Ideas, strategies, and tips, far growing your consulting business Special thanks to Ilise Benun, Tony Narinesingh and Anver Suleiman The finance function in your business is far too important to be left to financial or accounting specialists whether you are a practicing financial consultant or a business owner. You must ensure that you develop an understanding of the fundamentals of financing and accounting, as this will help you to support the “gut feeling” of your decisions with a more accurate gauge of how well your business is performing. Remember, you may have the best business plan presentation, range of products or marketing program, but investors ultimately invest in the capability of management to meet or exceed the stated objectives – and as a consultant, that is YOU! Gross Margin: Net Worth: Return on Investment: Return On Assets: Net Working Capital: Current Ratio: Quick Ratio: Debt Coverage: Price to Earnings: In assessing a project, you should try to determine the probability of failure by examining the trend in key ratios, such as: • Working Capital to Total Assets • Debt to Equity • Total Liabilities to Total Assets • Fixed Assets to Stockholders’ Equity • Net Income to Total Assets • Cash Flow from Operations to Total Liabilities • Net Income plus Interest to Interest In addition, in appraising the financial picture, the following areas should be carefully analyzed for indicators of possible failure: • Material decline in cash flow from operations • Material decline in earnings • Material drop in the market price of stock • Material decrease in dividends • Probability of failure in your industry • Age and size of company - startup/emerging/financial resources • High degree of competition • Involvement in areas not directly related to your basic business • Inability to meet past-due obligations • Poor financial reporting • Inability to control costs • Inability to attract and negotiate further financing Financial Forecasting and regular investigations of your financial performance can often detect problems that are often the cause of business failure. The importance of historical financial information is often underrated. Management needs to recognize the importance of regularly evaluating and learning from past performance while using this data to plan for the future. For instance, the Cash Flow Statement may show problems of cash mismanagement, the Income Statement may reveal dwindling sales or high expenses in a particular area, and the Balance Sheet which shows Assets, Liabilities and Equity, may show problems with Accounts Receivable and Inventory, or confirm the insolvency of the business. If you can detect these problems early, you can invariably take corrective action. Copyright July 2004, The Cynton Company. All rights reserved. Ansel V. Tony Narinesingh, CPC, APC, CC., CPCM., is the Senior Partner of The Cynton Company located in Ontario, Canada. He is a member of the Board of Advisors of the American Consultants League. Mr. Narinesingh is the author of The Cynton Business Planning and Development Program, an in-depth, interactive, practical and informative manual that can be used for start-up, emerging or established ventures. He can be contacted by email: cynton@rogers.com or at the web site: www.cynton.com. 20 Tips On Silence And A Few Interesting Ideas On What It Means By Ilise Benun Last month, I submitted a proposal to a prospect to revamp his web site (yes, I do that). He seemed very excited about the project, but when I tried to reach him to get an answer, all I got was silence. He "should" have responded too, but he hasn't. Part 1: 20 Tips on Silence I agree with you to not give up, but we ride a fine line not to be a pest. My mantra is PATIENCE and PERSISTENCE! -- Robin Sanderson 2) Ask for a “yea or nay” 3) Send a real letter 4) Put them on auto-drip 5) Ask if they’re okay 6) Give them a deadline to respond 8) Keep track of who hasn’t answered 9) Tell them what you’re imagining 10) Let them know you’re not going away 12) Keep calling without leaving messages 13) Ask if they got your first (or recent) message 15) Get their consent 16) Try to find out why they’re not interested 17) Develop a Prospect Rating System Having a system can keep you from wondering if you're being a pest…or maybe even not following up enough. My system is mainly based on the prospect's level of commitment, what he's telling me, and then tempered with my “gut feeling” about him. Here’s how it works: First, determine your prospect’s rating based on three criteria. For example, you could label prospects as “C” if they merely have casual interest, “B” for prospects with qualified need and an actual project they need help with, and “A” for qualified need where you also received a verbal commitment…AND a specific date to get the contract signed, etc. I may try a “call/email/call/email/letter” approach with an “A” prospect. This multi-pronged contact approach increases the chances of getting a response because some people may not be as diligent with their voicemail as they are with email, etc. You have to be sensitive to the situation, and that’s where you need to temper your persistence with that “gut feeling.” If the prospect in question travels a lot, or is an extremely busy person, you need to be sensitive to the fact that she won’t drop what she’s doing every time you call or write. 19) Send a “Salvage Letter” I call this tactic a “salvage letter” the goal is to get him to understand why I’ve persisted and hopefully convince or “guilt” her into contacting me with a “yes” or “no.” I explain that a “no” is just a good as a “yes,” since I’m simply trying to figure out where I stand so I can either move on, or follow up appropriately. I’ve found that many people won’t call you back because they’re embarrassed they led you on for so long and then never came through. Many folks think that maybe, if they ignore your calls, you’ll simply go away and they won’t have to go through the embarrassment of explaining what happened. When you give them an “out” (by letting them know it’s ok to say “no”), the truth usually surfaces. My “salvage letters” tend to get about a 50% response rate, which is pretty good considering how many unsuccessful attempts I have made by this point. When all else fails, I place the prospect in a targeted mailing list. This will ensure they get a message from me via U.S. mail (newsletter, articles, special offers, etc.) every quarter. I can’t tell you how many folks have contacted me years later to re-engage. If you’re courteous in your communications, and “professionally persistent,” you never know who will end up calling you back eventually and award you a very profitable project! -- Ed Gandia Ilise Benum is a member of the Board for American Consultants League. Part 2 of this article will appear in next month’s issue. For more about this and other self marketing issues, visit Ilise’s website at, http://www.artofselfpromotion.com/dws.info.html Ten Smart Things You Can Do To Become THE Authority In Your Field Successful savvy consultants know the best way to get business is to have it “come” to them, vs. chasing prospects. And the best way to get people to come to you for consulting work is by being known as THE authority in your field. Here are ten ways to put you on the track to investing in your future: 1. JOIN every association in your field(s)…including the related associations. Do this for both learning and networking (getting known). 2. READ every major book written on your subject matter. Keep them in a reference library near your desk. Try typing in your specialty on www.amazon.com and see what comes up. Or just under “search” on your browser. 3. SUBSCRIBE to every magazine, journal, and newsletter in and/or related to your expertise. Your associations will have links to these. 4. VOLUNTEER to serve on committees, boards, etc. Get involved and be known to the upper echelons. 5. SPEAK at conferences, seminars, etc. You will learn, grow, and get exposure. Your associations and publications will steer you to these. 6. WRITE articles for the publications in your field…and get reprints for distribution. 7. COMMUNICATE with the biggies in your field via e-mail, notes, letters, etc. so they get to know you. Point them to interesting facts you’ve uncovered. Ask them smart questions. Offer them insights that you have because of your experience. Don’t ask for quid pro quos…that will come later. Be a giver. 8. PREPARE a white paper, a study, a “something” that only you have done and give it away to anyone who asks for it. 9. CREATE a Web site with your credentials, your philosophy, and several give-aways that have value to your prospects. 10. SEND press releases out every week, or every month, about something you are doing, some insight you have, somewhere you are speaking, etc. Finally, add at least ten more items to this list of “How to Make Yourself THE Authority” in your field. It’s fun. You’ll learn. You’ll be recognized. And you’ll have people “coming” to you. But don’t put it off…begin today! Anver Suleiman is the Executive Director for the Independent Consultants Association (www.ica-assn.org) and a member of ACL. Come meet Anver this October at ETR’s Wealth Building Bootcamp. For more information, please contact us at: support@earlytorise.com CONSULTING RESOURCE OF THE MONTH: Two of our ACL Board members, Mark Amtower and Valerie Young, are offering unique services for the independent consultant. Check them out this month… Amtower & Company launched GovernmentExpress.com as an online resource for those looking to get into government contracting. The government does use consultants and small businesses for a variety of projects and programs. More free information will be added to this site over the next few months, as well as reports and information for a fee. "The interest in understanding how to do business with the government has never been higher," says Mark Amtower, founding partner of Amtower & Company and publisher/editor of GovernmentExpress.com. "The most important thing is for companies to get good information, information they can use. This is what differentiates what we are doing with GovernmentExpress. Their first, free monthly GovernmentExpress e-newsletter, goes out in late August. We’ll keep you posted. Are You Settling for a Paycheck When What You Really Want Is a Life? Imagine instead getting paid to shop, work with animals, write about NASCAR, work for yourself, tour the country in an RV or living on a boat, design costumes, work at the Grand Canyon or for the Peace Corps, work from home, start your own non-profit, live overseas, or live rent free as a professional caretaker. People do it every day... and so can you! Learn more at http://www.ChangingCourse.com/cooljobs.htm RSVP: Like what you see? Have suggestions for topics that you would like Board members to address? Send us your comments and suggestions to: American Consultants League, c/o Early to Rise www.earlytorise.com or email us at: support@earlytorise.com. Be sure to mention that you are a subscriber to ACL. American Consultants League Consulting Tips Newsletter 245 NE 4th Ave Ste 102 ACL Board Members: Mark Amtower, Ilise Benun, Bob Bly, Tony Narinesingh,
Consulting Tips Newsletter
From the Editor: In this issue, you’ll discover the ten things you can do to become the authority in your field; you’ll find some practical tips on handling the “silent response” of some clients, and you’ll get a quick lesson in financial ratios – one that is easy to understand and apply – if that’s possible.
"Perhaps the greatest secret to top trading and investing success is appropriate money management”
FINANCIAL RATIOS
A.V. Tony Narinesingh, CPC, APC, CC, CPCM
Ratios are guidelines and must be considered together with other factors, such as, volatile economic conditions, collateral, asset turnover, industry performance, confidence and track record of the owners, etc. A financial ratio is a useful tool only when compared with other ratios. By itself, it is ineffective and useless and will not help you to determine the health or performance of a business. Ratios used in financial statements reflect the mathematical relationship between two amounts and are expressed in percentages, fractions or decimals. While ratios will not provide solutions for existing problems, they can pinpoint operational difficulties for management to take corrective action. For your information, the following explains some of the most widely used financial ratios used in analyzing financial statements:
Used to assess the profitability of the business as well as a yardstick to compare the industry average. If the ratio is below the industry average, the causes should be investigated. Gross Margin = Divide Gross Margin by Net Sales.
This is often referred to as, owner's equity or capital or net assets or book value in the balance sheet. It represents the excess of total assets over total liabilities. It is the amount of money that is tied up in the business at a given time, i.e., the invested capital plus or minus the retained earnings/deficit. Net Worth = Invested Capital + or - Retained Earnings/ Deficit
Often referred to as Return on Equity or Return on Net Worth, ROI is the return on the original investment of Investors/Shareholders plus subsequent earnings retained in the business. ROI = Net Income after Taxes divided by Net Worth.
This ratio shows the profits generated from the use of tangible (production) assets. Goodwill, incorporation costs, deferred charges, etc., are not included. ROA= Net Income after Taxes divided by Total Tangible Assets.
While technically not a ratio, this is a practical and precise cash management tool as it indicates whether the company’s current assets exceed its current liabilities. It also shows the ability to meet short-term obligations and monitor any potential liquidity crisis that may arise. Net Working Capital = Current Assets minus Current Liabilities.
This ratio is related to Net Working Capital. It calculates the ratio between current assets and current liabilities. A lower ratio indicates that the company is less able to meet its obligations with its cash flow in a timely manner. Current Ratio = Divide Current Assets by Current Liabilities.
Often referred to as the "Acid Test", it is the ratio used to determine operating difficulties. A negative ratio suggests that company obligations to creditors cannot be met within a 30-day period out of accounts receivable unless other sources of funds are available. Quick Ratio = Divide Current Assets minus Inventories minus prepayments by Current Liabilities.
This ratio addresses a company's ability to repay long-term debt. It is invaluable in planning, managing and negotiating long-term borrowings with a bank or lender. Managing and reducing debt obligations effectively are directly affected by interest rates, profit margins and term of the loan. Debt Coverage = Net Income after Taxes plus Amortization plus Interest divided by Principal plus Interest Repayments.
In evaluating a company's financial position the P/E ratio - Market Price per Share divided by Earnings per Share - is important in determining the quality of the earnings, i.e., realistic earnings or monies earned after consideration of various factors which will affect the earnings quality of a company. This ratio is used when making equity financing decisions as a low P/E ratio means low earnings quality resulting in higher interest rates and cost of borrowing, lower bond ratings, and/or lower market bond pricing as well as fewer chances of attracting funding. Accounting policies may affect earnings quality. If a company's policies are very liberal in relation to realistic industry standards, earnings quality would most likely be lower. Therefore, you should always compare your accounting policies with those considered Industry standards.
I was dying to jump to a conclusion. I started to think, "It must have been too expensive for him," or "he chose someone else." But then I stopped myself, because I was basically making up stories in my head, stories that have more to do with my own "issues" than with the project at hand.
Do you make up stories in the silence too? More important, can you stop yourself? Because the reality is: you don't know. Most of the time, the silence means they're busy, maybe even overwhelmed, dealing only with what's on the top layer of their desk.
The most you can assume is that they can't deal with you now, and even that is not clear because you don't know if they actually got your message. Maybe it was filtered out. Maybe they accidentally deleted it. Maybe they're out of town and haven't reached the bottom of their email yet.
Most of us are not nearly as responsive as we'd like to be. And if you want to be a priority to your clients, it's your responsibility to remind them they are/were interested until they're ready to continue the conversation.
I submitted this idea to my clients recently and was surprised at the various suggestions and comments I received back from them. What follows is a two-part commentary that I hope you will find useful.
Part 1 compiles the practical tips people offered on how to deal with the silence that is inevitable when you are marketing anything. Part 2 is a bit more philosophical, and offers some really clear insights (and often opposing points of view) on the meaning we give to the silence.
I am grateful to all who contributed their ideas.
1) Be patient and persistent
I reminded a reporter that I had submitted an idea for a story in Lady's Home Journal. I said, "Give me a yay or a nay!"--it worked ...I got a 40 min interview and a story. -- Evan Lipkis
How about responding to these enquiries with a first-class business letter? It seems that they carry more impact than a simple e-mail. A follow-up postcard every month or so helps keep you in their mind. -- John Gilger
I have a rule I follow, 3 strikes and you’re out. I'll leave no more than 3 messages or send no more than 3 'personal' emails --- then that prospect simply goes into my auto-follow-up system to be “dripped on” until the time is right for them. -- Kathy Schneider
I think after the initial e-mail, wait a week or two. Try again. If no response, wait another week or two. On the second try, it is wise to say, "I hope you are all right"...this will usually get a response. -- Lenore Raphael
Once I have had a conversation with a client and they have expressed interest or even spoken about a particular assignment I usually follow up weekly with email or phone call. If a date is going to be missed due to their inactivity I will usually step it up to twice a week and gently remind them of the deadline we discussed. --Paul Gourhan
7) Put “second request” in the subject line
My technique is to send the same email a week or two later with "Second Request" in the subject box. It doesn't feel like I'm being a pest, but rather that I'm communicating that I'm more than casually interested in how my message/request/proposal is landing for the recipient/prospect. I've had better than OK results with this. Continued silence after that is a message to move on to lower-hanging fruit. -- Howard Stone
The question becomes what does one do with these unanswered queries. I save them in my email client and every month or so send a reminder of some sort, often recapping events or even taking the opportunity to present new situations to the perspective client. The truth is most of these originally unanswered responses will remain thus. On occasion, they pan out. -- Allan Weiser
If I truly feel that I am being a pest, I apologize for it in the follow-up email(s). I would mention my concerns that maybe they were no longer interested, did not have the money, or had joined up with someone else. I feel that if the concerns are "put out there" then possibly the person I was chatting with would be just as honest with me. Either way, once feelings are made known it is easier to move onto the next agenda on your list. -- Kathy Collins
Maybe send a quick post card or small card thanking them for considering you and following up after the proposal was sent. In the case where maybe they didn't get it - they'll call or email and say, "Hey, I didn't get your proposal"... which will continue the dialogue again. If they are just being lazy, maybe they'll contact you since they can see you're not going away. -- Heather Reneau
11) Call early or late in the day
One of the ways I follow up on the important ones is to call early in the morning or late in the day, without leaving a message if I don't get a person. If there is a screener - an assistant, etc. - I usually get past them if the person comes into the office early or works late. The definition of early depends on which part of the country and what industry I'm dealing with. New Yorkers, except for people dealing directly with the financial markets, tend to be later starters, so early means about 8:15 or so. Elsewhere, early is 7:30 or so. It's helped - in fact, in one case I'm sure it got me farther along than I expected to get. -- Deborah Brozina
I keep in touch, but try to keep it low-key and low-pressure. My solution has been to send a couple of follow-up emails about a week apart. If I still don't get a response, I'll call. If I get them in person, that’s great. If not, I tell the receptionist I'll call back, rather than leaving a message. This seems less "pest-like" (at least to my target - maybe not to the receptionist) and leaves the responsibility on me, rather than on them. If after a few tries I still can't get them, I'll leave a message and leave it at that for a while. I put a reminder in my calendar to try them again in a few weeks or a month. I figure that if they are too busy now to deal with me, maybe in a month things will be better. -- Kelly Hazen Klug
I believe that if a prospect hasn't answered in a week or two, it's perfectly all right to follow up with another contact. The question is what type of contact? Should you call and say, “I sent you an email a while ago and I'm wondering if you got it or if you have any questions about it.” Of course, after the first reminder, I think you need to use another method of follow up, or just let it go. -- Ellen Hofstetter Jaffe
14) Follow the rule of “3”
Following a rule of three: calling once a week every three weeks and, if still no luck after three tries (nine weeks total), putting the proposal aside and getting about my business. I put the person on my mailing list for holiday cards and 2-3 other promotional mailings I do each year to remind them I exist. Otherwise, I figure they know how to reach me. -- Leila Zogby
In the initial e-mail to the prospect, I give my pitch, appointment request, or whatever. At the end, I say "I'll be in touch in the next few days to make sure you have received this" or something similar. After a few days, when I phone them, they're expecting my call. So if I get the appointment, great. If not - and this bit is key, because it allows me to build a relationship with them over time, increasing the chance they'll do business with me in the future - I say something like, "is it OK if I stay in touch and perhaps drop you a line in a few months to let you know about any new developments?” Very few people are rude enough to deny you permission to do that, unless you were really annoying to them in the first place. -- Steven Pam
If they are not interested in my proposal, I want to find out as much information as I can, so I can review and reevaluate the proposal, if necessary, as something in their refusal may be something I overlooked. -- J. Thomas Duffy
Once you know where all your prospects stand, you can then determine the best way to contact each one (and the proper frequency for each prospect). I typically only pursue a “C” opportunity 3 or 4 times in the course of one month. However, I may try contacting a “B” opportunity a few more times (and for a bit longer), and an “A” opportunity even more persistently (and for a longer period of time).
18) Vary Your Communications
20) Never give up
By Anver Suleiman
Delray Beach, Fl 33483
Ph: 866-344-7201/ FAX: 561-278-5929
Editor: Denise Ford
Ruth Stevens, Valerie Young, Deeba Jafri, Michael Masterson