Independent Consulting: The Definitive Guide

INDEPENDENT CONSULTING

The Definitive Guide

(Revised edition)

Elijah M. JAMES, Ph. D.

Copyright © 2024 Elijah M. James

All rights reserved

No part of this book may be reproduced in any form or by any electronic or mechanical means without permission in writing from the author.

Canadian Cataloguing in Publication Data

James, Elijah M.

Independent Consulting: The Definitive Guide

ISBN 978-1-998692-00-2

EJ Publishing

663 White Plains Run

Hammonds Plain

Nova Scotia, Canada   B4B 1W7

This book is dedicated to the memory of my beloved Aunt, the late Ida Simon (Goddie), who exemplified patience, resilience, and confidence—the very qualities that define an exceptional independent consultant. Her wisdom continues to inspire my journey and this work.

Table of Contents

Preface

Acknowledgements

1 INTRODUCTION TO CONSULTING

Introduction

What Is Independent Consulting?

Why People Become Independent Consultants

Qualities Required For Successful Independent Consulting

Where Consultants Work And What They Do

Why People Engage The Services Of Independent Consultants

Chapter Summary

Self-Test Questions

Answers

2 THE CONSULTING BUSINESS

Introduction

The Organizational Structure Of An Independent Consulting Business

Security In Consulting

New Areas For Independent Consulting

And Now, The Money

Consulting Ethics

Not Everything Can Be Fixed

Consultant Client Interaction

Consulting Associations And Resources On The Internet

Chapter Summary

Self-Test Questions

Answers

3 MARKETING CONSULTING SERVICES

Introduction

Definition Of Marketing

The Marketing Concept

Marketing Functions

The Marketing Mix

What Is Your Product?

Marketing Methods

Chapter Summary

Self-Test Questions

Answers

4 OTHER MARKETING METHODS

Introduction

The Capability Brochure

Business Cards

The Yellow Pages

Selected Media Advertising

Conducting Seminars

Publishing A Book

Using The Internet

Other Marketing Devices

Chapter Summary

Self-Test Questions

Answers

5 THE MARKETING PLAN

Introduction

Environmental Considerations

The Nature And Importance Of A Marketing Plan

Minimum Desirable Features Of A Marketing Plan

Preparing Your Marketing Plan

Chapter Summary

Self-Test

Answers

6 PRICING CONSULTING SERVICES

Introduction

The Nature And Importance Of Price

Pricing Constraints And Objectives

Pricing Strategies

Psychological Aspects Of Pricing

Ways Of Billing

Chapter Summary

Self-Test Questions

Answers

7 PROPOSAL WRITING

Introduction

Proposal Writing

Proposal Defined

Why Propose?

Proposal Objectives

The Main Parts Of A Proposal

The Format Of The Proposal

Covers And Bindings

Samples Of Proposals

Chapter Summary

Appendix

Self-Test Questions

Answers

8 REPORT WRITING

Introduction

Definition Of Report

Reasons For Writing Reports

The Structure (Format) Of The Report

Chapter Summary

Self-Test Questions

Answers

9 THE INTERVIEW

Introduction

Should You Attend An Interview?

Appearance And Behaviour

The Purpose Of The Interview

A Few Don’ts

What You Should Ask For

Typical Questions Asked At Interviews

Effective Interviewing

Chapter Summary

Self-Test Questions

Answers

10 PLANNING AND CONTROLLING THE ASSIGNMENT

Introduction

Planning The Assignment

Controlling The Assignment

Chapter Summary

Self-Test Questions

Answers

11 MANAGING A CONSULTING BUSINESS

Introduction

Forms Of Business Organization

Records And Accounts

The Use Of Computers

Insurance

Chapter Summary

Self-Test Questions

Answers

12 CONSULTING CONTRACTS

Introduction

Contract Defined

Pros And Cons Of Contracts

The Contents Of A Contract

Alternatives To Contracts

Types Of Contracts

Chapter Summary

Self-Test Questions

Answers

13 INDEPENDENT CONSULTING AND ARTIFICIAL INTELLIGENCE

Introduction

Definition Of Artificial Intelligence (Ai)

Using Ai In Independent Consulting

Chapter Summary

Self-Test Questions

Answers

14 THE FUTURE OF INDEPENDENT CONSULTING

Introduction

Key Trends Shaping The Future Of Consulting

Challenges Facing Independent Consultants

Opportunities For Growth

Chapter Summary

Self-Test Questions

Answers

PREFACE

When I wrote Independent Consulting: The Definitive Guide, over 20 years ago, I indicated that the main reason for writing the book was to help consultants and other professionals run successful practices.  This edition has a similar objective.  Whether you are a veteran consultant or contemplating entering the field, this book is a definitive guide. 

Independent Consulting: The Definitive Guide is neither a manual on consulting exclusively nor a textbook on consulting exclusively.  Instead, it is a combination of both.  If you are interested in consulting as an accountant, the book does not provide you with the necessary accounting skills.  It assumes that you are already appropriately qualified as an accountant.  However, it does provide the consulting skills that will help to make you a successful independent consultant in accounting.

Independent Consulting is designed for a wide readership.  It will appeal specifically to the following:

• independent consultants in any field

• professionals and others who are contemplating entering the consulting field

• students in colleges and universities that offer a course in consulting

• people and organizations that use the services of consultants.

The book will also serve as a useful reference for a variety of topics.  Whether you are a seasoned independent consultant, a rookie, or a prospective independent consultant, you will find this book to be quite useful in many ways.

Special Features

1. Independent Consulting: The Definitive Guide is written in plain English.  Technical jargon is used only where it is necessary.

2. The book combines textbook features with a manual approach to produce a good balance of theory and practice.

3. Significant amounts of illustrations are used throughout the book. 

4. The author shares his considerable experiences as an independent consultant with the readers as a means of illustrating certain points, with the hope that such experiences will influence decisions that independent consultants will have to make.

5. Each chapter introduces the reader to the material that will be covered in the chapter.

6. The summary at the end of each chapter serves as a quick review of the material presented in the chapter.

7. Each chapter contains an objective self-test so that readers can assess their comprehension and level of mastery of the material.  Answers are provided at the end of each test set.

The book is conveniently divided into 14 chapters, covering the bare facts you need to know to run a successful consulting business.  Chapters 1 and 2 introduce readers to independent consulting and the consulting business.  Chapters 3, 4, and 5 cover various aspects of marketing as they relate to the consulting business.  Chapter 3 begins the discussion on marketing consulting services.  Chapter 4 continues the discussion, examining certain marketing methods.  Chapter 5 deals with the all-important marketing plan.  The fee that consultants charge for their services determines their income.  That is the subject of Chapter 6.  Chapter 7 discusses proposal writing while Chapter 8 examines report writing.  The consulting interview is the focus of Chapter 9 while Chapter 10 concerns itself with planning and controlling assignments.  Chapters 11 and 12 discuss managing a consulting business and consulting contracts respectively.  Chapters 13 and 14 end the book with a discussion of independent consulting and artificial intelligence (AI) and the future of independent consulting respectively.

The dish has been prepared.  The table is set.  Help yourself to a hefty serving of Independent Consulting: The Definitive Guide.  Bon appetit!!

ACKNOWLEDGEMENTS

I have incurred an unusually large debt in the course of writing this book.  Several people have given me a great deal of their time, energy, advice, suggestions, and encouragement, and have contributed in many other ways to making this book a reality.  I must express my gratitude to them.

First, I must thank my son, Dr. Ted James, who planted the idea of this book in my head.  In one of our conversations, he asked, Why don’t you write a book on the essentials of independent consulting?  I thought about it and decided that I would.  Thanks, Ted.

I owe a comparable debt to my daughter, Andrea who demanded (she thinks she has the right to do that) to know what I was doing in my office on a Sunday that was my birthday.  When I explained the project to her, she declared that it was cool.  Andrea, thanks for your consistent encouragement and support.

I am also indebted to my students in my MBA classes at Concordia University, Montreal.  Repeatedly they asked questions about various aspects of the independent consulting process.  Their questions directed my attention to the more significant issues in independent consulting.  The selection of topics for inclusion in this book was directed, in part, by those questions.

Koren Norton has once more demonstrated her unselfishness by sacrificing that valuable resource that we call time, which is scarce for the vast majority of us, but which was particularly scarce for her while I was preparing the manuscript.  She took time from her busy schedule to attend to my needs so that I could focus on writing the book.  I owe her a tremendous debt of gratitude.  Thanks, Koren, you are terrific.

I must also thank my dear friend, Veronica Martin-Batson, for constantly reminding me of the words of the wise man Solomon who said, ...I perceive that there is nothing better, than that a man should rejoice in his own works...  Veronica, thanks for the inspiration.

Finally, I must thank my Aunt, the late Ida Simon (Goddie), who, by precept and example, has taught me the art of problem-solving. As an independent consultant, I have had the opportunity to apply her teaching to many of my clients’ problems.  I do not have words enough to express my gratitude to her.

Elijah M. James

CHAPTER 1

INTRODUCTION TO CONSULTING

INTRODUCTION

Independent consulting is an exciting field of work.  Like other areas of business, it has its advantages and disadvantages.  Those of us who have become and remained independent consultants believe that the benefits (advantages) outweigh the costs (disadvantages).  This introductory chapter explores the nature of independent consulting.  It touches on a variety of issues relating to independent consulting and lays the groundwork for further discussions in later chapters.     

WHAT IS INDEPENDENT CONSULTING?

A definition of consulting seems to be a good place to start.  For purposes of this discussion, we define consulting as the process whereby independent and knowledgeable people provide expertise to others for a fee.  There are at least four points worth noticing in this definition:

1. Consulting is a process

2. Consultants are independent

3. Consultants are experts

4. Consultants are paid for their expertise.

Let us examine each of these assertions:

Consulting as a Process

A process implies a series of steps.  A typical consulting engagement ends with the consultant providing the client with expert advice to enable the client to make a decision that will solve a particular problem.  The consultant does not make the decision (that’s the client’s job) unless he/she is asked to do so, but he/she facilitates good decision-making.   In order to arrive at the juncture where expert advice can be given, the consultant must go through the following steps outlined in Figure 1.1.

Step 1.  Identify the Problem

The first step in the consulting process is to identify the problem.  Before the consultant can assist his/her client in making a decision (solving a problem), he/she must first understand and define the problem.  Care must be taken to identify the real problem rather than the symptoms. 

Figure 1.1.  The Consulting Process

For example, a manager may observe a high job turnover, what could be the real cause?  Perhaps one of the first things that will come to mind is inadequate wages and salaries.  But this might not be the case at all.  Perhaps the real cause is a lack of recognition and appreciation of the efforts of employees by management.

Let’s consider another example.  It has just rained, and water is flowing from a particular spot in the ceiling.  Certainly, there is a leak; but the leak may be located several meters from the immediate vicinity of the flow.  These two examples illustrate the need for serious investigation in order to diagnose the problem.

The 5 Whys technique helps identify the problem.  Let us assume that a manufacturing company is experiencing frequent delays in product delivery.  A consultant is called in to identify the cause of the problem.  To do so, the consultant asks the 5 whys as follows:

1. Why are the products being delivered late?

Answer: Because production is taking longer than expected.

2. Why is production taking longer than expected?

Answer: Because one of the assembly machines frequently breaks down.

3. Why does the assembly machine frequently break down?

Answer: Because it hasn’t been maintained regularly.

4. Why hasn’t it been maintained regularly?

Answer: Because there is no preventive maintenance schedule in place.

5. Why is there no preventive maintenance schedule in place?

Answer: Because management prioritized cost-saving over maintenance planning.

Root Cause Identified:

The lack of a preventive maintenance schedule is the root cause of the delays.

Step 2.  Gather Information

Once the problem has been correctly identified, the next step in the process is to collect relevant information.  This step is extremely important because problems do not exist in a vacuum.  Here is where the consultant’s training, experience, and expertise will prove to be of utmost benefit.  Relevant information might include current and expected interest rates, the age of equipment components, symptoms displayed, previous attempts made to correct the problem, etc.

Step 3.  Examine or Develop Alternatives

Many problems do have a unique solution.  For example, a damaged part may have to be replaced.  In most cases, however, there are alternative solutions.  If the alternatives are obvious, the consultant needs to examine them carefully.  If they are not so obvious, then the consultant needs to generate alternatives.  Consulting involves choosing the optimal solution from the list of feasible solutions.

Step 4.  Select the Best Alternative

Once the alternatives have been listed and examined, the next step in the consulting process is to select the most beneficial alternative.  On the basis of criteria derived from the client’s objective(s), alternatives must be evaluated and a recommendation made.

Step 5.  Make Recommendations

Unless the consultant is engaged to make decisions for the client, his/her role is to recommend.  Often, this is easier said than done.  The analysis and interpretation of the problem may create difficulties for a clear-cut recommendation.  The recommendation may be a tough one, which, if implemented, may affect many people adversely.  Just as managers are often faced with tough decisions, so too consultants are often obliged to make tough recommendations.  The consultant may also be asked to help to implement the recommendations.    

Step 6.  Gather Feedback and Evaluate the Results

Except for particular cases, the consultant’s job does not end with making the recommendations.  The results of the recommendations, if implemented, must be evaluated.  This is done by gathering feedback to determine the effect of the decision.  The feedback may be in the form of a simple telephone call to the client to determine whether the problem has been solved satisfactorily, or it may be in the form of another visit by the patient (the client) so that the physician (the consultant) can determine the effect of the treatment administered. If the chosen recommendation fails to solve the problem, then the consultant must search for alternative solutions.

Consultants are Independent

The term independence implies freedom from the control, authority or influence of others.  Independent consultants are not employees of their clients.  Certainly, without clients using the services of consultants, there would be no independent consultants.  However, the award of a contract or an engagement does not confer employee status on independent consultants.   Clients do not control the consultants’ income, their working hours, their place of work, or other aspects of their working conditions.  Independent consultants are masters of their own destinies.

It must be noted, however, that this independence does not imply that consultants have direct authority over changes to be made as a result of their recommendations.  Of course, it is the responsibility of independent consultants to involve their clients in the consulting process, so that the probability of implementation and ultimate success will be maximized.

Consultants as Experts

An expert may be defined as one whose knowledge or skill is specialized and profound as a result of study and experience.  Only experts can be expected to provide expertise on a continuing basis.  Consultants enter the consulting business because they believe they possess some specialized knowledge for which clients are willing to pay.  The expertise may be obtained from years of study or practical experience, and it may be acquired in any field.  For example, a medical doctor may specialize in orthopedic surgery and become a consultant in that field, or an auto mechanic may specialize in auto electrical systems and become a consultant in that field.

Consultants are Paid

Our definition of consulting suggests that consultants are paid for their expert advice.  Many knowledgeable people offer their services voluntarily, for free.  Although their contribution may be laudable, they are not considered consultants in the sense in which we use the term.  They may be philanthropists, but they are not consultants.  This does not suggest that independent consultants do not do anything for which they are not paid.  It does suggest, however, that when independent consultants give advice in their professional capacity as consultants, they should be paid.

WHY PEOPLE BECOME INDEPENDENT CONSULTANTS

Independent consultants are consultants who have the freedom to decide what they will do and when they will do it.  They decide whether or not they will work for a certain client, and they decide how much they will charge for their services.  They decide whether they will work on an assignment during the early hours of the morning or late in the afternoon.  They are their own bosses.

Independent consultants may work at home, in offices by themselves, or with other employees, or they may be engaged by consulting firms to work on certain assignments.  Their distinguishing mark is that their success does not depend directly on decisions made by others.  Certainly, a prospective client can decide not to engage the services of a particular consultant, in the same way that a firm can decide not to hire a Human Resources Officer.  However, once engaged, the independent consultant enjoys a freedom, an independence, that an employee does not experience.

An example will illustrate the difference between an employee and an independent consultant.  An accountant employed by a corporation usually has predetermined hours of work (even though the so-called flex time is changing that fact), a set salary, and normally does not have the opportunity to choose his/her clients.  That accountant’s success may be directly dependent upon decisions made, not by him/her, but by the executives of the company.  He/she is not independent.  If that same accountant were an independent consultant engaged by the company, he/she would be paid for his/her services, and his/her success as a consultant would be independent of the executives’ decisions.

The Varieties of Consultants

Consulting is multi-dimensional.  If it is possible to become an expert in a particular field, then it is also possible to become an independent consultant in that field.  Here is a short list of consulting fields, just to give you an idea of the breadth of the consulting business.

• Acoustical consultants

• Advertising consultants

• Agricultural consultants

• Art consultants

• Audio visual consultants

• Automotive consultants

• Aviation consultants

• Bankruptcy consultants

•Breastfeeding consultants

• Bridal consultants

• Broadcast consultants

• Building consultants

• Business consultants

• Carpet consultants

• Colour & style consultants

• Combustion & heating consultants

• Communication & Public Relations consultants

• Computer consultants

• Construction management consultants