The Reason New Consultants Often Go Back to a Regular Job

New consultants routinely return to a regular job within a few months or a couple of years. In my experience there are two primary causes: insufficient levels of business (i.e. income) or inability to handle the ebbs and flows of client payment cycles and from the hopping from engagement to engagement.

Insufficient levels of business (i.e. income)

Most consultants seem to exhaust the capacity of their personal and professional contacts to bring project work and refer business their way within a few years of starting out. These are typically the first folks a new consultant turns to as they announce their availability. There are only so many inquiries and referrals that can come in from this resource pool.

Also, people have finite memories and attention spans. It’s easy for someone to forget they know someone with specific expertise in their network – particularly after a few years have past since their last encounter.

The result is insufficient business to maintain a reasonable income. And, in turn, the consultant naturally seeks to return to a regular job with a predictable paycheck.

The Cause

The underlying culprit is their failure to develop systems for generating new business (assuming the consultant’s expertise is in demand). For technologists that have not built a business before from scratch nor ever had to do such personalized marketing and selling, it’s understandable this situation arises.

The Solution

The solution is that – regardless of the area of expertise of the consultant – they must also develop expertise in business. And specifically in the unique attributes of the business of consulting. In general, we’re talking list building, encouraging referrals, selling and marketing in an effective manner, generating new business from existing client relationships, communicating with clarity and effectiveness, and cash flow management.

Where to Start

Anyone can do some consulting on the side (that is, alongside their regular job) if they’re not interested in or prepared to tackle the business side of consulting. They likely wouldn’t make it as a full-time solo consultant for very long (certainly not a happy one) if they jumped right in expecting to replace all of their prior income. Plus the lack of business knowledge means probably overlooking a lot of opportunities and leaving a lot of money on the table.

My first time around I got snagged by a lack of business experience. I ended up going back to work for someone else after about a year. I nearly had to do the same the second time around (and probably should have given the amount of stress and frustration I sustained as a result at the time).

Even if you aren’t sure you can tackle the the business side of consulting, there is hope because you can always go back to consulting more as you develop your business skills and even test out a lot of them while you’re still employed (since these business skills are just as applicable to side gigs).

You have to start somewhere. But be honest about where you’re starting so that you know where you need to focus to grow. It’ll avoid a lot of extra frustration and confusion.

And if you’ve been tossed into things involuntarily? Well, there are no quick solutions. I’d probably say something like: set appropriate and realistic expectations for yourself, learn as much of you can, experiment and iterate quickly, and be willing to do things sub-optimally to live to fight another day.

Tech Consulting in a Tight Economy: COVID-19 Edition

During the Global Financial Crisis of 2007-08, I published a post of a similar title as this one. In light of the current humanitarian crises and resulting economic fallout that COVID-19 has triggered, it seemed worth revisiting that old post as well as sharing an up-to-the-moment opportunity example.

My opener is just as relevant today:

Independent consultants may be in an enviable position within the world of business. Our services – by their very nature of not being tangible – allow us to be more agile. We can adopt to changing market demands.

Adapting, accepting reality, making adjustments, experimenting, learning, brainstorming, analyzing results, incrementally getting better – these are things an entrepreneur does. And make no mistake: consultants and freelancers are entrepreneurs.

Aaron Cruikshank of Friuch Consulting writing on his blog around that time period said:

Find new pain points, serve them.

And also:

People starting out in consulting today might think that they need to go down market to succeed in a shrinking economy. I respectfully submit that such thinking is bunk. What you need to do is find a niche that is not something everyone else is doing and sell it at a premium. For example, when the economy is tight – offer a service that makes people think they’re saving money. You’re a webmaster? People still need websites, even when the economy is in the toilet. Make your niche designing websites in the most affordable way possible or link your design techniques to a measurable return on investment (ROI) so that the client can be sure they got their money’s worth.

I don’t think his statement just applies to those just starting out. It applies to all of us at all times.

Expanding on his example, I’ll dig into this a bit deeper so that you can see how it might apply to your own situation one way or another.

SITUATION: Restaurants (and other businesses too) are focusing on pick-up / take-out service with an emphasis on contactless service, social distancing enforced through scheduled pick-up and pacing, and the like.

OPPORTUNITY: Many restaurants have sub-par to horrible ordering processes on-line and off-line. They’re also suffering from cash flow and liquidity problems. They need orders, they need streamlined processes, they need a good customer experience, they need low hassle, and they don’t have any extra capital to invest in accomplish this.

SOLUTION: Utilize your web skills, business process skills, availability, and expertise with third-party technical solutions to pull together a tailored solution for a restaurant client in exchange for a % of sales (up to a fixed dollar figure roughly equivalent to what you’d have charged for the same work with paid ahead of time payment terms – or even 15% to 25% higher – to compensate for the added risk you’re taking on).

Making Money != Starting a Business

Today is my birthday.

(That really isn’t relevant, but it seemed like a good way to open today’s blog post.)

The other day I ran across an article in the current issue of Inc. Magazine (thanks to Ryan Healy for mentioning the article so I would take a look at it). Last night I finally got around to pulling up the article online and to reading it through this morning.

The article caught my eye because it is by Jason Fried of highly successful 37signals, but it kept my attention because he starts off early on in the article by stating a principle I’ve long held (in fact I based the founding of the IT Consulting Success Strategies community upon it). Jason states it like this:

You can be the most creative software designer in the world. But if you don’t know how to make money, you’re never going to have much of a business or a whole lot of autonomy.

Readers who signed up to be on my e-mail list in the past year or so may recognize the parallels that statement has with the premise for the e-mail list described on the page you signed up on.

Jason’s credo is “It’s simple until you make it complicated.” He has built a very successful business, seemingly wrapped around that philosophy. Thankfully, he is also great at communicating his thinking and approaches and, fortunately for us, seems to enjoy sharing his insights in order to help others.

Here’s a more extensive quote from Jason Fried from the first part of the article (though I suggest you go read the full article entitled “How to Make Money in 6 Easy Steps: Entrepreneur Jason Fried offers the most fundamental of all small-business advice: how to get good at making money.“)

One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don’t know how to make money, you’re never going to have much of a business or a whole lot of autonomy.

This is not about getting rich (though there’s certainly nothing wrong with that). Instead, for me, making money is about freedom. When you owe people money, they own you—or, at least, they own your schedule. As long as you remain profitable, the timeline is yours to create.

It took me a long time to figure out how to make money. Here’s how the lessons unfolded.

If the above intrigues and/or resonates with you, go read the full article here. It includes six specific lessons that are both highly relevant to technical consultants and highly actionable.

Hope you enjoy it as much as I did,

-jr

Why Marketing Really Matters

A business does marketing and sales for the money, but that’s not the sole reason to get good at it.  One of my favorite mentors, authors, and consultants is David Maister.  One day a while back I was reading through his archives and snipped this nugget from an article entitled “Doing It For The Money” (if you’ve been on my e-mail list for awhile you may have seen me mention this quote once before):

What getting good at marketing can do for the individual is to help him or her find the clients they could care about and be eager to help, and the types of work that would be truly stimulating.  The better you are at marketing, the more truly professional you can be, because you are not forced to take money from anyone and everyone just because you need the cash.

David’s original article is a bit long, but there are some other tidbits wrapped around this quote if you feel inclined to dig them up.  The link to the article is above.  I recommend reading two of his books, “The Trusted Advisor” and “Strategy and the Fat Smoker“, or spending a morning with your coffee in hand while perusing his articles and blog archive.