Insurance and Contracts

Safety consulting can be a very rewarding and lucrative enterprise if you are prepared for a challenge. There are many things to consider and research and decisions to make.
Pro’s and Con’s of Consulting

Safety Consulting Business

You need to consider the pro’s and cons of consulting as a profession, compared to a standard corporate job. Pro’s include flexibility with your schedule and ability to choose whom you will and whom you will not work for, without someone standing over you saying “I do not care how you do it, just Get ‘re Done.” Con’s include constantly having to go out and beat the pavement to get work, paying for your insurance, taxes, and overhead, and managing an income that is not necessarily steady. Other Pro’s and Con’s may depend on your situation. Consider if you are a self-motivated person or if you work better when provided with direction. Do you require the structure or are you fluid and flexible, able to work anywhere? Are you single or married? Do you have dependents? Are you in the middle of your career or approaching retirement? Are you the primary breadwinner? Review your ideas and plans with your family for their insight and, hopefully, support.

Research

Research

Before you quit your job and hang up your shingle, you will need to do a little research. Some community colleges have courses on starting a consulting business.

The Small Business Development Center in your targeted market area can help you to identify what federal, state, and local paperwork or licenses need to be filed, and can help you decide what type of business to set up, whether you chose a Partnership, Corporation, LLC, Sole Proprietorship, or other business types.

Another excellent resource is business.gov, which is a U.S. Government Internet site with links to both federal and state requirements for business start-ups. Check in your target area for other safety consultants who are already established. Look at their web pages and other marketing literature and try to get an idea of whom they work for, what services they provide, and their rates, if possible. Call the businesses that you plan to solicit to see what their needs might be and if you could fill them as a consultant. The local Chamber of Commerce can often provide you with contact information and may know what services their members historically have sought.

small business

If you are fortunate and have been diligent as a professional in networking and making contacts, you may already know many businesses in your area. Talk to your contacts and let them know you are considering going independent, find out if they would have a need for your service and if they are interested in working with you. If you are in the process of being downsized from your current position, consider asking your employer if they would be willing to keep you on as a part-time employee, or as a consultant. This will help you by starting off with at least one good paying client and will benefit the company because they will retain your services at a lower cost to them.

Decisions, Decisions, Decisions

Decisions, Decisions, Decisions

What types of services are you prepared to offer? Can you provide temporary full-time staffing for projects, such as for a construction project requiring a full-time on-site safety professional? Do you want to provide training and education services as a primary means of income, working with multiple businesses? How far are you willing to travel for work? Do you plan on working as a solo independent consultant or do you envision growing your business and hiring other safety professionals to handle your clients? These questions will not only help you narrow down what type of activity you will become but also help you to set goals for your business and stay on-track for success.

Finances

Finances

Your SBDC can help provide you with a worksheet and guidance to identify startup and overhead costs for your business. Not all companies will make money their first year, so you should determine what your living and business costs are and figure out if you have enough money in the bank to make it through at least six months of no income. Small business loans and grants may be available to help you through the first year. Use your worksheets to help identify what you will likely need to charge for your services and how much income you will need throughout the year. Talk to several banks to determine which is the best facility to establish a business account.

Insurance and Contracts

Insurance and Contracts

Insurance will range from Health Insurance if you have no other source to Workers Compensation if you plan on hiring employees, to Professional Liability Insurance and General Liability Insurance in case you get sued. Some safety professionals may tell you that they do not have Professional Liability Insurance; they just put disclaimers on everything, review such plans with a qualified attorney to help you identify the benefits and hazards of such a path. Also, be aware that some clients may require certain amounts of coverage from all of their contractors. You can purchase insurance that will cover only the work related to that client and then include the premiums in your billing. Shop several carriers and brokers to identify the best insurance packages for your needs. Whatever you decide to do with insurance, always use a contract to identify what your services will be, and what your payment expectations are. Be sure to work with an attorney who can carefully review your contracts and disclaimer wording to provide you with the maximum protection within the limits of contract law in your region.

Taxes

Taxes

Work with an accountant to identify what your tax liabilities are likely to be and make sure that you put aside money from your receivables to cover these expenses. Taxes will work out to be 30% to 50% of your receivables. Federal taxes are often paid on a quarterly basis and are based on estimated income.

Depending on where you do business, you may be dealing with multiple local and state taxes. Keep track of your mileage and business expenses, and work with your accountant to identify legitimate tax deductions.

Jumping In

Once you have conducted the appropriate research, have identified potential clients, and are ready to take the plunge into the world of safety consulting, then you are ready to file your business startup paperwork and hit the streets. Marketing is an important aspect of any business and is particularly important for the independent businessperson. In another article, we will discuss some of the available methods of marketing your safety consulting business.

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