What To Expect Your First Year as a Consultant:
BY MARY LYNN HALLAND
Develop an Expertise . . . Market Yourself . . . Field Job Offers
My first article on page 3 discusses factors to consider if you are contemplating becoming a consultant. It also looks at suggestions for establishing your business.
Now, you have perhaps decided to embark on the consulting road, but there are several predictable twists and turns ahead. In talking with other self-employed, independent consultants, I was surprised to learn that we all had had similar experiences while establishing our businesses, regardless of our areas of expertise. By describing these phases, guideposts may be erected that will help to guide you along the way. Perhaps knowing what those phases are in advance will help you understand what lies ahead during your first year as a consultant.
Getting Started
The initial thrill of going out on your own is wonderful. You are your own boss, able to make your own hours and set your own priorities. Your newfound freedom is delightful.
But establishing the workings of your business and your work space take a lot more time than you can imagine. Somebody (that is, you) has to buy a computer and fax machine, get postage stamps and stationery, open a bank account, pay the bills, etc. Someone (that's you again) has to be present when your new phone lines are installed. Suddenly you realize you're not a consultant-you are an office manager, repairperson and bookkeeper.
The support system you enjoyed as an employee is gone. If you need to send a fax, you send it yourself. If the fax machine runs out of paper, you reload it. If it breaks, you fix it, or pay someone else to (out of your own pocket). Your former fully functional office, and the ongoing support you used to take for granted, are now very much missed.
The good news is that the initial office setup time will eventually end. The bad news is, you will always need to spend some time maintaining your office, billing clients, monitoring accounts receivable (whether or not your clients paid you), paying estimated taxes, filing tax returns, etc.
For now, do what you can to inexpensively set up your work area for comfort and function. Remember, however, that your chief goal now is to get paying clients.
The First Clients Come In!
Hopefully you had at least one client before you hung out your shingle, but now you have two! You have landed clients, produced work and gotten paid for your services. Congratulations! Now you really are a consultant.
The Dry Spell
Consulting is cyclical-there are ups and downs in the flow of business. Inevitably there will be times when all your work dries up at once, perhaps unexpectedly. Over the course of time you will market yourself more consistently and build up a client base, so that the dry spells are less severe. For now, however, having a clear calendar is a shocking reality check.
Use your free time to your advantage by drumming up new business! Send mailings out to potential clients, then follow up with a phone call. Network with other consultants and former, current and potential clients by meeting for breakfast, lunch or a cup of coffee. Attend meetings of one of the professional associations you belong to. Or try doing something totally different simply to meet a new group of people and open up your thinking a bit-perhaps by performing a new type of volunteer work or attending a seminar. You have free time right now, so use it to build up your business.
Discovering What You Are Really Being Paid
Of course you know there is a difference between the money you are paid and the money you get to keep. It is a shock to discover how great this difference can be. When you factor in income taxes, both employee and employer portions of Social Security, lost revenue due to vacation time and sick days, benefits such as health insurance, pension funding, disability insurance, etc., it seems amazing that anything is left at all. Plus there are the normal business expenses such as office equipment, phones, etc.
After the initial panic wears off, remember that you have a lot of control over your revenue. It is up to you to put together a strategy and implement it. You can solicit better paying business, develop more highly compensated skills, and offer new services. Just a little additional training in one of your skills could help. For example, taking a short refresher course in the foreign language you used to speak perfectly would allow you to incorporate this skill into your consulting practice and increase your rates. Or maybe you need to rethink your target customers. Instead of pitching your skills to smaller businesses maybe you need to approach large corporations, which tend to pay higher rates. Any way you do it, learning to expand how you present yourself and your services will lead to a larger practice and bigger fees.
You're not just a consultant-you are an office manager, repairperson, bookkeeper.
Getting Paid
Eventually you will have difficulty collecting on an invoice, something people on a payroll never have to think about. Clients usually do pay, but often later than promised or expected, and without regard to when your bills are due. Again, this is part of the consulting business. But you will learn to not treat all clients equally. New clients should not be given much credit-try to bill for some services in advance (say, 35% of the project cost) or, at the least, submit an invoice as soon as possible and see how quickly they pay.
Handling Job Offers
This, I believe, is the true test of a consultant. You will receive job offers from clients who appreciate your work and want you on staff permanently. The decision is yours. Do you stay independent-or go back on someone else's payroll?
If the natural ups and downs of the consulting life have begun to bother you, now is the time to go back to steady employment. As a compromise you might be able to work part-time as an employee and still continue your consulting business. This is the point at which you either definitely commit to being an independent consultant (at least for now) or decide to go back to being an employee.
Many, many people opt for the more financially predictable life of an employee, but are much richer in knowledge and experience for the time they spent consulting. They will also now greatly appreciate the "extras"-like benefits, vacations and sick days-that employment offers, along with the security of again being an employee.
Clients usually pay-but later than promised
and without regard to when your bills are due.
Becoming an Expert
Maybe you already were an expert in some area, an expertise you were able to effectively market as a consultant. If not, stay a consultant long enough and you will eventually develop a specialty in some niche area.
For example, let's say you started your consulting business as a freelance graphic artist. One of your assignments was to design a catalog for vases to be purchased by florists. The catalog design was beautiful, effective and very well received. Now you are an expert in catalog design! You can now market your expertise to other catalog companies, and charge higher rates because you are "an expert."
Consultants get paid only if they produce.
There is no such thing as a paid sick day.
You Are Established
Most consultants I spoke to said that their first year of consulting was the most difficult. But once they were established, they all said they would not go back to working for someone else. After a year you have learned to market yourself effectively and to build up a client base. Your family and friends finally understand that you are a professional consultant and you are not just doing this until something better comes along.
At times you have less work than you would like, but there is rarely a time when nothing is happening (remember the terror of your first dry spell?). Your financial situation is at least satisfactory, and definitely improving. And best of all, you enjoy not only what you do, but also the clients you work for and the flexibility you have.
So if you think you have what it takes to consult-take the plunge. You will be happy you did!
I reserve one full day a week for new business development.
Mary Lynn Halland is a member of The Five O'Clock Club and consults in the field of business and project management. Mary Lynn attended The Five O'Clock Club while setting up her consulting practice.
If you can react the same way to winning and losing,
that's a big accomplishment.
That quality is important because
it stays with you the rest of your life.
Chris Evert Lloyd