Have you thought about starting your own consulting business?
Consulting can be a nice "bridge" between jobs. You might even find that you like it! In fact, some companies prefer this approach - it's safer and they can check you out first without making a commitment.
Management and technical consulting is one of the fastest-growing industries. At 44% in 10 years, it's grown four times faster than the workforce growth rate.
You can consult from anywhere. Take JobBait for example - we consult with clients around the world, by telephone and internet. It's rare that we actually meet our clients in person.
You can consult in almost any field. One of our $500k+ CEO clients found businesses who could not afford to engage him full time as a CEO, but wanted his expertise. He negotiated a handful of engagements with several businesses - some one day a week, some for a few hours a week, and some for a couple days a month. He is now working fewer hours and making more than $500k per year. In one of our conversations, he remarked that he would never go back to a full time job.
The formula is simpler than you think. The starting point should be three times your equivalent hourly rate. If you used to make $200k, that's $100 per hour, and three times that is a billing rate of $300 per hour which can easily be buried in a project or contract. At a minimum, charge two times your equivalent hourly rate.
Large consulting firms spend about 33% of revenue every year on sales and marketing. Regular businesses spend 20% to 25%. Microsoft, a virtual monopoly, spends 22%.
As a solo consultant, you should plan to spend at least 20% of your revenue on marketing. In other words, you'll have to spend money to make money. You can market your business with our direct mail campaigns to get started quickly - just ask, we'll explain how it works.
If you're planning on networking to find consulting work, you're in for a long haul. Most solo consultants who depend on networking fail for the first several years. Those who spend money marketing their businesses succeed very quickly. Those who continuously spend money marketing their business are the winners.
Having a business website not only makes sense, there are significant benefits.
According to the McKinsey Global Institute report on "What business can do to restart growth," a study of 4,800 small and midsize enterprises found that those with a strong Web presence grew more than twice as quickly as those with a minimal or no presence—and created more than twice the number of jobs.
Find a few clients who need your help part time - that's
often much easier to achieve than a full time consulting job.
It's also safer - when you lose one of your clients, you still
have income with the others. If you can find two clients who
need you one day a week, you can make as much or more than a
full time job. If you find 3 or 4 one-day-a-week projects,
you're making much more.
Many companies desperately need heavy-weight talent, but can't afford a full-time person.
Interim full-time consulting engagements are problematic, resulting in classic rags to riches. If you avoid the interim engagements from the start, you can build a nice book of business that has a steady stream of income over time.
Here are several things that will help you start solo
FYI, JobBait helps executives start up consulting businesses. Holler if you need help.
Going solo has enormous benefits, but you may be tempted along the way to join up with an established consulting firm, especially when you see their well-written ad in the paper, or impressive website.
There are good consulting firms and bad. Some firms prefer recent MBA graduates and seldom invite savvy, six-figure executives. They say they do, but it's rare.
Do you know why they focus on recent college graduates? You'll find out in a minute.
If you get the chance to interview with a firm that has a "colorful" reputation (easily done), chances are high they will send a very well-dressed person to meet you, perhaps near an airport, and this person will follow a well-rehearsed script. The interview will probably be arranged by a telemarketer sounding like the interviewer's secretary, not the person who will interview you, and the whole process will appear to be very formal. They will probably tell you how lucky you are to be selected for an interview!
Working for a consulting firm can look like an easy ticket to success.
They typically have a three-way split of fees, and the
likelihood of travel is very high. You should expect to get
one-third or less of your billing rate, and the consulting firm
gets the rest. And then, just when you think that the firm is
spending their cut of your fees on marketing and sales, you'll
find out that you eat-what-you-kill. You will be expected to
drum up your own business!
And then when business gets soft, who do you think gets laid off?
They come in all shades of grey. Here's how one of them works - a consulting company we'll call THE FIRM. They have thousands of consultants working world wide. Read the box below to see how some of them work.
FIRST: THE FIRM's front-end telemarketing crew lines up
appointments for a salesperson with a prospect. The
salesperson's job is to sell a canned financial analysis for a
price between $300 and $6,000 (depending on what that person
thinks he or she can get out of the prospect). They often
concentrate on very small companies in the $500,000 to $5
SECOND: Then a business analyst flies into the city the morning after the salesperson's meeting, rents a car from their personal funds, does the analysis and collects the analysis fee. That analysis fee then goes to THE FIRM and commissions are paid to the telemarketer and salesperson - but NOT the business analyst.
If no fee is collected ... no one gets paid.
THIRD: The business analyst then goes to a motel (using a small per diem), works into the wee hours of the morning to finish the analysis (heavily laden with boilerplate) ... and reports back to the client in the morning for another almost full day. They try to sell a follow-on project, typically for $20,000 or more. The price can be set ONLY by THE FIRM.
No follow-on project? No commission.
When the business analyst arrives at the prospect's location, he/she may find that no appointment ever existed (which happens) and all the expenses were for nothing. The business analyst just had the privilege of spending his/her own money to further THE FIRM's cause. The strategy (and your clue) is this: upon arrival and at the last minute, the business analyst will get the name and address of the prospective client from THE FIRM, but not the phone number. Calling to confirm the appointment is not appropriate because the prospective client might cancel. THE FIRM doesn't want that!
Even if the business analyst sells the follow-on project, no commissions are paid to the business analyst unless money is COLLECTED for the project by a project manager. THE FIRM has a whole department that works on collecting funds (many of them lawyers). The numbers get very big - millions of dollars!
It doesn't take long for the business analyst to realize the losing battle ... and resign ... only to find out that any commissions in the pipeline now go to THE FIRM and NOT the business analyst. That's a great business model for THE FIRM .... not so great for the business analyst. And so on up the chain.
The sales approach to the client is canned and tightly scripted. Over the years some of these consulting firms have developed, tested and refined the techniques that work best; and perhaps what cannot be challenged and litigated later.
Turnover is high because so many new employees (like you, the
former-employee-turned-business-analyst) get discouraged after a
few months. When new consultants like you leave, they find out
that they must pay their own expenses that would otherwise have
been covered by future engagements. THE FIRM has just reduced
expenses and increased their profit with your money.
These FIRMS always need fresh blood, and can take advantage of your services free while you're getting established. If you quit, it's better for them! Some refer to this dilemma as white-collar indentured servitude. Others call it golden handcuffs. Be very careful before you join!
The truth, the whole truth, and nothing but the truth
Some consulting firms don't always tell you everything. As a seasoned and savvy six-figure executive, you will probably recognize a slippery sales pitch.
Now do you see why these firms recruit from the ranks of recent college graduates? They also prey on desperate job-seekers.
If you've done your homework, found a reputable consulting firm, and agree with their approach, jump on it! Many executives have found wonderful careers in consulting.