WHAT THE FUTURE MAY HOLD
Having had some first-hand experience operating a
number of small “moonlight” businesses over the years,
my perception about consulting was more reality based.
While working on the agency side, I had also administered
contracts for consultants, so I knew they didn’t have it
all that plush, and that the good consultants worked their
Regardless of what we might imagine consulting work to
be, the reality is indeed different. It cycles between days
and weeks of relative calm with an associated income
reduction, countered by days and weeks and, to my good
fortune, certain months of juggling multiple clients,
meeting deadlines and still trying to find time to line up
new business to replace projects nearing completion. The
pace can be as restful or as busy as I want, but checks only
come in from the busy months. In the real world of private
consulting, revenue is in direct proportion to the amount
of work, so no one is going to send me checks unless I am
providing a useful service. The competition is real, and bids
need to be balanced between being competitive and not
taking a loss.
For some, a solid opportunity might be right back with
the agency or firm you left. They may be relieved to not
be paying your full salary, yet receptive to a contract
arrangement for work on an as-needed basis. In large
organizations, the overhead costs of maintaining a full-time employee with typical benefits can exceed 100% of the
gross base salary. Overhead costs like healthcare, payroll
taxes, insurance, office space, transportation, training and
retirement benefits can be pricey. That’s why they can pay
consultants, as needed, hourly rates that are as much or even
higher than full-time employee salaries and still save money.
While we tend to use the terms consultant and contractor
interchangeably, most of us do both kinds of work. We
may have some clients who are paying us for consultation
to help them strategize and navigate activities or processes
they don’t really understand. Then we have clients who
simply hire us, typically on an hourly basis, to do specific
work. Federal and state agencies seldom issue contracts
for consultants. They contract for specific technical or
professional services. They are not asking for consultation,
but for work that regular employees can’t accomplish, such
as writing an environmental document or negotiating the
acquisition of a set of easements. By doing this, they can
save on overhead costs by not having permanent employees
do the work.
OBSERVATIONS FROM THE FIELD
For anyone considering a little consulting work, I’d like to
share some of my personal observations:
Do some homework. Jumping in without a game plan
just to see what develops is not the path for getting paying
clients. I learned some valuable lessons by observing how
successful consultants worked. Before jumping in, talk
to your contacts and colleagues and see what the unmet
market needs are that you can best fill.
Reputation is everything. I have a website and
occasionally, I make cold calls. But all of my paying clients
to date have been the result of referrals and word-of-mouth.
Attitude is almost everything. There is too much
competition in the current economic climate to indulge in
bad manners or pent-up grumpiness on clients, agencies or
landowners. One way or another, word will spread. I have seen
aspiring consultants with valid work experience burn a few too
many bridges. Bouncing back can be slow and painful.
Picking your niche is imperative. The economy is slow
and the marketplace is jam-packed with firms ready and
willing to handle just about any type of project that arises.
Leveraging your specific areas of expertise will give you the
best chance for success. It will also alleviate the temptation
to cast too broad a net and competing with those who have
Develop a business plan. For a small start-up, you might
think this is a waste of time. I sure did. What a mistake.
Make a plan, but stay flexible. If the plan isn’t working after
a reasonable time, formulate a new one. Even just a one-page outline of your key goals and next steps will keep you
pointed in the right direction.
Your plan should address who, what, where, why, when and
how. For example, ask yourself: Who will be my clients?
What area of work will I focus on? How much should
I charge? Will I need facilities, equipment or operating
capital? When should I line up a list of skill providers?
Be smart. If you’re considering embarking on a new life
as an independent business owner, you may be surprised
by what you need from a legal and liability standpoint in
order to be fully protected. Even if you are a one-person
operation, a few hundred dollars for some advice from an
attorney, your insurance agent, and a tax accountant is a
worthwhile investment before you start.