Business Consultants

Archive for the ‘Business Consulting’ Category

Sure, you need technical skills. But to be a successful IT consultant, you also need to be able to work well with people. In this article, you’ll learn about some of the personality traits that make for a successful IT consultant.

IT Consultant Traits: Are You Assertive?

You need to be assertive, but not overly obnoxious. That is a fine line to walk. You need to make sure people don’t walk over you. You also need to be able to stick up for yourself without coming across as too aggressive. That really turns people off.

IT Consultant Traits: Are You Business Focused?

You need to put your business goals ahead of being perceived as being nice. Sometimes it will be impossible to always be the nice guy. You are going to have to ask yourself what is most important for your business.

Can you put your business financial needs over your desire to work with the latest greatest IT projects? Sometimes it is a lot of fun; you are working with the leading edge stuff. A lot of times you are going to have to hunker down and focus on what your clients are asking for and deliver it.

At the end of the day it is your clients that pay the bills. And that’s your business focus.

Consulting salaries are very closely related to the hourly billing rates that you charge and the salaried equivalents that you can afford to pay both yourself and others down the road. The consulting salary you expect must be affordable given your hourly billing rates.  This consulting salary must also be enough to attract sales and technical staff as your business scales up.  If you don’t set your rates at an appropriate level then you won’t be able to offer competitive salaries to future employees and your business growth will falter.

The Consulting Salary Equivalent of $75 an hour

$75 per hour sounds like an attractive rate.  Most people will equate it with a yearly consulting salary close to $150,000.  The assumptions are that there is little overhead and people with their own businesses hardly pay any taxes.

Unfortunately, figuring out a consulting salary is not that simple.  You need to remember that you’ll only be able to bill out about 75% of your week.  This takes you from a starting place of a $150k consulting salary to $112k per year.  That still doesn’t sound bad though, right?

There’s still something you’re missing here.  It’s called the Triple Billing Rule.

Triple Billing Rule

Your overall revenue is actually split into three.  1/3 goes to sales and marketing, 1/3 goes to taxes, insurance, fringe benefits and other overhead items. The final 1/3 goes toward a consulting salary. If we take our $75 per hour scenario, suddenly we have a maximum consulting salary of $49,500 but we haven’t accounted for the other business expenses that come out the final third.

When you look at consulting salaries realistically it is easy to see how setting billing rates is very complex.  Your rate has to be high enough to pay yourself or a contractor/employee a decent consulting salary but not so high that it impedes finding clients.

The Bottom Line on Consulting Salaries

Consulting salaries come out of the final third of overall consulting revenue:  marketing, sales, taxes, insurance, and administration all take precedence.  When you start a computer consulting business it is important that you are able to pay yourself a consulting salary that is equivalent to what you would expect to make working for someone else.  You may be an employer someday and you want to make sure the consulting salary you offer will be sufficient to attract the talent you are looking for.

Consulting rates vary from business to business.  Some people start up their own computer consulting business right out of school.  Others have worked in the industry for many years before deciding to head out on their own.  The reality is, not all computer consulting businesses are alike and not all consulting rates are alike either – their owners have different skills sets and experience levels.

Some owners of computer consulting businesses have bachelors degrees, some don’t.  Some have years of experience, other’s don’t.  Some are in their 20′s, some are in their 60′s. Given this disparity, the question that begs to be answered is, “How do I know if customers will pay premium consulting rates for my services?

Qualifications, Experience and Consulting Rates

The simple answer to the question is this:   If you have decent people skills and decent technical skills, if you can do the job and be an asset as an IT person for a sweet spot small business, then your age, experience, or education should not hold you back from charging consulting rates at the top of the market.

The flip side of this is also true.  If you are starting your business in your 50s or 60s and doing this as a second job or as a change in careers, don’t let that hold you back from setting premium consulting rates.  Your age, experience, and whether you have a degree should have absolutely nothing to do with it – your competency is the most important factor.

The Bottom Line on Consulting Rates

The core issue with setting your consulting rate is whether your computer consulting business provides value to the client.  Do you provide something that they can’t do themselves? Do you help them to be more productive? Do you help them get more done in a week? Do you help them cut expenses? If your answers are “yes” then you have every right to be charging premium consulting rates for the services you provide.