Benefits and Pitfall of owning you own consultancy
AIPM run excellent lunchtime sessions through the Women in Project Management (WIPM) speakers included:
Tim Scanlan Hopgoodganim lawyer
Therese Brockhurst – consultant for Board / advisor committee
Dane Van Heerden – Company Secretary and advises on how to win business
Elaine Roberts – Seasoned Consultant and trainer & assessor in Project Management
Advised that how you set up your consultancy as a legal entity is very important, set up and structure should be discussed carefully with your lawyer, there is no ‘one size fits all’ and you need to consider
Risk and liability
If there is potential for future investment with other parties
If you will have a business partner
Structure and set up
The most common structure is the pty ltd with shares owned by a trust.
If you opt to be a sole trader, then you are personally responsible for any liabilities incurred.
The risk of going into business with a colleague can be mitigated with a shareholder agreement which ensures that you discuss the issues in advance and agree the course of action which should take place in the event of certain decisions.
Agreements with clients
Clients often provide their own terms and conditions, sometimes you are not in a position to negotiate your own or you just want to win eth business but always be clear on what you’re signing up to and perhaps get some of the riskier contracts reviewed.
Look for personal guarantee statements which may make you personally liable even if you are a pty ltd. (this gets negated).
Obligations out of your control
e.g. if you need to engage a 3rd party and they let you down then you are on the hook to your client, therefore get a proper agreement in place between yourself and the 3rd party.
Broad indemnity can be capped, do you have the correct insurance in place, ask your insurer to review your contracts to make sure you are covered.
E.g. termination for convenience, 30 days means that you can be out of work with 30 days’ notice, consider making it more to give yourself more time.
Key takeaways from Therese included:
Outsource to save time,
make sure we know our compliance requirements and have good governance in place, it’s a good idea to establish a Board of Advisors
If bidding for work refer to ‘associates’ as opposed to ‘colleagues’
Sign off any bids as the Director and include fees to engage a mentor to ensure quality of service
Names and logos, there are 3 you need to be aware of:
Company name (this is not a trademark name)
Business name (this is your name for compliance purposes)
Dane Van Heerden
Talked about the phases of an engagement:
On 1st connection you usually have 5 mins to
articulate your business (you must know your business)
create synergies (you must know your market)
Therefore, you should research the business you’re talking to, so you can know your audience.
Many of the 1st interactions are via email with lots of information. The email body or coversheet must clearly call out the points you want to get across otherwise the message will be lost.
At the end of the engagement get feedback – positives and negatives, then after a few months follow up again to find out if the value was delivered, staying in contact creates the loyalty factor.
When: is a good time to start a consultancy – the answer lies with the prospective client and the cycle that they are in.
Why: starting your own consultancy to be your own boss is not the best reason to do it. The best reasons usually include that, as you will drive yourself very hard when you’ own your own consultancy
You have a unique niche product that is better than others on the market
Who are your customers
Find the balance from knowing the situation you’re in
Clients you’re dealing with
What service you can offer
Network, we don’t know everything, so we use our network to find the answer, when starting we fear failure as it impacts earnings, but failure drives us to learn lessons and forces us to seek help.
Where Home office or expensive city offices. Buy in professional help, you’re only as good as your last job
Then be prepared, have good governance, document everything and keep all receipts
User your project management skills to keep track of your consultancy.