Consulting is one of the greatest professions in the universe. If you handle it right, you can live in that special corner of the world that you’ve dreamed about, do what you enjoy most, have more free time than you can imagine, and make a good living while you’re at it. However, before you quit your job and convert your spare bedroom into an office, you should know a few things.
What Should You Know Before Going Out On Your Own?
Reality 1: If you think working for someone else is precarious, try working for yourself.
The consultant’s life has lots of peaks and valleys. Most successful consultants will tell you that they have either plenty of money or plenty of time, but rarely do they have both at the same time. Life is champagne and caviar while you’re on a project, but once the project is over, it’s quickly back to macaroni and cheese.
Reality 2: You’re not going to get rich quick.
Sure! We all hear about Tom Hopkins, Tony Robins, and Ken Blanchard, who earn $20,000 a day, but the billing rate of the average training consultant is less than $100 an hour. If you consider expenses and the number of non-billable hours, it comes out to a fairly modest wage. The top 10 percent earn a very nice living, but that takes discipline, hard work, and a little bit of luck.
Reality 3: Life isn’t going to be easy.
When you work for a large company, you are judged by your professional expertise. If you know your stuff, your coworkers will look beyond your shortcomings. That changes the moment you leave your corporate home to become a consultant. Of course potential clients want to hire the consultant with the highest level of professional skills, but the consultant who most often gets the job is the one who markets the best, has the best connections, and delivers the most convincing presentations.
Reality 4: You’ll starve waiting for the telephone to ring.
Once you leave the security of corporate life, you’ll be surprised by how quickly your co-workers forget you. Some professionals are able to negotiate a contract with their former employer, but that’s becoming increasingly rare. States are clamping down on the use of former employees as consultants or contractors because many companies use this as a way to avoid payroll taxes. Many large corporations now have policies prohibiting hiring former employees as consultants. If you’re expecting to start your practice by working for your former employer, I recommend that you find out what their policies are about using ex-employees as contractors. Even if your company does have policies against hiring former employees, there is usually a way around it. They can hire you through a temporary agency, though you may earn less.
When you leave the corporate world, where everyone knows who you are, you’ll be surprised at how invisible you become. At the small products division of Magnatek, you were a legend. New recruits were weaned on tales of when you worked 30 hours straight to finish the INB project and how you saved Sam Sniffles’ rear during the DuPint presentation.
Nevertheless, no one outside your company has heard these wonderful stories. If you want to continue paying your mortgage and putting food on the table, you need to pick up the telephone and begin playing “dialing for dollars.”
Reality 5: Consultants are treated differently.
Many companies see consultants as peddlers. Countless other people, who say they have qualifications similar to your own, have rung their telephone and knocked on their door. Don’t expect immediate respect. To make it through the first 90 days, you’re going to need to develop a tough hide.
Reality 6: You will spend up to 50 percent of your time on non-billable work.
When you first start your consulting practice, you will need to spend many hours marketing your services and organizing your business, and you’ll still need to spend time on those activities once your practice is established. I recommend no less than one day each week. Moreover, there will always be bills to pay, fees to collect, and struggles with a host of computer problems.
Reality 7: You only get to keep half the money.
Supplies, telephone service, administrative assistants, insurance, and computer equipment all cost money.
Basic Rule 1
Every practice is different, but a good rule of thumb is that only half of the money you take in will make its way into your pocket.
Reality 8: You still have to do stuff you don’t like.
I hate accounting, but someone has to oversee the CPA. I detest calling new prospects, but I have not found anyone who can market my practice as well as I can. If you’re serious about going out on your own, you’ll need to do many things that you don’t like. Here is the upside: You’re the boss and at the end of the day, you can look yourself in the mirror and know that you built a little bit more of something that’s truly yours.
Given These Daunting Realities, Why Be a Consultant?
I am sitting here on a Friday morning looking out a tree-lined suburban street and listening to a favorite and familiar tune on my iPod. Life doesn’t get much better than this.
I would be the last person to tell you that a consultant’s life is a bowl of cherries, but it sure does have its advantages. If you play your cards right, you’ll reap many of the following rewards.
Focus on what you do best and enjoy most
Despite current thinking, not many people can be considered a “jack of all trades.” If you are truly gifted at just one thing, you are fortunate. Becoming a consultant will allow you to focus on what you are best at and enjoy most. It could be developing training courses, delivering training sessions, authoring computer-based training programs, or speaking on a particular subject, such as leadership or management development. The choice is yours.
As a consultant, you will still have to do “stuff” that you do not like, but only for small amounts of time.
Keep your own hours
Few people work best Monday through Friday from 9 a.m. to 5 p.m. I work best from 8 a.m. to 2 p.m. The rest is gravy, so I do my most important work in the morning and leave the more routine activities to late in the afternoon. One of the best things about being a consultant is the ability to keep your own hours. You can work a couple of extra hours on Saturday morning to make up for the few errands that you’ve done at less crowded times during the week. You can even take a day off to go for a motorcycle ride in the foothills with a friend.
With today’s two-career couples, having flexible hours can be a tremendous help. Dropping your kids off at daycare or picking them up at the end the day is a lot easier if you don’t have to punch a time clock. You may even find that when you work for yourself, you have more hours in the day. I live in a suburb, where most people spend one to two hours commuting to and from work. Most days I work at my home office, so I don’t have to be part of the parade of stalled cars on the freeway. This gives me a few extra hours each day to run errands or write articles and books.
Many companies allow employees to enjoy some of these benefits by working virtually all or part of the time from home, and they enjoy these same benefits. However, I find that in most cases, these employers expect their staff to be at their desks during business hours, regardless of where that desk may be. These days, it may be in a hammock on the porch using a laptop with a wireless network connection.
Move to the country
For the most part, when you are employed, you need to live where the work is. Consultants have more flexibility. Since you will not have to visit clients every day, you can live a little farther out. If you are good at what you do, you may find that consulting will allow you to live and work in places like Boulder Colorado or the banks of the Hudson River.
Free yourself from office politics, meaningless memos, and meetings
Peter Drucker and Ron Zemke talk about the amount of time that is wasted in corporate America doing “stuff” that is not related to the customer. This is what I hated most about my stint in the corporate world. This includes conversations in the hallway, employee bonding meetings, office policy memos, “we pump you up presentations,” and birthday parties. I guess all this is important in some sort of way, but the best thing about being a consultant and working for yourself is that you no longer have to do these things.
On the flip side, isolation is also the hardest part of being a consultant. I often miss being part of a corporate “family.” Many people cope with this by joining a local professional society and making that their professional “home.” Networking with other consultants and communicating with clients and friends are important parts of being a successful consultant. They will provide you with the friendship and human bonding that we all need. I enjoy those interactions more than meetings and memos.
Living large
When you work for a company, you usually need to live smaller then you are. The company’s accomplishments and needs are more important than your own. As a consultant, you can finally live as large as you want to be. Your accomplishments are your own and your needs are the ones that count for your business.
Freedom is not without its cost
Sure, it’s nice being an enlightened father and dropping your kids off at daycare in the morning. However, what about the freedom to spend Saturday, and sometimes Sunday, tickling the keys of your laptop, or the freedom to pay your own cell phone bill? How about the freedom to wake up at 5:30 a.m. to fly to San Jose for a client meeting, work a long full day, and then return home at 9:30 p.m. to catch a few winks before a client meeting first thing the next morning? If that’s not so bad, how about the freedom to spend three days of non-billable time writing a couple of proposals to present at a professional conference? You can also enjoy the freedom to pay your own travel expenses. How about the final freedom of not knowing when, or where, your next check is coming from?
If this sounds to you like freedom is just another word for nothing left to lose, keep your day job. If you are strong of heart and pure in spirit, if you have confidence in who you are and what you do, and if you are willing to put the time in to learning the survival skills for succeeding as a consultant, you are halfway there.
