Should you start a consulting business? Do you have a marketable expertise? Do you have the other skills necessary for running a successful business? Brad Egeland, a Business Solution Designer, says consider these questions before launching your consultancy.
Independent consulting is not for everyone. If you’re a company man – or woman – and you’ve been with the same organization for 20 years and the thought of change scares the hell out of you…then it’s not for you. Change may be the best thing in the world for you, but success probably won’t come easily – or even ever. You’ll likely be too stymied by what just happened to you (getting laid off) or what you just did (quit outright) to think on your feet and react quickly. Don’t do it – unless layoffs are eminent. If that’s the case, or if you think it may be an option for you – then start thinking about your next move now and consider whether or not independent consulting is for you.
Do you have something or some skill that someone would pay for just you to do?
First, consider your background. Is this something that someone would pay an individual to do? If you are a coding wiz as a programmer, then yes. If you are an experienced project manager, then there may be some options out there for you – mainly traveling around as a contract project manager on 6 or 12 month engagements around the country. Remote work isn’t that easy to find. Will someone pay you to write content about what you do? That’s much of what I’ve been doing and I stumbled into it somewhat accidentally about seven years ago.
You can’t just step out and successfully support yourself and your family from day 1, no matter what. Be prepared to struggle for a while so it’s best, if you can, to try to start this on the side before you do something crazy like quit your job. You may have to take a while to find your niche. I basically did what I’m doing now as very part time self-employed consulting work for about three years before going out completely on my own. Now the periodic contract work is just that – very periodic and only if the right opportunity comes up.
Are you marketer?
I’d like to tell you someone could do this for you or that everyone will just come to you. But I can’t. If you are already very well known in your field – and that does happen…just not to project managers – then you may have people lined up knocking on your door to pay for your services and that’s great. But if you don’t quit with a pocket full of clients, then you’re going to be marketing your services. Again, this is a hit or miss strategy and skill – and learning experience.
You need to be creative, you need to be ok with being turned down a lot, and you need to be persistent. I may chase a client for two years or more before ever realizing any revenue from them. If you can stomach all this, then you may be ok.
I’ve never spent a dime on marketing…just a lot of effort and emails and some phone calls (no cold calls though…just followups to email discussions). But it is a time waster – meaning it will definitely eat into the creative time you have set aside for doing the actual work you do. So try not to get frustrated. But you will get frustrated. And you will want to say very negative things to potential clients who annoy you and waste your time. Do your best to avoid that.
Are you a bill collector and negotiator?
Finally, money won’t come in consistently. Maybe it will for you depending on what service you provide. For me, no. And since I work almost exclusively with small to medium sized businesses (the IBM’s and Apple’s of the world aren’t looking for what I provide, the startups and smaller organizations definitely are – and they are more fun to work with anyway), the potential that their funding for what they are paying me to do will go away the next month or the next quarter, is always there.
I had one day that I was expecting $10,000 to come in from two separate clients – $5,000 each. Then, within about 20 minutes, I found out both were having cashflow issues and weren’t going to be able to pay their recent invoices after all. $10,000 gone in an instant. That was a hard pill to swallow. It will happen and there’s nothing you can do about it other than know it will happen, prepare for it, and be sure toalways have multiple streams of income, if possible and if applicable.
Working for yourself is extremely rewarding. Your time is your own, your planning is your own, and your strategy is your own. But you need to be organized and you need to be good at it. And it won’t work out day 1. You must be prepared for it to take awhile to gain traction. Likely, anywhere from one to five years. It’s not for the faint of heart or those who have a hard time dealing with stress. And keep in mind there is no one out there to market you except yourself. You will need to be doing that frequently as you are best served having multiple streams of income coming in at once. Why? Because, no matter what a client may say about long term plans, they can just as easily run out of budget this afternoon. I guarantee it will happen multiple times to you…and it can be unsettling.