While most employees daydream from time to time about quitting the old corporate IT job and striking out on their own, those who are seriously considering taking this plunge should ponder a few points beforehand. Conventional wisdom on starting a business -- and setting up shop as an independent consultant surely falls under this heading -- dictates that you meet certain requirements before cutting ties to a regular paycheck and be...
Before making the transition from employee to independent consultant, consider the following:
- Startup funding: Most experts recommend that you amass anywhere from six to 12 months' worth of living expenses prior to setting out on your own. That way, you can concentrate on building your business and finding good work, rather than spending your time worrying about how you're going to make ends meet. If you can't save the money, you'll have to arrange a loan, a line of credit, or some other source of funds until your business can stand on its own.
- Prospective customers: It's hard to generate income unless somebody's ready to pay for your time, effort and expertise. You'll want to start building contacts and cultivating prospective customers at least six months before you cut ties to a full-time job, and perhaps even start off with some work on the side to get things going before going independent full-time. It's essential to know who your strongest potential customers are before you issue your personal declaration of independence, and to know that there's a good possibility they'll be able to send some work your way in the near future.
- Keep work in the pipeline: Without regular sales and marketing efforts, consultants can't find future work. Without paying work underway, they can't generate any revenue. You'll have to learn to strike a balance between the two. If you understand that this balance is necessary and allocate time appropriately, you'll be much less likely to find yourself idle when assignments end.
- Basic benefits coverage: Many consultants extend their coverage under continuing benefit plans after they leave a full-time job. Such coverage always comes with an expiration date, so plan to invest some time and effort (three days a year isn't unusual) to locate, research, select and handle the paperwork and logistics to get the benefits you need at a price you can afford.
Beyond the business basics, you'll have to look yourself in the mirror and decide if you've got the right temperament to succeed as an independent consultant.
First and foremost, you have to be a self-starter. Next, you have to be sufficiently organized to keep work flowing, but you must also keep up with billing, accounting and prospecting. (None of these tasks pay the bills, but they're necessary if you're going to build a viable consulting business). You have to be sufficiently motivated to go out and find work and keep yourself as busy as you can stand to be, without overdoing things.
One of the hardest lessons you must learn if you're to succeed as a consultant is when to say "no" to incoming work. If a job doesn't pay enough, if you really don't have time to do it, or if your gut tells you something's not right about a prospective job, you're probably better off turning such work down. It may hurt, but you have to understand that not all work is good work, nor are all jobs profitable.
Finally, you have to understand what your time is worth -- and don't forget that if you work 40 hours a week, you're unlikely to be able to bill more than 25 hours in that week. Make sure your income repays your efforts, your expenses and the time you put into earning a living.
Resources for prospective consultants
Some of the best resources for prospective consultants can be found online. There are also a few gems in print. Here's a short list of some tools and resources that no consultant should be without:
- Gerald Weinberg is a well-known writer on many computing topics. He's one of those rare gurus who can make you laugh and learn at the same time. His book Secrets of Consulting (Dorset House, 2001, ISBN: 0932633013) not only lives up to the title but provides tons of useful advice. See also his More Secrets of Consulting (Dorset House, 2001, ISBN: 0932633528) for information about tools and tracking techniques to help ensure consulting success.
- Tracking time, effort, expenses and billing is all part of a consultant's job. At a minimum, get a time-tracking tool, and consider investing in a low-end accounting package.
- Staying busy means keeping current customers happy while finding new ones at the same time. Invest in a time and contacts database, or make the most of your e-mail software's address book and calendar features.
A little digging using your favorite search engine on the Web will turn up lots more tools and resources. Remember, the more you invest in your future consulting success, the more likely a successful future in consulting becomes. Good luck!
About the author
Ed Tittel is the vice president of content development at iLearning.com and the author of more than 100 books on computer-related topics. He's been more or less independent -- responsible for keeping the bills paid anyway -- for over 10 years now, and he is still working.
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Read Ed Tittel's story on budgeting, billing and collections in the November 2002 issue of Certification Magazine.