When you go to Starbucks and order a latte, what are you really paying for? Milk, sugar, espresso and a cup? No way! You're participating in the Starbucks experience.

As you hit the door, you smell the aroma of coffee. You're in a perfect coffee-toned world, where soft jazz and comfy chairs await. In placing your order, you get to put your personal stamp on your beverage of choice. You wait by the end of the counter for a drink served up to your specs. In short, when you go to Starbucks, you're claiming 15 minutes for you, your wants and your way of being.

Take that Starbucks experience and apply it to your consulting. Stop producing products. Start providing experiences:

• Business consultants offer strategies for improving revenues, cutting costs and increasing customer retention -- not reports
• Graphic designers help clients project professional images in sync with their target markets -- not logos, brochures or websites
• Personal trainers help clients meet personal fitness goals -- not workouts
• IT c onsultants help automate business processes to free up time for value-added business activities -- not tech support or system implementation
• Personal chefs provide healthy meal planning solutions for busy families -- not prepared meals

What experiences do you provide for your clients? This is homework. Reply with your answer -- and, if you like, a description of your business and your website (if applicable) -- and I'll feature you in an upcoming post.

 

In the business world, the rearview mirror is always clearer than the windshield.
-- Warren Buffett

He's not kidding. It's always easier to see what's behind you than what's ahead. We all make mistakes and, in retrospect, it can seem like we should have done something different.

When I think back to my early days in consulting, I remember a client who wanted me to work for $15 an hour, a fraction of my regular consulting rate. I had a day job, so I didn't feel desperate for money. And it sounded like such a great opportunity. Ugh. I ended up working till late at night -- for very little money. And ,as time went on, I realized that I didn't want to do any more work for the guy. All I got out of the deal was a bit of money and a lot of exhaustion.

Well, I got more than that. I realized that I needed to stick to my guns when it came to consulting fees. I never, ever cut my rate again. I realized that clients who nickel and dime you are clients you don't want. If they don't respect your rates, they don't respect you.

So, looking back, the money I didn't earn was worth it. I learned never to work for such a paltry amount again. And I learned that I'm a business, so I set my rates. I'm not a wage slave.

In my post on fear of the phone, I brought up the fact that a phobia can affect your business. Well, it isn't just a fear that can affect your business. A mere dislike of something can affect it too!

How many times have you put off doing something, simply because you don't like it? I know I've fallen victim to this. For example, I don't like formatting my customer newsletter. It's a pain. But I've found ways to deal with things I dislike.

Dealing with work you dislike

1. Outsource it to someone else
2. Put it at the top of your "to do" list and do it before you do anything else
3. Take a small step toward accomplishing that item every day, before you do anything else
4. Give yourself a reward for completing the task
5. Look for another way to meet your goal. Do you really need to even do this?

We all have things we don't like to do. How do you deal with work you dislike?

Over the past couple of weeks, I watched as a good friend -- a consultant -- struggled with delivering her latest project, a new course. I'd seen her go through this before. I'd always come forward to give suggestions and to offer my moral support. But she still felt overwhelmed and uneasy...even when she finally developed a super end product on time and with great fanfare. She always emerges on top, but getting there is a huge battle for her, when it comes to developing courses and teaching them.

Last night, I asked her if she'd ever considered taking one of the adult education courses at a local college. I mentioned that I took the certificate before I got into teaching. She was blown away. She'd had no idea that you could take a course in teaching. Suddenly, the burden of developing the course seemed a bit easier. If she could just get through this project, she could go take the certificate and feel better. Six nights and $700 would change her world.

If you feel like you're overwhelmed by the work before you, don't look at this as failure. It's merely an opportunity to strengthen your skills and learn from your mistakes. As I've mentioned before, great people make lots of mistakes, too. It's the asking for help and looking to improve that will make the difference. And practice. Lots of practice.

One of my closest friends took me to task recently. She said I'd got too wrapped up in my earnings and measurable results and that I was losing sight of the big picture.

And she was right.

See, I've been having a great year, earnings-wise. But I kept pushing that bar higher and higher.

And so I just never felt like I was as good as I could be.

I kept changing my definition of success, in my pursuit of achievement. Whatever I said was good enough last week, suddenly wasn't good enough this week. I needed to do more.

Well, if there's anything to appreciate, it's a good friend. And my friend told me point blank that I was being ridiculous. And she's right.

I'd become so focused on growing my business and measuring myself by that yardstick that I lost sight of all the amazing things going on outside my bank account. (And, as I've noted, it isn't like my bank account is a problem right now.)

And so, all week, I've been thinking about all the amazing things I'm doing right now. I revised my goals for the next two quarters, so that they focus more on where I'm going and less on what numbers I need to achieve. I'm going to focus more on doing and less on measuring.

This is a hard thing. I mean, I've been having an amazing year with my business. So looking at the numbers must be the solution, right?

Well, I'm not going to focus on the numbers for the next while. I'm going to look to my dreams and my hopes and my passions.

That's because I didn't leap into self-employment with the aim of making as much money as I could. I did it because I wanted to take control of my life, have flexibility, call my own shots....I did it for the experience and the quality of life. And, frankly, there's no way to measure that. Being acquisitive with my revenues isn't going to show all the great things I've done with my life -- even though this has been a great year in terms of finances. Because it's not about the money. It's about the spectacular family, friends, lifestyle, balance and joy I have. And I wouldn't give that up, no matter how high my revenues soared.

When I look back when I'm 90, I won't say, "Gee, wasn't 2008 a great revenue year?" No, I hope I'll say, "Wow, wasn't 2008 the year I took amazing personal risks? Wasn't that the year my boys were both still so little and I got to spend so much time with them? Wasn't that an amazing year?" It will never be about the numbers, even if the numbers were fantastic. They aren't the point.

I recently wrote about what Steve Nash can teach you about business. Justin Beller commented that greats like Churchill and Michael Jordan can also offer wisdom.

Curious, I decided to check out Jordan. I love this Michael Jordan quote I found on ESPN:

I've missed more than 9,000 shots in my career. I've lost almost 300 games. Twenty-six times, I've been trusted to take the game-winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed. -- Michael Jordan

When you hear about great athletes, it's tempting to think that they're perfect. But the reality is that someone like Michael Jordan has probably missed more shots than anyone else.

If I stop for a moment and think about this myself, I've made a lot of mistakes. As I've mentioned in my newsletter (subscribe above right), I've been working with a personal trainer -- and I've seen a huge effect on both my professional and personal life. If I think about how when I started, just doing lunges was tricky. I didn't want to do them. But now I can do dozens in a session and get them right. But I've had to do those lunges a few hundred times now. And I see such a difference. If I just focused on how many I messed up, I'd be discouraged. I choose to focus on the results I've achieved. And that's where I can be proud.

So, if you're working your way through the world of business, try practicing and focusing on the end goal. The mistakes aren't as important and what you learn.

Sometimes, despite your best efforts, you may run into a period where clients are late in paying. Perhaps it's not your fault that clients have paid late and you've been good at giving clients a short credit window. So what do you do when you're faced with a delay in payment?

• Take steps to collect any other outstanding payment
• Get other clients to pay a deposit
• Set up an emergency fund in advance
• Save regularly and use a budget
• Consider a side job if cash flow will be tight for a while
• When times are good, pay down debt
• Look to manage the peaks and valleys in consulting income
• Evaluate your credit options, if you're in a position to manage credit responsibly

What steps do you take to manage payment delays?

Once in a while, I have lunch at a market near my home. There's a struggling greasy spoon that has changed owners several times. I've never ordered from the greasy spoon because their menu looks like this:
spaghetti
chicken

• burgers
• sushi
• potstickers
• meatloaf
• pasta with your choice of 10 sauces and three meats
• teriyaki with your choice of two carbs and three meats
• pizza
• all-day breakfast
• salad with your choice of three meats
• and so on

The greasy spoon has pictures of all the foods hanging above and around the counter. Some of the food actually looks pretty good. But I've never ordered any.

Why? Nobody can possibly do all those things well. The greasy spoon has failed to specialize. As a result, my trust in their abilities is eroded. If they had a tight menu, I'd probably try it out. But the laundry list of food options suggests to me that they don't even know what they do well.

As I mentioned in Do you do "X"?, it pays to specialize. By keeping a tight rein on your business offerings, you'll be in better control of your business. More importantly, clients will be more likely to see you as an expert.

What do you do well?

With any small business, it's possible to get caught up in administration. Consider taking steps to automate your business processes, so that you can focus on paying work.

How to automate your consulting business

• Develop "boilerplate" responses for emails and proposals
• Implement a customer relationship management system for handling incoming leads (like calls and emails)
• Give clients a small discount to incent them to use Paypal, email money transfers and similar methods to pay you
• Pay your subcontractors by Paypal or email money transfer
• Outsource low-skilled, repeating tasks, so that you can focus on higher paying work

Do you have any tips for "automating" your home business?

Tax time isn't that far behind us and, well, you just know it's going to be sneaking up again. Via the IRS website, I found a guide to telling whether your business is a hobby or not.

But, let's look at things another way. What are five things you can do so that you run your business like a business and not like a hobby?

1. Focus on profit -- make decisions designed to help you make more money from your business. As always, set your consulting fees so that you make money.
   
2. Pursue lifelong learning to help you run your business better (if you're reading this, you're already doing that)
3. Plan to make a profit and generate a livable income -- write a business plan and use it as a guide in building your business
4. Build your business on your expert knowledge -- you'll be more likely to succeed if you have knowledge of the market you're in
5. Use contracts -- you'll be taken more seriously, even by the IRS.

Oh, and one bonus tip: separate your personal finances from your business finances.

What do you think distinguishes your business from a hobby?

Via Trevor Speirs of MyTechnologyCompany.com, I found a top five list of business interests. And that got me thinking about my own interests.

I've got a list of my passions on the website of my marketing company, but what about right this very minute?

So, off the top of my head:

1. Improving productivity
2. Social proof in a business context (I talked about this in my recent newsletter -- you can sign up in the top right of this page)
3. Lead generation
4. Growing a business to the next level
   
5. Technology

How about you? What are you thinking about right now?

In Stay true to the cause, I talked about meeting the goals you set when you started your business. In the past few years, I've found a great way to stay true to my goals. I outsource -- to other consultants.

Yep. I focus on what I do best and try to hire other people when time or experience prevent me from "doing it all". I've learned that, if I can hire others to help me meet my goals, I'm still going to meet my goals.

To hire other people, I've had to loosen up a bit. I used to think that no one else could possibly deliver the same work that I can. Well, I was right about that. No one else has the same overall standards, experience and skills. But I don't need to hire people who are just like me. I just need to hire people to do parts of what I can do. I can still add value to the work they do, all while reducing my overall workload and increasing my productivity.

So, here's today's question: what work could you outsource?

Consulting can give you the freedom to do anything you want. Take Fridays off. Be home for your kids. See matinees. Take your aging parent to the doctor's office. Semi-retire. Travel the world. But are you really staying true to the cause?

IT consultant Alex Williams notes that he originally aimed to take Fridays off and meet some other goals. Still, he often finds himself working Fridays. But he notes:

What I didn’t fully understand - and it didn’t take long to figure out - was that I was the one and only person who could mess with that dream. I was the only one who could alter it, and I did.

If your consulting business isn't aligned with your dreams and goals, take some time to re-focus. Sometimes, you just need to ask yourself what's important. I know I've fallen prey to the entrepreneurial trap before. For example, when I came home from the hospital with my first baby, I got a dream call from a reporter who wanted to interview me. I started thinking about prepping for the interview...then realized that my four-day-old baby needed me more. It was hard to step back from such an opportunity. But I realized that, 10 years before, I'd got into consulting so I could have work-life balance.

Do you struggle with focusing on your true consulting goals?

Consulting can give you the freedom to do anything you want. Take Fridays off. Be home for your kids. See matinees. Take your aging parent to the doctor's office. Semi-retire. Travel the world. But are you really staying true to the cause?

IT consultant Alex Williams notes that he originally aimed to take Fridays off and meet some other goals. Still, he often finds himself working Fridays. But he notes:

What I didn’t fully understand - and it didn’t take long to figure out - was that I was the one and only person who could mess with that dream. I was the only one who could alter it, and I did.

If your consulting business isn't aligned with your dreams and goals, take some time to re-focus. Sometimes, you just need to ask yourself what's important. I know I've fallen prey to the entrepreneurial trap before. For example, when I came home from the hospital with my first baby, I got a dream call from a reporter who wanted to interview me. I started thinking about prepping for the interview...then realized that my four-day-old baby needed me more. It was hard to step back from such an opportunity. But I realized that, 10 years before, I'd got into consulting so I could have work-life balance.

Do you struggle with focusing on your true consulting goals?

Customer service can make an incredible difference in professional services business, such as consulting. Regular Consultant Journal reader Tony Rose blogged about his experiences with customer service at a major department store. I especially liked Tony's last paragraph:

No matter what business you are in, excellent customer service will help you win and keep loyal customers. Even when your prices are higher, people are willing to pay more for convenience, quality and peace of mind.

As you go through the process of setting your consulting fees, remember that the value you bring to your clients is part of the package.

Consulting tends to be a people business and people like to do business with people they know. Every so often, you may be approached to by a friend who has a great personality but makes a lousy business partner.

Many years ago, I fell ill and knew I wouldn’t be able to complete a project. My client knew one of my friends and asked if I’d feel comfortable with him finishing the project. I said I wasn’t sure he’d be a good candidate. But the client was desperate to have someone put the finishing touches on my project and couldn’t wait for me to recover (it was a major health issue).

Well, the friend – let’s call him Joe – had some experience and skills that were similar to mine. But that’s where it ended. Joe had absolutely dismal writing skills – and this was a writing project. The client asked me to mentor Joe, but I knew it was a lost cause. Joe really couldn’t write. My client soon realized their mistake in inviting Joe to work on the project. I ended up having to take over Joe’s work from my sick bed. I had to work like crazy to finish the project. And Joe was miffed that someone thought his writing skills needed work. His nose got out of joint and I don’t think he ever recovered. I learned my lesson – I never again worked on a project with someone who struck me as less than solid in their professional skills.

In the situation above, I was very ill and had a desperate client. Normally, I wouldn’t have partnered with someone like Joe. But I know other consultants who fall prey to social pressures over and over again. They end up taking on a partner because they want to preserve a friendship.

If you want to preserve a friendship, don’t do business with a shaky friend. What’s that saying? Don’t mix business and friendship? It’s bang on.
 
Should a friend ask you to work with them when you think it’s a bad idea, you can:

• Say that you don’t like to mix business and friendship
• Thank them for the compliment, but say it’s not a good fit right now.
• Let them know the timing isn’t right – this leaves the door open for future work, since, down the road, they may have a better skill set or approach.
• Point them to someone else who can help

Related to business and friendship

• Building a business network for introverts

• How to Win Friends and Influence People at Amazon.com

Back in December, I noted that I was planning to read a book by Timothy Ferriss called The 4-Hour Workweek. I read the book in early January and have finally got around to implementing some of the ideas.

Although I don't advocate everything in the book, it certainly got me thinking about ways to streamline my work processes. In fact, since reading the book, I've hired two subcontractors to work on projects for me. I've worked with subcontractors before, but usually just when I wanted help during a busy time or when I didn't have the skills to do a project. This time, I'm hiring people to do work I could do myself -- but that someone else could do more cheaply. (And I've hired people in my own town, as opposed to sending the work across the planet.) It's going really well and I'm going to continue with this.

Have you experimenting with subcontracting?

Related

• The 4-Hour Workweek on Amazon

It's St. Patrick's Day, which has me thinking about all things green. And, speaking of green, are you someone who falls prey to consulting envy?

If you're self-employed (or even just thinking about it), it's easy to think everyone else is doing better than you are. I know I've fallen into this trap. I frequently compare my business to that of a friend. But my friend doesn't even work in consulting! She doesn't have a business model remotely similar to mine. Yet I often find myself comparing my own business to how well I perceive hers to be doing.

Guess what, though? I recently discovered that I make more money than my friend does. And I found out that her business costs are much higher than mine. See what a waste my envy was?

If you're lying awake at night, thinking you're not up to snuff because you assume others are earning far more, try a new strategy. Look at what others are doing and figure out a way to learn from them. Because of my friend, I've branched into new business areas. I've come up with a modified business model that allows me to generate recurring revenue, for example. So, while envy on its own isn't a good idea, learning from others' success can help you grow.

In starting and growing a consulting business, you face many decisions. One of the earliest decisions you need to make involves the structure of your business. Should you set up a sole proprietorship, partnership, corporation or some other structure? Nina Kaufman offers this discussion of the reasons to avoid sole proprietorship.

However, even if sole proprietorships offer some drawbacks, you shouldn't beat yourself up for running one. Incorporation involves a higher level of organization, record keeping and business management. Sole proprietorships can be extremely flexible -- and they're cheap and easy to set up. I launched as a sole proprietorship and, although I now have more than one business, I still enjoy the flexibility of such a business structure.

After more than 10 years in consulting, I've gone through a lot of goal-setting exercises. Some of those goals included:

• planning a consulting business
• graduating from an entrepreneurship program
• getting my first client
• achieving part-time success
• leaving my full-time job
• making more than I did in my full-time job
• securing my first "Fortune 500" client
• moving into new business areas
• teaching at the college level
• establishing recurring revenue
• subcontracting work
• and so on.

However, no matter what my successes, I'm tempted to look at my revenues. It's my biggest vice. I know there are a million ways to measure success, but I always end up looking at my financial statements.

Do you share my challenge? How do you manage it?  

It's Friday. Regular readers know that I reserve Fridays for the Friday 5 -- a weekly top five list. Last week, I said I was making an exception when I linked to a list of the top 10 ways to clear clutter. Well, this week, I'm making an exception again. I found Ron Garrett's top 10 geek business myths and just had to share them.

As a marketer, I love myth # 7, which refers to the value of a Phd. Ron writes:
In academia, what your peers think matters. In business, it's what your customers think that matters, and your customers are (almost certainly) not your peers.

Always keep your focus on what your customers want. Customers are the heart of any business -- even when they're paying you to tell them what to do.

Last week, I complained about my top 5 sources of office clutter. Since then, I've stumbled across Life Organizer's 10 simple ways to clear clutter from your home and office. I usually stick to top 5 lists for the Friday 5, but I'm making an exception this week.

This suggestion stuck out for me:
Make a rule that everything has a drawer, cabinet, basket, bin, or shelf it belongs on put nothing on the flat surfaces in your house

What do you do when you live in a small space? What do you do when your office is in a small space? I can't even use my home office to its full capacity, since I have floor to ceiling windows and a preschooler. I can't create risky opportunities. Anyone else have this problem?

Subcontracting tends to be common in the world of consulting. Whether you're the subcontractor or the person hiring others for subcontracting, you'll run into outsourced outsourcing at some point. But some consultants shy away from working for other consultants. That's because some consultants seem to think that they need not pay till their client has paid them. And that's a situation you want to avoid.

When you're hired to do a job, your pay should be contingent on fulfillment of your own contract. A deposit to get the project rolling and payments at key milestones. No matter who's hiring you, you should be paid according to the terms of your contract. Don't ever let a client tell you otherwise.

Some clients (usually other consultants who've hired you as a subcontractor) will try to say that they haven't been paid by their client, so they can't afford to pay you. This is dead wrong. They're obligated to meet the terms of their contract with you. Think of it this way. If you hired someone to plumb your basement, would they give you a few more weeks to pay, just because your employer delayed your latest pay cheque? Would your credit card company let you have a few weeks more to pay? No way. They'll either demand payment right this minute or they'll charge you a high interest rate.

If you are willing to extend credit, make sure your contract specifies the interest you should be paid. Stop work until you've been paid for any overdue invoices and interest charges. Don't let other companies turn you into a line of credit. If they want the perks of hiring subcontractors, they need to set aside money to pay their subcontractors. (If they were smart, they would have got a deposit from their own clients upfront, so that they'd have cash to pay you in a situation like this.)

Do you think of yourself as a freelancer? There's almost no difference between a freelancer and a consultant. In either case, you have a variety of clients and projects. It seems that some people prefer the term "freelancer" because it sounds more informal. But make no mistake: you're still running a business.

What's involved in the business of freelancing? The Wall Street Journal details the business side of the freelance world. But, as you work as a freelancer, you'll be confronted with business decisions every day. Some examples:

• Pricing -- how to set your fees
• Client management
• Invoicing and accounting
• Lead generation
• Taxes
• and so on

Even if you think you're "just a freelancer", you're still running a business. Be sure to keep good records, because the tax guys aren't going to give you a break if you say you're just a freelancer.

Subcontractor -- what is a subcontractor? A subcontractor is an indvidual or organization that assumes all or part of another party's contractual obligations. The subcontractor signs a contract to take on some of the work for which another company has a contractor. For example, when contruction companies are hired to build houses, they often farm out work to plumbers, carpenters, carpet layers, electricians and other subcontractors.

But not all subcontractors work in the construction industry. Graphic designers hire copywriters. Financial consultants hire accountant. Attorneys hire legal nurse consultants. Just about any consultant can hire a subcontractor -- or be one.

Related to subcontractor:

• Should you subcontract?

Looking at buying a business, instead of starting one from scratch? Check out this week's Friday 5, a list of the top 5 mistakes made when buying a business, via Michelle Knudson. She notes the importance of evaluating the potential of the business:

We often get so sidetracked by the idea of being a business owner that we often forget what is the most important when it comes time to purchase.

Remember, as great as a business idea sounds, you have to make sure you're actually getting something for your money. If you're buying a services business, like consulting or coaching, make sure that the business will be worth something without the current owner. If you can't make up for their expertise and contacts, you're going to be in a tough spot. Don't be so in love with the idea of owning a business that you forget to make sure it's the right one for you.

When you've got too much work on your plate, you may start thinking about farming out work to subcontractors. It's tempting to look at the work available and consider that you could still mark it up and make money for doing nothing. However, the realities of hiring subcontractors should not be taken lightly.

In hiring subcontractors, you become a project manager. You'll be entrusting projects to someone other than yourself. If you've got specialized knowledge or you thrive on control, this may be challenging for you. It can also be a problem if the subcontractors you hire don't deliver as promised. At the end of the day, you're still the one responsible for meeting your client's contractual obligations.

You'll also need to pay your subcontractors. If your client fails to pay you -- on time or at all -- you'll still need to write cheques to the people doing work for you. Make sure you have money in the bank -- or a good line of credit -- or that you've established pay timelines that allow you to have money in hand before you pay your subcontractors. Don't try to squeeze your subcontractors by delaying payment. They may refuse to deliver projects until paid -- and they wouldn't be in the wrong.

In hiring subcontractors, you'll need to spend administrative and project management time. You'll be dealing with both the client and your subcontractors. Be sure to mark up your subcontractors' time so that you cover this.

That being said, hiring subcontractors may be the smartest thing you could ever do. Just don't assume it's easy street.

As your consulting business grows in popularity, you may find yourself in the favourable position of having too much business. That excess of work means too many leads coming in, too many requests from repeat clients and too many referrals from people who know and trust your work. As great as this situation sounds -- it is a nice problem to have -- it can be a bit overwhelming the first time it happens. So how do you work through it?

What to do when you're overworked:

1. Refer new clients to friends who work in the same field. I've had many referrals from my friend Anne, who has taken two maternity leaves. In turn, I've referred work back to her when I was on maternity leave, ill or busy with other projects.
2. Outsource. Hire some subcontractors to do the job for you.
3. Raise your rates. Price should appear where supply and demand meet. If you've got too much demand, raise your rates. Try this with new clients and not-so-favoured clients first.
4. Delay your start date. Say you're available in two weeks, a month, two months or some other specific time. Clients seeking professionals realize that the best, most experienced consultants can rarely start a project right away.
5. Hire an intern. Get someone else to do routine and administrative work.
6. Stop doing non-consulting work. Hire an accountant, office cleaner, photocopy shop or other party to do the non-consulting work you have. If you can make $150 an hour doing marketing consulting, why waste your time on cleaning the office, when you can hire someone for $20 an hour?
7. Pace your proposals. Try to do several proposals at once, so that you can pick the cream of the crop.

Having too many projects on your plate is a great situation for any consultant. But struggling with the realities for the first time can be a challenge when you're just weeks or months away from the feast or famine stage. Just take a deep breath and pick a strategy that works for you.

As part of my Friday Five series of top five lists, here comes Brian Hewitt's 5 tips for success in IT consulting. Even though he mentions IT consulting, the list offers good advice for people working in just about any consulting field. Consider Brian's thoughts about  "throwaway interviews" with prospective clients:

A “throw away interview” is an interview for a job I’m almost certain I either won’t get based on my qualifications, or am not likely to take if offered. (Some “throw aways” have surprised me and turned into great contracts!) It’s a great way to get practice, and develop your personal sales pitch and I.T. anecdotes.

Practicing your basic selling skills and honing your pitch are great ideas -- as long as you've got the time. Of course, if you're truly strapped for time, you must already be doing a great job with sales and marketing.

A fool and his money are soon parted...so, if you're thinking of starting a home business and you want to make smart decisions, you may want to read 5 things to look for in a home business.

In starting a business, you also want to look at the barriers to entry. Even though starting a consulting business is cheap, it's hard for just anyone to hang out their shingle and copy your business. That's because consulting depends on knowledge. If you position your business to draw from your unique knowledge, you'll create a barrier to entry for copycats. For example, when I started in freelance writing, I carved out a niche in writing marketing communications materials for high tech companies. Few writers have the skills to do marketing communications, let alone understand high tech subjects. Not only did I have few competitors, but my specialized knowledge allowed me to command high consulting fees.

Related:

• Discover Your Inner Consultant - what kind of consulting business is for you?
• Consulting business ideas

This week's Friday 5 comes from Business Opportunities and Ideas. Check out the top 5 business start-up myths. Myth #2 says:

Myth No. 2: It takes years to start a business from scratch.

Fact: Most businesses are established within six months, but those thinking about or avoiding starting a business tend to assume that it takes substantially longer, on average, deterring some from starting up.

When I started my consulting business, I started making money within a couple of months. It wasn't long till I gave up my day job and officially became a consultant.

Want to increase your productivity? Check out this list of 50 ways to increase your productivity, via Lifehack.

Number 29 is good for a chuckle: go on an information diet. Given that the list of ways to increase your productivity runs to 50, just reading the article itself underscores the problem. I know I can waste a lot of time reading information online, though. When you consider email, blogs, websites, newspapers and instant messenger, it's easy to fritter away a chunk of time. In recent months, I've worked to become more efficient with the information I consume.

Time for the Friday 5. American Chronicle shares the top 5 business travel nightmares. Number 3 was good for a chuckle:

You are receiving the cold shoulder because you used the 6 words that every ticket or gate agent despises. “Do you know who I am” are the six most lethal words any passenger can use.

One of my friends has a second job as a call center agent for an airline. Her regular job involves work in the medical industry. She recently had a call from an irate customer -- who tried to power trip by emphasizing their role as a doctor. My friend tried not to laugh, since she actually sometimes works with the doctor in her usual job. That same doctor would never try power tripping my friend in the medical field, which goes to show you that some people break the world into "small people" and "big people". Unfortunately for the doctor, my friend will now always see her as one of those "small people", albeit with a different interpretation.

Ever get halfway through the summer and realized you haven't taken a vacation? When you're self-employed, it can be hard to justify taking time off. A week without work means a week without pay...right?

Not necessarily. If you've managed to set your consulting fees properly and set aside money throughout the year, you should have cash on hand to cover vacation time. For example, as a minimum, I allow myself six weeks for vacation and sick leave when I calculate my fees. That's similar to the amount of time off I'd get in a full-time job.

No money to cover time spent on vacation? Start saving. Set up a high interest savings account and contribute 12% of everything you earn. That's the same as 6/52 or saving for six of 52 weeks. If you only end up taking four weeks of vacation and no sick time, you can reduce your contribution for the next year, since you've already saved for sick leave. (Unless you want to accumulate sick leave, but then that's overlapping with your emergency fund.)

In my post on Discovering your niche, I extolled the virtues of specializing. I wanted to pass along a great article by web development consultant Jonathan Snook -- "How I found my niche". Jonathan notes:
When I first went freelance, I tried to market myself as a man of many talents. "Everything you need in one package," as the tagline on my site said.

He goes on to explain why he now specializes in certain areas -- and efficiencies and business sense play a big role.

It's tempting to approach consulting with a shotgun approach -- fire and hope your spray of shot hits something. But, truth be told, it's a lot easier to focus all your fire power on one spot.

Independent consultant -- it's an important term to understand. Are you an independent consultant or are you actually an employee of your supposed client? If you're working full-time for a client, working their hours and using their offices and tools, there's a good chance you're actually an employee, not an independent consultant.

The IRS has a guide to help you determine whether you're an independent consultant (1099 worker) or an employee. It's important to understand the distinction. Although the tax guys may go after your client for payroll taxes, they may also audit you for all the business tax write-offs you've been using. Make sure you're doing the right thing. Talk to an accountant, lawyer or the IRS for help in determining your status.

Consultant Cameron Moll has decided to hang up his consulting hat and take on a a full-time job. But his summary of lessons learned from freelancing make for great reading.

I know some of you may be wondering why I'm pointing you to someone who has closed up shop. But I've said it before and I'll say it again:

I think it's a mistake to say "fail". Fail does not mean go bankrupt....It often just means that the owners have moved on to a new stage in life.

I previously discussed reasons for closing a business in Why small businesses fail. That's where the above quote comes from.

SmallBizSurvival's Becky McCray has a great post on going from a business idea to an operating business. Most (if not all) of the resources are free.

Becky's blog focuses on the special reward and challenges of running a business in a small town. She's based in small town Oklahoma, where it sounds like she's having fun as the owner of a liquor store, marketing consulting business, and blog business.

If you're in a small town or thinking about moving to one, perhaps her blog will be of some interest to you. I just stumbled across it today.

Over at Famlies.com, Kori Rodley Irons champions the idea of "acting as if" with your home business. Also known as "fake it till you make it", this strategy involves acting as if you're successful. I've heard this advice time and time again in career management circles.  Kori suggests:

Celebrate all the little achievements and start telling yourself what a great and fabulous job you're doing

This is a fantastic strategy. People who beat themselves up all the time have a lot harder time. I remember one consultant I knew who was a full-time stay-at-home mom and a consultant for the government. Even though she was pulling in around $500 a month -- more than enough to cover a car payment and insurance -- she considered herself a failure. She constantly talked about how she was "doing nothing", "had no career" and so on. She eventually gave up, put her child in daycare for $1000 a month, and took on a job that paid $2,000 a month before tax. After paying for daycare and transportation, she was actually making less than she had as a consultant! And she was still really unhappy with her career -- still is, even though it's been a couple of years now.

Imagine if this consultant had told herself a different story! When I looked at her, I saw a talented person who was providing excellent childcare, continuing her career, building a business and charging a high hourly rate. $500 a month is nothing to sneeze at, especially when you have next-to-no business expenses (starting a consulting business is cheap) and you can achieve work-life balance.

Are you acting as if? Accentuate the positive. You don't need to tell yourself lies, but you don't need to point out all your faults, either. Count your successes and work to improve on your weak points. What more can you ask of yourself?

Staying motivated; fighting depression

Sample business consulting plan. When you're starting out as a consultant, it's important that you put together a consulting business plan. But where can you find samples? Figuring out what to put in your business plan can be a challenge. It can help to look at a sample business plan outline, like the one I've included below.

Sample business plan outline:

• Executive Summary
• Confidentiality and Recognition of Risks
• Business Overview
• Products and Services
• Industry Overview
• Marketing Strategy
• Management and Staffing
• Regulatory Issues
• Risks
• Implementation Plan
• Financial Plan
• Financing Request (if applicable)

In upcoming posts, I'll review each section of a sample business plan outline in more detail.

Posts related to sample business plan outline:
First steps in consulting: now what?

"Sample consulting business plan" from Become a Consultant at ConsultantJournal.com.

Building a successful consulting business takes more than just good luck. If you mix together key ingredients, you can build a successful consulting business even if you’re not a business wiz. Whether you do it yourself or hire someone else, these five areas will help you run your consulting business.

Planning

What’s that saying? If you fail to plan, you plan to fail? Well, it’s true. If you don’t plan ahead, you’ll make reactive decisions, not strategic decisions. You’ll be blindsided by competitors, customers and even your own employees. By putting together strategic, business, contingency and human resources plans (and buying insurance), you can help keep your small business on track.

Credit

A few years ago, a company hired me to improve their sales. They’d grown sales by a large amount in the previous year and they wanted me to build on that success. However, when I examined their numbers, I discovered that their accounts receivable has tripled and the average collection period was more than a year. In other words, the company’s growth had been achieved by pretty much giving away their product, since they hadn’t bothered to invoice or enforce payment! Don’t let your clients use you as a free line of credit. Develop a credit policy, invoice regularly and follow up to enforce payment. Finance and credit are key.

Marketing

Your marketing should be about more than goodwill and brand name recognition. Strategic marketing serves to help you increase revenues, attract customers, retain profitable customers, and meet your targets. When you're running a consulting business, you're doing more than working at a job. You need to work hard at getting work, not just working.

Accounting

If you don't keep track of where your money is, you've pretty much lost it. If you don’t know when bills are due (to collect or to pay), when it’s time to respond to customers’ requests, or when to deliver projects, you’re bleeding money. Make sure you know how to set fees, read a balance sheet, figure out your cash flow and measure growth. If you don’t know the finance and numbers behind your consulting business, you’re giving your money away.

Selling

Do prospective clients ever invite you to long meetings, then never contact you again? If you’re doing more talking than questioning in a sales meeting, you’re giving your services (and income) away. As a consultant, you should be asking questions, not giving answers until you’ve got a contract in place. Otherwise, your prospective clients may simply enjoy a free consulting session that remove the need to actually hire you.

The good news is that you don’t have to master all these skills. If you’re not good at accounting or marketing, outsource your work. Hire an administrative assistant or, if you have more complex and strategic needs, hire a consultant. By tapping the skills of subject matter experts, you may be in a better position to make money. Heck, that's why people hire you, right?

"Successful consulting practice: 5 building blocks" from Become a Consultant at ConsultantJournal.com.

Someone recently told me that they'd like to start a business with their friend. Are two heads better than one?

It depends. Ideally, you'd identify a consulting area where you both already have expertise. You'd want your partnership to strengthen that opportunity. Just deciding to work with a friend isn't enough. You both need to make the business idea work.

That being said, your friend's skills and experience may be a great complement to yours. If you're not sure, perhaps you could both look at doing a personal inventory to help generate consulting business ideas.

"Should you take on a partner?" from Become a Consultant at ConsultantJournal.com.

Earlier this week, I mentioned prenatal/postnatal fitness consultant Melanie Osmack from Fit4Two prenatal and postnatal fitness. Melanie has been able to overcome a challenge many consultants face -- by hiring instructors and franchising her company, she's been able to expand her services beyond what she can do alone. This is a great example for anyone interested in consulting, regardless of what field you're in. She's learned how to harness her knowledge and transfer it to others in a way that's profitable for her. Even though Melanie works in a different field than I do, I always look to her as a shining example of how to grow your business.

"Growing your consulting business" from Become a Consultant Blog at ConsultantJournal.com.

"Do I need a lawyer to start my business?" asks Marthe, an up-and-coming freelance designer. Figuring out whether you need a lawyer will vary, according to your unique circumstances. I've needed lawyers, from time to time, but I didn't need one to help me start my business. However, if you're in legal or financial trouble, you should definitely seek a lawyer's assistance. According to Lawyers.com, it's possible you do need a business lawyer when:

In good times as well as bad, individuals and businesses rely on their lawyers’ advice to understand and secure legal rights and financial interests. Lawyers help clients with estate planning and business negotiations, strategies and transactions. With good legal advice, clients are better prepared to comply with and navigate through the complex mazes of governmental rules and regulations.

Over at Findlaw.com, you probably do need a business lawyer "when you're in over your head" -- and preferably before. That article suggests using lawyers for specialized cases and sticking to self-help resources for less complicated issues.

Again, it's hard to say whether you need a lawyer. If you just want to set up a simple business, you can probably go without a business lawyer or corporate attorney. However, I'm not familiar with your unique circumstances -- and I'm not a lawyer, so I can't provide legal advice. Still, in general, you don't need a lawyer to set up a simple sole proprietorship for your consulting business.

Related Posts

• How to become a consultant

"Do I need a lawyer?" from Become a Consultant at ConsultantJournal.com

Figuring out how to start a consulting business is part of becoming a consultant. Unless you've opted for a corporate job, you'll need to learn how to start a consulting business. Your consultancy itself is a business and starting up isn't as hard as you might think.  Check out these free business plan resources:

• BDC business plan template
• Business plan guides
• Business plan samples

Related Posts

• Why become a consultant series
• Setting consulting fee rates

How to start a consulting business.

Why do businesses fail? With all the effort people put into starting up businesses, you'd think more would succeed. But thousands of small businesses fail each year.

 A quick drive around the web reveals a lot of reasons why businesses fail:

• MSN has a list of the top 10 reasons businesses fail
• The US Small Business Administration lists its own 10 reasons why businesses fail
• And this anti-Amway site provides some information on how most small businesses fail within five years
• But, best of all, is this MIcrosoft article on why business failure is actually a good thing

I think it's a mistake to say "fail". Fail does not mean go bankrupt. Many people start up home businesses because they want to stay home with their children, supplement retirement income, generate multiple income streams, earn money on the side, satisfy a desire to moonlight outside their existing job, or indulge an interest in a particular field. When those businesses close up, they don't necessarily "fail". It often just means that the owners have moved on to a new stage in life. People become consultants and start home businesses for many reasons. Instead of focusing on how many close up shop, we should ask how many were satisfied with the outcomes.

Why businesses fail

Drop by any coffee shop at three in the afternoon and you'll probably find several consultants. Heck, drop by at 10 am and you'll find consultants. The Asheville Citizen Times points out that people who become consultants hang out at Starbucks, but work pretty darn hard the rest of the time. Ah, the lifestyle of a consultant. Sure sounds easy, right? After a decade of doing this, I'm pretty happy with my lifestyle, but there are days when I find myself working late, spending a little too much time on admin tasks, or cursing at the broken printer. All in all, though, I do love it and I've bever regretted my decision to get into this line of work. Still, if you're thinking about going to work for yourself, ask these questions before you become a consultant.

From Become a Consultant Blog at ConsultantJournal.com.