Posts Tagged ‘ Thrift ’

By Clair Schwan

Continuing with this four part series for frugal entrepreneurs, we’ve already looked at some startup considerations for those who might desire to create their own consulting company. We’ve also examined the issue of expenses. Let’s now look at the general “hassle factor” of starting your own business in the world of consulting. More often than not, this area serves as a ready-made source of excuses for those who are looking for justifications for not starting an enterprise of their own.

The List of Problems

It amazes me each time I hear that someone doesn’t want to start their own enterprise because they don’t want the hassle associated with getting themselves incorporated, processing time cards, and taking out taxes each paycheck. Many also don’t like handling invoices, dealing with insurance issues, negotiating contracts, and wrestling with local officials about business licenses and other incidentals associated with starting an enterprise. To some, it’s all very mysterious and daunting. Well, it’s not.

If you peek behind the curtain, you won’t see the Wizard manipulating levers, pushing buttons or adjusting dials. What you will see is a bunch of clerks pushing papers. I can do that. Can’t you?
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By Clair Schwan

Continuing with this four part series, we’ve already looked at some startup considerations for the frugal-minded who desire to create their own consulting business. Let’s now look at what might be the most intimidating part of the equation – expenses. The frugal among us are good stewards of money, so we need to understand how best to minimize expenses that will erode our revenue, and as a result, minimize the profit we see from our enterprise.

Direct and Indirect Expenses

Let’s assume you’re no longer tethered to the corporate mothership nor chained to your desk inside that little cubicle. We’re off and running. You know it’s going to be scary because it’s expensive to run your own company. After all, it takes a huge corporate financial commitment to finance the business you just left, doesn’t it? No. It doesn’t. In many respects, you were financing the corporation all along. Huh? Let me explain.

In much of the corporate world, you pay for your own travel expenses until your expense report is prepared, submitted, reviewed, approved, and then finally paid. In essence, you’re giving a loan to your company for the direct expenses associated with project work and overhead travel. The only thing that the company “floats” in terms of expenses is the cost of labor. In your new business, that would be you, and your time costs you nothing – it’s not an expense, it’s an investment.

Besides, most of your travel and living expenses, and many other expenses for a particular project will be what are known as direct expenses. In other words, they are part of the cost of a project and therefore should be chargeable to the customer. When you bid a job, these direct expenses should be itemized or estimated in your bid so the customer isn’t surprised when they show up on the invoice.
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By Clair Schwan

As a follow-on to Kevin’s recent articles about how frugality comes into play as an entrepreneur, I’m offering a four-part series to suggest that the business of consulting is a good one to consider. Perhaps this line of work has a limited application for the general population, but it’s a legitimate career path if you’re in any field that one might consider to be “professional” in nature.

Being frugal means being a good steward of resources, particularly financial resources, but it also means that me make certain we’re getting good return on our investment of time and effort. The bottom line is we’re not wasteful. Although consulting can have its expenses, especially in the area of travel, it can be a business with low startup costs, low risk, and little wasted investment, something the frugal among us can appreciate.

In this first part of the series, let’s look at startup investment, and then I’ll use future articles to address expenses, potential problems, and what we might expect in terms of income.
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