November 2005

Question

I have been contacted by a former employer to design the curriculum for a new chain of proprietary colleges in Monterey, California. This will be the foundation for the Diploma and Degree students will earn. I know you have answered many questions relating to rates, but I think I need your help in that this will be a curriculum that will be used in about 15-20 colleges in the next 5 years. My research thus far has indicated a range from 60-85 dollars per hour or a flat rat of 120-140K. Here is the catch. . . The entire curriculum must be delivered within 4 months.

Answer

Sorry, I probably did not meet your 4 month window with this response, but your question does address something that we have not discussed previously in this column. Speed. The world is moving faster—exponentially faster. Designers who can design fast are at a premium. So if you can design training faster than the New York Times produces a newspaper each day, you will be in high demand. Be sure to charge for your special talents. Charge a premium. How much more? 50 percent more isn’t too much. I’ve charged double when I know I am going to be working 16-hour days and every weekend.

Question

I have been consulting on my own for 5 years, and have not run into any clients wanting me to have personal liability insurance, until now. I would like to know what the industry standard is for carrying insurance, and what most consultants carry or what is recommended. Also, would like to know where training and OD consultants can get coverage that is reasonable?

Answer

Would you drive a car without insurance? Would you own your home without insurance? Why would you risk all you have on one over sight? Yes, if you are a business, you need business insurance! 

Get Errors & Omissions Insurance. E&O (AKA professional liability) coverage protects consultants from suits alleging poor decisions or bad advice. Think of it as malpractice insurance. There are many consultants out there without professional liability insurance. Think of what you’re risking. For most sole practitioners the premium is less than $3,000.00. If a former client sues you, how much have you lost? The attorney alone could cost you $50,000 or more! You may be able to purchase E&O coverage from your professional association. If not, talk to your current insurance agent who will be able to lead you to the right source. Your insurance agent should be a part of your business team.

Question

As most consultants, I have started my business as a single owner. However, I am now considering hiring additional consultants. What considerations should I explore before I make this next step?

Answer

This is a question that most independent consultants face at one point or another. Consultants are experts and authorities in their fields. They spend time promoting, learning, consulting, coaching, speaking and doing all the smart things that any growing consultant should. At some point they begin thinking of the future. Remain independent, or bring in other consultants? When? How? Why? What are the benefits? Ask yourself a dozen questions before committing to bringing in additional consultants.

1. Why am I doing this? To get more of the same kind of business? To get new business? To save me time? To make more money?
2. What are my other options/priorities? Perhaps it might be wiser to invest these resources, including time and reputation in another business activity.
3. Am I prepared to manage someone and make a commitment to their development?
4. Can I do this on a trial basis?
5. Will this consultant and I be compatible?
6. Should I bring this person in as an employee, subcontractor, partner, or provide the option to buy in?
7. What will this do for my lifestyle?
8. How will I need to change my office set-up?
9. What do my family members think about this direction? And this person?
10. Should I be thinking about bringing in more than one person at the same time, or staging this initiative slowly?
11. When I explore the investment and the return on investment, what are the best case and worst-case scenarios?
12. What is my “gut” telling me to do?

This may be an agonizing decision. At the front of it all, however, consider your goals, the industry you are in, how your life (business and personal) will be changed, and how risk averse you might be. Going through the exercise of answering these questions will help, but it won’t result in a decisive answer from you. This is a big change—bigger than it might seem. I always recommend a trial run first. Set up a temporary arrangement before you commit formally. Read Chapter Eight in The Business of Consulting for a more in depth discussion.