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New To Consulting Presentation


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If your thinking of starting a career as an independant contractor; this is a must watch powerpoint.

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New To Consulting Presentation

  1. 1. It’s Your Talent – Own It! Making the Transition to Independent Consulting <ul><li>Gene Zaino President and CEO, MBO Partners </li></ul>
  2. 2. Overview <ul><li>The Entrepreneur </li></ul><ul><ul><li>Pros & Cons of being in business for yourself </li></ul></ul><ul><ul><li>Is consulting right for me? </li></ul></ul><ul><ul><li>Big vs. Small </li></ul></ul><ul><li>Business Structure </li></ul><ul><ul><li>1099, sole proprietor ? </li></ul></ul><ul><ul><li>S-Corp, C-Corp, LLC, PER ? </li></ul></ul><ul><ul><li>Self-employed tax benefits </li></ul></ul><ul><li>Sales & Marketing </li></ul><ul><ul><li>Finding work </li></ul></ul><ul><ul><li>Marketing your services </li></ul></ul><ul><ul><li>Networking and backlog </li></ul></ul><ul><li>Compliance, Insurance and Accounting </li></ul><ul><ul><li>Tax administration </li></ul></ul><ul><ul><li>Business insurance </li></ul></ul><ul><ul><li>Cash flow: Billing, collections, expenses </li></ul></ul>
  3. 3. Is Consulting Right for Me? <ul><li>Successful independent consultants have tenacity, determination, talent, and an entrepreneurial mindset. </li></ul>
  4. 4. Some Key Success Factors Core competencies of Independent Consultants <ul><li>Defined, verifiable expertise </li></ul><ul><li>High integrity </li></ul><ul><li>Comfortable with marketing and self promotion </li></ul><ul><li>Able to establish and develop high quality, enduring relationships with clients and other professionals </li></ul><ul><li>Can easily identify opportunities and then sell themselves and their ideas </li></ul>
  5. 5. More Key Success Factors Core competencies of Independent Consultants <ul><li>Apply knowledge and experience to add value to clients </li></ul><ul><li>Create strong references (happy clients) </li></ul><ul><li>Pursue a pipeline of potential new assignments without compromising existing client work </li></ul><ul><li>Assemble a strong support team to minimize their time on financial, legal and business administration activities </li></ul>
  6. 6. The Oxford Dictionary <ul><li>Oxford defines Independent as follows: </li></ul><ul><li>“ Not dependent on or controlled by another person or thing.” </li></ul>
  7. 7. The Independent Lifestyle Benefits of the consulting lifestyle <ul><li>Flexibility and Control </li></ul><ul><ul><li>You are your own boss </li></ul></ul><ul><ul><li>Deliver your work, your way </li></ul></ul><ul><ul><li>Manage your work / life balance </li></ul></ul><ul><li>Autonomy </li></ul><ul><ul><li>Build the skills you want to develop </li></ul></ul><ul><ul><li>Pick the projects you want </li></ul></ul><ul><ul><li>Avoid “office politics” </li></ul></ul><ul><li>Financial Rewards </li></ul><ul><ul><li>Profit from owning your talent </li></ul></ul><ul><ul><li>Leverage your experience </li></ul></ul><ul><ul><li>Own valuable relationships </li></ul></ul><ul><ul><li>Launch pad to big business </li></ul></ul>
  8. 8. Why the Time Is Right for an Independent Career <ul><li>Build career resilience during uncertain economic times </li></ul><ul><ul><li>Diversify your career portfolio </li></ul></ul><ul><ul><li>Create a “go-to” network of relationships </li></ul></ul><ul><ul><li>Maintain an infrastructure that generates constant flow of choices and opportunities </li></ul></ul><ul><ul><li>“ All eggs are NOT in one basket” </li></ul></ul>
  9. 9. <ul><li>“ The federal government is facing some extraordinary workforce challenges and will need to draw on the best talent from both government and government contractors.” </li></ul><ul><li>John Palguta </li></ul><ul><li>Vice President for Policy </li></ul><ul><li>Partnership for Public Service </li></ul>Client Opportunities at the Federal Government
  10. 10. The Demographics Are In Your Favor Nearly 60% of Federal employees are over age 45. 550,000, 1/3 of the federal workforce will retire in the next five years. - Office of Personnel Management, 2007 “ Dual compensation restriction” bars retirees from drawing a full annuity while employed with the Federal Government even on a time-limited or part time basis. – Partnership for Public Service, 2007
  11. 11. Competition for Talent is Heating Up Throughout the United States 5/29/2008 OURPUBLICSERVICE.ORG
  12. 12. Migrating to an Independent Career <ul><li>Set up shop at home </li></ul><ul><ul><li>A quiet place with internet access </li></ul></ul><ul><li>Set up your consulting parameters </li></ul><ul><ul><li>Where do you want to work? </li></ul></ul><ul><ul><li>When do you want to work? </li></ul></ul><ul><ul><li>How many clients do you want? </li></ul></ul><ul><ul><li>Stay as soloprenuer or big consulting firm? </li></ul></ul><ul><ul><li>Build a 12 to 36 month plan </li></ul></ul><ul><li>Start planning while you are generating other income </li></ul>
  13. 13. Migrating to an Independent Career <ul><li>Hone your assignments to improve your marketability </li></ul><ul><ul><li>Add experience that will be in demand </li></ul></ul><ul><ul><li>Learn which industries or areas will have largest need </li></ul></ul><ul><ul><li>Focus on assignments that are your strengths </li></ul></ul><ul><ul><li>Mold your skills to what will increase your value and set you apart </li></ul></ul>
  14. 14. Migrating to an Independent Career <ul><li>Do you have ideas for your first contract? </li></ul><ul><ul><li>Anyone you can approach? </li></ul></ul><ul><ul><li>Maybe lower your rates for right assignment in order to build reference base equity </li></ul></ul><ul><ul><li>You can always raise or lower rates on future assignments but what you need is to get started </li></ul></ul>
  15. 15. Build Your Brand Identity <ul><li>Build marketing materials </li></ul><ul><ul><li>List your skills and credentials </li></ul></ul><ul><ul><li>Create a small list of interesting projects (case studies) </li></ul></ul><ul><ul><li>You will need both a Resume and Services brochure </li></ul></ul><ul><li>Position yourself as an expert </li></ul><ul><ul><li>Offer free advice via online discussion boards, blogs, or articles </li></ul></ul><ul><li>Use the internet to build online profiles: </li></ul><ul><ul><li>Linked In </li></ul></ul><ul><ul><li>MBO Partners </li></ul></ul><ul><li>Email everyone you know and provide them with your profiles and materials </li></ul><ul><ul><li>Follow-up personally with key business relationships </li></ul></ul>
  16. 16. Stay Connected <ul><li>Network with friends, past employers, professional associations </li></ul><ul><li>Read professional journals to keep up on trends </li></ul><ul><li>Attend conferences and workshops </li></ul><ul><li>Collect business cards and follow up </li></ul><ul><li>Connect with colleagues </li></ul><ul><li>Find a mentor or two </li></ul>
  17. 17. Market Yourself “Directly” to Organizations <ul><li>Find the appropriate contacts </li></ul><ul><ul><li>Use corporate web site to identify opportunities </li></ul></ul><ul><ul><li>Locate names of HR contacts and recruiters from job postings </li></ul></ul><ul><ul><li>Develop rapport with internal recruiter </li></ul></ul><ul><ul><li>Promotion notices in local business publications </li></ul></ul>
  18. 18. When to Use Recruiting Firm (Staffing Company) <ul><li>Only when you can’t find project directly </li></ul><ul><li>Important tips: </li></ul><ul><ul><li>Let them know you’re knowledgeable </li></ul></ul><ul><ul><li>Protect the integrity of your resume </li></ul></ul><ul><ul><li>Protect your references </li></ul></ul><ul><ul><li>Protect your freedom to work directly (do not sign broad non-competes) </li></ul></ul><ul><ul><li>Establish a corp-to-corp contract (or use a PER.. More later) </li></ul></ul>
  19. 19. Legal Structures Choosing a Legal Framework for Your Business <ul><li>Sole Proprietorship </li></ul><ul><li>1099 Status </li></ul><ul><li>Personal assets at risk </li></ul><ul><li>Income taxed on 1040 Sch C </li></ul><ul><li>Large Clients prefer to avoid </li></ul><ul><li>Highest risk of audit </li></ul><ul><li>C-Corporation </li></ul><ul><li>Personal asset protection </li></ul><ul><li>Taxed at Corp separately </li></ul><ul><li>Double taxation </li></ul><ul><li>Unlimited shareholders </li></ul><ul><li>Very investor friendly </li></ul><ul><li>Moderate risk of audit </li></ul><ul><li>S-Corporation </li></ul><ul><li>Personal asset protection </li></ul><ul><li>Income taxed on 1040 Sch C </li></ul><ul><li>Avoids double taxation </li></ul><ul><li>Limited shareholders </li></ul><ul><li>Investor friendly </li></ul><ul><li>High risk of audit </li></ul><ul><li>Limited Liability Company </li></ul><ul><li>Personal asset protection </li></ul><ul><li>Income taxed on 1040 Sch C </li></ul><ul><li>Avoids double taxation </li></ul><ul><li>Limited shareholders </li></ul><ul><li>Easier, but investor un-friendly </li></ul><ul><li>High risk of audit </li></ul>
  20. 20. Business Insurance What you need to protect your business <ul><li>Workers Compensation </li></ul><ul><ul><li>Compensation if injured at work </li></ul></ul><ul><li>General Liability </li></ul><ul><ul><li>Protects business assets in the event of personal injury or property damage </li></ul></ul><ul><li>Professional Liability (Errors and Omissions) </li></ul><ul><ul><li>Protects business assets in the event of errors or omissions </li></ul></ul>
  21. 21. Vendor Qualifications How to get on the list <ul><li>The Vendor List </li></ul><ul><ul><li>Getting on is no small feat </li></ul></ul><ul><ul><li>GSA for government work </li></ul></ul><ul><ul><li>Supplier qualification assessment for large companies, consulting firms and integrators </li></ul></ul><ul><li>Some Qualifiers </li></ul><ul><ul><li>Years in business </li></ul></ul><ul><ul><li>Financial strength </li></ul></ul><ul><ul><li>Legal structure </li></ul></ul><ul><ul><li>Business insurance </li></ul></ul><ul><li>Security Clearance </li></ul><ul><ul><li>Who will hold your clearance? </li></ul></ul>
  22. 22. Accounting Getting systems in place <ul><li>Invoicing </li></ul><ul><ul><li>Hourly, by the project, by the piece </li></ul></ul><ul><ul><li>Monthly or project-based billing </li></ul></ul><ul><ul><li>Collections </li></ul></ul><ul><li>Expenses </li></ul><ul><ul><li>Some may be billable to clients </li></ul></ul><ul><ul><li>Out-of-pocket, tax deductible </li></ul></ul><ul><li>Tax Management </li></ul><ul><ul><li>You may need to file quarterly estimated taxes </li></ul></ul><ul><ul><li>Self-employment taxes for 1099s </li></ul></ul><ul><li>Management Options </li></ul><ul><ul><li>Software, e.g. Quickbooks </li></ul></ul><ul><ul><li>Hired accountant </li></ul></ul><ul><ul><li>Portable Employer of Record – manages back office (more later) </li></ul></ul>
  23. 23. Tax Deductions Maximizing your tax benefits <ul><li>Home office </li></ul><ul><ul><li>Percentage of mortgage, utility bills </li></ul></ul><ul><ul><li>Office supplies, computer equipment </li></ul></ul><ul><li>Travel and Entertainment </li></ul><ul><ul><li>Mileage to business meetings, on-site assignments </li></ul></ul><ul><ul><li>Out-of-town travel to conferences, etc. </li></ul></ul><ul><ul><li>Meals and entertainment for business </li></ul></ul><ul><li>Out-of-Pocket Medical </li></ul><ul><ul><li>Expenses for you and your family not covered </li></ul></ul><ul><ul><li>by insurance </li></ul></ul><ul><ul><li>Must meet threshold, or use PER </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>Conference and seminar fees </li></ul></ul><ul><ul><li>Continuing education related to industry </li></ul></ul><ul><li>Dependent Care </li></ul><ul><ul><li>Child care or elder care expenses </li></ul></ul><ul><ul><li>from eligible, certified providers </li></ul></ul>
  24. 24. <ul><li>Employee Benefits </li></ul><ul><ul><li>Medical, dental, life, disability </li></ul></ul><ul><li>Group versus Individual program </li></ul><ul><ul><li>Group means guaranteed coverage </li></ul></ul><ul><li>Retirement </li></ul><ul><ul><li>401(k) program or SEP </li></ul></ul><ul><ul><li>Tax deferred </li></ul></ul><ul><ul><li>Roth option </li></ul></ul>What About You and Your Potential Staff?
  25. 25. There Are Other Options <ul><li>Consulting companies </li></ul><ul><li>Staffing agencies </li></ul><ul><li>Portable Employer of Record firms (PER) </li></ul>
  26. 26. Understanding a PER: It’s Your Business, Make the Most of It <ul><li>Take everything you love about consulting… </li></ul><ul><ul><li>Operate as your own boss </li></ul></ul><ul><ul><li>Pick your own engagements </li></ul></ul><ul><ul><li>Set your own rate and terms </li></ul></ul><ul><ul><li>Work multiple projects </li></ul></ul><ul><ul><li>Build project teams </li></ul></ul><ul><ul><li>Maximize your tax benefits </li></ul></ul><ul><li>… and add: </li></ul><ul><ul><li>Complete back-office support </li></ul></ul><ul><ul><li>Improved cash flow </li></ul></ul><ul><ul><li>Affordable group benefits </li></ul></ul><ul><ul><li>Free GL, E&O, and crime bond </li></ul></ul><ul><ul><li>Personal account service </li></ul></ul><ul><ul><li>An “in” to huge clients </li></ul></ul><ul><ul><li>Online system to track it all </li></ul></ul>
  27. 27. Comparing the Alternatives What % of billing rate is kept? 100% 40% - 70% 92-96% Level of reclassification risk? High None (if W-2) None Find projects yourself? Yes No Yes Deduct business expenses? Yes No Yes Deduct medical expenses?* No No Yes Who handles financial admin? Self Staff/Cons Company PER Who carries business liability? Self/Corp Staff/Cons Company PER When do I get paid? Upon client payment Bi-weekly Upon client payment** Overall benefits quality? Varies Low to medium High Benefits cost? Very high Low to medium Medium Who absorbs employer payroll tax? Self/Corp Staff/Cons Company Self/PER Personal audit risk? High Low Low Credit profile? Weak Weak to Good Excellent Staffing/Cons. 1099/Self-Incorp. PER Who handles client billings and collections? Self Staff/Cons Company PER *Assumes under 7.5% of annual AGI in medical expenses ** May qualify for advanced financing
  28. 28. Is Consulting Right for Me? What it takes to be the best of the best <ul><li>Entrepreneurial Mindset </li></ul><ul><ul><li>It’s all up to you </li></ul></ul><ul><ul><li>Your success is measured by the success of your clients </li></ul></ul><ul><ul><li>Drive, dedication, and talent will ensure your success </li></ul></ul><ul><li>Specialized Skills and Knowledge </li></ul><ul><ul><li>You must have specialized skills and knowledge </li></ul></ul><ul><ul><li>Experience, insights, and connections that will help businesses </li></ul></ul><ul><li>Business Sense </li></ul><ul><ul><li>Running a business is more than just being good at what you do </li></ul></ul><ul><ul><li>Organization, back office management </li></ul></ul><ul><ul><li>Marketing yourself </li></ul></ul>
  29. 29. The MBO Difference: Run Your Business within Our Business <ul><li>Safe, client-friendly W-2 tax status </li></ul><ul><ul><li>Tax benefits better than 1099 or Corp </li></ul></ul><ul><ul><li>No more quarterly estimates </li></ul></ul><ul><ul><li>Lose the “shoe box” of receipts </li></ul></ul><ul><ul><li>Audit risk dramatically reduced </li></ul></ul><ul><ul><li>Improve credit score </li></ul></ul><ul><ul><li>Maintain full autonomy </li></ul></ul><ul><ul><li>Run your own division within MBO </li></ul></ul><ul><ul><li>Your clients, your rates, your P&L </li></ul></ul><ul><ul><li>MBO umbrella carries all privileges of large-company employment </li></ul></ul><ul><ul><li>Extend benefits and payroll to staff </li></ul></ul>
  30. 30. MBO Partners 13454 Sunrise Valley Drive, Suite 550 Herndon, Virginia 20171 1-800-220-0469