6/2/2014 How to Build a World Class Consulting Business National Wellness Conference June 26, 2014 Patty Koppa, MPH Coaching Resilient Consultants Public Health Consultants, LLC pattykoppa@gmail.com Myth Busting 1. Consultants are people who borrow your watch and tell you what time it is, and then walk off with the watch. --Robert Townsend 2. A consultant is someone who saves his client almost enough to pay his fee. --Arnold Glasgow 3. I’m not unemployed. I’m a consultant. 4. How many consultants does it take to change a light bulb? We don't know. They never get past the feasibility study. REPUTATION IS EVERYTHING 1 6/2/2014 Breakout Session Objectives 1. Assess readiness to become a wellness/health care consultant 2. Begin an action plan to start and grow a consulting practice 3. Describe 2-3 greatest tips to become a resilient entrepreneur You have to be a salesman, you have to be a networker, you have to be an accountant and you have to handle every aspect of a business. You have to be really comfortable riding the waves. Kristin Osborne, Kensington Public Relations, Four Daughters Vineyard & Winery, Southeastern Minnesota. Quote from Minneapolis Star Tribune. “Free Agent is New Face of Minnesota Workforce.” Article by Adam Belz, September 1, 2013. 2 6/2/2014 Before You Dive In! 1. Types of Consultants 2. Definition of Consultant/Solopreneur 3. Reasons to Start a Business 4. IRS: Consultants vs. Employees Types of Consultants 1. Large firm consultants 2. Internal consultants 3. Independent consultants • • Solo Partnerships A Story About a Consultant, a Coach and a Therapist 3 6/2/2014 The Consulting Choice • Financial considerations • Fill in a part-time job • Need for a flexible second source of income • Encore careers/legacy • Entrepreneurial spirit • Need for more variety or challenge • Way to use your skills and leverage your talent • No longer interested in working for someone else The Consulting Choice • No current advancement opportunities • Laid off or about to be, or part of reengineering • Family circumstances, caregiving older parents, etc. • Desire to live wherever you want • Freedom…to follow dreams, live life on your own terms and choose work that aligns with your deepest values • Others? You are a consultant if…. • Your client can control and direct the end or results of your work, but cannot control the means or ways of accomplishing the outcome of the work. • You have an investment in the facilities you use when you perform services for someone else. • • • You agree to complete specific contract deliverables and are responsible for satisfactory completion of them. You are legally obligated to make good for failure to complete contract deliverables. You are not doing the “same work” you did during your full-time employment if you are hired as an independent contractor with your former employer. Your client does not withhold or pay any taxes on payments to you. You pay estimated taxes, which include federal, and state income taxes, and the entire FICA tax (15.5%). See handout: IRS Publication 15-A that describes the differences between an employee and an independent contractor 4 6/2/2014 Questions to Assess Readiness Strategic Readiness • What wellness/health care needs exist that I could help improve or solve? Will I serve as an “expert” in this area, and/or will I provide process skills? • What is my value proposition, product/service and niche? Am I comfortable selling myself? • How would I describe my competition? • What is my client profile? • What will I include in my business plan? • What cash flow will be required? What is my pricing strategy? • After one year, what will business success look like? What profit am I forecasting? • Is the timing right? • Who can mentor me? • How will I engage my network as I start up? Questions to Assess Readiness Operational Readiness • What office and electronic systems will I need for my business? • Will I need office space? If yes, are there cooperative options? • How will I get support with administrative & technical tasks? • How will I learn basic business skills? • What will I need to learn about negotiating strong contracts? Submitting stand-out proposals? • What type of insurance will I need? • What type of legal structure will I choose and what are the state and federal filing requirements? • Will I need an accountant, lawyer, and/or tech support services? • Will I be subcontracting work? • What professional associations will be helpful to join? 5 6/2/2014 Questions to Assess Readiness Personal Readiness • • How strong are my problem solving, decision making, project management, and time management skills? What relationship-building skills will I offer my clients? What resiliency skills will I bring to my work? How do I typically deal with and learn from rejection and/or failure? What key self-care strategies will I adopt and sustain? • How will I celebrate success? • What risks am I willing to take? What risks am I not willing to take? • How will I balance personal time with demands for travel, planning, office time, meetings, continuing education, networking, marketing and operational time? How do I effectively set boundaries? • In what ways will other people support me, e.g., family, friends, colleagues, etc.? • Where can I get entrepreneurial education and technical support on how to start a business? • Do I have a passion for doing this? What will I give and what will I get? Business Plan Defines and organizes your business, anticipates issues and explains how your outcomes will be achieved. • • • • • • • • • Executive Summary Business Concept & Mission Management Team and Ownership Market Analysis Marketing and Sales Plan Operations Plan Critical Risks, Assumptions & Contingency Plan Financial Plan See Handout “Business Plan Outline,” University of St. Thomas, Opus College of Business, 2014. Consultant Wipeouts • Not realistically assessing your readiness, expertise and capacity to consult. • Not doing your homework about niche before making the move. • Not having a client before resigning from a current job. • Having only one primary client. • Rejecting small projects out of hand. • Not asking for repeat business or referrals. • Not developing/updating business and marketing plans. • Not testing your market before you commit. • Not acquiring business management and financial skills. • Failing to strategically network; attend conferences. • Not being comfortable “selling yourself.” 6 6/2/2014 More Wipeouts • Not understanding payment gaps. • Under or over pricing your services. • Not understanding contract language, or not knowing how to negotiate a contract. • Not defining the client-consultant partnership in the contract. • Doing work for a client prior to having a contract. • Not clarifying a client’s invoice requirements and timing prior to beginning work. • Failing to prospect for new clients when you are very busy with current projects. • Taking current clients for granted when you are marketing your services. Even More Wipeouts • Getting involved in company politics if not contracted to do so. Not addressing client’s interest in change and sustainability. . • Defining deliverables in terms of your skills or product/s, instead of client outcomes. • Not using creative ways to market services, e.g., social media. • Not taking advantage of professional and personal development opportunities. • Not being part of a “consultant” community. • Not understanding the nuances of consultant time management. • Not managing the home office environment. • Not keeping adequate records of time and cash flow, etc. • Not outsourcing when appropriate. • Not having sufficient PC software skills. • Overlooking the web as a great source of information & networking Entrepreneurial Resiliency 1. You are resourceful and have superior communication and problem solving skills. 2. You don’t expect perfection and learn from mistakes. 3. You are perceptive and always have a “Plan B” in your pocket. 4. You radiate passion and purpose and believe in yourself. 5. You’re self-motivated and assess risk well. 6. You have a strong social support system. 7. You’re flexible and can adapt to change. 8. You have a bold vision and the steps to make it happen. 9. You take time for yourself. 7 6/2/2014 Confucius Says Choose a job you love, and you will never have to work a day in your life. 8 The Basics of Starting Your Own Business Quiz AARP, October 10, 2013, online Please circle answer 1. What steps should you take before starting your own business?  Take a hard look at your business ideas, your qualifications and your personal goals  Research and plan, plan, plan  Network  All of the above 2. What does building a business require?  A product or service  Thoughtful planning  Access to financial resources  All of the above 3. Which of the following is not required when running a successful small business?  Expand as quickly as possible  Know your product and how to sell it  Be passionate about what you're doing  Have a business plan 4. Which government agency helps Americans start, build and grow businesses?  Federal Trade Commission (FTC)  Small Business Administration (SBA)  Federal Reserve Board  Securities and Exchange Commission (SEC) 5. What is the name of an SBA resource partner that assists current and future small business owners?  Small Business Mentor Organization  Men's Business Development Centers  SCORE  Association of New Business Owners 6. The first step to starting a business is to write a business plan. What does a good business plan include?  Why your idea is workable  How your business will operate  How much your projected revenues and expenses will be  All of the above 7. Which of the following is the best way to fund your small business?  Use your retirement savings  Sell your house  Explore small business loans  Win the lottery 1 8. Why is it important to have a small business mentor?  To provide you with advice and guidance  To shower you with praise  To help you become a millionaire  All of the above 9. Creating a marketing plan can help you reach your target customers and effectively promote your product or service. Which of the following is not an essential component of a successful marketing plan?  To provide you with advice and guidance  To shower you with praise  To help you become a millionaire  All of the above 10. In addition to the SBA's website (www.sba.gov), what is a helpful online resource for current and future small business owners?  aarp.org/StartaBusiness  aarp.orgWorkResources  LifeReimagined.org/Work  All of the above Answers: 1. All of the above, 2. All of the above, 3. Expand as quickly as possible, 4. Small Business Administration (SBA), 5. SCORE, 6. All of the above, 7. Explore small business loans, 8. To provide you with advice and guidance, 9. Unlimited budget, 10. All of the above, 2 Department of theTreasury lnternalRevenueService Contents What's New Publication 15-A Reminders C a t .N o . 2 1 4 5 3 7 lntroduction 4 Employer's Supplemental Tax Guide 1. Who Are Employees?. 4 (Supplement to Publication I 5 (Gircular EfrEmployer's Tax Guide| Forusei" 2014 2. Employeeor IndependentContractor? 3. Employeesof ExemptOrganizations 4. ReligiousExemptionsand SpecialRulesfor Ministers s 3u 5. Wagesand Other Compensation . . . 6. Sick Pay Reporting. . . . 7. SpecialRulesfor PayingTaxes c! Ki -{ 8, Pensionsand Annuities . . . . 9. AlternativeMethodsfor Figuring Withholding 24 FormulaTablesfor PercentageMethod Withholding(for AutomatedPayroll Systems) es Wage BracketPercentageMethodTables(for AutomatedPayrollSystems) 3S CombinedFederalIncomeTax,Employee SoeialSecurityTax, and Employee MedicareTax WithholdingTables s.3 10.Tablesfor Withholdingon Distributionsof lndianGamingProfitsto TribalMembers gg How To Get Tax Help . ru lndex ?? FutureDevelopments relatedto For the latestinformation aboutdevelopments Publication 15-A,such as legislation enactedafterit was published,go to sssJig"gag€ff&_1"5€.. What'sNew Getformsand otherInformation fasterand easierby Internetat $ffi$.Sotv Dec23. 2013 Socialsecurityand Medicaretax for 2014. Thesocial securitytax rateis 6.2"/"eachfor the employeeand employer,unchanged from 2013.The socialsecuritywage baselimitis$117,000. The Medicaretax rateis 1.45"/"eachfor the employee from2013.Thereis no wage and employer, unchanged baselimitfor Medicaretax. Socialsecurityand Medicaretaxesapplyto the wages of household workersyou pay$1,900or morein cashor an equivalentform of compensation. Socialsecurityand Medicaretaxes apply to electionworkerswho are paid VoluntaryClassificationSettlementProgram(VCSP). Employerswho are currentlytreatingtheirworkers(or a or classor groupof workers)as independent contractors other nonemployees and want to voluntarilyreclassify theirworkersas employeesfor futuretax periodsmay be eligibleto participate in the VCSPif certainrequirements for Volunare met.To apply,use Form8952,Application taryClassification SettlementProgram(VCSP).For more information, visitlRS.govand enter.VCSP" in the search box. 2. Employeeor Independent Contractor? to controlhow the work resultsare achieved.A business may lack the knowledgeto instructsome highlyspecializedprofessionals; in othercases,thetaskmayrequirelitThe keyconsideration is whetherthe tle or no instruction. businesshas retainedthe rightto controlthe detailsof a worker'sperformance or insteadhasgivenup thatright. Training that the busrness gives to the worker. An employeemaybe trainedto performservicesin a particular manner.Independent contractors ordinarily use their ownmethods. Financialcontrol. Factsthatshowwhetherthe business hasa rightto controlthe businessaspectsof the worker's job include: The extent to which the worker has unreimbursed buslness expenses.Independent contractors are more An employermust generallywithholdfederal income expensesthan are employtaxes,withholdand payoversocialsecurityand Medicare likelyto have unreimbursed ees. Fixedongoingcoststhat are incurredregardlessof taxes,and pay unemployment tax on wagespaid to an whether work is currentlybeingperformedare especially generally haveto withemployee.An employerdoes not holdor pay over any federaltaxeson paymentsto inde- important.However,employeesmay also incur unreimwiththe servicesthatthey bursedexpensesin connection pendentcontractors. performfor theiremployer. Common-LawRules To determinewhetheran individualis an employeeor an independent contractorunderthe commonlaw,the relationshipof the workerand the businessmust be examined.ln any employee-independent contractordetermination,all information that providesevidenceof the degree mustbe conof controland the degreeof independence sidered. Factsthat provideevidenceof the degreeof control fall into three categories:behavioral and independence of control,financialcontrol,and the type of relationship the parties.Thesefactsarediscussednext. Behavioralcontrol. Factsthat show whetherthe businesshasa rightto directand controlhowthe workerdoes thetaskfor whichthe workeris hiredincludethe typeand degreeof: lnstructions that the business gives to the worker, An employeeis generallysubjectto the business'instructionsaboutwhen,where,and how to work.All of the folabouthowto lowingare examplesof typesof instructions do work. o Whenandwhereto do thework. The extent of the worker's investment. An independentcontractoroften has a significantinvestmentin thefacilitiesor toolshe or she usesin performing services for someoneelse.However,a significant investment is not necessary for independent contractor status. The extent to which the worker makes his or her services available to the relevant market. An independentcontractoris generallyfreeto seekout business opportunities.Independentcontractorsoften advertise, maintaina visiblebusinesslocation, and are available to workin the relevantmarket. How the busrness pays the worker. An employeeis generallyguaranteeda regularwage amountfor an hourly,weekly,or otherperiodof time.This usuallyindicatesthat a workeris an employee,evenwhenthe wage An independor salaryis supplemented by a commission. ent contractoris oftenpaida flatfee or on a timeand materialsbasisfor the job. However,it is commonin some professions, suchas law,to pay independent contractors hourly. The extent to which the worker can realize a profit or loss. An independent contractorcan makea profitor loss. Type of relationship. Factsthat showthe parties'type include: of relationship r Whatworkersto hireor to assistwiththework. . Written contracts describing the relationship the parties intended to create. o Whereto purchasesuppliesandservices. o Whether or not the business provides the worker o Whatworkmustbe performed by a specified with employee-type benefits, such as inEurance, individual. a pensionplan, vacation pay, or sick pay. o Whatorderor sequenceto follow. o Thepermanency of the relationship. lf youengage thatthe relationship will a workerwiththe expectation neededvariesamongdifferThe amountof instruction continueindefinitely, ratherthanfor a specificproject ent jobs. Even if no instructionsare given, sufficient evidencethat or period,thisis generallyconsidered behavioral controlmay existif the employerhas the right o Whattoolsor equipment to use. Publication15-A(2014) Page 7 yourintentwasto createan employer-employee relationship. o The ertentto which seruicespefiormed by the worker are a key aspect of the regular business of the company.lt a workerprovidesservicesthat area keyaspectof yourregularbusinessactivity,it is morelikelythatyouwillhavethe rightto directand Forexample,if a lawfirm controlhisor heractivities. hiresan attorney,it is likelythatit willpresentthe at torney'sworkas itsownandwouldhavethe rightto controlor directthatwork.Thiswouldindicatean employer-employee relationship. makes'frequent inany helper.A companyrepresentative site. Whena houseis finspectionsof the construction ished,Wallaceis paid a certainpercentageof its costs. He is not responsible for faults,defectsof construction, or At the end of eachweek,he presents wastefuloperation. the companywith a statementof the amountthat he has spent,includingthe payroll.The companygiveshim a checkfor that amountfromwhichhe paysthe assistants, liablefor theirwages.Walalthoughhe is not personally lace Blackand his assistantsare employeesof the SawdustCo. with ElmCorporation Example4. Bill Plumcontracted to completethe roofingon a housingcomplex.A signed whetheror not IRShelp. lf youwanttheIRSto determine contractestablisheda flat amountfor the servicesrenof fileFormSS-8,Determination a workeris an employee, deredby Bill Plum.Bill is a licensedrooferand carries Worker Status for Purposesof Federal Employment workers'compensation and liabilityinsuranceunderthe withthelRS. TaxesandIncomeTaxWithholdinq. businessname,PlumRoofing.He hireshis own roofers tax who aretreatedas employeesfor federalemployment IndustryExamples purposes.lf thereis a problemwiththe roofingwork,Plum Roofingis responsible for payingfor any repairs.Bill The followingexamplesmay help you properlyclassify Plum,doingbusiness is an independent as PlumRoofing, yourworkers. contractor. Example5. Vera Elm,an electrician, submitteda job estimateto a housingcomplexfor electricalwork at $16 'Example1. JerryJoneshasan agreement withWilma per hourfor 400 hours.She is to receive$1,280every2 Whiteto supervisethe remodelingof her house.She did weeksfor the next 10 weeks.This is not consideredpaynot advancefunds to help him carry on the work. She mentby the hour.Evenif sheworksmoreor lessthan400 makesdirectpaymentsto the suppliersfor all necessary hoursto completethe work,VeraElmwillreceive$6,400. under materials. She carriesliabilityand workers'compensation She also performsadditionalelectricalinstallations thatsheobtainedthrough contractswithothercompanies, insurancecoveringJerryand othersthat he engagedto Verais an independent contractor. assisthim.Shepaystheman hourlyrateandexercisesal- advertisements. overthe work.Jerryis not free rnostconstantsupervision to transferhis assistantsto otherjobs. He may not work TruckingIndustry on otherjobswhileworkingfor Wilma.He assumesno reExample. RoseTruckingcontractsto deiivermaterial theworkandwillincurno contracsponsibility to complete for Forest,Inc.,at $140perton.RoseTruckingis notpaid perif he failsto do so. He and hisassistants tualliability At times,Jan Rose, formpersonalservicesfor hourlywages.JerryJonesand for any articlesthatare not delivered. who operatesas RoseTrucking,may also leaseanother hisassistants areemployees of WilmaWhite. truckand engagea driverto completethe contract.All operatingexpenses,includinginsurancecoverage,are paid tile sef Example 2. MiltonManning,an experienced is ownedor rentedby Janand perform by JanRose.Allequipment to fulltime ter,,orallyagreedwith a corporation for all maintenance. Noneof the drivers sites.He useshis own toolsand she is responsible servicesat construction performsservicesin the orderdesignated by the corpora- are providedby Forest,lnc.Jan Rose,operatingas Rose is an independent contractor. The corporation Trucking, tion and accordingto its specifications. makesfrequentinspections of his suppliesall materials, work,payshimon a pieceworkbasis,andcarriesworkers' ComputerIndustry compensationinsuranceon him. He does not have a Example. Steve Smith, a computerprogrammer,is placeof businessor hold himselfout to performsimilar laid off when Megabyte,Inc., downsizes.Megabyte servicesfor others.Eitherpartycan end the servicesat anytime.MiltonManningis an employeeof the corpora- agreesto payStevea flat amountto completea one-time projectto createa certainproduct.lt is notclearhow long tion. that it will take to completethe project,and Steveis not Example 3. WallaceBlackagreedwith the Sawdust guaranteed any minimumpaymentforthe hoursspenton laborfora groupof houses. the program.MegabyteprovidesStevewith no instrucCo.to supplytheconstruction costs.How- tions beyond the specifications for the product itself. The companyagreedto pay all construction He per- Steveand Megabytehavea writtencontract,which proever,he suppliesall the toolsand equipment. conformspersonalservicesas a carpenterand mechanicfor videsthat Steveis consideredto be an independent and fore- tractor,is requiredto pay federaland statetaxes,and rean hourlywage.He alsoactsas superintendent to assisthim. The ceivesno benefitsfromMegabyte.Megabytewillfile Form man and engagesotherindividuals Income,to reportthe amount Miscellaneous cornpanyhas the rightto select,approve,or discharge 1099-MlSC, Buildingand Constructionlndustry Page8 Publication15-A (2014) paidto Steve.Steveworksat homeandis notexpectedor postage,andtravel,costsfor whichthe corpbrations have allowedto attendmeetingsof the softwaredevelopment agreedto reimburse her.Donnais an independent congroup.Steveis an independent tractor. contractor. AutomobileIndustry TaxicabDriver Example l. DonnaLee is a salesperson employedon a full{imebasisby Bob Blue,an autodealer.Sheworks six daysa weekand is on dutyin Bob'sshowroomon certain assigneddays and times.She appraisestrade-ins, but her appraisalsare subjectto the salesmanager'sapproval. Lists of prospectivecustomersbelong to the dealer.Sheis requiredto developleadsand reportresults to the salesmanager.Becauseof her experience, she requiresonly minimalassistance in closingand financing salesand in otherphasesof herwork.Sheis paida commissionand is eligiblefor prizesand bonusesofferedby Bob. Bob also pays the cost of health insuranceand group-termlife insurancefor Donna.Donna is an employeeof BobBlue. Example. Tom Sprucerentsa cab fromTaft Cab Co. for $150per day. He paysthe costsof maintaining and operatingthe cab.Tom Sprucekeepsall faresthat he receivesfrom customers.Althoughhe receivesthe benefit of Taft's two-wayradio communication equipment,dispatcher,andadvertising, theseitemsbenefitbothTaftand TomSpruce.TomSpruceis an independent contractor. Salesperson To determinewhethersalespersons areemployeesunder the usualcommon-lawrules,you mustevaluate eachindividualcase.lf a salesperson whoworksfor youdoesnot meet the tests for a common-lawemployee,discussed earlierin thissection,you do not haveto withholdfederal '' Example2. SamSparksperformsautorepairservices incometax from his or her pay (seeSiefu"i**/Srnployees in the repairdepartmentof an auto salescompany.He in section1). However,even if a salespersonis not an worksregularhoursandis paidon a percentage basis.Fle employeeunderthe usualcommon-law rulesfor income has no investmenlin the repairdepartment.The sales tax withholding, hisor herpaymaystillbe subjectto social companysuppliesall facilities, repairparts,and supplies; security,Medicare,and FUTAtaxes as a statutoryemissuesinstructions on the amountsto be charged,partsto ployee. be used, and the time for completionof each job; and checksall estimatesand repairorders.Sam is an emTo determinewhethera salespersonis an employee ployeeof the salescompany. for socialsecurity,Medicare,and FUTAtax purposes, the salesperson mustmeetall eight elementsof the statutory Example3. An autosalesagencyfurnishesspacefor employeetest.A salesperson is a statutoryemployeefor HelenBachto performautorepairservices.She provides socialsecurity,Medicare,and FUTAtax purposesif he or her own tools,equipment, and supplies.She seeksout she: businessfrom insuranceadjustersand other individuals and doesall of the bodyand paintworkthatcomesto the 1. Worksfulltimefor one personor companyexcept, possibly,for sidelinesalesactivities agency.Shehiresanddischarges herownhelpers, deteron behalfof minesherownand herhelpers'workinghours,quotesprisomeotherperson, cesfor repairwork,makesall necessaryadjustments, as2. Sellson behalfof,andturnshisor herordersoverto, sumes all losses from uncollectibleaccounts, and the personor companyfor whichhe or sheworks, receives,as compensation for her services,a largepercentageof the grosscollections fromthe autorepairshop. 3. Sellsto wholesalers, retailers, contractors, or operaHelenis an independent contractorand the helpersare torsof hotels,restaurants, or similarestablishments, heremployees. 4. Sellsmerchandise for resale,or supplies for usein thecustomer's business, Attorney Example. DonnaYumais a solepractitioner who renis officespaceand paysfor the followingitems:telephone, computer, on-linelegalresearch linkup,fax machine, and photocopier.Donna buys office suppliesand pays bar duesand membership duesfor threeotherprofessional organizations. Donna has a part-timereceptionistwho also does the bookkeeping.She pays the receptionist, withholdsand paysfederaland stateemployment taxes, and files a Form W-2 each year. For the past 2 years, Donnahashad onlythreeclients,corporations withwhich there have been long-standingrelationships.Donna chargesthe corporations an hourlyratefor her services, sendingmonthlybillsdetailingthe workperformedfor the priormonth.The billsincludechargesfor longdistance calls,on-lineresearchtime, fax charges,photocopies, Publication15-A(2014) 5. Agreesto do substantially all of thisworkpersonally, 5. Hasno subslantial investment in thefacilitiesusedto do thework,otherthanin facilitiesfor transportation, 7. Maintains relationship a continuing withthepersonor companyfor whichhe or sheworks,and 8. ls not an employee undercommon-law rules. 3. Employees of Exempt Organizations Many nonprofitorganizationsare exempt from federal income tax. Although they do not have to pay federal Page 9 How to be a World Class Consultant Readiness Questions & Action Plan Strategic Readiness • • • • • • • • • What wellness/health care needs exist that I could help improve or solve? Will I serve as an “expert” in this area, and/or will I provide process skills? How do I define my value proposition, product/service and niche? Am I comfortable selling myself? How would I describe my competition? What is my client profile? What will I include in my business plan? What cash flow will be required? What is my pricing strategy? After one year, what will business success look like? What profit am I forecasting? Is the timing right? How will I enhance and engage my network as I start up? Operational Readiness • • • • • • • • • • • What office and electronic systems will I need for my business? Will I require office space? If yes, are there cooperative options? How will I get support with administrative & technical tasks? How will I invoice? How will I learn other basic business skills? What will I need to learn about negotiating strong contracts? Submitting standout proposals? What type of insurance will I need? What legal structure will I choose and what are the state and federal filing requirements? Will I need an accountant, lawyer, and/or tech support services? Will I be subcontracting work? What professional associations will be helpful to join? Who will mentor me? Personal Readiness • • • • • • • • How strong are my problem solving, decision-making, project management, and time management skills? What relationship-building skills will I offer my clients? What resiliency skills will I bring to my work? How do I typically deal with and learn from rejection and/or failure? What key self-care strategies will I adopt and sustain? How will I celebrate success? What risks am I willing to take? What risks am I not willing to take? How will I balance personal time with demands for travel, planning, office time, meetings, continuing education, networking, marketing and operational time? How do I effectively set boundaries? In what ways will other people support me, e.g., family, friends, colleagues, etc.? Where can I get entrepreneurial education and technical support on how to start a business? Do I have a passion for doing this? What will I give and what will I get? How to be a World Class Consultant Readiness Questions & Action Plan First answer the strategic & operational readiness questions on the back of this page, and review the Consultant Wipeouts from the PowerPoint. Actions Public Health Consultants, LLC, pattykoppa@gmail.com How When/Where Who Outcome Business Plan Outline Before starting any new business or expanding an existing business, you should develop a business plan to define and organize your business, anticipate problems, and explain how your results will be achieved. The business plan is also necessary to raise capital from lenders or investors. Begin your business plan with a title page including your business name and complete contact information. The plan narrative should be no more than ten pages plus the financial plan. 1) Executive Summary The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest. The executive summary should highlight the strengths of your overall plan and therefore be the last section you write. However, it usually appears first in your business plan document. a) b) c) d) e) f) Description of business concept Problem being solved Who we are What we sell Who we sell to Financial summary 2) Business Concept and Mission This section of your business plan provides a review of the different elements of your business. Explain your products and services. This is akin to an extended elevator pitch and can help readers and potential investors quickly understand the goal of your business and its unique proposition. Many companies have a brief mission statement, usually in 30 words or fewer, explaining their reason for being and their guiding principles. a) Describe the nature of your business and the marketplace needs being satisfied. b) What is your value proposition? Why will customers buy from you? c) What is your mission? What is your business purpose? 3) Management Team and Ownership This section should include your company's organizational structure, details about the ownership of your company and profiles of your management team. What is their background and why are you bringing them into the business? What are they responsible for? a) Describe the management team and their experiences and relevant accomplishments. b) How much of personal cash are the owners willing to invest? 1|Page Business Plan Outline c) Do you have outside advisors? If so, who are they? d) Identify any missing management pieces. 4) Market Analysis How much do you know about the people you want to sell to? Do your products appeal to certain population groups? You also want to show what's going on with this market (growth, trends), and how your business fits into the larger industry that meets this market's needs. The market analysis section of your business plan should illustrate your knowledge of the market and of your competitors. a) b) c) d) e) f) Identify your target customer. How many are there? How many in the future? What is your value proposition? Why will customers buy from you? Identify major competitors, substitutes or other options for customers. What are their strengths and weaknesses? What will their reaction be to your business? 5) Marketing and Sales Plan Your marketing and sales plan should broadly outline three things: how you differentiate your business from your competitors; how you will communicate that message to your target audience; and how you will deliver your product or serve. Identify what sets you apart from the competition. An important part of how you market to your customers will be the pricing of your products or services. What will your customers pay? How did you come up with that price? How are you going to get your message to your target customer? If you think about the common traits of each customer group, which type of advertising is more likely to find them and speak to them? How will your product be delivered to your customer? Will you sell direct to your customers? Do you sell online and then have your orders shipped direct from a storage location to the customer? Will your products be delivered to a store who will sell to your customers? There is no single way to approach a marketing strategy; your strategy should be part of an ongoing business evaluation process and unique to your company. However, there are common steps you can follow which will help you think through the direction and tactics you would like to use to drive sales and sustain customer loyalty. a) What is the marketing message you want to convey? Who are you, and what sets you apart from your competition? b) Where will the message be carried? How much will it cost? c) What is your pricing strategy? d) What is your distribution strategy? How much will it cost? e) Identify actions, timelines, costs and responsibilities for carrying out the plan. 2|Page Business Plan Outline 6) Operations Plan Explain the daily operation of the business, its location, equipment, people, processes, and surrounding environment. Address each of the following topics: a) b) c) d) e) f) g) h) How will your products or services be produced? Where will you be located? Why? What are your credit policies? Will you be hiring employees? How many? How much inventory will you need to carry? Who will be your suppliers? Will they offer you credit terms? What issues will you have with licensing, permitting, zoning, regulatory, etc.? Other 7) Critical Risks, Assumptions, and Contingency Plan The success of your business as anticipated in this plan relies on assumptions with respect to anticipated revenues, costs, the economy, etc. Most businesses will experience episodes of distress. Survival will depend on how well you are prepared to cope with them. Your contingency plan should anticipate potential threats to your business and how you plan to overcome them. 8) Financial Plan Describe how the sales forecast was developed. How do these numbers compare with others in the business? Provide the details that support your projected expenses. Remember that if you anticipate losses in the short term, those losses need to be funded from somewhere. You banker will not let you carry a negative balance in your checking account. You should have at minimum the following financial schedules: a) b) c) d) Schedule of start-up costs and source of funds Schedule of capital expenditures First year of projected Profit & Loss Statement by month. Investors and/or lenders will also want three years of i) Profit & Loss Statements ii) Cash Flow Statements iii) Balance Sheets 3|Page “How to Build & Promote a World Class Consulting Business” Resource List ARTICLES Blanchard, M.H, BA, CMC, MCC and L.J. Miller, BA, MA, MCC. (June 2010). Coaching and Consulting. Choice Magazine, Volume 8, #2. Hargis, C. C. Lean Time Pursuits: Becoming a Better Consultant (and Person) on Your Off Days. Journal of Practical Consulting, vol 3, 25-27. ONLINE DOCUMENT Thorsgaard, Claus. (August 1, 2013). Four Benefits of the Agile Consulting Firm. Consulting Magazine. Retrieved September 28, 2013 from http://www.consultingmag.com/article/ART1090557T BOOKS Adams, S. (2013) How to Fail at Almost Everything and Still Win Big. Portfolio Publishing: Publication Date October 2013. Aulet, B. Disciplined Entrepreneurship: 24 Steps to a Successful Startup. New York: Wiley Publishing. Cagney, P. (2010), Nonprofit Consulting Essentials: What Nonprofits and Consultants Need to Know. Alliance for Nonprofit Management. Pregill, M. (2011). Become One: Choose Sanity Over a Job and Become a Consultant. Rojo Press. Ries, E. (2013). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Random House, Crown Business. Weiss, A. (2011). The Consulting Bible: Everything You Need to Know to Create and Expand a Seven-Figure Consulting Practice. New York: Wiley Publishing. KEY WEBSITES http://www.entrepreneur.com/startingabusiness/index.html http://www.sba.gov/content/follow-these-10-steps-starting-business http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Starting-aBusiness http://www.encore.org