Five Things to Think About Before You Become Independent Consultant

“I know. I’ll become an independent consultant.”

Consultants, corporate staff people, or executives came to this career epiphany before asking my advice. I gave them these five things to think about.

#1 Why?

The first question I asked was “Why?” because it helped me shape the advice.

Consultants felt limited at their firm. Maybe they missed a promotion and in “up or out” world, were headed OUT. Maybe they groused about compensation and said, “if I worked for myself? I could keep all the money.” Maybe they chafed at the power structure and wanted autonomy. These folks understood the work of consulting, but not sales, or how to consult without a team.

Staff people often wanted to be listened to like external consultants. These folks how to do a project, but not how to find one. They had few contacts outside of their firm.

Executives had reached a pension vesting plateau, or their firm downsized and they took a package “you’d have to be stupid not to take.” These folks were often the least realistic about the actual work of consulting, but they did have contacts.

When they articulated “Why” some realized they were being unrealistic; some didn’t.

#2 Who is your first client?

Almost no one wanted to start the conversation here. Very few had a client already. The worst had an eight-page website, six service offerings, had been “in business” for six months, and burned through their severance and called me weeks days before total desperation set in.

I broke through fog with the statement:

“Consulting is about serving clients. If you don’t have a client, no matter what your business card says, you are not a consultant; you are unemployed.”

We discussed how to find a client. Some staff and execs had work with their previous employer; some consultants had subcontract work with a small firm. Getting paid enough was a challenge. Subcontract consultants have even less autonomy than those on staff and when a company hires back ex-employees they often want more work without paying benefits.

I recommended everyone make a list of everyone they knew who might hire them and start making calls.

#3 What are you selling?

In my experience this question was either over or under thought. Consultants and some staff people crafted service offerings encompassing multiple issues. I encouraged these folks to focus. As an independent you’ll be remembered for one or two things.

Executives often expected to be “of counsel,” offering wise advice to other executives. I urged them to think of a business outcome where they have the greatest experience, i.e., new product development, new market entry, turnarounds, operations improvement, etc.

For some I expanded their definition of how they might work. I explained the difference between content consultants who sell advice and process consultants who sell help with a process like continuous improvement, or organization development.

#4 What is your business plan?

Too many didn’t have a business plan. Some told me “I’m not really starting a business. It’s just a way to earn big money with no investment or expenses.” My response wasn’t always kind.

Revenue? I saw spreadsheets where revenue magically rose at three months.? I asked:

·?????? How will you generate revenue? - it takes three to twelve months to sell a new consulting project. Will you find clients through:

o?? Direct sales? How are your sales skills and contact list?

o?? Writing? You typically must have multiple publications (HBR articles, books) to make a dent.

o?? Public speaking? You have to sell engagements and rigorously follow-up any interest.

o?? Referrals? This is how I developed business. I was very disciplined about asking “Who else should I be talking with?”.

Expenses? I encouraged people to think about:

·?????? Home office or rent – If you are you easily distracted spend the money on rent or shared space (Regus, Industrios, Spaces, LiquidSpac).

·?????? Structure – LLC, S-Corp, Inc,? or sole proprietor?

·?????? Phones - I suggest a work mobile phone (separate from personal) and an answering service.

·?????? Printing – many don’t own a printer, and proposals aren’t all digital yet.

·?????? Administration - billing, accounting, documentation, etc. I did my own, but if you hate it or aren’t good, hire to alleviate headaches.

·?????? Travel and accommodations – executives used to traveling first class don’t understand that this is rare in consulting.

#5 Tactical stuff

This is often what aspiring independent consultants want to talk about. I save it for last because until you have designed your business (#s 1- 4) tactical stuff is a waste of energy. The most frequent questions were:

·?????? What should I charge? ?

Consulting day-rates range from $500/day to $20,000 or more. Most independent consultants charge between $1000 -$5000, depending on their experience and client demand. Start with what you need to earn (including benefits, and expenses) and divide by 150 billed days a year to allow for marketing time, vacations, and administration. Then test that figure for competitiveness with some clients and other independents.

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·?????? How do I ensure I don’t just work all the time?

Most people don’t ask this, but they should. Schedule downtime after crunches or you’ll burn out. Contract with the client to keep your weekends mostly free, schedule vacations and family time, and be disciplined about it.

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·?????? How do I manage project flow so when one project ends another begins?

This will never be seamless. If you save 25% of your time to market during delivery you can minimize revenue dropping to zero. Put marketing time on your schedule and (this is hard) don’t cancel it for paid work.

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·?????? How do I make sure I get paid?

In your initial interviews include accounts payable so you understand the process. Big corporations manage their cash flow on the backs of their suppliers, especially the little guys. Set terms and stick to them. Never let a client slide to two billing cycles without a face-to-face collection conversation.

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·?????? Doesn’t it get lonely?

It can. Make time for family, friends and neighbors. Build a network of other independents. Partner with some, sharing leads for a finder’s fee, discussing articles or attending courses or conferences.

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Independent consulting is not for everyone and, despite what some books on Amazon say, few get investment banker or tech entrepreneur rich. I was an independent consultant for more than twenty years. I enjoyed the autonomy, constant learning, and challenge. Perhaps, with a little planning, you will too.

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