Consulting and delivering on “intangible” services
Early in my career as a consultant, a prospect said, “Yes, yes, I understand you offer strategy, but do you do anything?” I immediately changed my tag line to active verbs and clear deliverables, all the while offering “strategy.”
A colleague of mine has agreed to create a training presentation for small business contractors. I asked, “What kind of contractors?” “You know, contractors – service providers rather that product companies – like plumbers and consultants.” I nodded, knowing that service businesses have different demands from product businesses.
But then I said, “Yes, but… a plumber doesn’t have the same challenges as a business or marketing or social media consultant. You hire a plumber and you know what he will do – he’ll fix the plumbing. The successful outcome is the sound of flushing. When you hire a business consultant, you don’t know what the successful outcome sounds like. Strategists and marketing and business development consultants must sell intangibles – they have a different challenge in presenting what they do and how to value it. Everyone knows the value of the flush.”
This got me thinking about pitching, closing and delivering on the value of an intangible service that does not have an easily definable deliverable – like strategy or marketing or social media consulting. Of course, there are projects and initiatives to work on, but tracking the actual results of an engagement can be difficult. And if your engagement is ongoing, not project based, the challenge is more daunting.
Sales’ consulting has results in prospects and closed sales; business development has deals signed. Market intelligence consulting is usually project-based, and the final report is the deliverable. But marketing and social media consulting delivers results that are more vague, or more distant, because they support “awareness” which can be tracked but not necessarily to closed sales or deals.
And strategy is the worst – what does “strategy” translate into? Sometimes more clarity, and efficiency, and better margins, and more deals, and less wasted time by management, and more bandwidth for the CEO – but these are intangibles too, to a certain degree. Ultimately, there is likely to be success or business growth or a rise in valuation from your services. But those take time.
Many service consultants learn to “productize” the deliverables of their intangibles – they write reports, or white papers, or findings. Sometimes these are valuable, but too often these deliverables end up on the credenza after a first reading and are not integrated into the strategy of the business, especially if you are not involved in a long-term, ongoing engagement. And sometimes this gives “consulting” a bad name., because the client can remember the price but not the value.
Here are a few ideas for ensuring that your client continues to value your involvement:
Clarity: agreeing on expectations, expertise, process and deliverables.
The best way to approach proving the value of your intangibles is to work with the client in the beginning, both before starting the work and during the first 30 days of the engagement, to refine his or her (and your) expectations. Before the work begins, you will define the scope of work for the contract. But as soon as the work begins, you must have the client outline with you the best way for you to get inside the company to get a handle on your work. Then you can dig in. But, you must continuously refer back to your client on what you are seeing and learning, and what next steps you should take, even if you are used to initiating your actions yourself. Your client must buy into the process as well as your expertise and deliverables.
Communication: taking on a defined role in the company as part of your engagement.
Also, you may take on roles that the company is lacking, say, handling the communications with the Board, or functioning as an outside marketing division. This role and its actions must be approved by the client, and remove most of the burden of this role from his or her responsibilities.
Reporting: Tracking your work done (and value delivered) every month.
Let’s say you are on a monthly retainer and you are going along responsibly doing an excellent job of it. And let’s say that’s become so comfortable for all concerned that it becomes routine in the company. This is good news. But only if you repeatedly make clear to your client the details of your ongoing involvement, deliverables, and work effort. You are still a consultant, and will be one of the first to be fired if bad times hit.
So, you must report in every month, along with your invoice for the upcoming month, with a brief report of work committed during the previous month. Do not track your time (except internally for your own use), but list everything that was accomplished, every situation that was resolved, every meeting you attended, every task done that was not in your contracted assignment, and every deliverable produced, whether the client saw it or not. This can be a bulleted list from an XLS spreadsheet (wherein you can track your time but not copy that section to the client). A client savvy enough to watch his or her bottom line will review it every month and be reminded of your value as your retainer check is cut. A client too scattered to focus on this “administrivia” will be able to be reminded of what you have been providing, in case some trouble or misunderstanding arises (legal or otherwise). In all cases, it is the track and the proof of your deliverables and your value.
These strategies of clarity, communication and reporting will keep your engagement strong and your client satisfied. All it takes is a sustained discipline (which is its own secret to success).
Market, Network, Speak and Publish while you work
You know, now is a great time to make a big splash. Bad economies that run everyone down need a spark of light and you can be it. Is everyone around you bummed out? Move on out into a new energy and shine.
All entrepreneurs know they must continuously market and network no matter how busy they are. Entertainers, even famous ones, repeatedly speak of their culture’s dread, that “after this gig, I’ll never get work again.” And entrepreneurs and consultants, even if not plagued by such misgivings, are still unsure where the next gig is, after this one, or these. They know they can deliver excellent value and still have their contract terminated, usually ahead of less productive employees.
We have spoken about free agency for many years now, and it is a reality. So the imperative to be seen, to be out there, to make yourself known, applies equally to folks with real jobs. And for those with no jobs and no gigs, step right up.
Despite this economy, there are places to go and people to see and ways to be seen. There is speaking to do – just volunteer and contribute something of value. Start with smaller venues and with people you know, so you build a track record, then move up to larger venues. Get testimonials and post them.
There are blogs to write, and social networks to participate in, and many opportunities to offer up your special insights and knowledge. Make sure you watch your Google analytics to know which social networks are most responsive to your postings.
Of course, you should focus on offering that special knowledge that will get you seen by your next client or employer. You should hone your positioning in all your “appearances” – formal, informal and online, so folks can know what specialties you have to share.
The mission here is to create buzz, then create referrals. “Buzz” is that condition when folks say your name when a colleague or a stranger says “I have a problem with ….” The person saying your name may not know you well, but remembers meeting you or seeing you speak, or recalls your tag line or a post or something that connects your expertise with the solution to this problem. Buzz is industry-wide in your market or niche.
The next agenda is to create referrals. For this you must know who (and/or what kind of colleague) refers you the best work… is it attorneys? CPAs? Marketing or branding colleagues? Then you must focus in on your friends, colleagues and 2nd-level contacts from that referral base. And one lunch won’t do it. You must actually connect and re-connect and offer something of value to these referral sources. So make sure, first, that they address your target market, and that they know what you do. Use the same tagline repeatedly, especially when speaking with them. If they have a prospect, suggest precisely what they should do to send the referral to you (for example, they might email an introduction which includes a link to your website or your blog or whatever is your best online selling tool).
So, the time is now. Just do it. Don’t whine, don’t be too busy, or too tired. Just add it to your schedule and keep up. Your future depends on it.
First time consulting – a master checklist
The current economy’s recovery is looking seriously “jobless.” This is leading professionals to consider creating a consulting practice while they stay on the job-hunt. Some even plan to keep some consulting on the side once they are employed. There is no job security anymore, and we are all free-agents whether we choose it or not.
Recently I was asked to help a professional (who had always been employed) to jump-start his new consulting practice. So I wrote an initial checklist for him to consider. This was beyond the basic “how to start a small business” list about business licenses, incorporation, taxes, and so on, which is written about everywhere.
This list was about the subtleties of defining his intangible offerings, what would make him unique, what markets and targets would get him a paying gig with the best pay in the shortest time, and so on. So I thought to share it here, for all of you considering consulting for the first time, and for those of you who are already consulting, as a check-up list to revisit.
Define your unique value proposition: what is different about your offering from all the other consultants that sound like they do what you do?
Create language for selling your intangibles (including contracting, delivering and justifying them).
Create testimonials from your earlier work (wherever it was).
Create success stories from your work and reduce them to one-two sentences.
Create your initial tag line based on your unique value proposition.
Refine your target market, then your target niche(s)
o Refine UVP & tag line for each, if required.
o Prioritize your targets for the highest margin from them and best access to them.
Profile your ideal client.
o Go where they are to meet them – in person, online, at conferences, and so on.
Create a short screening-questions list for initial conversations to prioritize which to pursue.
Determine various pricing models, and when you will use each one. Eliminate some.
o Retainer, project fees, value pricing, hourly.
o Equity deals if appropriate, including getting options vs. grants of shares.
Refine language to explain why you do not write proposals, but only contracts.
Create standard contract(s)
o Design these to allow for quick production.
o Define your scope of work with the client before writing contracts.
Practice your negotiation skills –
o Selling your value in words and success stories.
o Defining your flexibility and boundaries.
o Saying no to some prospects early on.
o Finding the point of negotiation that is blocking the close (different for each prospect).
o Re-negotiating tactics to overcome this block.
o Exercising follow-up tactics for prospects you can’t close immediately.
o Letting some prospects go.
Create language and tactics for controlling expectations, time, schedules and boundaries.
Use tactics for providing ongoing proof of your value to your client.
Use strategies in negotiation and practice to get paid upfront, and ongoing.
o Negotiate for your fees ahead of your time commitment to work. Do not work without surety of being paid.
o Create your own understanding of when to stop work, and when (and if) & how to continue working in arrears (if you can afford to work in arrears). Then act on it.
Create an internal tracking system for monitoring your time commitment to each client.
Create an internal system for your private assessment of how much time you are spending building a high-margin consulting practice, and still having a life.
Follow good guidelines to balance work & life while running your own practice.
Of course this list is not comprehensive. And I know that many of us who consult do not keep our own houses in order as well as we can write lists. But it is useful to review our lists every now and again. And when starting out on a new venture, it is useful to know the terrain you must travel.
New economic models –all you can eat – consulting, cafés, barter
I evolved a new pricing model this year to handle my clients’ concerns about cash control and the troublesome economy: all you can eat consulting. This is a variation on value pricing: a defined set of offerings of expertise on a fixed-price retainer, committed for a guaranteed minimum number of months.
Deals can include a reduced price for an initial trial period for multi-year assignments, or a deferral of some of the fees for up to six months for a company still raising its initial capital, and these deals always include equity participation. Screening prospective clients for these deals must be deep and meet criteria that include significant success and exit in a short time frame. Controlling the time, deliverables, expectations and boundaries of this kind of an agreement are challenging, especially across multiple clients, but this can be handled. The structure is appropriate to the value delivered and the clients’ current needs.
I knew of some restaurants experimenting with charging a fixed price for any meal, but then I heard about the SAME Café (“So All May Eat”) in Denver http://www.soallmayeat.org that offers all-you-can-eat for pay-what-you-can. This means the diner can pay what they have or pay what they think is appropriate. If they cannot pay, they can volunteer an hour’s work in the Café in exchange for their meal. The Café is a success and is expanding its model to others.
This from an article in February 2009 http://tinyurl.com/djkltm ~
“SAME has a menu that changes daily but always features food that’s made from scratch and is largely organic. It has tables, chairs, bus bins, plants in the windows and overhead music (usually a mix of classic rock). But there’s one thing SAME doesn’t have: a cash register. There’s no credit-card machine, no change drawer, no receipt book. That’s because SAME doesn’t have prices. Diners come in and order — some ask for just a cup of soup or a small slice of pizza, while others go for a whole meal, maybe even seconds if they’re really hungry — and then pay what they want.”
The SAME café is combining new pricing models with bartering. Many consultants barter too. The alternative health community has long bartered among itself — masseurs, chiropractors, trainers, and others often exchange services without cash changing hands. And lately service consultants in business have been exchanging marketing or strategy or blogging or web development or web video services among themselves.
How have you changed your pricing structures to meet your customers’ needs?
Healing or Stealing? Paul Hawkins’ commencement address 2009 to University of Portland
[Y]ou are going to have to figure out what it means to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. Kind of a mind-boggling situation… but not one peer-reviewed paper published in the last thirty years can refute that statement. Basically, civilization needs a new operating system, you are the programmers, and we need it within a few decades.
There is invisible writing on the back of the diploma you will receive, and in case you didn’t bring lemon juice to decode it, I can tell you what it says: You are Brilliant, and the Earth is Hiring. The earth couldn’t afford to send recruiters or limos to your school. It sent you rain, sunsets, ripe cherries, night blooming jasmine, and that unbelievably cute person you are dating. Take the hint. And here’s the deal: Forget that this task of planet-saving is not possible in the time required. Don’t be put off by people who know what is not possible. Do what needs to be done, and check to see if it was impossible only after you are done.
There is a rabbinical teaching that says if the world is ending and the Messiah arrives, first plant a tree, and then see if the story is true.
Abolitionists were the first people to create a national and global movement to defend the rights of those they did not know. Until that time, no group had filed a grievance except on behalf of itself….and their goal was ridiculous on the face of it: at that time three out of four people in the world were enslaved. Enslaving each other was what human beings had done for ages. And the abolitionist movement was greeted with incredulity. Conservative spokesmen ridiculed the abolitionists as liberals, progressives, do-gooders, meddlers, and activists. They were told they would ruin the economy and drive England into poverty.
Ralph Waldo Emerson once asked what we would do if the stars only came out once every thousand years. No one would sleep that night, of course. The world would create new religions overnight. We would be ecstatic, delirious, made rapturous by the glory of God.
[Above are extracts from Paul Hawkins’ commencement address to the University of Portland in 2009. Its prose is lyrical. It is a call to action. I could not resist sharing it with you, and urge you to read the entire speech here: http://www.up.edu/commencement/default.aspx?cid=9456 ]
When they are 50: the next new entrepreneurs
I remember the highs of the early days of the Internet Boom, when many of my clients were under 30. One of them – a visionary in his 20s – IPO’d his B2B company in 1998 – because part of his gift was the vision to anticipate the market early enough to catch the wave correctly.
After the IPO, he told me his plans for the next 20 years – to build a war chest of capital to become a significant philanthropist by the time he was 50.
This lead me to reflect that his generation of entrepreneurs, now approaching 40 (the Gen X*), came of age (out of university into the business world) into a boom market, and the smart ones moved quickly to ride that economic wave. When the tech crash came in 2000, followed by the economic crash in 2001, they didn’t know what had hit them, because they had never been independent adults during a downturn.
I remember remarking then, that we would know which of these brilliant young entrepreneurs were the Rockefellers and J.P. Morgans and Steve Jobs and Bill Gates of their generations, around the time they were 50, when they were seasoned over several successes and failures.
I see many of them now, working on their 2nd or 3rd new idea, dealing with the current downturn and its lasting effects. Partners who had succeeded separately or together in earlier ventures got sufficient capital before the crash. Others, with one success, may have waited too long to settle on their next new thing, and having seed capitalized the concept with their own money, looked for Series A after September 2008 and found the fountain dry and the term sheets nasty.
Some successful entrepreneurs are showing the serial nature of their ideas, their market timing, and their clarity about exits. Others may be one-trick ponies, with only one good idea in them to execute, and are finished now, even if no one knows this. Time will tell, and we can keep watching.
The next Net generation, the Millennial’s*, now in their mid-20s, are starting their first ventures now, have finished their education, worked a bit, and moved on to entrepreneuring. They are quick and smart and determined to contribute something new to the world.
It is heartening to me to see so much talent in the Net generation now turning 40, and the one now turning 25. We are surrounded by the riches of ideas and the courage of the entrepreneur, in good times and bad. What a fine e-ticket ride!
*See William Strauss and Neil Howe’s Generations: the history of America’s future, 1584-2069 and their Millenials Rising: the next great generation.
Owning What Is Created
Summary: the second in an intermittent series on lawyers and startups—this one on owning what you create. Basically, a written agreement must affirmatively assign rights of anything put to (digital or other) paper.
This is the second in a series of posts about the landmines startups face when they skip using lawyers. You can indeed not use a lawyer, just pay attention to what has to be done. And, as usual, this is not legal advice.
OK, so you have a few employees and some independent contractors–let’s say someone building your website and someone programming your nifty new mobile app.
So who owns what gets created? The basic principle is that the person that creates something owns it, with some exceptions–among them employment or an agreement assigning rights.
You Make It, You Own it.
Generally, what employees create while employed is owned by the employer, without the need for a written agreement. But to be safe, many companies have employees sign an assignment agreement, also known as a Proprietary Rights & Inventions Agreement. This expressly specifies what is and is not owned by the employer.
Look at it this way. It is rare that a company does not have employment agreements for key employees (say, the core management team). If you are looking for venture capital, you can be certain that such agreements will be nothing short of mandatory.
For the independent contractors, the law is pretty explicit. Typically, an agreement is necessary, one that either assigns the rights or makes it clear that the work being done is, by the nature of the engagement, owned by the party contracting the services of the independent contractor–i.e., the startup. The latter sort of relationship and agreement is called “Work-for-hire” under federal law; the former is usually called an “assignment agreement.” Be careful: usually, you cannot have a work-for-hire agreement that applies to work already started.
When it comes to the website itself and the programming, you’ll have to pay attention to just what is being owned. Well, you say, it is the website. Well, yes, but does the website include technology already created by the developer? Similarly, does the programming include code written by the programmer that he or she used in a previous job? Do you own it?
James C. Roberts III is my long-time colleague, a world-savvy attorney in new technology, new media, IP, entertainment, green and clean tech and mergers & acquisitions, as well as other transactions that matter. Check out his Global Capital Law Group at www.globalcaplaw.com
Recession or Boom times: working more, working smart, working to get work
How long are you working each week? How does it change when conditions change?
Strangely, you would expect to work less during a recession and more when market conditions are booming. Not always so.
During downturns, we often work more hours than when we are busy with a book of clients – because creating work is more time-intensive than doing work. Although I always insist that my clients continue to market even when they are busy working, the pressure to create work through networking and managing your social sites and your connections with your “loose ties” adds to the time you commit to your business during slow times.
And, if we are wise and refuse to be stalled by bad economic times, we spend our slow times preparing to enter adjacent markets or adding new skills to create new profit centers for our companies.
One consultant I know has focused on mastering the new social networks, developing programs to speak to, train and offer strategy to the masses of businesses of all sizes that now need to get on the social network bandwagon.
Even my dentist (a renowned prosthodontist) spent this past year training himself on the software of a new computer-driven system that creates new crowns while the patient waits during the first appointment (gone are the days of multiple visits while the remote lab tries to get the correct fit). He had the capital to invest in the system but not the time to master the software until his practice slowed down earlier this year.
As we entrepreneurs (the “self-employed” even if we have our small corporations) know, we are most likely working 60 hours a week. Are you tracking your time? See http://tinyurl.com/mlmjnw
Gallop reports that “… a sizable percentage of self-employed workers — 26% — say they work at least 60 hours per week, a much larger percentage than is found for workers of any other sector. Thanks to my colleague Beth Zimmerman at Cerebellas www.cerebellas.com for her Tweet about this new Gallop poll on the number of hours folks are working this year, despite the recession, in comparison with earlier years (about the same). http://tinyurl.com/n6nxnw
And, something else is happening here too. I am seeing a trend in more work activity for early stage and small businesses. Pipelines that were stalled are opening up and my colleagues are closing new work. Two colleagues and two of my clients have received their seed funding in recent weeks, each from private investors.
Now, no real change in the market conditions or the economy has taken place that can matter to small businesses. Unemployment is essentially the same as it has been in prior months.
But I’ve seen this before in other downturns (this is my 5th downturn, between tech crashes and general economic bad times). I was expecting it. The U.S. business community can only tolerate about 12 months of inactivity. Then, in true American fashion, it gets impatient and moves forward no matter the economic conditions. Although this impatience may be an emotional response to feeling stalled or stuck, it is no more irrationally emotional than the swings in the stock market.
Now, this isn’t economic theory I’m proposing here, just a personal trend I notice, down here in the emerging technology small business sector.
But I hoped it would come, and it looks like it is here.
Recession-proof: the entrepreneurial spirit & the companies born of downturns
We are all tired. It is the dog days of summer, the bad economics have lasted too long, and we need either a break or a shot in the arm to excite us.
If you are deeply tired, take some time this week to rest as we approach Labor Day. It is important to rest as well as work. I mean take a real rest, a non-working rest ~ go to the beach, or hang out with your buds or your family, or read a junk book. Turn off the computer – don’t putter, don’t do administrative work, turn your mind off for a couple of days.
When I was young, vagabonding around the world, I worked for a year at an architectural building site in Brighton by the Sea, in England (a delightful seaside town with a pier and salt-water taffy and little twinkling white lights in the trees all year round down on the promenade). The architect and I were gazing out the window of the rooms we were working in, as the demolition crew – long-haired happy muscular young men with a big wrecking ball on a chain – crashed down our building from the opposite end, on their way slowly to where we sat. He pointed out a worker leaning on a shovel at the top of the site. “See there?” he asked. “Always remember that the time you lean on your shovel is as important as the time you are digging.”
Balance is precious. It restores your spirit. A quiet mind creates new ideas. A calm mind is open to new thoughts.
The recession got you tense? I’m sure if you are suffering from it, it has. But remember that these companies were built in various bad times:
During the (first) great depression, 1873–1895
§ Hersey’s
§ IBM
§ General Electric
§ AT&T
§ Johnson & Johnson
§ Gillette
§ Chevron
During the Great Depression, 1929-1939:
§ Fisher-Price
§ HP
§ 20th Century Fox
§ United Technologies
§ Texas Instruments
During the stagflation, oil crisis and market crash of the 1970s:
§ Microsoft
§ Apple
§ Genentech
During the downturn of the early 1980s:
§ Sun Microsystems
§ Autodesk
§ Adobe
§ Electronic Arts
§ Symantec
So, take a break. Think a new thought. And after Labor Day, when our Calvinist work ethic kicks in and we put our heads down to work until the year-end holidays, take your new thought and your renewed energy and build your dream company.
And, in taking my own advice, I will be playing on Monday, Labor Day, and this blog will be resting as well.
A brief moment of time and history, (or, life is long and you have time for everything, or, slow down and smell the flowers)
When I was 27, and just beginning to build my consulting practice, I lived in an apartment carved out of an 1860’s townhouse, in a row of townhouses, on the flat of Beacon Hill in Boston. The neighborhood has an annual “tour of the flower boxes” which spurs us all to plant pretty flowers in the bay windows which face the streets.
Beacon Hill is an old neighborhood, frequented by many elderly Brahmins who have lived there all their lives. Frances, at 80, lives around the corner from my place. Every morning around 11:00, she goes about her errands, walking slowly around the Hill, using her cane for support. She passes my front bay window where I sit working, having my mid-morning English tea with milk.
Beacon Hill is not a neighborhood where one sits on one’s stoop. So neighborliness arrives as a nod of acknowledgement, or a brief hello to those folks you see frequently. So it is with Frances and me.
Just before tour day, I am out on my stoop, not sitting, mind you, but preparing my flowerbox for the front window, and making a goodly mess of it with potting soil and young little pansies everywhere. The spring day is sunny and I have the front door open onto the entry hall. Frances passes by on her daily rounds, and stops to admire the flowers, my community spirit, and the coming of Spring. We agree that the flowers, sprouting each spring, signal the return of the season and the cycle of time.
“I live just around the corner on Brimmer Street,” she comments, after we had passed the time of day about the flowers. “I remember playing in your place when I was a little girl. I used to slide down that mahogany balcony there, into the front hall. I would laugh so hard everyone would hear. My grandfather built this row of townhouses just after the Civil War, and the family gathered in it for the holidays.” She peers past me into the entryway and into her childhood.
And I peer from the newborn pansies, from my youth to her age, and we are both transported back a hundred years and more, to a time when the balcony remembers her giggling as a girl.