by: Rome Williams, CRM on 6/11/2018
Certain individuals – those with the right credentials, experience, and personality – are attracted to contract work for several reasons. Independent consultants are among the most well-paid professionals in the fields of Records Management and Information Governance. Whereas practitioners are limited by a single company’s compensation policy, freelancers have uncapped earnings potential. Furthermore, contractors work on a variety of projects for different types of companies for a specified period, which can be fulfilling for those who enjoy new challenges, along with the occasional change of scenery. Finally, freelancers have more flexibility than company employees do; for example, a contractor might work for six months during the spring and summer and take the next six months off if they so choose.
Competition for open positions within established RIM/IG consulting firms is notoriously fierce. Established consultancies often focus on a specific client profile (for example, some cater primarily to law practices) that otherwise qualified applicants may not have experience in. Furthermore, established RIM/IG consulting companies tend to be top-heavy, meaning upon obtaining employment even a very seasoned practitioner is relegated to a junior title, responsibilities, and compensation. Barriers to entry such as these lead some to forge their own path ahead.
This article lists the steps to becoming an independent contractor/consultant. It does not cover the requirements or realities one should consider before transitioning into consulting work (although both topics are indeed worth exploring!) and it is not intended as a substitute for a formal business plan. However, if you are thinking about starting a RIM/IG consulting practice, here are some of the practical steps you’ll need to take to get your business off the ground:
Seems obvious, right? If you start a business, it requires a name. Consider placing “Consulting” after the name (some companies substitute the term “Solutions”). Whatever name you decide upon, you’ll want to ensure it is available in the state where you will be licensing your business. To do this, go to the business licensing website for your state and perform a lookup/search. You may also want to perform a domain name search as well so that your proposed business name synchronizes with a future online presence.
Your next step is to incorporate your business. It is your choice if your business will be a sole proprietorship, limited liability company, or an S or C Corporation. There are legal, and tax considerations for each so choose wisely.
To incorporate, simply go to the Secretary of State’s website in the state where your business will be headquartered, fill out the registration forms, and pay the required fees.
Tax Identification Numbers
Your registered business will need its own state and federal tax identification numbers.
Register online with your state’s Department of Revenue to obtain a state tax identification number.
You will register online with the Internal Revenue Service to obtain a Federal Tax Identification Number (TIN) or Employer Identification Number (EIN).
It is very likely that a business license is required to perform commercial services in your city and state.
Your state’s online business licensing service is where you will register (and pay for) your local and state business licenses.
Minority Business Certification
If you as a business owner are a member of a minority group, are a veteran, have a disability, or can otherwise be classified as belonging to a disadvantaged group, you may want to certify your business as such. Certification sometimes provides specific benefits when bidding on government contracts.
The certification process varies by state. Perform an online search to find out how you can certify your small business as “disadvantaged.” Keep in mind this process may have costs associated with it and could require a lengthy application process.
You do not want to make a mistake when it comes to insurance. Your consulting practice will need, at minimum, liability coverage and errors and omissions (E&O) coverage. Sit down in person with an experienced broker to find the right level of coverage for your startup.
As your own employer, you are also responsible for securing health insurance. For some, a spouse’s coverage will do. For everyone else, there are individual health insurance plans. Open enrollment periods are typically in October or November. Research the coverage available in your region and select a plan that fits your needs.
As an independent contractor, you are 100% responsible for seeking out and signing new business. Your marketing materials (such as business cards and brochures) will make or break a first impression. Stand out from the rest of the pack by maintaining a polished and professional presence. Your firm should have a professional logo, a dedicated phone line, a mobile-friendly website, and an email address linked to the website’s domain name.
Begin by researching your competitors. Study their marketing materials and see what works and what doesn’t. Team with an experienced graphic designer and web developer to craft a visual image that evokes competence and professionalism.
Ask others to proofread your copy and provide critical feedback; your written words must effectively speak to your customers’ needs, including the ones they didn’t even know they had.
It is important to know that when it comes to presentation, every detail counts – from the colors on your logo to the simplicity of your webpage to the way your business cards feel in a customer’s hand. If your brand is “off,” your customers will not take you seriously and your business will suffer, so spend as much time and energy as necessary to create and deliver top-notch content.
Business Bank Account
Be sure to establish a bank account specifically for your business. Even though you may be a one-person shop, your personal account is not an appropriate place for business funds, especially if you’re using a third party to assist with tracking revenue and expenditures.
Unless you enjoy accounting and have the time to crunch numbers (which, once you get the ball rolling, you will not), you may want to consider investing in a payroll service and bookkeeper. Paying a third party to assist with finances is a wise decision, mainly because local, state, and federal taxes are due periodically. A one-hour meeting each quarter with your bookkeeper to discuss expenses will likely pay for itself come tax season.
Other Practical Considerations
As a new consultant, consider seeking the advice of a trusted mentor. Those who have been in the industry for several years can provide valuable information to flatten the learning curve.
Now that you are your own brand, marketing your business becomes an everyday activity. Consider using social media and online advertising to attract eyeballs to your webpage – the more views, the better!
But keep this mind: face to face interaction is still the number one way to build and maintain relationships that lead to new clients and business opportunities. When you have the opportunity, attend networking events to meet as many new people as possible and catch up with existing contacts. Build rapport through pleasant conversation. Remember to follow up with new prospects and old colleagues alike, always with the intention of fulfilling their specific needs.
Finally, as your business grows, you may need to take on contractual partners and/or employees. This is where running a business becomes exponentially more complicated. Spend as much time as necessary to understand labor laws, as well as contractual language/obligations. At this point, you may even want to retain an attorney to assist you with making prudent decisions and avoid legal pitfalls.
Again, this list of practical considerations is not intended to be comprehensive, but it does provide you a basic outline of steps when starting off as an independent RIM/IG consultant.
Whatever path you choose to take, I wish you the very best on your journey.
About the Author: Rome Williams, CRM, is a University of Washington graduate and Certified Records Manager. He specializes in electronic records management, with a focus on developing technologies and enterprise system implementations. He has served on the Board of Directors for both the Oregon Chapter and Greater Seattle Chapters of ARMA International where he advocates for individual and collective action to elevate the RIM profession.
For more information on this topic, or to contact the author, please visit www.avicennaconsultingllc.com.