main advantages to having a home office

There are many advantages to having a home office. Among them are:

• Low overhead expenses. You don't have to worry about paying rent or utilities for an office; you will appreciate this feature until you establish a regular client base.
• Flexibility. There is little doubt that operating as a consultant at home gives you a great deal of flexibility. You can set your own hours and take time off as you need it.
• No rush-hour nightmares. For anyone who has had to commute to and from a job during rush hour, this will be a welcome change of pace.
• Your home office space will most likely be tax-deductible. The IRS has relaxed the rules for people who work at home, but check with your account or income tax preparer to see if you qualify for this deduction.

Employees

When you first open the doors to your consulting practice, you may be able to handle all the operations by yourself. But as your consulting business begins to grow, you may need help handling administrative details or help completing the actual consulting assignments.

You need to make some important decisions. For example, do you have the time it will take to make labels and insert your brochure into 1,000 envelopes? Can you afford to spend time doing administrative tasks when you could be using that time effectively marketing your services--and signing up new clients?

There are many options when it comes time to decide if you need help with your paperwork. For example, a quick look through the Yellow Pages will reveal a number of small secretarial support firms. The rates will depend on a variety of factors, including how large or small an organization it is and what types of services it provides.

While it will pay you to shop around for these types of services, don't select a secretarial service just because it happens to have the lowest prices in town. Instead, ask for references, preferably from other consultants who have used their services, or from small-business owners. A good, reliable support service is worth the price in the long run.

There will come a time, however, when you may find it more cost-effective to hire someone to work in the office with you. Hiring a good administrative support person can sometimes mean the difference between success and failure--between obtaining more clients or constantly losing clients. There are some benefits to having someone in the office with you. Among them are:

• You save time and money. By having someone concentrate on the more routine tasks (opening the mail, filing, answering phones, etc.) you can focus all your efforts on recruiting new clients. Think about this: Would you want to lose a $500-a-day client because you were too cheap to hire someone to stuff your brochures into envelopes?
• You don't worry about being out of the office. If you are a one-person operation, it's hard to be out on the road marketing your services if you're worried about clients calling--and only getting your answering machine.
• You have someone to offer another perspective. Sometimes it can be pretty lonely trying to do everything yourself. Having someone around the office during the day who can offer another perspective can be worthwhile.

Hourly Fees

You need to tread carefully when setting hourly fees, because two things could happen: A) Your hourly rate is so high that no one could ever afford you (therefore no client will ever knock on your door). B) Your hourly rate is so low that no one will take you seriously.

Keep one important rule in mind when establishing your fee, no matter which structure you decide on: The more money people pay for a product or service, the more they expect to get for their money. In other words, if a client agrees to your hourly rate of $400, then you had better give $400 worth of service to that client every hour you work for them.

Some clients prefer to be billed on an hourly basis, while others hate the idea of paying someone what they perceive to be too much per hour. Those clients usually prefer to pay per project.

Project Rates

When working on a project rate basis, a consultant normally gets a fixed amount of money for a predetermined period of time. A few of my fund-raising clients actually preferred to be charged this way, so it wasn't unusual for me to charge $36,000 for a one-year project in which I consulted them on how they could raise money. Because of the amount of money involved, most agencies preferred to be billed on a monthly basis. This worked out fine until I realized that many agencies were late paying their monthly bills.

Because of this, I decided that all future clients who wished to be billed on a monthly basis would pay the first-month fee and the last-month fee at the signing of the contract, which meant that if the agreed-upon amount of the project was $36,000, to be paid on a monthly basis, I received a check in the amount of $6,000 before I began any work ($3,000 for the first month's fee and $3,000 for the last month's fee).