GETTING REVENUE
These are some considerations for generating income.
2.1 Finding Clients
2.1.1 Sources (where you find clients)
- Network and reputation are usually the most important.
- Word of mouth and referrals may suffice. (“Let them call you”).
- How are you going to build your network?
- Consultant directories (ASA, etc.): Understand the type of people who would be browsing such lists.
- Freelancing platforms (Upwork, etc.). Understand the type of work available in each platform.
- Formal tenders/RFPs (requests for proposal; refers to a formal process for soliciting proposals).
- It can be done even by independent consultants. However, they are very labor-intensive, and you will likely need to partner with others for complementary skills. They are generally not looking for one-person teams.
- You have to find these opportunities; government opportunities often require acceptance or subscription of some sort (different by federal/state/local; generally no cost but requires effort).
- There may be considerations for set-asides (preference given for certain business attributes) and certifications (small business, minority-owned, women-owned, etc.). This is different by state, local, federal, etc.
- Subcontracting:
- With complementary consulting firms/consultants (of equal caliber).
- As a junior consultant to larger consulting firms or to more experienced consultants (pay may be low but the experience will be gained).
- This article is a good summary.
- Advertising: effectiveness usually limited. (See below under Developing Awareness.)
- “Cold calling” generally does not work (but sometimes it does).
2.1.2 Business Development
- Proactive business development
- This is when you reach out to prospective clients to (eventually) get business.
- Building relationships is important. Do not burn bridges.
- The sales cycle (time from first contact to closed sale/contract) depends on your sphere; it may be weeks, but may be up to 24 months in some cases.
- Reactive business development
- This is when clients come to you with a specific project or need.
- It can be quick if it is the fruit of an existing or well-nurtured relationship.
- Additional comments:
- Consider: do you want quality or quantity?
- There is a lot of trial and error. Sometimes, we get lucky!
2.2 Marketing
The specific needs and effectiveness depend on your sphere.
2.2.1 Branding and Collaterals
- Business Cards.
- Stationery.
- Website:
- Domain name and professional email address. Note that “free” email addresses (Gmail, Yahoo, Hotmail, etc.) can impose subtle restrictions if you want to send marketing emails (newsletters, etc.) to your existing and prospective clients.
2.2.2 Developing Awareness
- Thought leadership.
- Blogs (consistency is key).
- White papers.
- Speaking engagements/conferences.
- Podcasts.
- Webinars
- Journal publications.
- Other publications.
- Social media (see below).
- Newsletters: Create your own mailing list to keep in touch with clients and prospective clients. Be at the top of their mind.
- Social Media: Consistency is important. How active should you be?
- Twitter
- LinkedIn
- YouTube
- Others
- Advertisement: It is advisable to know whether it works before you spend substantial money on it (experimentation is OK; investment: think about it).
- Google Ads / Paid.
- Paid social media posts.
- Paid ad in newsletters.
2.3 Pricing and Billing
2.3.1 Setting Rates
- Your rates will depend on:
- Your niche.
- Your setting/industry vertical/etc.
- Your seniority/level of experience.
- Type of work: advisory vs. “labor” (skill work; including professional services/staff augmentation/outsourcing).
- Hourly vs project-based (aka unit price)
- How well defined are the deliverables?
- Type of work (see above)
- If hourly, do total cost estimates (for the purposes of budgeting and setting expectations).
- Finding out the “going rate”:
- Starting at a consulting firm can give you an idea of what others charge.
- Ask others with similar niches, etc.
- Corporate benchmark.
- Some situations (e.g., government) will have max/limit/rate cards you could use as a guide.
- Some formal tenders and RFP will have stated budgets or limits.
- Considerations:
- What are you going to charge for? (How do you deal with your overhead?)
- Your cost vs. your revenue
- Value to the client vs. price. Should the client pay the same price regardless of who does it?
- Rush surcharge (especially for existing contracts)
- It could have some ethical concerns depending on the situation.
- The reasons for the rush are important.
- You may need language in the contract to allow charging extra for rush.
- Base vs. performance “bonus” (the latter tied to a specific result or performance metric).
- Annual increases, if multi-year relationship.
- You may need specific languages in the contract.
- Cost-of-living adjustment, increase in federal pay scale.
- Accounting for your own professional growth (especially early career)
- If you can do things faster, do you raise rates? Otherwise, you get paid less for being efficient (effectively take a pay cut).
2.3.2 Invoicing and Payment
- Set invoice frequency.
- Hourly: Bill at least monthly.
- Flat fee: Examples:
- 25% at contract execution, 50% in the middle such as first deliverable, 25% at the end
- 50% at contract execution, 50% at the end
- More frequent, such as percentage at each deliverable
- Depends on who you are working with.
- Relationship.
- Payment risk of the client.
- What do you want to show on your invoice?
- Details to be shown? Clients often have their rigors.
- Even if you do not show on your invoice, track your time in-house with a timesheet. Create your own or use a free online tool.
- If you use a DIY template and use invoice numbers, be sure to increment for each invoice.
- Consider free/near-free tools.
- Decide what you will do in case of non-payment.
- Will you charge late fees?
- Will you stop all work until you are paid what you are owed?
- Build it into the contract (see next section). Set the expectation upfront.
- Also, may want to build in “severability” language about what to do if the client does not like a part of the invoice. (The client will need to explain why they do not like it).
2.4 Contract and Other Legal
- Do not start work without a signed contract unless you really believe it is worth the risk, even for hourly work.
- Avoid spec work (work done for free/reduced fee on a speculative basis).
- https://www.nospec.com/what-is-spec Although this reference specifically pertains to graphic design, it is relevant to any consulting agreement.
- For statistical analyses, a client may want to withhold payment based on results.
- Consider a paid “sales engagement” (activities for selling your services) if scope and sizing are unclear.
- Legal contents of contracts: Consult an attorney. Some of these points will have bearing on the price charged
- Intellectual property (IP) assignment.
- What is included vs. not?
- Whose resources will be used?
- Transferred? How and when?
- Conflicts with other clients?
- Other items?
- Work products and associated rights.
- Non-disclosure agreement (NDA; a.k.a. confidentiality agreement).
- Data security/privacy agreement. Note that this protects something different from what the NDA protects.
- Depends:
- Non-compete: an agreement to not pursue competing interests. It may be for a type of project, type of client, specific market, etc. If you currently work for an employer, this may mean that you are not allowed to work with any client or potential clients of your employer, or anyone you have come into contact with through your employer.
- Non-solicitation: aka non-poaching; e.g., not hiring employees away from the client (or from your current employer as the case may be).
- Other items.
- Time limits on the items above.
- Scope of Work.
- Specific activities and plans.
- In scope AND out of scope.
- Delivery expectations:
- Deliverables.
- Objective results of your service. It is important to state exactly what you will be paid for. For example, if the statistical results do not support their desire, they should still pay you.
- Acceptance criteria (of deliverables and/or the service).
- Expectations for the client (participation, responsibilities, etc.).
- Assumptions, limitations, dependencies.
- Estimated timeline: recommended to be a relative timeline, not absolute.
- Logistics.
- Budget/pricing.
- Others as appropriate.
- Working with a third party.
- Will you have contractors/subcontractors?
- Will you be a contractor/subcontractor to another consulting firm?
- Contractual arrangement vs. go-to-market may be different (white labeling joint)
- Who will be prime vs. who will be sub?
- The amount and the complexity of paperwork will depend on a number of factors, including the type/size of client, the extent of things to be protected (on both sides), level of formality required, etc.
- Handling of the expenses (including who pays for them).
- Incidentals.
- Usual-and-customary office expenses.
- Travel expenses.
- Travel time (if hourly).
- Other expenses.
2.5 Collaborative Delivery
You may need other professionals with complementary skills to deliver a project. It is important to have a network of professionals you can trust, including former colleagues, former classmates, and friends. Be careful with personal relationships. Contracts and NDAs are important regardless of any relationship.
Some sources include:
- Consultant and other professional directories.
- Professional Associations and Networks.
- Mailing lists.