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Thursday, May 19, 2011

How to Write a Business Plan for a Consulting Business | Inc.com

 

There are four key areas that you should focus on when developing a business plan for your consulting business.

By Darren Dahl |  Apr 14, 2011

If you've found yourself holding a pink slip from your corporate employer or perhaps are just tired of the old 9 to 5 grind, one of the best ways to get back on your feet might be turning your experience and skills into a consulting gig since just about anyone who possesses specialized skills can hang out a shingle of their own. But before you do, you might want to consider taking the time to create a business plan for your new venture, which will not only help you map out the opportunities before you, but also the threats.
While business plans doesn't appeal to everyone, especially if you don't ever expect to raise capital for your business, it can be a critical factor in getting your business off the ground, says Jennifer Leake, a certified management consultant and founder of Consultants Gold, an online community dedicated to helping consultants run their ventures successfully.
That's why, as you get started, Leake offers the following tips for developing a plan:

  1. Write it! "Putting it on paper requires far more thought than just having it in your head," says Leake.
  2. Keep it simple so that you revisit it often—so don't make it too long or too complex, she warns.
  3. Spend the lion's share of your time defining your niche and why you are uniquely situated to serve it. "If you can't succinctly articulate what your business is selling, you'll never get people to buy," says Leake. 
  4. Don't create your plan in a vacuum. "You'll develop a better business plan if you have feedback, and you'll be more likely to take action if you have accountability from mentors, coaches, or success partners," she says.

But crafting a business plan for your new consulting company doesn't mean you should stick to the average template you can find online, as you should spend your time focusing on the elements that most often make or break companies in your industry.
"Writing a business plan for a consulting firm sounds fairly straightforward because there are so many who call themselves 'consultants,' but it can be quite difficult for many reasons," says Michael Hermens, president of Finance Forward, a financial advisory firm in Dallas.
That's why Hermens says that you should focus on four key areas when fleshing out your business plan:

1. Value Proposition
Answer this question: What is your specific value proposition?
"Thousands of ex-IT programmers are now 'Social Media Consultants,' " says Hermens. "What do you do that thousands of other people don't?"
The keys to building a solid value proposition are to give decision makers solace that they made the right decision, he says, which can be done in three ways: 1. Offer a service guarantee, 2. Build and take prospects through a well-defined methodology, or 3. Specialize so narrowly that it is easier to increase your stature. "The challenge with a guarantee is that larger firms don't normally purchase on that basis and smaller firms generally take a service guarantee as a tacit admittance of being mistake prone," says Hermens. "A well defined methodology or approach takes a while to build, but is well worth it for prospects who do not know you. Narrow focus helps potential consultants gain exposure, increased stature helps clients be satisfied with their hiring decision."

Dig Deeper: Nobody Buys a Value Proposition


2. Target Market
Answer this question: What is the best target market for you, or do you hunt every potential client that might possibly need your services?
"Understanding your target market is the most difficult planning activity," says Hermens. But developing an understanding of the competitive landscape is crucial, particularly go-to-market and pricing strategies, as well as the specific problems that the industry or market segment is trying to solve. "Gaining insight into how companies in your industry go to market, the basis on which consulting firms compete, matters," he says. "In strategy consulting, it might be references of former clients or the published knowledge share that gets clients interested. In large IT deployments, it is probably the strength of the methodology. With forensic consulting, your name and personal credibility is a huge selling point." In other words, determining how you should go to market, how (or how much) you charge your clients, and your familiarity with specific industry jargon and problems the industry is trying to solve, are crucial in planning your consulting business, according to Hermens.
One approach offered by Beth Corson, founder of Your FundingKey Advisors, is to choose a few industries and then outline the size and type of businesses that you'd like to work within those industries. "Rather than the desperate approach of taking any client that comes along, be selective and create a clear road map of where you want to go," she says. "Several years from now, your client roster should be fairly close to the plan that you make now. By working with similar clients in a specific industry, your company creates a level of expertise that makes it easier to perform well and get new clients because you understand their unique challenges and how to overcome them."

Dig Deeper: How to Define Your Target Market

3. Marketing
Answer these questions: How do you market your consulting business? What tactics do you employ to get in front of decision makers to evaluate your offering?
There's no question that in order to get your new consulting venture off the ground, you'll need to market your skills and experience to potential clients. That can be difficult, though, when you're a sole proprietor, since time spent marketing is time you're not billing for. While you can always hire an outside firm to help, your fledgling business might find the cost prohibitive. The answer, then, is to be creative in finding ways to promote your offering. One way to do that could be through landing public speaking engagements, which can be very effective at promoting your knowledge and point of view on your industry's challenges, says Hermens. Another option can be to partner with other companies that might offer complementary services to your own, a tact that may also help you build experience in new areas. But, at some point, you must develop your own client relationships independently if you want to keep your company growing.

Dig Deeper: How to Promote Your Consulting Business

4. Employees
Answer these questions: If you have employees, what is the best way to deploy them, given the reality of project work? Do you plan to pay them hourly, by confirmed project, or salaried?
"The issue here is how do you leverage yourself to grow revenue?" says Hermens. "Consultants who develop their brand can write books and charge an hourly rate, but they still cannot serve two clients simultaneously. Leverage allows your consultancy to flourish as your company takes on more projects." The key, then, is to think about how you align revenue arrangements with employee compensation and how to pay employees to ensure they are available when you need them by asking yourself questions like: Do you pay a salary and risk a lull in projects? Or, perhaps you pay employees on a project basis, only when they work, risking their availability when you get a new contract? "The goal here is to align revenue with employees compensation in the beginning as your consultancy grows," says Hermens. "Once your business becomes large enough, put key people on a salary, with performance bonuses. They will stick with you, have learned your go-to-market strategy, and know your methodology inside and out."

Dig Deeper: The New Rules of Employee Compensation

Tuesday, May 17, 2011

8 Tips for Nailing Your Next Startup Job Interview

Alex Berg Alex Berg is the Chief Product Officer of Bonanza and Bags Bonanza. Bonanza is a marketplace focused on creating a browse-friendly experience that helps you discover unique items. Prior to Bonanza, Alex served in leadership positions with Wetpaint, Expedia and Blue Nile.

While unemployment remains high, some sectors are hiring at a breakneck pace. New startups are cropping up in cities across the U.S., with hotspots emerging in New York, Chicago, Austin, Seattle and, of course, San Francisco and Silicon Valley. If you’ve been limiting your job search to more established companies, you might just be missing out. For every Twitter, Groupon and Zynga, there are dozens of smaller-stage companies emerging and hiring everyone from programmers to interns.

However, when it comes to hiring decisions, startups are a breed of their own. With their unique value systems, knowing a startup’s particular “fit” criteria can mean the difference between a second round of interviews and being shown the door. Equally important, of course, is understanding how well the startup fits you.


1. Why “Fit” Matters


Startups are for believers. This isn’t to say that Pollyannas abound at your average startup, but most folks are there to make a significant impact. This is true with regard to their own day-to-day roles as well as the impact that their company makes on the world at large. Startups like to disrupt markets and challenge Goliath-like competitors. Getting everyone on board is crucial to their success, and the wrong fit stands out like a red-shirted crew member in a Star Trek landing party.

Fit goes beyond merely finding believers, though. In larger companies, you can often avoid interactions with the office jerk, but the small size and fox hole mentality of a startup can turn a jerk into a real morale killer. Not surprisingly, startups are laser-focused on making sure the fit is right. When there are less than a dozen employees in a company, every one really matters. The challenge is that what constitutes fit varies from startup to startup. Some startups celebrate collaboration and autonomy, while others are manically focused on productivity or technical innovation.

And, of course, fit is a two-way street. It has to be right for you, as well. Find out as much as you can about the culture before you go in. Check out LinkedIn and sniff out info from people in your own network. Read reviews on sites like Glassdoor, but take these with a grain of salt. Company review sites can be a haven for the disgruntled and startups likely don’t have lots of ex-employees anyway. Ask pointed questions of managers and individual contributors and see how their answers line up. Don’t compromise any strongly held beliefs and don’t expect the startup to adapt to you either. If the fit is not right, be ready to walk away — buyer’s remorse of the career variety is the worst kind.


2. Getting Noticed


Once you have your sights set, the first thing to do is get on the radar. Startups’ focus on fit makes them a fairly incestuous lot. They tend to hire friends and former colleagues, so relationships really count. The best way to get noticed is not through the front door. Hop on LinkedIn and comb through your contacts. There’s a good chance that someone in your extended network knows someone who knows someone who can get you in touch directly. Take the burden off of your contact by making it clear you aren’t asking for a recommendation, only that they pass you along.


3. Spring Cleaning


While you’re mining your network, make sure your LinkedIn profile is current and nicely polished. A pretty resume template looks very “1997,” and many startups have a bias against those not taking advantage of what they consider superior tools. Besides, at some point, the decision maker is going to pour over your profile looking for someone who can provide an unsolicited reference. So make sure your skills and job history are current and your endorsements are strong.

Lastly, do yourself a favor and Google your own name before they do (and they certainly will). Make sure your online presence is the very best version of you. You don’t need to eliminate your personality, but that late night tweet or old spring break photo might be perceived unflattering.


4. Do Your Homework


Before your interview, find out who you will be meeting with. Get the names of your interviewers and research their backgrounds. You might even get lucky and know someone who has worked with them and can give you the inside scoop. When asking for feedback on a company or prospective manager, resist the temptation to send the easy email. Offer to buy a coffee instead. In a world where emails get forwarded fast, you’ll find people understandably reluctant to dish online. When candor matters, cappuccinos are currency. Even if you don’t have a direct connection, understanding your interviewers’ unique backgrounds can give you insights into how they think and what they are looking for.

When candor matters, cappuccinos are currency.

Preparation goes beyond the interviewers, though. Get to know the company’s products and get to know them well. Have pointed questions and suggestions written down and ready for discussion. Candidates who don’t bother to try a company’s products demonstrate an appalling lack of interest and are often shown the door.


5. Showing You Have What it Takes


Startups don’t want people who do what’s asked of them and little more. They want people who genuinely love what they do. Be ready to tell multiple stories about how you went above and beyond the call of duty. If you don’t have any examples in your work experience, create one as a side project. Taking on an extracurricular project shows passion, curiosity, and enthusiasm — characteristics that are incredibly attractive to startups. When interviewing engineers, my teams always look for “tinkerers” — engineers dabbling in Ruby on the side, or designers escaping their day-to-day template work with more exciting outside projects. Demonstrate that you’re more than a solid contributor and have all-star potential, and remember that showing is always more powerful than telling.

A close second to having initiative is being adaptable. In a world where terms like “fast failure” and “pivot” are celebrated, you have to be ready to flex. Startups change direction. Sometimes it’s simply a collection of tactics, but on occasion it’s the entire company strategy. Prove you’re not just tolerant of change, but actively embrace it. If you were a part of a new initiative at your previous employer, be ready to tell the story.

Startups also value candidates who are focused on what can be done, rather than on what cannot. This might sound obvious, but early stage startup teams in particular are focused on validating the appeal and market for their products. This requires rapid and repeated trial and error. What makes this possible is a culture that champions what can be done, and done quickly. Startup productivity comes to a grinding halt when the focus shifts from the possibilities to edge cases. Demonstrate your openness to new ideas and creative thinking, taking care to build on the ideas of others rather than tearing them down.


6. Tilt Your Scale Toward “Work”


Every company talks about valuing a work/life balance, but the fact of the matter is that most startups’ scales are weighted more heavily toward work. If your situation requires a predictable 9-to-5 schedule and 40 hours a week, a startup probably isn’t the right place for you. If you are accustomed to longer hours and the occasional night or weekend, that’s the kind of thing they want to know.


7. Beware of the Oncoming Bus


Take care when referring to your previous employers and managers. While your last manager might have indeed been incompetent, you’re not going to earn any points by throwing them under the bus. If you do, you’ll come across as jaded and start raising big, red “fit flags.” Find the positive in your previous gigs and, when pressed about why you are looking, retain a positive outlook. If the situation warrants it, by all means be candid, but don’t be petty. No one hires that guy.


8. Follow Up


Don’t disappear once you’ve left the interview. It’s important that you not only stay top-of-mind but also that you build your own personal momentum as a candidate. Get business cards or email addresses from your interviewers. For extra points, go beyond the mere thank-you note that expresses excitement about the opportunity and add something to the conversation. Flub an answer? This is your chance to fix it. Have an epiphany in the car afterward? Share it. Continue to demonstrate passion and interest and you’ll rise to the top.


Above all, the most important thing you can do is find out what the startup uniquely values, ensure it aligns with your own interests, and then demonstrate that you’re the perfect fit. Startup teams labor over hiring decisions heavily. The skills conversation takes about five minutes. The fit conversation? That one can take hours.

8 Tips for Nailing Your Next Startup Job Interview