Tag Archives: consulting

Going Into Consulting? Prepare for Scope Creep

Are you new to consulting? Planning to start soon? Beware of scope creep. It’s a real problem in a lot of professional services. I ran into it in my years of consulting related to high-end planning and market research.

Scope creep is what happens when you’ve done the consulting (or programming, design, engineering, etc.) you promised but your client wants more. I ran into it a lot during my consulting years, doing business plans for clients. Imagine my disappointment as I delivered a finished plan along with an invoice for my fees, only to be asked for more work. Suddenly, my money was being held hostage. And, in my case, the kids needed shoes. But the client said assumptions had changed, or the product had been revised, or the financial analysis needed more scenarios.

You Can Avoid, and Manage, Scope Creep

It’s always worse with new clients. With repeat business with existing clients, you know each other, and you can take some of this for granted.

At the outset,

  1. define the deliverables carefully, with specific, concrete, agreed-upon definitions for each step, with approvals and approval process laid out.
  2. And while you’re on the subject, you should also build timing of deliverables in terms that protect you from the client’s delays, such as having milestone 2 coming due not on a specified date, but rather on a specified amount of days after approval of milestone 1.
  3. And, better yet, that plus days after receipt of payment for milestone 1 (solving another problem while you’re at it).
  4. And also, point out from the beginning that things do change, and progress can lead to change, and when things change requiring work different from what is specified, that takes place at a given billing rate.

Then, as the engagement rolls on, you have to stick to it.

Very Hard To Do After the Fact

What’s difficult is that you have to deal with scope creep in the beginning, with the way you define the engagement, and your billing structure. It’s very hard to manage when you’re delivering, and your terms of engagement haven’t built the precautions into it, ahead of time.

If you get into that situation, of course you know you are dealing with ambiguity. Reasonable people can disagree about what’s a prototype and how that relates to the entire product. Details that should have been specified weren’t. So now what do you do?

Try to configure your response as “yes, we can do that for you … and here’s how much it will cost.” Follow that with details of the difference between what you promised and what more they want. Be specific. Have a good list of additional development required to go from your vision to theirs. Try to explain your point of view. If you have to, it will save the relationship, and you can afford to, offer a big discount on additional work. Take the high road, blame yourself for the misunderstanding, and keep the client happy.

Remember that repeat business is the life’s blood of professional services. Try not to lose your client.

The client is not always right

You may run into a client whose demands are unreasonable. The first time is the client’s fault. From then on it’s your fault, not the clients. Specify your jobs better and stick to your policies.

You might find this helpful: in my years of consulting, I ran into one client who played scope creep on me more than once. I guess it had become a standard tool in his toolbox, to get more work from consultants for less money. After the second time I started taking the price I would have charged to anybody else, and tripling that price for him when he asked me for consulting. I didn’t get the engagements, but also I didn’t have the aggravation. I was better off.

But I also, for my own peace of mind, stuck with the general rule for consulting: you don’t say no. You say yes, and here’s how much it will cost. Build the aggravation into the price. Make it so that if you do take it on, it’s worth the extra problems.

Reflection: 10 Lessons Learned in 22 Years of Successful Bootstrapping

(I posted this about two years ago on Small Business Trends. I’m reposting it here today because this is a good time of year for this kind of reflection. And maybe also for not writing a new post. Tim )

Last week a group of students interviewed me, as part of a class project, looking for secrets and keys to success. They were asking me because after 22 years of bootstrapping, my wife Vange and I own a business that has 45 employees now, multimillion dollar sales, market leadership in its segment, no outside investors, and no debt. And a second generation is running it now.

Frankly, during that interview I felt bad for not having better answers. Like the classic cobbler’s children example, I analyze lots of other businesses, but not so much my own. As I stumbled through my answers, most of what I was saying sounded trite and self serving, like “giving value to customers” and “treating employees fairly,” things that everybody always says.

I wasn’t happy with platitudes and generalizations, so I went home that day and talked to Vange about it. Together, we came up with these 10 lessons.

And it’s important to us that we’re not saying our way is the right way to do anything in business; all businesses are unique, and what we did might not apply to anybody else. But it worked for us.

1. We made lots of mistakes.

Not that we liked it. At one point, about midway through this journey, Vange looked at me and said: “I’m sick of learning by experience. Let’s just do things right.” And we tried, but we still made lots of mistakes. We’d fuss about them, analyze them, label them and categorize them and save them somewhere to be referred to as necessary. You put them away where you can find them in your mind when you need them again.

2. We built it around ourselves.

Our business was and is a reflection of us, what we like to do, what we do well. It didn’t come off of a list of hot businesses.

3. We offered something other people wanted …

… and in many cases needed, even more than wanted. You don’t just follow your passion unless your passion produces something other people will pay for. In our case it was business planning software.

4. We planned.

We kept a business plan alive and at our fingertips, never finishing it, often changing it, never forgetting it.

5. We spent our own money. We never spent money we didn’t have.

We hate debt. We never got into debt on purpose, and we didn’t go looking for other people’s money until we didn’t need it (in 2000 we took in a minority investment from Silicon Valley venture capitalists; we bought them out again in 2002). We never purposely spent money we didn’t have to make money. (And in this one I have to admit: that was the theory, at least, but not always the practice. We did have three mortgages at one point, and $65,000 in credit card debt at another. Do as we say, not as we did.)

6. We used service revenues to invest in products.

In the formative years, we lived on about half of what I collected as fees for business plan consulting, and invested the other half on the product business.

7. We minded cash flow first, before growth.

This was critical, and we always understood it, and we were always on the same page. See lesson number 5, above. We rejected ways we might have spurred growth by spending first to generate sales later.

8. We put growth ahead of profits.

Profitability wasn’t really the goal. We traded profits for growth, investing in product quality and branding and marketing, when possible, although always as long as the cash flow came first.

9. We hired people slowly and carefully.

We did everything ourselves in the beginning, then hired people to take tasks off of our plate. We hired a bookkeeper who gave us back the time we spent bookkeeping. A technical support person gave us back the time we spent on the phone explaining software products to customers. And so on.

10. We did for employees’ families as we did for ourselves.

Family members — not just our own family, but employee family members too — have always been welcome as long as they’re qualified and they do the work. At different times, aside from our own family members, we’ve had two brother-sister combinations, an aunt and her niece, father and daughter, and husband and wife.

And in conclusion…

Bootstrapping is underrated. It took us longer than it might have, but after having reached critical mass, it’s really good to own our own business outright. It might have taken longer, and maybe it was harder — although who knows if we could have done it with investors as partners — but it seems like a good ending.

Family business is underrated. There are some special problems, but there are also special advantages too.

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Read This Before Hiring a Coach or Consultant

May I call it the expert business? It’s kind of like a zoo (no offense intended). There are coaches of all varieties, from business to life to style, to executive and leadership and others. And management consultants, planning consultants, strategy consultants, marketing consultants, public relations consultants, etc. And designers and programmers, project managers, event planners, graphic artists … I’ve been both seller and buyer, and I’m thinking I can help you figure out which section to go to, and which cage to rattle, by sorting through some of the species, and some of the differences.

I worry that people use these terms indiscriminately. To me, a coach teaches you to do it better, helps you, and trains you to do things better. A consultant delivers a report telling you what you’re supposed to do.

A coach watches you do it, then reviews your performance. A consultant studies, listens, concludes, and delivers the conclusions.

Can you tell I lean towards coaching? Maybe because I made a living consulting for 20 years, both on my own and as an employee of brand-name firms. And in my specialty, business planning, having it done for you doesn’t work. It’s like paying somebody to do your exercise. Coaching is more likely to work better. I’ve done strategy consulting, and that’s very similar. Strategies are to develop and implement yourself, over a long term. A coach might help, a consultant, not so likely. I’m immersed in social media, and I think that’s another example of something you so yourself, ideally, rather than have done for you; which means it’s another area for coaching more than consulting. And PR? Maybe you have somebody do the press releases, and arrange the meetings, and suggest tips and techniques, but do you believe in anything actually said by a spokesperson?

Ideally, you look for a relationship in which you are buying, and paying for, just the expertise. Pay the expert to coach you as you do it yourself. You pay for fewer hours, but you still get the benefit of somebody else’s experience and expertise. That’s the best of both worlds.

(Note: as the conceptual author of Business Plan Pro software, I’m completely biased on this point, but I’m amazed that any business plan coaching or consulting relationship doesn’t include two copies of business plan software, one for coach and one for client. That empowers the client, who has to own the plan to implement it, and focuses the consulting work on coaching, not doing. Both sides win.)

(image: REDMIRAGE/Shutterstock)

A True-Story Reminder About Pricing In Consulting

True story: back in my business planning consulting days, 1983-1994, Apple computer was by far my best client. I worked for the Latin America group, then Apple Pacific, then Apple Japan, and a bit for Apple USA and Apple Europe. I facilitated a lot of business plans, and did market research and some country plans, single-issue plans, and so on. I also worked with other clients, of course; but I depended on Apple.

money trapI priced my consulting by the engagement. The client would describe the job, I’d write a proposal, set a pricing and billing schedule, and then stick with it.

There was one person, among several dozens I worked for, who had a pattern of scope creep: meaning that after we’d agree on what was to be done for how much money, as I delivered the work in stages, he’d consistently want more than what had been agreed. It was always “But what about this” and “have you followed up on that?”

And it’s hard, as you know if you’re in this kind of expert business, to tell the client too often that what he or she is asking for is beyond the scope of the project. Sure, you have to sometimes, but it’s never easy.

So here’s my nugget about pricing: after I worked with that person and had that happen once, I was concerned with the problem. The second time he asked for a job, I wrote the proposal much more carefully, trying to block out scope creep; but it happened anyhow. The third time he asked, I calculated what I would normally charge, and tripled it.

That pricing idea worked. I didn’t want to have an enemy embedded among my favorite clients. So he didn’t accept that proposal, and I didn’t do any more work with him after that. But we remained on good terms at meetings, and he didn’t lobby against me when my name came up.

The worst I heard he said about me, second hand, was “how can you guys work with him so much? He’s really expensive.” And that was fine with me.

One Way Not to Market Your Expertise

Is this you? Are you trying to sell yourself as a consultant by sending general messages to people (or companies) you don’t know? Promising to solve whatever problems they have?

TrashI don’t dislike this person. I just feel sorry for the enormous waste of time and effort spent in the wrong direction.

This morning I received a second email from a guy who wants to sell me management consulting. His message is hardly convincing me of his competence. He’s never met me or anybody else at my company of 45 employees. And he’s addressing the wrong person because I’m not CEO anymore. And he’s promising to solve whatever problems I happen to have. Quote:

My services are flexible, ranging from advisory services to senior management and targeted special projects, as well as interim C-level management.

I’m sorry because he’s obviously in a tough spot. Despite this very unconvincing trolling marketing effort, he’s got what looks like a good resume and it’s a well-written email. I like this phrase:

I don’t write theoretical reports–I provide hands-on, practical assistance to help companies achieve the next level.

Then I think of the effort I assume is involved in finding me and my company. How many others are getting the same offer? How many people are opening that email, let alone reading it? And I think our website makes it obvious that I’m not even the right person to send this to.

This has to be an enormous waste of time. I’ve been close to consulting one way or another since 1974, and I was a full-time management consultant for 11 years. In all that time, I’ve never heard of a consulting engagement that started with a blanket offer like this. Companies seek consultants out to solve problems. As a consultant, you have to have a focused expertise and concentrate on being found by people who have the problem you solve, but after they perceive the problem.

I wonder if a medical doctor has ever been successful offering undefined medical services to people he or she doesn’t know.

It does remind me of the snake oil cliche, a medicine that will cure whatever ails you. These are tough times. I hopes he lands a job. Fast.

(Image: Blazej Lyjak/Shutterstock)

You Probably Mistreat Your Best Clients

PR people, social media experts, marketing experts, not to mention lawyers, accountants, and consultants: do your long-term loyal clients get the worst treatment? Do they pay the highest rates? Do you take them for granted?

It’s not an idle question. I’m not trying to make trouble. It’s just that I think this happens a lot. I think it’s a natural result of efforts to generate more business and new business.

I confess that I did it at least once that I know of. Very early in the on-my-own portion of my professional service career, I had a retainer arrangement with a large textbook publisher. They paid me $1,000 a month to have me on call, while the rest of my business planning clients paid me a negotiated amount for each engagement. I built the thousand dollars into my sales forecast, but I hated it when they called. I wanted to deposit the money without any work. I took it for granted.

Telephone companies do it, don’t they? Give the new customers better rates than existing customers? The longer you’ve been with your provider, the more you pay? And don’t the cable companies give new customers better deals?

How about this: review your client lists. Make sure your longer-term clients get the best rates and the best treatment. In professional services, repeat business is golden; but there’s a temptation to focus on recruiting new clients instead of keeping existing clients.

(Image: istockphoto.com)

True Story: A Challenge

I was the planning consultant to Apple Computer’s Latin America group from 1982 until 1991 or 1992, the end of the relationship being a bit hard to define as I was called on steadily more by Apple Japan and less by Apple Latin America.

The challenge came in the spring of 1985. The annual business plan was done every spring, turned in to management in June and then discussed and revised and resubmitted and eventually accepted in July. In April of 1985 I had been the consultant for that process for four years running when Hector Saldana, manager of the group, said:

“Tim, yes I want you to do our annual plan for us again this year. But only on two conditions: first, I want you to stop working for other computer companies. Second, I want you to take up a desk in our office, come every day, and sit here and see us implement the plan.”

Happily, he also had some good news related to giving up other competing companies as clients: “And, if you agree to do this, I want to contract you for all of your hours for the next year, and at your regular billing rate.”

The condition of giving up competing clients was difficult for a one-person business. What if Apple had problems, or changed its policy regarding consultants? What if Hector got promoted or fired? Where would I be then, if I had given up other business relationships.

That’s not the real point of the story, although it does relate to planning as you go. That certainly wasn’t part of my business plan for my business, but it was a classic example of changed assumptions. We talked about it at home at length, and decided to go ahead with it. However, we also modified the plan we had going related to efforts to generate new leads and new business: we would focus that effort within Apple itself, different groups that didn’t talk much to each other, to reduce risk of having two many eggs in the single Apple Latin America basket. The plan was modified for cause, to accommodate changed assumptions.

The problem of implementation, however, forced me to consider the difference between the plan and the results of the plan.

There was some history. The previous year or two had been the time of “desktop publishing” for Apple Computer. Desktop publishing, which we now take for granted, started with the first Macintosh laser printer in 1985. It was a huge advantage for Apple in competition against other personal computer systems.

Our plan for fiscal 1985 had been to emphasize desktop publishing in most of our marketing efforts. And it didn’t happen. While we talked about desktop publishing in every meeting, the managers would go back to their desks, take phone calls, put out fires, and forget about it. They didn’t intend to, but they’d had so much emphasis on desktop publishing that it seemed boring, old hat. Multimedia was the thing.

So, faced with the implementation challenge, I created what became the strategy pyramid to manage strategic alignment. We ended up with a relatively simple database of business activities. Collaterals (meaning brochures and such), bundle deals (software included with the hardware at special bundled prices), advertising, trade shows, meetings and events, all were tied into a system that identified what strategy point they impacted, and what tactic.

So during that year, as business went on, we were able to view actual activities, spending and effort, divided by priority. We set more budget money for desktop publishing activities than any other. During the review meetings, we compared actual spending and activities (the beginning of what I talk about as metrics)  to planned spending and activities. And over time, with pie charts and bar charts to help, we were able to build strategic alignment. What was done was what the strategy dictated.

The plan-as-you-go implication was that this didn’t happen just because it was in the plan. It took management. There was a plan review schedule with the meetings on the calendar way in advance, and for every meeting I was able to produce data on progress towards planned goals. The managers discussed results. Plan vs. actual metrics became important.

When things didn’t go according to plan, the meetings would bring that to the surface. Managers would explain how the assumptions turned out wrong, or some unforeseen event — we had good results as well as bad results — and we would on occasion revise the plan.