Last week I had the opportunity to meet with finance experts from small and multinational companies. The meetings’ scope was more about general finance approaches than a deep dive in a certain topic. What was very interesting to me is the contradictory message from business leaders. I was surprised when I heard different approaches for the same topic, as an engineer I thought that there are not so room to move in this field because of the regulations.
Financial consulting was an absolutely new field to me, actually it was interesting to experience that, there is similarity to the standpoints of engineering consulting. In finance the CFO, CEO want to be buy some kind of value, what the consultant should bring to the company. They mainly care about packages which provide some kind of directions, goals, opportunities to the company. Quite briefly there are three key factors what we have to manage in consulting.
- Business outcome
- Amount of time
- Amount of money
As a consultant you have to deliver your promises to the business, so it is inevitable to create an executable plan for two months. Also important to clarify all the activities and deliverable (SMART goals). If we have the agreement on goals the next step to make agreement with the customer about the responsibilities, who deliver/provide what by when. What is the role of the consultant and who is the sponsor of the project. Extremely important to get the buy in from the management and other functional leaders to succeed.
Probably the biggest challenge for an entrepreneur consultant is to manage cash flow. Specially at the early cycle of the business, when there are not many customers and the professional network is small. To set the price for a project is depend on multiple variables, if the project schedule is long, there is possibility to reduce the cost, because your risk is lower. At short term projects you have to build the risk in the price, suggested to calculate with 3-4 months “lauf” when you plan your prices and incomes. So here are some best practices what you do not want to break.
- Never undersell yourself, keep your price, even you really need that job!
- Always know the profitability of each gig
- Plan engagement carefully
- Always use milestones (more milestones – more frequent money) chap it up every projects
- Do NOT let customer payments slides, you need your positive cash flow and they get use to it.
- They need You, this is why they do business with You.
Also indisputable the importance to increase your customer base, there are several ways to do this.
- Former employers
- Always ask for referrals
- Social media is your friend
- Get know