Bruce Jacobs, of BKD LLP in St. Louis, says clients no longer question whether you are good at accounting, but rather whether you have knowledge of issues such as pricing, strategy, performance, and organization structure. If you can work with clients on this level, you will have permanent relationships.

Tony Zecca, partner in charge of Cohn Consulting Group, a division of JH Cohn in Roseland, New Jersey, hires people with five to 10 years’ experience in finance or operations. Examples are vice presidents in manufacturing, sales, or marketing. Cohn’s consulting business has handled projects such as installing business intelligence and performance management systems, transferring of ownership, and assisting manufacturers with fulfillment problems.

Clients must be deeply involved in the engagements or the project won’t succeed. Clients must gather data, attend meetings, and cooperate in other ways. If client personnel are part of the team, they will play an important role in formulating the design and implementing the solution.

Sometimes clients already know the solution to the problem, but need the advisor to implement it or recommend it to upper management.

It is common to use value billing in consulting engagements. There may be a contingent fee in a merger & acquisition engagement, but in general consulting engagements should not be billed on the basis of the outcome. If the fee is contingent, it is a sign the client doesn’t have confidence in the outcome. Instead of concentrating on the best way to serve the client, you concentrate on earning the fee.

Satisfaction surveys are a standard part of every engagement at Cohn. Invoices are delivered every two weeks, not mailed. The invoice shows what was done v. what was planned for that period. Retainers are usually 15 percent of the expected total.

Selling consulting engagements is a continuous process because the engagements don’t get annuitized like compliance work. Networking is not as important as making presentations, writing articles, and performing other activities that demonstrate your expertise. Marketing has to be specific, i.e., focused on particular skills rather than on consulting in general. But in selling to clients, focus on what you know they need.

If you decide to become a consulting firm, hire a professional consultant, and expect to turn the corner in three to five years.

The engagement letter for a consulting engagement should include:

• Background on the proposed project.
• Objective of the project.
• What the work plan will include, such as:
  • Interviews.
  • Collecting information.
  • Visiting locations.
  • Training.
• What kinds of analyses will be needed.
• How the project will be staffed.
• Description of the deliverables.
• Length of the project.
• Fees and expenses.
• An attachment regarding the firm’s expertise relating to the project and resumes of key people.

Joseph Coluzzi, of Margolis & Company in Bala Cynwyd, Pennsylvania, developed a number of tools to help with trend and ratios analysis, financial forecasting, strategic planning, budgeting, cash flow, M&A structuring, ROI analysis, estate planning, and personal financial planning. The tools include the ability to do sensitivity analyses.

From Practical Accountant, August 2006, 800-221-1809. For the complete article, click on the following link: http://www.webcpa.com/article.cfm?articleid=21005&;pg=pracacc.