What is a Consultant?
A consultant is a professional who sells expertise in a specific area (or areas) to clients, providing them with assessments on their practices, helping them identify problems and solutions, and advising them on possible courses of action. Consultants act most commonly as advisers, but they may also be employed to address any other type of situation where their specific experience and knowledge is required. For instance, a consultant could be asked to implement his or her recommendations, provide training sessions on his or her area of expertise, take part in the planning of a corporation's strategy, design promotional material, evaluate bookkeeping methods, etc.
In fact, there is no sphere of activity that is exclusive to consultants or any sphere of activity from which they are expressly excluded. From branding and marketing programs and services to designing new packages, they are a cost-effective alternative for operations that have not yet reached a point where they need to hire a full-time employee but do need periodic expert assistance.
Consultants can work:
- for large consulting firms;
- for boutique firms (i.e. small specialized firms);
- as independent contractors;
- as contractors working within an organization where some form of employer/employee relationship already exists (this depends on the statutes and regulations of the organization, as well as its needs).
Consultants are normally employed on a contractual basis; however, within some firms, consultants may be hired on a permanent basis until their engagement is over. Afterwards, they are made available to hiring firms. Within small consulting firms, it is more likely consultants will be hired as contractors, and their employment will be terminated when the project ends. The same applies to independent contractors.
Your Consultancy is a Business
If you want to establish yourself as an independent contractor or a contractor working within an organization where some form of employer/employee relationship already exists, it is important to remember that owning your own consulting business is precisely that, owning a business. This means you will need to go through the same start-up processes that any other entrepreneur must go through: business registration, acquiring a business number, dealing with business taxes, etc.
Planning Your Business
What is a Business Plan?
A business plan is a recognized management tool used by successful and/or prospective businesses of all sizes to document business objectives and to propose how these objectives will be attained within a specific period of time. It is a written document, which describes who you are, what you plan to achieve, where your business will be located, when you expect to get under way, and how you will overcome the risks involved and provide the returns anticipated.
Why Do I Need One?
A business plan will provide information of your proposed venture to lenders, investors, and suppliers to demonstrate how you plan to use their money, and to establish a basis for credibility of your project. This plan will serve as a guide to the various areas that you as a manager will be concerned with. As you work through this plan, adapt it to your own particular needs.
For further information:
see the document: Business Plan Guide
Interactive Business Planner (IBP)
The IBP is a computer software program that uses the capabilities of the Internet to assist you in preparing a 3-year business plan for a new or existing business. The IBP will help you write your business plan, provide a format for writing your business plan, and take the information you enter and prepare financial projections for you.
For further information:
visit the web site:Interactive Business Planner
see the document: Interactive Business Planner (IBP)
3. Regulations
Knowing the rules and the regulations that apply to your area of expertise is necessary. The amount of regulations that you need to know depends, as might be expected, on your field of activity. Also, keep in mind that some projects may require you learn about rules and regulations you do not already know something about. Keep up to date on amendments to legislations that affect your business.
Business Regulations Info-Guide
This document will assist you in navigating federal, provincial and municipal regulations that apply to a number of industries and businesses in Ontario.
For further information:
see the document Business Regulations Info-Guide
4. Financing
The Canada-Ontario Business Service Centre has created documents, which provide an overview of some of the main financing options for individuals starting and operating a business in Ontario, including programs offered or supported by the government.
5. Managing Your Operation
Dealing with Business Taxes
All businesses must be aware of the various taxes that may apply to their product or service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply.
For further information:
see the document: Taxation Info-Guide
Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, consider asking other business owners in your area to recommend one.
The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.
Basic insurance:
- fire insurance (extended coverage on buildings and contents);
- liability insurance;
- burglary protection (theft coverage);
- dishonesty insurance (covers thefts by employees).
Insurance needs naturally vary from one consultancy to the other, depending on your field of activity. It is best to choose an insurance agent or broker that is familiar with your field of expertise. As a consultant, liability coverage will be vital.
Note: Your professional association may have information about insurance packages specifically tailored for your needs. It is best, however, to discuss your specific requirements with your insurance agent.
Marketing/Advertising
Word-of-mouth advertising and good public relations are often the best ways of promoting your business. Depending on your market and its size, also consider flyers, business cards, brochures, newspapers (especially for holiday promotions), radio, TV, the phone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Referrals are also a valuable way of making customers aware of your products or services.
A web site is also a good marketing tool. It should have details to describe the location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else you think may be of interest to potential customers. However, once you launch a web site, you should update it on a regular basis.
Participating in community events is another way of advertising your business. You may also hold events that will promote your business. No matter how you choose to market your business, it is wise to track how your clients became aware of your establishment - this may help determine your future advertising strategies.
For further information:
visit the web site:Preparing a Marketing Plan
see these documents:
Guidelines for Developing a Company Brochure
Signs and your Business
Plan your Advertising Budget
Advertising Do's and Don'ts
Ways to Promote Your Product or Service
Marketing Plan Outline
Online Small Business Workshop - The Marketing Basics section covers the basics from developing your customer profile to promoting your business.
The federal Competition Act governs misleading advertising and deceptive marketing practices for most businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation.
For further information:
visit the web site:Competition Bureau
see the document: Competition Act - Misleading Advertising and Deceptive Marketing Practices
Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan.
In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material, and ensure that the product or service can be provided effectively at a profit.
For further information:
see the document: Market Research for Your Business
Contracts and Proposals
Consulting contracts may vary widely in their format and their length, depending on the nature and the complexity of the project. There are standard articles to include in written contracts: the name and the location of the parties involved, the date the contract is signed, an offer, an acceptance of the offer, consideration (i.e. the benefit accruing to the parties), signatures of the parties, etc. A written contract helps to avoid misunderstandings, to outline the terms of payment and to protect you in case of disagreements with your client on the nature of the assignment. If you do not possess the legal expertise to draft legal contracts that include all mandatory provisions, you should seek advice from a lawyer.
For further information:
see the document: Selecting Professional Services
The Office of Small and Medium Enterprises
The Office of Small and Medium Enterprises provides two types of support for those SMEs wishing to do business with the government. The Office assists SMEs as they navigate the government procurement system and is working within the government to ensure the procurement system treats SMEs fairly.
For further information:
visit the web site:Office of Small and Medium Enterprises
Clients and Proposals
Virtually all sectors of business call upon the expertise of consultants, so don't be too restrictive. Your clientele may consist of organizations from both the public, the private and the non-profit sectors. To identify consulting opportunities, look for advertisements on websites, in newspapers, magazines and trade journals.
Public Sector
Governments are important clients for consultants. Most contracts are from solicited proposals, but you can submit an unsolicited proposal and try to get the contract directly, or you can sub-contract with other companies who have been awarded the contract. When seeking consultancy opportunities with governments, make sure you look through electronic tendering services. The Ontario Government uses MERX, while the Federal Government uses MERX and Business Access Canada.
MERX - The Electronic Tendering Service
MERX is an Internet-based electronic tendering system that advertises government contracting opportunities to potential bidders across Canada.
For further information:
visit the web site:MERX
see the document: MERX: Electronic Tendering Service
Business Access Canada
Business Access Canada is an inter-departmental initiative to improve supplier and buyer awareness and simplify access to federal government purchasing information.
For further information:
visit the web site:Business Access Canada
see the document Business Access Canada
Procurement
Selling to the Ontario Government means supplying a large marketplace. Businesses of all sizes and types can be successful vendors to the government.
The Management Board Secretariat, Procurement Policy and IT Procurement Branch (PPITPB) is responsible for the development of the government's procurement policy framework, the preparation of requests for proposals and negotiating and managing government-wide contracts for information and information technology.
PPITPB online
PPITPB online provides strategic procurement advice, training and services to government ministries and agencies and supports supplier development and the ongoing implementation of Ontario's interprovincial trade agreements.
For further information:
visit the web site:PPITPB Online
Ontario Opportunities
In the Procurement Opportunities section of its web site, the Procurement Policy and IT Procurement Branch lists other public sector organizations' calls for proposals sites and other electronic tendering services.
MARCAN
MARCAN is a window to tender notices for procurement opportunities within the Canadian public sector.
For further information:
visit the web site:MARCAN
bidsCanada.com
bidsCanada.com helps you sell to the Canadian public sector by providing free e-mail notification and search capabilities of the most recent business opportunities including Tenders, Requests for Proposal, Requests for Quotation and other contracts.
For further information:
visit the web site:bidsCanada.com
Proposals
Whether you are responding to a call for proposals from the public, the private or the non-profit sector, there will be selection procedures to follow. These procedures will vary from one organization to the next, so gather all the required information before submitting your proposal. The following are a number of areas you should be aware of when pursuing a contract for service. The appropriate professional services, such as legal counsel should also be sought out and utilized.
| Site: | Insurance: |
| Contact: | Contract time: |
| Qualifications: | Subcontractors: |
| Examination of contract documents and site: | Omissions: |
| Federal, Provincial and Municipal laws: | Addenda: |
| Bond: | |
Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.
Professional services often used by entrepreneurs may include:
- lawyer:
- insurance broker;
- accountant;
- banker (for tips on dealing with your bank, see the document Dealing With Your Banker & Other Lenders).
For further information:
see the document: Selecting Professional Services
Accounting/Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.
For further information:
see the document: Basic Bookkeeping
Setting-Up a Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce workforce turnover.
For further information:
see the document: Setting Up a Pay System
Setting the Right Price
Setting the right price can influence what consumers will buy, which in turn affects total revenue and profit. In the end, the right price for the product/service is the price that the consumer is willing to pay for it. Hence, correct pricing decisions are a key to successful management.
For further information:
see the document: Setting the Right Price
Profit Watching
Making a profit is the most important -- some might say the only objective of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits, you must raise revenues, lower expenses, or both. To make improvements, you must know what's really going on financially at all times.
For further information:
see the document: Checklist for Profit Watching
Fees
Consultants work for a fee. Pricing of their services will influence consumers and consequently the total revenue of their consultancy. In the end, the right price for the services of a consultant is the price that the consumer is willing to pay. For this reason, correct pricing decisions are a key to success.
For further information:
see the document: Profit Pricing for the Costing of a Service
As a consultant, there are many ways to set your fees: by the hour, by the day or by assignment. When you are quoting, make sure you include in your fee not only the cost of your labor, but also your daily overhead for the duration of the project, the indirect and direct expenses you will incur, as well as a profit margin. You want to build in your fee enough money to cover the operating costs of your business and the time you spent on marketing your services, maintaining your skills and administration.
Do not bill clients exclusively on the basis of the time spent delivering your services. From your clients' perspective, you are an authority on a subject matter that is important to their operation; set your fees accordingly. However, when setting your fees, make sure you find the right balance between overcharging and undercharging: your business must be profitable, but your fees should not be scaring clients away. Research what your competition is charging to see if you are asking for too much or not enough.
Many factors influence the worth of your services. When setting your fees, take into consideration the following:
- rarity - knowing how rare knowledge is drives the value higher. Keep in mind though, that once your knowledge has been shared or sold to someone else, the value begins to dilute.
- accuracy and dependability - if the information/solutions that you are selling have consistently been accurate and measured to be of substantial value, you can charge more because the risk is less for buyers.
- market rate - in some cases the buying markets have already defined the going rate through supply and demand. For example, seasonable high demand may cause you to increase your rates; conversely, during low demand periods you may reduce rates to keep cash flow coming.
- initial rates - having already determined what your competition is charging, you may alter your rates to reflect your newness in the market. You are in essence trading rate for reputation. You need completed projects to gain credibility and presence in the marketplace. Being cost competitive may give you an edge in gaining those first few contacts.
- predetermined price - a defined project may have a fee or stipend already outlined.
- cost plus - determine what your costs are, including external expenses and overhead; multiply that amount by the percentage of profit you wish to make. That percentage may be used on the industry average.*
*This paragraph adapted from How to be a Consultant, Canada-Manitoba Business Service Centre, Western Regional Office, Manitoba Industry, Trade and Mines.
For an example of a basic proposal for tender, see the document Basic Proposal for Tender.
6. Associations
Association of Independent Consultants (AIC)
The Association of Independent Consultants (AIC) helps potential clients find specialists, experts and contractors in many fields. The AIC holds educational networking meetings, workshops, and their website has articles on consulting, a discussion board and a searchable database of consultants.
For futher information:
please call 416-410-8163
visit the web site:Association of Independent Consultants
Association of International Consultants (AIC)
Association of International Consultants (AIC) provides companies and international institutions with highly qualified experts for assignments of varying length on short notice.
For further information:
visit the web site:Association International Consultants
Canadian Federation of Independent Business (CFIB)
CFIB represents more than 100 000 owners of small and medium-sized businesses, distributed across all industry sectors and all regions of Canada. CFIB's advocacy is based on the strong feedback it receives from its members, and it has a high profile in government, in business and among the general public.
For further information:
visit the web site:Canadian Federation of Independent Business
see the document: Canadian Federation of Independent Business
7. Other Resources
Business Information by Industrial Sector
Canadian Association of Management Consultants
Need more information?
Click: Canada-Ontario Business Service Centre
Call: 1-888-576-4444
Visit: visit our Regional Access Program Locations page to locate an office near you
Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.
DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.
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