Thinking about becoming an independent consultant? You may be an expert in your field, with deep subject matter knowledge that would be invaluable to many companies. So now it’s time to monetize that and go out on your own.
It has its benefits: doing the types of projects you like with clients you like. Working from a home office. Taking home all the revenue with potentially high margins. Controlling your own destiny and making your own decisions. Maybe you want to work part time as you wind down your career and free up time to pursue other interests.
But there are six critical things you might not be aware of that are essential to your success.
1. You better be versatile.
Independent consultants have to sell to survive and they have to do it continuously. An independent consultant may have one large client or several clients, but if you are truly a consultant (not a contract based employee), your projects will end at some point – a month, six months or a year. Sales is a specialized function that not everyone can do. You will also have to deliver the service, which in most consulting roles means having subject matter knowledge, knowing how to write, present, persuade, teach, analyze, facilitate and solve problems. Knowing at least basic PowerPoint, Excel, project management tools and other computer skills are also important. You will need a reasonable level of marketing and financial understanding. These are all foundation skills, not meant to be all inclusive. If you can’t do all of the above, it is likely going to be a challenge for you.
2. You need a support system.
If you decide to hang out a shingle, you will need the right structure, tools and processes:
• Bookkeeping and accounting support
• Form of entity, e.g. an LLC or Sub-Chapter S entity
• Standard contracts or letter of engagement
• Methodology for fees and project delivery
• Marketing tools and techniques
• Administrative support
• Business bank account and credit card, company retirement plan (e.g. SEP/SIMPLE IRA)
• IT and communications environment, including professional email address and website, contact database and IT support
• Physical office setup for productivity, efficiency and comfort
• Financial backing and security to withstand peaks and valleys
3. Going solo can be lonely.
When you are on your own, you might not have anyone to go to lunch with. There is no hanging out at the coffee maker with co-workers, no idea sharing and no office party. If you want recognition and encouragement, which all humans do, you can’t readily gain that as an independent. There’s no annual review. However, if you are doing good work for good people, your clients might recognize you and express appreciation. If you like working in teams, you might get that by becoming an extension of your client’s team, which is the ideal status to achieve.
4. Having a strong network is essential.
If you have a professional network, it can go a long way to addressing item 3. A good network of trusted colleagues can provide a sounding board, social interaction, and support resources. As with finding a job, the best way to find new consulting clients is through networking. As an example, several years ago I met for coffee with a former colleague who I hadn’t seen for about eight years, just to catch up. She was starting a new job and needed help with strategic planning for a new business. After two cups of coffee, it led to my working for her firm for three years to help launch the business. Your network will also help you learn, solve problems, make new connections and provide point expertise and services that become an important and essential extension of your services.
5. You need a clear brand and value proposition.
If you are going to compete with established and larger consulting firms, you will need a compelling personal brand and value proposition. That boils down to addressing what business benefits you can deliver to your clients and why they should hire you rather than someone else. What is your unique capability? As a newly independent consultant, my first client was a healthcare IT consulting firm. I had just left my job as VP Marketing for a large healthcare IT consulting firm where I helped them achieve the top brand position in the industry. My consulting value proposition was clear: I would help my new client build their brand and grow their revenue.
6. Always be selling and marketing.
A common trap that independent consultants can fall into goes like this: You gain two great clients. They make substantial commitments to utilize your services for six months each. Your income is soaring. Work is fun and you like the people you work with. Clients love you and your work. You stop networking and selling outside these clients. After six months, the clients thank you for your work but no longer need you. Your cash flow goes to zero. It now takes 4-6 months to gain new clients and projects to reestablish your desired revenue rate. As an independent, you must continually be networking and looking for the next deal. You can’t sit back. Sales and marketing are on-going jobs.
If any of these are a show stopper for you, think twice before hanging out your shingle. But if you are aware of these realities, have the right make-up, attitude and capabilities, independent consulting is a wonderful place to be. For additional insights check out “The Ultimate Consultant” here. Good luck!