Becoming an independent consultant required numerous changes in mindset. One of the things you now have to think about is all of the things you won’t directly charge a client for that still have to be covered in order to make your consulting practice financially solvent. Most often called non-billable hours in the consulting world, these are activities that don’t earn you any consulting income but are necessary to keep your consulting business humming along.
I like to make sure these “administrative fees” are factored into my contracts, so that I can focus on producing results for clients knowing my time is covered.
#1 – Travel time
As I write this article, I’m currently high above 10,000+ feet somewhere between Raleigh, North Carolina, and Dallas, Texas traveling from a speaking gig I had this week. While mileage and expenses are deductible, your actual travel time isn’t typically billable. There are exceptions, for instance, conference calls while in route, or even delivering digital assets via WiFi while in route. Be sure you factor this in for each project and account for slight delays as well. For myself, my airplane time can be the most productive. However, you can’t always plan on having wifi access on every flight so prepare for billable activities during those wifi free times.
#2 – Billing and Accounting
Unless you hire these tasks out, they can quickly eat up valuable work time and add to your stress, unless you have set up your fees to where it all pays the same. I don’t enjoy these tasks, but recognize they need to be a priority to maintain a successful business. This includes any paperwork, or organizational tasks, such as organizing receipts for expenses or reimbursements.
#3 – Business development and networking
This is one of those “expenses” time wise you likely took for granted while on salary, or working hourly. In many jobs it’s just expected and it becomes even more essential when you rely solely on your own efforts to develop new business. You may have specific business networking opportunities you want to include, or you may just want to assume a certain number of hours per month for “non-billable” conversations with clients, potential clients and referral sources. This is part of your marketing and you need to pay yourself for it.
#4 – Business Proposals
This activity is closely related to number three, but onsite visits to develop specific proposals take a lot of time and can cut into your schedule. It’s all well and good if you land the client, but if work is postponed or you don’t get the contract, you need to make sure you are getting paid for your time. It is part of the cost of doing business and needs to be factored into your billable rate.
Business proposals take time. There’s the initial client call or meeting to understand their needs often followed by a proposal document or project outline including statement of work, project timeline, deliverables and hourly consulting rate or fee.
#5 – Me Time
This is one of my biggest challenges. I really love my job and it’s easy to get lost in the work and forget to take time out for friends and family. This year I have made it a priority to put time for cocktails with friends, some pampering and the occasional few hours of time to just do whatever. After all, we ought to be working to live, and not just living to work.
Also included under me is your own personal development whether its reading business books, hiring a coach or taking a class at Lynda.com or Udemy. Take some time for you to kick back, relax or work on improving yourself which in turn benefits the clients and companies you are working with.
So, what about you?
What other “necessities” do you have to figure into your bottom line to make sure you are making what you need to really do your job properly? It’s different for everyone, but if you fail to take them into account, it can sink your business.
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