Sunday, January 20, 2008

Services for a Small Consulting Business

I haven't blogged for almost two months. I've been too busy. Busy is usually good for a consulting business, but not this time. A month or so ago, I parked by our UPS store and headed inside to pick up our mail. At least I thought I was picking up mail until I saw the sign on the door: CLOSED UNTIL FURTHER NOTICE.

Closed? All my mail was inside, and there was no other information. A kindly old gentleman must have seen the befuddled expression on my face and came out of the golf store to inform me that the New Mexico tax people had come that morning and sealed up the UPS store for non-payment of taxes.

I will spare you the pain we experienced as a result of this failure of one of our service providers–mail delayed two months or more, or lost; literally hundreds of change-of-address notices sent, checks from clients that we couldn't get our hands on; dunning notices from vendors whose bills we hadn't received; and who knows how many mails lost forever. I want to tell you about the benefits, instead–lemonade from lemons.

The principal benefit from this potential disaster was making us stop and review all the vendors we counted on.

Communication

- We use the mail drop because the US Postal Service does not deliver mail to our house or office. Moreover, they do not hold the quantity of mail we accumulate when we are working out of town for a couple of weeks. We also use them as our fax station so we don't have to bother with a fax machine in our office. Same for copy machines.

- Same for wrapping and mailing. When I had my own publishing company, we had a mail room with two full time employees. When business got so good I was about to hire a third, I decided that managing them was a drag on my consulting time, so we sold the publishing business.

- After careful analysis, we chose a new mail drop–another UPS store–which seemed to be on a much more solid financial basis, and about the same distance from our house. (Going there has introduced us to some new restaurants in the locality, which is a second benefit.)

- We also use voice mail. I do so obviously because I'm often away from the office, but even more because I won't allow myself to be interrupted by any idiot with a quarter. If a call is important, I'll get it eventually on the voice mail. For many years, I had an administrative assistant to answer my phone and perform other services, but an employee creates a fixed cost that is not easily reduced. And, it's a person to manager. I don't get paid for being a manager, but only for being a consultant.

Computers

- Some of my techie consultant friends maintain their own servers and other networking equipment. They also host their own websites. These activities are so much for for us nerds, they can be a trap. For a few dollars a month, I can have full-time professionals doing those things for me. What I care about is their reliability, so I don't have to spend time looking over their shoulders.

- Curiously, I do my own bookkeeping. I used to hire a bookkeeper, but I found I was spending as much time preparing papers for him as I needed to handle the paperwork from end-to-end myself. More than that, with someone else handling the books, I found I was losing track of the way my consulting business was actually running. Follow the money if you want to understand your own organization.

Taxes, Legalities, Insurance, Banking

- On the other hand, I would never try to do my own taxes. Bookkeeping hasn't changed much since I was in high school, and what changes there have been have made things easier (with computers). But keeping up with the tax code, that's another matter entirely. I figure my accountant saves me thousands of dollars every tax season. If she didn't, I'd be looking for a new accountant. She's been my accountant now for more than twenty years–ever since I fired my previous accountant for failing to file my tax returns for the several years he was in an alcoholic fog. Now, I don't hire service people who have drinking problems.

- I retain several attorneys, not on retainers, but on an as-needed basis. When someone plagiarizes my writing, I need an intellectual property specialist, but that happens only about once every ten years (so far). When I buy or sell a building, I need a different kind of attorney, as I do when someone accuses me of trespassing when I'm hiking on a trail in the National Forest. In the past, I had one general counsel for all my legal needs, but it's really impossible to find one attorney who is expert in all areas. In general, though, I keep my attorney needs to a minimum. For instance, all my client contracts are simple letters based on mutual trust (except we always put dollar amounts in writing.

- Insurance, to me, is just another form of legal matter. I use an agent I trust, and I don't look for the cheapest policies. What I want is real insurance–policies that protect me from catastrophic financial loss, not policies that pay me $100 when someone dents my car.

- I do use a bank, rather than keeping my money in a mattress. Actually, I use two banks, so my eggs are in separate baskets. Every so often, one of the banks starts doing "creative banking," so I switch to another one. Since I have two, I can switch painlessly without interrupting my business. Banks today are pretty much a commodity business. If they hassle me, or have poor security, or lack convenience, I simply switch.

Physical Services

- Janitorial work, we farm out, too. We're rather neat, but every two weeks we have a professional crew in to do the big cleaning. But I clean up after the new puppy.

- Nobody can really farm out security, though we do have an alarm company. Our major physical security is our crew of trained German Shepherd Dogs roaming our fenced property. People don't generally bother us, even to waste our time trying to sell us magazine subscriptions or contributions to their one true church. Computer security, I take care of myself. No need to go into details here, but the fewer people who know how you secure your computers and data, the better off you are.

Editorial Services

- Finally, as writing is a huge part of our business, we retain professional editorial help on an as-needed basis. Part of that is using old-fashioned publishers, who still value the work of real editors, and who turn around manuscripts promptly as promised.

Our Philosophy

So perhaps you can see our philosophy, which may be useful for other small consulting firms:

- Fundamentally, our billing rate is far higher than any of the services we use, so it doesn't pay to perform these services ourselves. Better to spend our time earning money.

- But flexibility is important, too, because there are dry spells where there's no paid work at hand. In the past, that situation was much more common,d so we always structured our work so we could take over most services if cost-cutting was the word of the day. In the end, though, you can't make a living by cutting costs.

- Since our time is so valuable, we shed a service if it requires too much involvement of our own. We like to hire small businesses where we know the owners and can count on them to resolve problems quickly. They understand our situation as a small business. And, they don't run in the second or third string on us, the way some of the larger firms do. We know the people who work for us, and we deal with them as individuals, the way we like to be dealt with ourselves.

11 comments:

Dwayne said...

Sorry to hear about the mess. The good news is that the rest of us have an opportunity to learn without as much pain.

Have you (or any readers) ventured into using virtual assistants or outsourcing for small services? This type of thing is being mentioned more and more in blogs lately.

Gerald M. Weinberg said...

Dwayne,
Tell us more about virtual assistants.

I do use PayPal to accept payments, and Dorset House and Amazon to deliver books. Would you consider those virtual assistants?

Dwayne said...

Google on "personal outsourcing"

Let's start with this blog entry:

http://www.fourhourworkweek.com/blog/2008/01/21/the-holy-grail-how-to-outsource-the-inbox-and-never-check-email-again/

The author gets 1,000 emails a day on various accounts. He hires people (in India I believe) to scan through these, eliminate 99% of them, and contact him about the rest.

Here is another link:

http://blog.seattlepi.nwsource.com/buzz/archives/116158.asp

that describes some of the tasks that people are outsourcing like designing birthday cards. There I times when I would pay someone $10 to research some ideas for me on the net ($20 gets me an Indian researcher for 2 hrs, 4hrs, 8hrs?).

Google on "virtual assistants" and I found a company in my town:

http://ioreston.com

Someone will screen your phone messages, make appointments, and such.

These are time savers. If they charge $10 an hour or $10 a day and your time is more valuable than that...

I've never used any of these myself, but I see them mentioned often.

Gerald M. Weinberg said...

Thanks, Dwayne.

I do use Jacquie Lawson's wonderful greeting card service: $18/year for all the wonderderful cards I want to send.

I think I'll look for someone to mail manuscripts and receive rejection slips. It's a job I detest, but absolutely necessary for a writer.

And I'll be on the lookout for other virtual services. If only I could find someone to take airline flights for me--what a relief that would be.

Dwayne said...

Jerry, you may have hit on a new business opportunity. When a writer receives a rejection note, they send me $20 and I in turn will feel rejected, dejected, forsaken, and a few other bad things for them so they will have a good day regardless.

Maybe this should be on your writing blog.

Gerald M. Weinberg said...

Dwayne,
You've got a great idea there. I'd pay for that service, cheap at twice the price.

If you want to post it on my writing blog, be my guest.

Jeff L. said...

Greetings Jerry,

I enjoyed the post and will look to take some of its lessons to heart as I grow my consultancy.

"Now, I don't hire service people who have drinking problems."

Do you have a specific test for that? Many of the alcoholics I've known hid their problem well, at least for some period of time.

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Thanks for sharing...
Regards,

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