Are you thinking about becoming a consultant? First consider the questions as to why organizations hire a consultant? I can quickly think of three reasons:
- The skills or knowledge that is needed does not exist in the organization
- Management wants objective outside analysis or alternatives to a critical issue
- Management wants to point the finger elsewhere else if the solution doesn’t work
If you’re thinking about leaving your job to become a consultant, here are some things you should consider before making the leap.
- What can you do that very few people are able to do? Consultants have special or unique skills, knowledge or expertise that organizations need. Unless you have a national reputation, are a known expert in your field, or can convince executives that you can obtain the results they are looking for, why should they hire you as a consultant?
- The actual process of consulting is the easy part. Most consultants can do a minimally adequate job of consulting. But meeting with senior management, presenting a pathway to results, convince executives that you’re better than all others, then actually sign up a client for a fee, is the hard part. What makes you more effective than all your competitors? What can you do that they can’t?
- During the first or second year of consulting, most new consulting business is dependent upon your contacts from past executives you’ve known before. After the initial flush of business and the low hanging fruit gets picked, then you have to dig out business from organizations that don’t know you or maybe never heard of you. Most consulting firms dry up within a few years.
In addition, a few more considerations:
- It’s a very lonely existence. There’s no one to kick around ideas or critique presentations
- What do you know about legal issues, licenses, tax implications, accounting, marketing, time allocation, insurances and variable income?
- Even when you have a consulting job, you need to market yourself for the next project
- Your financial time horizon is about 3 to 6 months out
- The benefits and healthcare costs are huge. There’s no corporation to help pay bills
- Your clients will ask, “Where have you worked in our industry? If not, why hire you?”
- When you have to add needed staff, your costs escalate and cut into your margins
- The local, state and federal laws for liability, insurances, taxes and licenses are complex
- It’s difficult for an independent consultant to make over $100,000 a year. Why? The skill-sets needed, start-up and marketing costs and the marketplace all work against you
- Lastly, if you try to move back into the corporate world, the hiring managers will be reticent to hire you. Why? Because you left another manager in the lurch and it would be too easy for you to do the same now.
Consulting looks easy, glamorous and financially rewarding. In reality, you need many diverse skills, extensive business contacts, and a determination to succeed that most individual consultants cannot sustain over time.
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