How to Get Started as a Consultant

Last Updated May 26, 2009 6:30 PM EDT

You've been laid off and are coming to the sobering
realization that it's going to take more than the typical three to
six months or so to find a new job — maybe a lot longer. Unemployment
checks aren't much help, especially considering what you're
paying for health insurance, so you need to start making money soon. The
solution for many experienced professionals who've gotten the axe —
oftentimes simply because there's nothing else available — is
to become a consultant in the field you've been kicked out of. But if
you've never worked as a consultant before, you're probably
a bit unsure about how to get started and make it pay, even as you continue to
look for full-time opportunities. Here's how to do it right.





Do Your Due Diligence and Plan Ahead


What’s your niche? Companies usually turn to “name-brand”
firms for general management and strategic consulting, but recognize that
specialized projects often require individual practitioners. So a good deal of
the art of consulting is to identify a unique marketable area of expertise that
fits your experience. So pick one, and call every consultant you’ve
ever worked with, and every peer who has ever hired one, and ask them how much
work there is out there in the area you’ve identified and whether it
pays enough to be worth the effort. David Mark did just that after he got laid
off from his job as a food research scientist several years ago and discovered
there was a real need for nutrition scientists who knew how to work with
marketers. “There were maybe 50 people who fit that description,”
he says. “After that, it was just a matter of doing the math.”

No business can succeed without careful strategic planning —
and a business with one employee is no different. Veteran consultants emphasize
the need to develop “rules of engagement” early on in your
decision-making process. What are your office hours? (Yes, one of the joys of
consulting is flexible scheduling — but if your clients are chained
to the 9-to-5, make sure you’re available on their time, too.) Your
hourly and daily rates? (You may end up charging per project, but some clients
will want to know your rates, so figure out a fair average if you were on
salary somewhere, and add at least 50 percent). What about your compensation
and reimbursement policies? (Half of your fee on engagement, half on delivery
is common, as is reimbursement within 30 days for approved expenses upon
presentation of receipts.) And just how much are you willing to travel?
Answering all of these questions is critical not just to your business, but
also your lifestyle.


Gather the Right Resources


If you’ve done your homework properly, you should have
a clear sense of your market. Next, you need to determine the resources you’ll
need to effectively deliver on client expectations. The first priority is building
a secure financial base from which to operate so that you can concentrate on
winning and servicing clients, rather than on paying the rent. Ideally, you’ll
have built up a cushion of three months of your previous salary to tide you
over until your first payments start coming in; turnaround time for payment
from even Fortune 500 companies runs an average of 60 to 90 days. If you don’t
have that much saved up, bite the bullet: cut back on your living expenses so
that you can weather an extended period of little income without going deep
into debt.

Checklist

Equipment and Infrastructure You’ll Need

Besides money, here’s what else you should have:


  • A dedicated home office. Even if you prefer to be mobile,
    you’ll need a base of operations for organization and storage.

  • Connectivity. Make sure you have a separate work phone
    with voice mail, as well as broadband Internet since your work will almost
    certainly involve transferring large files back and forth.

  • Storage. You’ll want to keep complete files of
    every client and project, digital as well as physical. Buy a big hard drive
    (500 GB or more) that allows you to mirror the entire contents of your
    computer, and back up religiously.

  • Collateral. Business cards, a current, consulting-specific
    resume, and a Web presence — a simple blog or professional profile on
    a networking site — are necessities. But don’t worry about
    printed materials: creating digital documents that you can customize and update
    makes more sense.

Get (Re)Connected


Once you’ve got the right pieces in place, the next
step is marketing yourself. If you’ve left your former company on
good terms, they may well be your first client. But even if you have a customer
out of the box, developing a new-business pipeline is essential, and that means
networking. “When I sensed something in the wind at my company, I
started reconnecting with all my contacts just to be fresh in their minds,”
says Kim Lopez-Walters, who launched her practice as a consultant specializing
in food-related new product development after being laid off last July. “When
the layoffs came, a friend had already contacted me asking if I was interested
in doing project work.” Even if your contacts don’t have
work for you themselves, they’ll be your best source of the
consultant’s bread and butter: referrals.

Hot Tip

Other Ways to Get Those First Jobs

First-hand contacts are always best, but registering with
agencies that have a consultant-staffing practice can generate initial
opportunities. Robert Half, for instance, offers consultant placement services
for accounting
and finance
, marketing and creative work, and
general
management
, among other industries. Professional organizations such
as the Institute
of Management Consultants
can offer connections with peers who can
give you advice and, potentially, business. Other ways to build a project
portfolio and generate leads for bigger business include advertising on online
consulting marketplaces such as Elance.com and href="http://www.guru.com">Guru.com (and yes, even Craigslist), although compensation on sites like
these is likely to be lower than you’d get compared to clients you
secure through placement services or via your own network, and the competition is
sometimes stiff.


Balance Consulting Work with Your Full-Time Job
Search


If you’re primarily looking at consulting as a way to
earn extra money and keep busy while you’re looking for a full-time
job, you’ll need to make sure you continue devoting enough time to
your search. Typically, that’s 10 to 15 hours a week for research,
interviewing, and networking. “If you can’t manage at least
that, your job search is going to wither up and die,” says Caroline
Ceniza-Levine, a career coach with Six Figure Start. Fortunately, a lot of this
research and emailing of contacts can be done after hours and on weekends.

Sometimes, of course, consulting can be just the foot in the
door you need with a potential employer, serving as a critical “audition”
for a full-time job. However, you shouldn’t assume that getting
upgraded to a full-time position is always an option — after all,
companies often hire consultants precisely because they don’t want to
add full-time staff. “You have to do your due diligence to see if
they’re open to hiring, and then you have to be clear about your
intentions,” says Ceniza-Levine. “You might wait a few
weeks to prove your value, but then you have to raise the fact that, hey, if a
permanent position became available, you’d be interested.”

The Legalese

Contractor Law

If you’re consulting for a company with the hope
of on-ramping into a permanent position, remember that it’s a
violation of labor law to retain contractors indefinitely without hiring them
as salaried employees. In 2000, Microsoft was forced to pay a record $97
million
after losing a class-action lawsuit filed by contractors who found
themselves in “permatemp” limbo. However, this also means
that companies have no choice but to place limits on the duration of consulting
assignments that stand in for traditional hires. If an assignment goes longer
than six months, companies will want you to have other clients to prove that
you’re really an independent contractor, so even if you’re
looking at consulting as a temporary move, you may need to start building up a
client list.


Leave Them Wanting More


The best marketing tool is a happy client: they’ll
hire you again — and spread the word. That means delivering projects
to scope and on time is critical, so you’ll have to hit the ground
running from day one. “You don’t get a ‘trial
period’ in consulting,” says Lopez-Walters.

Though it’s important to be clear up front about
expectations, going a little above and beyond the call can pay off. “You
want to avoid project creep, but you should always be willing to put a bit more
in the pot,” says David Mark. “That kind of goodwill leads
directly to repeat business.” For that reason, proper follow-up after
every project is also a must, to obtain feedback and assess future
opportunities.

And after you’ve established a regular flow of
business, you can hopefully start to enjoy the benefits of being your own boss.
“You can’t beat the flexibility,” says Nancy
Fritz, who last year celebrated her tenth year as a consultant specializing in
research strategy and group facilitation. “When a recruiter calls me
and says, ‘Hey I have a [full-time] position that’s perfect
for you, big bucks,’ I say, ‘Yes, but will it let me take
off my shoes and put my feet up on my big furry dog?’”

  • Jeff Yang

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