In Part I of Tools for Consultants, focused on the process that should be followed when deciding if becoming a consultant is right for you. The key elements that were covered were:
• Deciding what you want to be and do
• Marketing yourself
• Searching for opportunities
• Proposal writing (if required)
• Landing the opportunity
• Execution of the project/opportunity
• Reporting/completion and post-mortem
In Part II, I address some of the aspects of a more established consulting business, which may take as long as 2.5 years to develop, as explained in the first part of this series:
“Most consultants are rarely 100% successful immediately. If you ask around, you will hear that 100% engagement, or 2080 hours per year if you wish to be that busy, takes 1.5-2.5 years to develop and cultivate, unless you retire and are hired back by your former employer as a consultant. Networking and developing new skills takes time.”
If you have worked for a large company in a department with multiple, simultaneous projects, you undoubtedly understand the concept of a portfolio and the periodic assessment of it, usually referred to as a “portfolio review.” Running your own consulting business is similar. At regular intervals, you need to step back and evaluate what you’ve have done, where you are and where you want to go. This includes what you’ve done well, and what you could have done better, and if you have the right “mix” of revenue-bearing activities to be sustainable.
Since you have been on a steep learning curve, there should have been some key learnings that make your path forward easier. Perhaps there are some tools you have developed, or contacts you have made with mentors. Or maybe activities that you thought would be profitable, were, in fact, time-consuming with little return.
Not all activities need to be revenue-generators. Personally, I enjoyed coaching and mentoring in my early career as much as I did the technical pieces. Since I’m currently lacking those aspects for the most part (at least one-on-one), I have engaged with Everwise (www.geteverwise.com) , which is a business that sets up mentoring/protégé relationships for periods of 6 months’ duration. I offer my mentorship pro bono, and I find it very rewarding. I realized that part of the flexibility in consulting is that some of my accomplishments should be people-centric and not money-centric, since I derive rewards in both.
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Earlier, I referred to a “mix” of activities. But as I mentioned in my first article, this is as much about risk, reward and each individual’s comfort level with risk, as it is about diverse engagements of both long and short duration. Just as an investor has a combination of investment types based on his financial goals and point in life, a consultant can decide something similar. However, as companies continue to downsize and lose experience, some firms have taken to bringing back these same “retired” employees in less-than-full-time (LTFT) positions to help mentor younger people and ease the transition, albeit without the benefits the former employee enjoyed. These are still consultants in the literal sense, but they’re really doing nothing more than continuing a previous job, at a lower cost to the company. In some cases, consultants may prefer doing just one type of work or for one client. That seems risk-free, but if you have all of your eggs in one basket… Well, you know the saying.
As an example of a diversity of concurrent clients, I provide Xavier. He has a primary company for whom he consults, and as well as several other minor ones, which pay him a premium because of the shorter-term engagements. He is a guest lecturer and speaker, and receives an honorarium for both, but it is the networking his he is able to accomplish at these events that is of most importance to him. He edits chapters of books and is active in on-line discussion groups on LinkedIn. He receives inquiries to consult almost daily, and sometimes passes opportunities to peers when others are better-suited or have the time he doesn’t. But he is getting to a point where he needs to decide if he wants to take on a partner or, perhaps, approach a small established consulting firm; maybe even with a lab.
In the example, Xavier has been very successful in developing his business and is at a crossroads. Does he lose some freedom and flexibility in merging? This is probably subjective and more of an individual issue. He might be able to work on some things he can’t now, or perhaps provide business leadership for new business development if he had the time.
As your business grows, you also have the decision about the use of your time. Perhaps you were eager for clients your first 2 years, but now you’re turning people away. Reflection on who is approaching you with what might provide some insight on your presence in the market and how you are perceived. Just as you redistribute your stock portfolio, it can be an opportunity to develop new skills and move in new directions. You have a strong base of business, so perhaps you want to spend time reinventing yourself. You should be tracking your hours spent on client projects, and know what your overall hourly rate was for a project. This way, you can delineate the home-runs from the singles and help direct future efforts. Or perhaps you want to reduce your annual hours while maintaining your annual revenue level. Tracking your progress is key in doing this.
In an upcoming article, (April 2016), I’ll discuss the thoughts and efforts that go in to setting up a lab and provide examples of some in the industry with their various specialties.
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