consultants can also be used to resolve conflicts between various levels of management.
The consultant plays an arbitrating or mediating role that permits frustrations to be expressed so that energy can be directed toward constructive resolution.
3.10 Delay tactics Consultants can be hired to perform research studies which take the pressure off a company that is being exposed to public or government scrutiny. This also permits the organization to use the excuse of a consultant’s study to justify a delay in decision-making.
The consultant is frequently asked to be the contact person, which reduces media attention toward the organization concerned.
3.11 Executive assistance
An executive who is aware of his or her personal limitations may request that a consultant review a problem situation, provide advice on how to deal with it, and possibly follow up with implementation.
3.12 Government regulatory compliance Government regulations at all levels are constantly changing, and companies are frequently not prepared or trained to comply. Consultants may be retained to provide expertise to assist a company in complying economically, efficiently, and with the least amount of trauma to the organization.
3.13 Socio-economic and political changes
Socio-economic and political matters are always in a state of flux.
These changes present opportunities for consultants.
For example, pollution problems create a need for environmental protection experts, and fuel shortages create a need for energy conservation experts.
3.14 Government excess funds Consultants benefit considerably from the expenditure of large amounts of government money.
The government may be funding the private sector with the hope of stimulating the economy; there may be political reasons before an election; there may be a balance in a department’s budget that must be spent before the end of the budget year so as not to reduce the allotment requested by that department the following fiscal year.
Governments also frequently hire consultants to assess needs, provide solutions, and to conduct in-house training.
4. Regulations Affecting Consultants Some professional organizations are empowered by legislation to exercise rights of practice, membership, and discipline. However, there is no government control or regulation of consultants as such.
The term consultant is similar to the term accountant: anyone can use the word to describe his or her activity without credentials, experience, competence,
There are many organizations for specific areas of consulting, but membership
These organizations or associations have little power or authority to investigate complaints.
Management consultants can apply to become a member of the Institute of Management Consultants (www.imcusa.org).
This group provides guidelines for professional practice.
The benefits of membership in a consulting association include:
(a) Certification status if the consultant meets minimum acceptable standards
of skill and knowledge
(b) Opportunities for self-development in seminars and workshops
(c) Interaction and networking with other consulting professionals
(d) Representation of the membership’s areas of interest to government and other professional bodies
(e) A code of ethics and code of conduct
(f) Keeping current on issues in the area of consulting by means of newsletters
or other publications.
1. Introduction Many consultants never do a thorough, honest appraisal of their strengths and weaknesses.
If you haven’t identified your skills, attributes, and talents, how can you determine your specialty areas and the target market ?
How are you able to package and sell your services and take advantage of opportunities ?
Without this awareness it is difficult to project the self-confidence necessary to operate your business and respond to questions a potential client might ask you.
Most consultants never go through the steps outlined in this chapter, and that gives you a distinct competitive advantage. To know yourself — your strengths and weaknesses — is to have power and a prescription for success.
2. Attributes of Successful Consultants Various studies have found that successful consultants often possess certain attributes:
• Good physical and mental health
• Professional etiquette and courtesy
• Stability of behaviour
• Personal effectiveness and drive; that is, responsibility, vigor, initiative, resourcefulness, and persistence
• Integrity; that is, the quality that engenders trust
• Independence, self-reliance, and ability to resist conforming to the opinions of others • Intellectual competence
• Good judgment; that is, the ability to provide sound, objective appraisals in their areas of competence and experience
• Strong analytical or problem-solving ability
• Creativity; ability to see the situation with a fresh perspective
• Articulateness and persuasiveness, with above-average oral, written, and graphic communication skills
• Psychological maturity; readiness to put people, things, and events in perspective and act calmly and objectively without being diverted from a sound, logical, and ethical course by outside pressure
• Interpersonal skills for building client relationships, such as gaining trust and respect, involving them in solving problems, applying principles and techniques of change, and transferring knowledge
• Receptiveness to new information and the points of view expressed by others
• Oriented to the people aspect of problems In addition to these attributes, consultants also require an all-encompassing knowledge of the business.
They must recognize where they lack skills and seek to acquire those skills or employ people who have them.
3. Assessing Yourself and Your Marketable Skills p>
After you have completed the exercise, you will have a comprehensive guideline for your successful consulting business.
Review it, update it, and modify it on a regular basis.
If you have taken the time to thoughtfully complete the exercise, you should feel confident that you have developed a realistic framework for the next important stages of your business development.
4. Resources for Identifying
Consulting Opportunities Increase your awareness
of additional consulting opportunities by using the Bibliography and the resources outlined in this section.
4.1 Consulting newsletters and websites
There are many free information sources that you can use to stimulate new ideas on managing your business and marketing your skills.
The directory website http:// consulting.about.com
is a good place to begin your search for websites and newsletters designed to keep you up to date on consulting opportunities and events related to the consulting industry.
4.2 Newspapers and magazines
Read as much as you can about current events relating to your specialty.
In addition to local daily newspapers, read The New York Times,
The Washington Post, and the Wall Street Journal;
in Canada, read the Globe and Mail and the National Post.
These national newspapers provide interpretations of trends and important events that could affect your business.
There are numerous excellent business magazines that can stimulate further ideas and provide sources of contacts and information.
Visit an international news outlet for an indication of the publications available.
Public libraries are also good places to find free, current business magazines and international newspapers.
You should also subscribe to trade journals related to your area of interest, and subscribe to any free mailing lists relevant to your specialty area.
4.3 Consulting and professional associations
To find professional associations related to consulting in your local area, look for the reference book Consultants and Consulting Organizations Directory in public libraries. It lists consultants in various specialties throughout the United States and Canada.
If there is a local association of consultants, either of a general or a specialized
nature relevant to your needs, try to attend a number of meetings and ask a lot of questions.
Contact with the associations will provide you with an opportunity
to obtain information on your specialty from newsletters, publications, meetings,
or other consultants.
4.4 Government agencies and publications
Depending on your specialty, you may want to sign up for free or low-cost publica publications distributed to the public by government organizations or departments. Various levels of government are the major purchasers of consulting services;
very large sums of money are expended each year directly and indirectly for that purpose.
FedBizOpps (www.fbo.gov) is the US government’s portal site for information
on federal contracts.
The Business to Government Market website
(www.b2gmarket.com) allows you to search for local, state, and federal contracts. State and local contracts can also be found at www.govcb.com.
In Canada, Merx (www.merx.com) provides access to opportunities in both the
public and private sectors.
4.5 Public and university libraries There is a vast amount of current, accessible research and information at your public or university library.
A wide range of information sources are available through library websites;
get a library card in order to access online databases for free.
4.6 Continuing education courses and seminars Universities and colleges offer continuing education courses and programs on many subjects related to business. Government agencies may also offer courses and workshops.
The Small Business Administration (SBA) in the United States, and the Business Development Bank of Canada (BDC) offer small business seminars and workshops on an ongoing basis.
For more personalized assistance, you may wish to look into programs that offer expert help to beginning consultants.
The SBA sponsors SCORE (www.score.org), an organization that provides
consulting for beginning businesses without charge.
In Canada, the bdc (www.bdc.ca) offers consulting services to those starting
out in small business.
They offer one-on-one coaching and mentoring services, as well as business and financial consulting.
4.7 Competitors Attempt to identify the competitors in your area and specialty.
Study their style and method of operation, how long they have been in business,
their marketing strategy, what they charge, and their clientele.
If they are successful, try to ascertain why and use this information to determine
how you can best distinguish yourself and find your niche in the market.
You want to know what makes your style unique if a prospective client were
to compare you and your competitors.
Setting Up Your Business
You have now assessed your skills, attributes, and abilities and have determined your area of interest and expertise. Various administrative matters have to be understood, considered, and dealt with before embarking on your road to success.
This chapter and the next ten chapters deal with the administrative fundamentals.
The challenging and fun part — that is, successfully marketing your consulting business — is explained later.
Before setting up your office and opening your doors to the public, many matters have to be considered.
Your fee structures, marketing plan, and business plan, which includes your
cash flow projections, will all determine how much revenue you must generate
to pay your overhead.
It is wise to be conservative when estimating anticipated revenue and the lead
time it will take to reach a break-even point.
Your legal, tax, accounting, and financial advisers will influence your initial decisions. These important aspects are covered in other chapters.
This chapter discusses how to establish the basics of an office while controlling your expenses. With thorough review and comparison of the costs of the key overhead areas, you should require minimal capital investment and keep your overhead and risk at a safe level.
1. Start-Up Costs And Monthly Expenses
There are many factors that determine what your costs and expenses are going
to be, such as whether you are going to use your own home or rent an office,
whether you are going to buy, finance, or lease new or used furniture and equipment, and whether you intend to hire staff or do the typing yourself.
Your individual finances and needs and your shrewdness and negotiating ability will clearly affect your overhead.
1.1 Start-up costs Start-up costs vary widely depending on your choices and circumstances. It is important to keep a record of your estimated and actual costs for overhead expenses as well as for your cash flow projections during the start-up and first year of operation.
The date to pay column should assist you in scheduling your cash flow or other funds to meet the initial expenses. You should be able to fill in the estimated costs after you have done your research thoroughly. Further details on aspects of start-up costs are covered later.
1.2 Monthly overhead expenses Naturally, monthly expenses will vary widely depending on the type of consulting service you are planning to operate.
1.3 Personal expenses Personal monthly overhead expenses obviously influence your cash flow needs and the amount of resources available to invest in your business.
When you prepare your business plan (see Chapter 6), you will take into account your personal needs. It will be helpful, though, to consider your personal cash flow needs while planning your business expense outlay.
2. Selecting A Name Selecting your name is an important decision both from an image and a legal perspective. It is essential to be aware of the implications of selecting your name from the outset.
2.1 General considerations Many consultants do business under their own names:
for example, “David R. Jones, Educational Consultant.
The business card and letterhead stationery would also show the address
and telephone number (with area code) and a brief description of the service.
The description could read, for example,
“Research studies and project management.” Many consultants prefer to use
their own name because they are offering a personal service and promoting
and selling themselves.
The drawback of using your name is that it implies a one-person operation;
this could cause a client to doubt your capacity to complete a project if you are
ill or injured.
For this reason, and by personal choice, some consultants prefer to use the phrase “and Associates” after their names.
This implies a business with more than one person and a resource base of skilled consultants. Many consultants contract with sub-consultants as required, depending on the job project.
This cuts down on overhead, provides depth and flexibility, and expands consulting contract opportunities.
Other name variations include “Jones Educational Associates” or “Educational Consulting Associates.” It is important to describe the nature of the services you are offering and not limit the future development of your consulting service.
For example, if you are a hospital consultant, you may not want to state on your letterhead or business card “specializing in personnel development” if you could receive other spin-off consulting work outside the limits suggested by personnel development.
Don’t use the word “freelance,” as it may not project the professional image
you want to create. Some consultants prefer not to use their own name in the
firm’s name for a number of reasons.
One reason is that the consultant does not want an employer to be aware that a consulting business is being operated part time.
Another reason is that if goodwill
is developed under a company’s name rather than an individual’s, a higher price might be obtained if the consulting practice is sold.
If you decide to incorporate your business, you must have the name approved
by the responsible government department and the name must end in
Ltd. or Limited, Inc.
or Incorporation, or Corp. or Corporation.
Advantages and disadvantages of forming a corporation are discussed
in Chapter 4.
2.2 Fictitious name If you are operating your proprietorship or partnership business under a name other than your own, you are required in most jurisdictions to register your fictitious name.
Filing for fictitious names does not apply to corporations.
The procedures vary from area to area.
The costs generally range from $10 to $75. Ask your lawyer about
the requirements for your area.
The procedure generally is to fill out forms disclosing the people behind the name and, in some cases, to place an ad in the local newspaper or legal gazette outlining the information in the filing documents.
3. Selecting An Office Most beginning consultants operate out of their homes.
As the business grows, the decision might be made to move into outside office space. Normally consultants go to the client’s office, but occasionally clients wish to meet the consultant at the consultant’s place of business.
3.1 Home office There are several advantages to operating out of your home.
You save money on gas and rent.
The stress of commuting to work is reduced.
You are able to deduct from income tax the portion of your home you are using for business purposes.
(The tax deductions you can use when you have a home office are covered in Chapter 9.) Being close to the family is an important consideration for some consultants. There are also disadvantages to having a home office.
You may be distracted by your family members during the work day, or your
presence may be distracting to family members.
The mix of home and office dynamics could negatively affect your private life.
You could turn into a workaholic due to the proximity of your office.
Your home might be distant from your clients’ offices, which would make it difficult
for your clients to visit you.
If clients come to your home office on occasion, you would want your home
to present a positive impression and not to detract from your professional image.
Your home address on your stationery and business card could present
a questionable image to prospective clients who may wonder about your business competence.
Clients may view you as a freelancer and be more likely to question your fees.
Due to the limitations of working out of your home, you may wish to consider
a professional identity package provided by various office service businesses.
This includes a mail drop address and telephone answering service, as well as
other features you may desire.
The mail drop means having an address that is recognizable as a business and, depending on the location, as a prestigious address.
The staff at this location are able to receive or send out courier packages for you and receive envelopes or messages from clients who may stop by “your” office.
These services can generally be found under “Secretarial Services”
or “Stenographers — Public” in the Yellow Pages telephone directory.
A post office box number has a negative effect in terms of your credibility and business reliability, and should be avoided if possible. However, if you look
in the Yellow Pages under “Mail Box Rentals” you will see companies providing
a wide range of other services such as fax transmissions, email, courier, word processing, desktop publishing, photocopying, etc.
If you work out of your home, it may be an advantage to rent a mail box.
For security and marketing reasons, you may prefer to keep your home address confidential. Having a personalized telephone answering service connected to your telephone at home lets you know your telephone calls are being handled in
a professional manner whether you are at home or out making calls.
By keeping the answering service informed of your schedule for the day,
your callers will receive the appropriate response and know when the call might be returned. Generally, it’s not a good idea to use an answering machine;
it doesn’t present a professional image, callers get the impression that you are a one-person operation (which, of course, you are), and you may be perceived as a freelancer, which has a negative connotation to some.
3.2 Office outside of home You may wish to get an office outside your home when circumstances and finances justify it.
Having your own office address increases credibility and stature when dealing with clients or prospective clients. Studies have shown that consultants are able to collect higher fees for performing the same work when operating out of an office.
When considering an office location, factors such as expense, image of business address, your proximity to clients, and referral possibilities should be examined.
Try to look at your long-range goals over two years and imagine what your office needs might be. It is costly to pay for new office stationery and other start-up costs, and several moves may create an image of instability.
3.2a Office sharing arrangement
You may wish to look for an office with complementary professional or business tenants and prospective business clients. You have your own office and generally supply your own personal office furniture, but the rent expenses of the office and the receptionist’s salary are shared on a proportional basis by the tenants.
The secretarial expenses are negotiated depending on use.
If you do seek out a pooling arrangement, try to have a minimal notice period to leave the premises
You may wish to leave due to expansion, inability to pay the rent, or personality conflicts. It is fairly common to have a three-month notice provision.
Make sure that the terms of your rental relationship are in writing and signed by the necessary parties before you begin your relationship.
As a general caution, avoid sharing space with a client. You could have a falling out or the client could attempt to use your time for free or look on you as staff.
3.2b Sharing same private office
Two or more people may use the same office space. The parties agree on the costs of furnishing the office, unless it is already furnished, and an agreement is worked in terms of the hours and days of use.
Costs of this arrangement are negotiated on a per use basis.
3.2c Office rental package
There are firms in the business of renting packaged office space.
There can be anywhere from 5 to 50 tenants or more.
Each tenant has a private office, and there is a common reception area.
The office package arrangement is a good source of potential contacts for networking or prospective clients, depending on the mix of the tenants.
Telephone answering and office furniture are frequently included in the package price as well as a nominal number of hours of secretarial time per month.
The rental arrangement may be a minimum two- or three-month notice to vacate, or a six-month or one-year lease arrangement. Prices and terms of various office package arrangements may be negotiable if there is competition in that marketplace in your community. There are several other advantages of an office package arrangement. Other services that might be available to save you considerable money on staff and equipment include:
(a) Street mailing address — not a post office box number
(b) Postage metered mail for prompt delivery and a professional appearance
(c) Typing and desktop publishing — a variety of typestyles available on comcomputer for letters, reports, invoices, statements, etc.
(d) Secretarial services, including letter composition and editing using correct business language and form
(e) Photocopying — a bond copier with various features including collating could be available to produce quality copies on your letterhead, transparencies,
or address labels
(f) Word processing services with the advantage of speed, efficiency, and storage and retrieval capacity
(g) Data management and bookkeeping
3.2d Occasional office
You can rent a boardroom or an office for as short a time as an hour, a half day,
or a day.
The cost is negotiable.
The occasional office space can be found through office rental package services described earlier.
Some firms require that you have a telephone answering or professional identity package arrangement with them before you are able to rent occasional office space. 3.2e Leased space Leasing space does have its advantages, and it is most important that you consult your accountant and a competent lawyer familiar with commercial leases before signing anything.
You should shop around for space to make sure you have the best arrangement for your needs and to assist you in negotiating.
Leases are generally for a period of one to five years.
There are three basic types of lease payment formulas.
The terminology may vary, but the concepts are the same.
The first type, called a “net” lease, means that the base rent is the total rent.
In other words, the flat negotiated rate is the only monthly payment you have to make.
The second type of rent, “double net,” is similar to the first except you have to pay a pro rata share of any tax increases over the base tax period outlined in your lease.
If the taxes increase substantially, you could have extra overhead you had not anticipated.
The third type, “triple net” rent, can be very expensive.
The base rent is just the beginning.
All other landlord costs, such as taxes, insurance, maintenance, repair, improvements, management, and administration fees, are passed on proportionately to the tenants. This could increase your monthly rent by 50 percent to 100 percent.
The other problem with this type of rent structure is the resulting uncertainty
when you try to budget for your rental overhead expenses.
A variation of this third formula involves paying the landlord a percentage of your gross revenue. Naturally, for a professional consultant, this is an unacceptable arrangement.
Some of the clauses to be wary of when you are considering a lease include ones that restrict your ability to sublet or assign your lease, that restrict the use you intend for the premises, or that limit alterations or improvements to the premises;
clauses setting out liabilities and duties of the landlord and tenant; acceleration clauses in case of a default; and clauses requiring your personal guarantee if you are doing business as a corporation.
If you are still interested in signing a lease, attempt to negotiate as many attractive features as possible.
All leases are negotiable and there are no standard clauses.
Your lawyer can properly advise you and possibly negotiate the lease on your behalf. The following tips will help when you are negotiating your lease:
(a) Rather than negotiating a three-year lease, for example, try to negotiate a one-year lease with two additional one-year options.
This way you minimize the risk in the event you cannot afford the lease, or in case you need to expand or the premises are otherwise unsuitable for your needs.
(b) Consider offering the last two or three months as a deposit.
If you default the lease and leave before the end of the term, the deposit monies
go to the landlord and you are free of any further liability.
(c) Put in the lease that alterations or improvements you intend to make
will be at the landlord’s expense.
(d) Attempt to get the first few months free of rent as an incentive for you to
lease the premises.
(e) Try to get out of paying the last month’s security deposit rent if possible.
If it is not possible, try to negotiate with the landlord to pay you interest at
a fixed rate on the security deposit money.
Another factor in leasing space is the additional expense for furniture and equipment for your office and reception area, plus the additional costs of a secretary or receptionist. All these additional costs have to be carefully factored out to ensure there is sufficient cash flow to justify the commitment.
3.3 Equipping an office
Equipping an office is not too expensive if you buy secondhand furniture.
You can obtain good used business furniture from bankruptcy sales, auction sales,
or through the classified section in the newspaper.
The type and quality of furniture that you select naturally will relate to your type of consulting clientele and the image that you want to project.
There are certain basic things you need for your office, including desk, chairs, tables, lamps, bookcases, file cabinet, calculator, telephone answering device (optional), tape recorder (as a dictaphone, to record meetings, to record consulting or marketing ideas), card file and/or address file, clock, postage meter, and briefcase.
You will probably also need a computer, printer, photocopier, fax machine, and other communications equipment.
Here is an overview of some of the main types of communication equipment you should consider.
3.3a Computer It is likely you are already computer literate and have your own personal computer (PC) at home.
Your computer is an essential tool that will maximize your consulting capabilities.
A basic desktop computer or laptop may be all you need.
Producing documents, giving presentations to clients, working with graphics, maintaining lists of clients or other records, bookkeeping and accounting, or doing other financial calculations such as budgets or forecasts are all tasks that can be accomplished on your computer.
In addition, you may want to use your computer to keep track of appointments and scheduling information, to do project management or estimates, or for access to various online information services (e.g., Internet).
When deciding on which computer to buy, investigate the manufacturer’s customer support services and consider the following:
• Is there a three-year limited warranty on parts and labor, with a one- or two-day turnaround policy ?
• Does the manufacturer offer one year of free on-site service, extendible for an additional fee ?
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