Regular expenses: food, clothing, mortgage/rent, recreation. Special events: marriages, college, extended trips, and so on. Unexpected events: family help, illnesses, uninsured losses. Impulses: spontaneous purchases, ego needs. Lifestyle changes: new cars, house remodeling. Debt reduction: zero‐out credit cards, one‐time purchases. Nonretirement investments: stocks, bonds, real estate. Philanthropy: contributions and memberships.
Don't simply spend what you make, and don't spend it on whatever happens to be in front of you. Think about priorities, because you also have these business needs:
Professional development
New hardware, software, and technology
Office support
Nonreimbursed travel
Marketing
Communications
These can be sobering when viewed in this manner, but they are better viewed in daylight than hidden in dark corners. That's why lean and mean is best. I've never had a staff or part‐time employees, and my office has always been in my home.
Don't mix personal and business funds, even in a Subchapter S corporation, until the year is nearly ended and you can be advised on distributions and bonuses. Try to establish a separate, business line of credit with your bank. If you have both personal and business accounts, you'll have more clout and probably obtain more credit.
The purpose of credit is to even out the unequal flows of revenue and expenses. Credit should be paid off as soon as possible. That is responsible and appropriate in business. People who tell me they “never use credit cards” and pay only by check are amateurs, and remind me of people who put the rent money in one envelope and the milk money in another. If you're not willing to confidently use credit, then you simply don't trust your own abilities.
Administrative Support and Resources
Here's an area that can cost you a bundle if you're not careful, and here's why.
When I was fired as president of a consulting firm in 1985 (the owner and I shared a mutual antipathy), I told my wife I was going to go out on my own and no moron would ever be in a position to fire me again. She said fine, what was I planning to do first?
“Get an office,” I responded.
“Why?” she asked.
“I'll be out on my own.”
“Why do you need an office?”
“I won't have any support staff otherwise.”
“Are people going to come to see you, or are you going to go visit them?”
“Uhhhhhh …”
“If it turns out you need an office, then get one. But for now, why not forestall that expense?”
I still don't have an office, or a staff, or an assistant, real, virtual, or imagined (well, there is that picture of Michelle Pfeiffer). My two children went to private school from preschool through their undergraduate degrees at major universities. The total of those tuition payments was $450,000 (don't smirk—it's even worse now). I calculated that, over 21 years, a modest office with utilities, insurance, rent, repairs, and part‐time help would have cost me … $450,000.
Are you getting the picture?
The Gospel
A staff is not important unless you need it to help you walk up a long and winding road seeking enlightenment. And that's true only if you have a bad hip.
Most virtual assistants require supervision, and many of them don't represent you well, since they're representing another dozen or so people, as well. I warned one woman, in Toronto, who answered the phone for one of my mentor program members, that I would personally try to have her fired if she wasn't more polite when I called.
Also remember that full‐ and even part‐time employees often must be covered in the same benefit formulas and retirement plans that you implement for yourself and your family. And then there's illness, theft, personal problems, errors—do you really need these headaches? Most of us are refugees from larger organizations and the people management issues that thrive there, like mold in a damp cellar.
Here are six suggestions and resolutions:
1 Tuck your ego away. Having a staff doesn't elevate you in the eyes of the buyer. Telling someone your “people” will look into it will generate only levity.
2 Learn to do simple tasks efficiently. You should have invoice templates, sample proposals, automated expense statements, and so on. Use technology. Send clients or prospects letters from your laptop.
3 Learn to type, and I don't mean with your thumbs. I can type 60 words a minute, and so can you. If you can learn to use a keyboard, then you can learn to type on it. (I love the airline counter clerks who have been using keyboards for 20 years and never bothered to learn to touch type. It's not rocket science. These days, even rocket science isn't rocket science.)
4 Delegate and outsource. I use the following regularly:Automated voice mailGraphics designerBookkeeperPrinterAudio studioVideographerInternet expertsInternational limo companyAmerican Express travel servicesPostage and packaging suppliesFedEx and UPS accountsYou get the idea. These people and companies are available when you need them for fixed fees and rates (don't give them this book). I also make it a habit to pay local vendors such as my printer and designer first, because they are small businesses and always need the cash, and when I need a priority job they always put me at the top of their lists.
5 Shift work to the client. Your value is in results, not physical presence. Educate the buyer about how the client provides scheduling, administrative support for the project, security passes, parking, prompt reimbursement of expenses, internal follow‐up, and so forth. Make your work less labor intensive; don't design it to provide work for a staff of your own.
6 Hire people by the hour situationally. If you absolutely must, hire college students or community acquaintances (not friends!), or even part‐time employees from agencies for a few hours or a day to get volume work done. But that should be a last resort.
Early in your career, practice lean and mean. Later in your career, check for the bloat that often accretes to a growing, successful practice. I've counseled and coached consultants making $350,000 annually who have two full‐time and two part‐time employees! I run a business in excess of $3.5 million with no employees.
One of the interesting and common reasons for staffs to be hired is that the consultant has very strong affiliation needs that were once met by a larger, corporate (or intimate, small‐office) environment, but are now missing. The resolution for that is to find affiliation in other ways: civic responsibilities, socializing, professional associations, family gatherings, volunteerism, and pursuing hobbies with others.
In the worst case, if you don't have affiliation, get a dog. But don't get a staff. I love dogs and would do anything for them, but they've never cost me $450,000.
This last need leads me to a much more intangible but far more vital support requirement.
Emotional Support and Resources
Emotional support cannot be virtual, and it's the most important support in any consulting practice, whether nascent or mature.
Ideally, it comes from family, then friends, then acquaintances, then professional colleagues, then the