Consulting / Freelance Blog

An important step in getting your new consulting business off the ground is to figure out what your rate sheet is going to look like. Sure, you want to help people with your expertise, but the work is also about growing a business and making money, right?

Even if you're offering some of the best services around, if your pricing is too high, people may not find it a good value and go elsewhere; too low and your bottom line could suffer.

So consider the three Cs of pricing, taking into account your costs, what the competition is doing, and your prospective clients' expectations. From there, you should have a good ballpark for setting the appropriate prices to attract clients.

Given the tumultuous economy and rocky business environment, the timing of Donald R. Keough's new book is pretty good. The retired Coca-Cola executive just published, "The Ten Commandments for Business Failure." As might be expected, it's a hard look at the mistakes made in business that can ensure failure and what to do to avoid them.

For consultants, this book may be one better borrowed than bought. By the author's admission, in this recent interview with The New York Times, it's probably not a book consultants will find endearing. A chapter discussing Keough's own glaring failure with the "New Coke" project, also contains a hard look at the role consultants play. But here, read the quote:

"Consultants will probably not be great purchasers of this book. There is nothing wrong with outside help. But they have to be there for a specific purpose, for some knowledge that you don’t have. These are usually very smart people, and they are very good at PowerPoint presentations. But you shouldn’t rely on them more than the people in your own company." - Keough

PowerPoint presentations? That's what consultants are good at - really? Certainly, the man is entitled to his opinion, but that one just felt like an unecessary dig. Regardless, I think this is a good opportunity to think about the relationship that you, as a consultant, have with a client and the critical importance of defining the value that you bring to a client in your consulting role. Let's say you have a long-term contract with a particular client, or even a client for whom you do smaller projects on an occassional basis. Outside of the initial proposal that suimmarizes your proposed work, how often do you sit down with the client to discuss the results of the project to-date, or for a simple "feel good" conversation about how things are going? Certainly, in most all projects, there are milestones that must be met or final results that must be achieved to note success.

In this case, I'm talking about having conversations that don't just rely on progress you can check off on paper, but rather progress in the relationship with the client. Does your client trust you? Is he/she able to share both positive and negative feedback about a project? Even if the project is meeting its original goals, does the client still view the project as needed and/or valuable to his company? Asking these questions may seem obvious, but they often get lost or forgotten during the course of a project. And the result is a client, like Keough, who eventually finds it convenient to blame "outsiders" for undue influence that pulled their company off-track. How do you ensure that clients find value in what you do? Leave a comment and let us know.

The workload for independent contractors is on the rise as companies continue looking for ways to cut costs while maintaining productivity levels. The good news for freelancers comes at the expense of employees as small business salaries took a .04 percent dip in June. That's according to a survey from SurePayroll that shows average salaries declining (except in the Western region) by more than $200 since the start of 2008.

Where are companies spending the money they're saving on salaries, payroll taxes and benefits? Hiring freelancers, of course. In fact, SurePayroll indicates June is the fifth month in a row that saw a rise in companies engaging contractors. Breaking down the numbers, the survey indicates there are around 3.54 contractors for every 100 employees. That may not seem significant, but you can expect to see those numbers increase as the economy continues to tighten the purse strings of employers. Hiring freelancers can be a less expensive option that comes with an easy out once a project ends.

As a freelancer, the key is to take advantage of the "positive" shift in the market. Do you use economic realities as a marketing tool? Let us know if your marketing efforts tout the cost-savings benefit of using your freelance services.

A new ruling favoring the National Geographic Society has left freelancers on the losing end of a battle over copyrights and future earnings. A federal appellate court in New York backed an earlier ruling in an Atlanta court, stating that magazines and newspapers can resell collective works and not owe additional royalties to contributing freelancers.

According to this article from the Daily Report, the ruling ended a long-standing legal battle between National Geographic and a Florida-based freelance photographer. The gist of it is that the magazine repackaged earlier issues in a digital (CD) version, selling it as "The Complete National Geographic." The photographer's original work was included, but he received no additional payment for the use of the image. The court says, that's okay.

Why, you ask? The final decision concludes that as long as the product (in this case a CD) being resold is a duplication of the existing product (the magazine) - considered a "collective work," then there is no copyright infringement. It's essentially the same product. However, if a photograph (or an article) is taken from the original product and used on its own, such as on a website, or is assembled as part of a new work that differs from the original, then the freelance photographer or writer is owed additional monies for use of the copyrighted materials.

What do you think? Does the final ruling seem fair - or are freelancers getting the short end of the moneybag?

Sandy Baruah has been named by President Bush to head the Small Business Administration (SBA). Despite Baruah's stint as a corporate consultant, the reactions to his nomination have been mixed - particularly given the challenges that small businesses (and the SBA) face in today's economy.

While working for Oregon-based Performance Consulting Group, Baruah advised companies such as Intel and Disney. However, other than that seven-year consulting gig, Baruah's career has been firmly in the world of government. Most recently, he has been serving as an assistant secretary of commerce.

While no one denies the SBA is in need of some good advice and strong leadership, this article from BusinessWeek pinpoints the many concerns with Baruah. Primarily, there seems to be debate about his experience with small businesses and the private sector, in general. With the SBA facing continuing budget cuts and criticism for handling everything from disaster relief loans to government contract awards, critics say Baruah may not be the right "consultant" for the job.

Just for fun... If the government were to contract with a consultant or a consulting firm to help put the SBA back on track, what type of consultant should they hire? An image consultant? A marketing consultant? Someone specializing in only small businesses? Leave a comment and let us know what you think.

For freelancers, one of the greatest challenges is simply learning how to manage a business. It's not enough to be a creative genius (we know that's the easy part). To succeed today, you have to have real business savvy, too. The new Creative Freelancer Conference is designed specifically to help "solopreneurs" manage their businesses better.

The event, developed by HOW Magazine and Marketing Mentor, is planned for late August in Chicago. "Among all the creative fields, freelance professionals are a unique breed: they’re independent spirits, they’re passionate, they’re self-starters. The Creative Freelancer Conference is all about helping marry that energy with business strategy, so you can run your business without it running you," says HOW editor, Bryn Mooth, in the conference blog. Conference sessions will cover everything from marketing and proposals, to collaboration and pricing strategies. Register before July 15, and you can qualify for an early bird discount and knock $60 off the price.

While you're waiting for the conference, or if you can't make the event, check out these articles to help get your freelance business off the ground.

• Determining Your Hourly Rate
• Landing Your First Client
• Developing a Winning Proposal

Are you tracking mileage for your business? If so, you can now deduct 58.5 cents per mile for the business use of your vehicle. The IRS announced the new rate change, Monday. The rate is effective from July 1 through Dec. 31, 2008. It's equivalent to an extra eight cents in your pocket per business mile. It may not seem like much, but it counts.

Why the unexpected change in rates? The move is seen as an effort to help small businesses deal with the rising cost of gas. "Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. The IRS normally evaluates the rate annually, in the fall, and it is then effective for the following calendar year.

For consultants and freelancers who spend quite a bit of time travelling in the car, this mid-year perk could add up. And, with major airlines continuing to increase airfare and baggage fees, this rate change by the IRS could be a good incentive to use your car for some of those client road trips. Then again, it may not be enough to offset the need to increase your rates to cover rising expenses. What do you think - is it enough?

Freelancers, especially those just getting started, are often tempted to take a few odd jobs to pad cash flow in-between larger projects. Taking on smaller projects is also a valid way to build a portfolio of work and a list of professional references. However, some jobs are better left undone - as is the case with "turking."

If you're not familiar with the term, consider yourself lucky. I stumbled across it in this article from WalletPop.com on how to make money online. The term comes from a program started at Amazon.com (yes, the online mega retailer) called Mechanical Turk. The program is billed as "a marketplace for work." Amazon describes it as a place where they "give businesses and developers access to an on-demand, scalable workforce." As a worker, you are able to select from hundreds of tasks and work when and as often as you like. Once you complete a job, the money is deposited into an account and Amazon cuts you a check when the balance of the account reaches or exceeds $10. It sounds a lot like a job site for freelancers. Right? Not quite.

Don't misunderstand, it is definitely a source of legitimate freelance opportunities. But, after a quick perusal of the available "tasks" and the amount paid for each, it's easy to see that you might just have to work the equivalent of a full-time job to collect that 10 bucks in your account. In fact, most of the tasks were worth under a dollar - with many offering mere pennies upon completion. The exception was a list of several writing jobs that were paying $4 each for articles that were 350 to 500 words each.

Granted, the idea for the site is based on offering simple tasks that can be easily completed in a short amount of time. And while many of the tasks were indeed pretty easy, they hardly seemed worth the effort. I doubt many established freelancers would see value in this online marketplace. For those of you launching a freelance business, or just looking to pick up a little work on the side, I think there are better ways to build a portfolio, earn a fair rate for your services.

For seasoned executives who are not completely ready to give up their day jobs but want a little more independence, transitioning into a freelance role may be an option. As the Babyboomers reach retirement age, it's certainly a topic that's increasingly getting attention. This article from CFO.com offers a few suggestions for executives on how to become a freelance CFO. One tip, in particular, caught my attention.

The advice touches on everything from networking and building relationships to billable hours and office space. And listed among the top tips is to "Insist on a retainer..." and "Get your money up front." That's a good goal but I don't know if working only on retainer fees is always practical - or the best option, for you or the client. Especially as money tightens for projects of all types and sizes, it may be that more clients want to operate on a fixed-fee arrangement based on specific project terms as opposed to signing up for an on-going monthly fee.

Also, if your retainer fee is too high, you may find yourself at a competitive disadvantage in the market. On the flip side, you could also miscalculate what you need for an average fee. You need to make sure you cover your costs or you could end up on the losing side of that financial equation. Particularly when starting out as a freelancer, it pays to make sure you have a fair, competitive rate. Do you prefer to work on retainer? Leave a comment and tell us what you think.

Are you working from a home office? If so, you could catch a $1500 break on your next tax bill. The National Small Business Advocate (NSBA) reported that a new bill has been proposed by Rep. John McHugh (R-NY) to simplify home office deductions for those working from home. Do you qualify? If you have set up a home office, either because you are self-employed or because you work from home (partially or fully) for an employer, then you would be eligible as part of this proposed tax deduction.

The Home Office Deduction Simplification Act of 2008 (H.R. 6214) would allow a flat $1,500 deduction. And you would not have to itemize in order to get the deduction. As an additional bonus, the deduction would be indexed for inflation (meaning you get the full $1500 benefit each year - without requiring more legislation to account for inflation).

Would you be more likely to take a home office deduction if this bill was in place? Read More...