Developing a Small Business for Evaluation Consulting Melanie Hwalek, Ph.D. President SPEC Associates 615 Griswold, Suite 1505 Detroit, Michigan 48226-3992.

Developing a Small Businessfor Evaluation Consulting

Melanie Hwalek, Ph.D.President

SPEC Associates615 Griswold, Suite 1505

Detroit, Michigan 48226-3992(313) 964-0500 ext. 202

[email protected]

Agenda

9 am – 10 am: Relevant IntroductionsWhat is your future business?

10 am – 11 am: What makes a business valuable?11 am – noon: How do you get there?Noon – 1 pm:Lunch1 pm – 2 pm: The Life Cycle of a Contract2 pm – 3 pm: Cash and its flow3 pm – 4 pm: Do you really want to do this?4 pm – end: Other issues (international, personal)

Relevant Introductions

• Name

• How do you identify your profession/skills

• Experience doing consulting

• Experience owning a small business

• Fun fact about yourself

• Interest in owning a small business

• Most pressing question for today

Imagine your futureWhen you are 60 years old …• Do you want to be married/partnered?• Do you want to be raising children? How many?• Do you want to own a business?

– Do you want to be able to sell it?– Do you want to work by yourself or with others? If others,

how many?– Do you want your office at home or in an office building?– Do you want to be working full or part time?

• What salary do you want to be making?• What other things are related to your financial or

professional status?

What would your future cost today?

(case study #1)1. How much income must your business generate each year to at

least make ends meet?2. What kinds of expenses did you consider to arrive at this figure?3. Ideally, what is the best combination of each sized contract that

you should strive for in a typical year? $5,000$10,000$25,000$60,000$100,000$500,000

4. What are the job titles and/or overall responsibilities of the three employees (including you) likely to have?

5. What are the billing rates for each of the three employees?

What makes a business valuable?

What makes a business valuable?

• Goodwill– Expertise– History of quality work– Loyal customer base– Advisors/content experts– Staff– Subcontractors– Staff/subcontractor configuration

What makes a business valuable? (con’t)

• Products and Services– Proprietary– Consumable– Niche

What makes a business valuable? (con’t)

• $ Solvency– Financial statement– % of revenues to owner– Pattern of revenues over time– Debt

What makes a business valuable? (con’t)

• Systems– For providing services– For business management

Where do you start?Case #2

What are the first ten things you would do?

Here are the first 10 things I would do 1. Make and print business cards and letterhead

2. Draft an outline of your business plan

3. Draft an outline of your marketing plan

4. Register assumed name

5. Make potential customer database

6. Talk to current employer about conflict of interest

7. Join some networks (potential customers, competitors, potential staff/subcontractors)

8. Create basic marketing materials (brochure, Web site)

9. Send at least 100 letters with brochure to potential customers

10. Make follow-up calls and ask for appointment

… loop back to #9

Create a need and fill itWhat does this mean for selling evaluation and related services?

What would your sales pitch be?

How I would manage a sales meeting …

1. What I would bring

• Something to leave behind

• Including business card

• Makes the case for creating/identifying need and filling it

2. What I would say

• Quickly assess customer knowledge and perception of evaluation

• Determine if need is internal (e.g. CQI) or external (e.g. funder requires) and plan pitch accordingly.

• Give examples

• Stay away from technical jargon

• Offer something free (evaluation plan for grant proposal)

How I would manage a sales meeting …

3. How I would end the meeting

• Ask customer how is best way to keep in touch

• Ask customer about others s/he may know who might need your services

• Ask if you can use customer name as referral

How I would manage a sales meeting …

4. How I would keep in touch

• Send thank you email and reminder

• Create quarterly newsletter

• Send relevant articles or other documents as identified

How I would manage a sales meeting …

The Life Cycle of a ContractCase #3

• Before you start

• Doing the work

• Ending the job

The Life Cycle of a Contract

• Before you start– Contract with customer– Contract(s) with subcontractors– Timeline (special meetings, report deadlines)– Payment schedule– Key decision points– Costing the job

• Fixed• Hourly (not to exceed)• Retainer• Pay for performance

The Life Cycle of a Contract

• Doing the work– Finding the right people – Assigning people to tasks– When to contract vs. hire– IRB issues– Assuring quality

• Of data collection• Of data entry• Of data analysis• Of report preparation• Of human interactions

The Life Cycle of a Contract

• Ending the job– Letter of completion– Ask for quotables– Ask for referrals

Cash and its FlowCase #4

• When would you start looking for more work?

• What do you do if you see expenses outpacing revenue?

Cash and its FlowCase #4

• When would you start looking for more work?– You never stop!– Expect minimum 6 months from

contact to contract

Cash and its FlowCase #4

• What do you do if you see expenses outpacing revenue?

– Apply for loan• Line of credit• Long term (if purpose is long term)• Short term

– Invoice ASAP– Subcontractor paid only after you are clause in

contract– Talk to suppliers and arrange payment plan

Cash and its FlowCase #4

DOCUMENT

DOCUMENT

DOCUMENT

Auditable trail

Check and balance receipts and checks

Do you really want to have an evaluation consulting business?

The 33 Keys to Independent Consulting

More case studies

Your cash flow analysis indicates that this year’s confirmed sales are $150,000 but it takes $300,000 to cover all of your business expenses (including your own salary). In the mean time, you are currently working day and night to meet current work deadlines. What should you do?

More case studies

You like to travel and you would really like to do some international work. You have some experience living abroad in a developing country, but not doing evaluation internationally. How would you go about getting international work?

More case studies

You’ve decided that there is going to be a huge market for services evaluating programs aimed at decreasing consumer energy consumption. While you are interested in the topic, you have no prior experience evaluating these types of programs. How can you begin to capture some of this business? Where do you start? How do you proceed? How long should you keep trying?