Do Your Due Diligence and Plan Ahead
What’s your niche? Companies usually turn to “name-brand” firms for general management and strategic consulting, but recognize that specialized projects often require individual practitioners. So a good deal of the art of consulting is to identify a unique marketable area of expertise that fits your experience. So pick one, and call every consultant you’ve ever worked with, and every peer who has ever hired one, and ask them how much work there is out there in the area you’ve identified and whether it pays enough to be worth the effort. David Mark did just that after he got laid off from his job as a food research scientist several years ago and discovered there was a real need for nutrition scientists who knew how to work with marketers. “There were maybe 50 people who fit that description,” he says. “After that, it was just a matter of doing the math.”
No business can succeed without careful strategic planning — and a business with one employee is no different. Veteran consultants emphasize the need to develop “rules of engagement” early on in your decision-making process. What are your office hours? (Yes, one of the joys of consulting is flexible scheduling — but if your clients are chained to the 9-to-5, make sure you’re available on their time, too.) Your hourly and daily rates? (You may end up charging per project, but some clients will want to know your rates, so figure out a fair average if you were on salary somewhere, and add at least 50 percent). What about your compensation and reimbursement policies? (Half of your fee on engagement, half on delivery is common, as is reimbursement within 30 days for approved expenses upon presentation of receipts.) And just how much are you willing to travel? Answering all of these questions is critical not just to your business, but also your lifestyle.
Gather the Right Resources
If you’ve done your homework properly, you should have a clear sense of your market. Next, you need to determine the resources you’ll need to effectively deliver on client expectations. The first priority is building a secure financial base from which to operate so that you can concentrate on winning and servicing clients, rather than on paying the rent. Ideally, you’ll have built up a cushion of three months of your previous salary to tide you over until your first payments start coming in; turnaround time for payment from even Fortune 500 companies runs an average of 60 to 90 days. If you don’t have that much saved up, bite the bullet: cut back on your living expenses so that you can weather an extended period of little income without going deep into debt.
Checklist
Equipment and Infrastructure You’ll Need
Besides money, here’s what else you should have:
- A dedicated home office. Even if you prefer to be mobile, you’ll need a base of operations for organization and storage.
- Connectivity. Make sure you have a separate work phone with voice mail, as well as broadband Internet since your work will almost certainly involve transferring large files back and forth.
- Storage. You’ll want to keep complete files of every client and project, digital as well as physical. Buy a big hard drive (500 GB or more) that allows you to mirror the entire contents of your computer, and back up religiously.
- Collateral. Business cards, a current, consulting-specific resume, and a Web presence — a simple blog or professional profile on a networking site — are necessities. But don’t worry about printed materials: creating digital documents that you can customize and update makes more sense.
Get (Re)Connected
Once you’ve got the right pieces in place, the next step is marketing yourself. If you’ve left your former company on good terms, they may well be your first client. But even if you have a customer out of the box, developing a new-business pipeline is essential, and that means networking. “When I sensed something in the wind at my company, I started reconnecting with all my contacts just to be fresh in their minds,” says Kim Lopez-Walters, who launched her practice as a consultant specializing in food-related new product development after being laid off last July. “When the layoffs came, a friend had already contacted me asking if I was interested in doing project work.” Even if your contacts don’t have work for you themselves, they’ll be your best source of the consultant’s bread and butter: referrals.
Hot Tip
Other Ways to Get Those First Jobs
First-hand contacts are always best, but registering with agencies that have a consultant-staffing practice can generate initial opportunities. Robert Half, for instance, offers consultant placement services for accounting and finance, marketing and creative work, and general management, among other industries. Professional organizations such as the Institute of Management Consultants can offer connections with peers who can give you advice and, potentially, business. Other ways to build a project portfolio and generate leads for bigger business include advertising on online consulting marketplaces such as Elance.com and Guru.com (and yes, even Craigslist), although compensation on sites like these is likely to be lower than you’d get compared to clients you secure through placement services or via your own network, and the competition is sometimes stiff.
Balance Consulting Work with Your Full-Time Job Search
If you’re primarily looking at consulting as a way to earn extra money and keep busy while you’re looking for a full-time job, you’ll need to make sure you continue devoting enough time to your search. Typically, that’s 10 to 15 hours a week for research, interviewing, and networking. “If you can’t manage at least that, your job search is going to wither up and die,” says Caroline Ceniza-Levine, a career coach with Six Figure Start. Fortunately, a lot of this research and emailing of contacts can be done after hours and on weekends.
Sometimes, of course, consulting can be just the foot in the door you need with a potential employer, serving as a critical “audition” for a full-time job. However, you shouldn’t assume that getting upgraded to a full-time position is always an option — after all, companies often hire consultants precisely because they don’t want to add full-time staff. “You have to do your due diligence to see if they’re open to hiring, and then you have to be clear about your intentions,” says Ceniza-Levine. “You might wait a few weeks to prove your value, but then you have to raise the fact that, hey, if a permanent position became available, you’d be interested.”
The Legalese
Contractor Law
If you’re consulting for a company with the hope of on-ramping into a permanent position, remember that it’s a violation of labor law to retain contractors indefinitely without hiring them as salaried employees. In 2000, Microsoft was forced to pay a record $97 million after losing a class-action lawsuit filed by contractors who found themselves in “permatemp” limbo. However, this also means that companies have no choice but to place limits on the duration of consulting assignments that stand in for traditional hires. If an assignment goes longer than six months, companies will want you to have other clients to prove that you’re really an independent contractor, so even if you’re looking at consulting as a temporary move, you may need to start building up a client list.
Leave Them Wanting More
The best marketing tool is a happy client: they’ll hire you again — and spread the word. That means delivering projects to scope and on time is critical, so you’ll have to hit the ground running from day one. “You don’t get a ‘trial period’ in consulting,” says Lopez-Walters.
Though it’s important to be clear up front about expectations, going a little above and beyond the call can pay off. “You want to avoid project creep, but you should always be willing to put a bit more in the pot,” says David Mark. “That kind of goodwill leads directly to repeat business.” For that reason, proper follow-up after every project is also a must, to obtain feedback and assess future opportunities.
And after you’ve established a regular flow of business, you can hopefully start to enjoy the benefits of being your own boss. “You can’t beat the flexibility,” says Nancy Fritz, who last year celebrated her tenth year as a consultant specializing in research strategy and group facilitation. “When a recruiter calls me and says, ‘Hey I have a [full-time] position that’s perfect for you, big bucks,’ I say, ‘Yes, but will it let me take off my shoes and put my feet up on my big furry dog?’”
