Tweet

So You Want To Be an Independent Consultant - Key Issues for New Gray-Hair Consultants

Written by: Tom Long

Article Overview: As the baby-boomer generation begins to retire in larger and larger numbers, it is increasingly the case they will seek non-traditional retirement by establishing new careers in their own businesses. One of the frequently chosen businesses is independent consulting. The key issues these new consultants face and some approaches to resolving them are the topics of this paper.

So You Want To Be an Independent Consultant - Key Issues for New Gray-Hair Consultants

Introduction:



For new consultants who are, nevertheless, experienced in business, there are a number of key issues they face as they consider a new career as an independent consultant. How these issues are faced and resolved largely determines the new consultant’s success or failure.


Starting your consulting practice



Independent consulting can be an exciting and rewarding career. You have the chance to set your own goals, to work with a wide variety of clients, to exercise a high degree of control over your own schedule and to exercise creative control over the services you offer.



The first and foremost issue to be faced is the fact that you are starting your own business. For someone who has been an employee for most or all of a career, this is not a small consideration. For some, the most stressful part of having your own business is the financial uncertainty. For others it is the loss of a social infrastructure. And for still others, it is the realization that you are at a point in life where you are finally not employable the way you used to be. Luckily, the rewards are correspondingly great.



Michael Gerber, in his book, The EMyth Revisited, refers to this initial stage of entrepreneurship as “suffering an entrepreneurial seizure”. But soon the thrill and excitement subsides and reality sets in. If you want to do more than just create a job for yourself, if you want to form a successful small business, then steps must be taken to avoid the failure suffered by more than 80% of new small businesses. The SBA reports that more than 50% of small businesses fail in the first year and more than 80% fail in the first five years.



Therefore, it is critical to make a conscious and deliberate decision to start your own business and to do everything necessary to make it successful. It is one thing to decide to start your own business. But to decide to start a consulting company is its own decision. Being a consultant is not easy for as Gerald Weinberg says in The Secrets of Consulting, “We’ve seen how difficult change is. This difficulty suggests that most of your consulting interventions simply won’t work. If that prospect sends you into a deep depression, stay out of the consulting trade…. If you can’t accept failure, you’ll never



succeed as a consultant.” But I would add, if you enjoy helping others to shift from failure to success then consulting is for you.



As with any business, consulting has its own special issues and challenges. Perhaps the greatest is the very intangible nature of consulting itself. When a prospect or client asks you what they will get for your services, you cannot point to a catalog or picture of anything. And if you fool yourself that producing a report will somehow make the service tangible, you will not last long as a consultant.



Regardless of your skills, expertise or knowledge, the good consultant realizes it is not about you but about the client. The client doesn’t care about your degrees, certifications or qualifications; they care about some problem they face. Your challenge as a consultant is not even to solve that problem, but to help the client solve the problem.



So, if you choose to run your own business and particularly a consulting business, a critical consideration is to focus on the few critical success factors out of the hundreds of possible issues. The issues below are those critical success factors.


Some key success factors when you start out
1.Cash Reserve



One of the most critical failure points in any small business, and a consulting business is no exception, is the establishment and management of a good cash reserve and effective cash management.



Unless you are one of the fortunate few who start in consulting with a big client engagement in-hand, you will have to survive the start-up phase of your new business. The old maxim still applies that you have to spend money to make money, so at the start you will have money going out but none coming in. Having a source of cash in this period is critical. For some this may be retirement income, for others it may be a spouse’s income, home equity loan or even savings. Some individuals may be able to secure an SBA backed loan for business startup.



It is appropriate to look at this area in a bit more detail. The first place you should look for outside financing is among your friends and relatives. This is traditional wisdom for any new business startup.



The second place to look is with your banker. Since banks prefer asset based lending, you may be asked to consider a second mortgage for your funding. This approach is typically the easiest and the most economical.



The Small Business Administration (SBA) does not actually lend money, but it does offer to secure a loan through a participating bank. Even with banks that advertise SBA loans,







it is critical you find the specific individual within the bank who knows how to apply for an SBA loan.



One particular type of SBA loan to investigate is the SOHO loan. Small Office Home Office Banking is a product developed by Innovative Bank to promote the Small Business Administration (SBA) Community Express Loan Program to provide financial assistance and capital access, along with technical and management assistance to the underserved segment of the small business community.

SOHO Banking offers the potentially qualified small business owner a loan as small as $5,000 with a 7-year term, no pre-payment penalty, minimal paperwork, bank-paid technical assistance for the borrower as needed and a fast decision.

Further details may be found at www.sba.gov/financing/lendinvest/comexpress.html. Certain other considerations apply to the types of businesses and applicants for SBA loan programs and may be viewed at www.sba.gov/financing/subfiles/type_of_business.html.

The key question is therefore, how long can you go with no income or less than previous income and how quickly can you find and secure paying clients.


2. Brand yourself



It is tempting to dive right in to finding and selling your first client. But as with any new business, it is wise to do some planning and preparation first. Of course, there is a risk for some that the planning will take on a life of its own and provide an excuse for not actually getting started, so some balance is required.



There are many things to consider in a marketing plan, but it all starts with branding. “Branding tells the world who you are”, according to Bob Killian, author of Do-it-Yourself Advertising & Promotion, and in consulting your brand is you. Early on, you need to decide how you will present yourself to the world from what clothes you wear to meet with prospects, to your business card and your message when you communicate about your company. Branding starts with the question, who are you and why should I care.



Many new consultants start with a laundry list of services they can offer and emphasize the functions and features of those services. This just serves to confuse the prospect. It is far more important to develop a clear, concise statement about your company that emphasizes the client’s point of view, not the consultant’s. Addressing the pain a prospect experiences in problems faced is far more important than grand, sweeping generalizations about benefits.





Another way to think of this area is in terms of story. What is your company’s story? And not the story that you tell your friends and relatives which takes an hour or more, I mean the short version, fifteen or thirty seconds. This is sometimes known as the elevator speech because it can be stated in a brief elevator ride. The objective of this speech is not to sell anything; rather it is to elicit the response of “tell me more”.



There are many excellent books on the marketing plan available, and they include many details on pricing, promotion, positioning, etc., but they all start with the issue of identity and message.


3. Building Relationships



Finally, you are ready to start selling your services. You’ve got your A-suit on, you’ve got business cards and you’ve got your brand message down pat. Now what? Prospects aren’t exactly lining up at your door even if you have a great web site and have sent letters out to the local business community announcing the birth of your business.



According to Alan Weiss, author of Million Dollar Consulting, “Consulting is a relationship business. A special product may make you competitive. Differentiated services may make you distinct. But only carefully crafted relationships will create a breakthrough firm”. Unfortunately, relationships take time to develop and require considerable attention in the process.



It is generally recognized that referrals and networking are the best ways to develop long-term client relationships. This means you have to get out into the market and meet people. Most of these contacts will not be clients, but they can lead to clients if you understand some of the basic principles of effective networking. Ivan Misner in

Masters of Networking indicates “Masters of networking know that givers gain – that creating, maintaining, and serving a wide network leads to great business and personal rewards. Generating leads and referrals, building healthy relationships, and delivering value over the long-term are at the heart of networking”.



So, attack networking with a vengeance. Recognize that every business organization in your community is a source of networking, every social group is too and even friends and family may already know someone who you need to meet. Networking groups have also now sprung up in nearly every geographic location. Their meetings are often listed in the local business press or papers. Seek them out and become an active networker.



What about cold calling? With the advent of the do-not-call lists, many believe cold calling is dead. Regardless, two areas of cold calling are very much alive: cold calling for networking contacts and tele-appointing services.



o Cold calling for networking is simply an adjunct to normal networking, but now you are calling someone not to sell them anything, rather to set up a networking meeting. Most business executives are very willing to meet if they perceive there may be something to be gained in a business network contact. If you are seen as simply someone who wants something then the meeting is unlikely. You must be willing to give first, hence the expression “givers gain”.



o With cold calling being so difficult, a number of companies have arisen which specialize in doing the cold calling for you and setting up appointments with business executives for a fee. Some of these companies charge by the hour and others charge by the appointment. Regardless, you need to work carefully with them to establish the appointment criteria and even help develop the script they will use.



If relationships are the key to long-term success in consulting, then networking is the key to getting relationships started.


Running the Business



At this point, you have a cash reserve, a brand, and an approach to reaching prospective clients, you are now ready to operate. Now you need to consider a second series of issues:
Resources Network



Any consultant who practices client centered consulting quickly realizes they need a network of resources to supplement what they themselves can do for the client. No one person can have all the skills and expertise required by a client over the longer term and long term relationships are what most consultants seek.



Ideally, you would like the client to think of you first whenever they need an outside resource. This is not because you can do everything, but because you have such a well-developed network of skilled resources you can help the client find whatever they need. This kind of resources network happens because you constantly meet potential resources through networking and you are sensitive to the needs of the client. It is important to never put your own needs first by becoming overly protective of your client or by never letting other resources help when appropriate.



The implication here is that you need to expand your network to even include other consultants and professionals. Organizations such as the Institute for Management Consultants, the Independent Consultants Association and the Institute for Independent Business, to name just a few, can be sources for networking contacts among professionals. In addition, service organizations, civic groups and chambers of commerce can also provide ways to network with other consultants, bankers, CPAs, lawyers, etc.


Professional Development





In consulting, if you do not keep your skills and expertise sharp and up-to-date, you will most likely not be employed. Steven Covey, in The 7 Habits of Highly Effective People, calls this Habit 7: Sharpen the Saw. “Habit 7 is taking time to sharpen the saw. It surrounds the other habits on the Seven Habits paradigm because it is the habit that makes all the others possible.”



On another level, we can think of our skills, knowledge and expertise like product inventory. Inventory that stays on the shelf too long eventually becomes obsolete and cannot be sold.



This further means that in addition to your revenue generating activities, you need to plan for and include some which are necessary but produce no income: administration, marketing and professional development are the most common.



Certainly, taking classes, as part of a degree or non-degree program at a university is a classic way to keep skills up to date. But there are many other alternatives as well. The American Management Association offers seminars on a wide variety of technical and non-technical topics. Most professional organizations offer seminars or workshops on current topics and self-study through books, books on CD and journals and magazines are available as well.



As the urgent often drives out the important, it is critical that you deliberately take time to “sharpen the saw”.


Consulting Methodology



The largest consulting firms long ago discovered that having standard methodologies for conducting business allows the leverage of less skilled consultants. They also found it as the critical factor in continuous process improvement. If there is no standard or baseline process, then improving the process is pure luck.



But how can an independent consultant afford to develop or have one or more methodologies? After all, the big firms spend millions to create and maintain their methods.



I am not suggesting the independent consultant develop the elaborate methodologies like those at Accenture or IBM. What I am suggesting is the consultant can take advantage of industry standard and other published approaches for many aspects of consulting. For example, in the software arena, the Capability Maturity Model from the Software Engineering Institute at Carnegie Mellon University is an excellent framework for analyzing the effectiveness of software development processes and organizations.



The Project Management Institute and others provide solid approaches to managing projects in many domains.



Michael Porter in Competitive Strategy provides an in-depth approach to analyze a company’s strategy.



And in The Heart of Coaching, Thomas Crane provides a rich framework for executive coaching: “The Transformational Coaching process provides a useful framework to guide performance coaching discussions in ways that open up communications and build trust. It also creates a powerful commitment to mutual learning and a partnership for discovering the best next steps.”



There are many more frameworks than these, but the point is only that an independent consultant need not approach every client situation as if it had never been seen before. Choosing and using at least the framework of a methodology will enable every consultant to practice continuous improvement.


Ethics



There are three aspects of ethics to be considered by the new, gray-haired consultant: personal ethics, clients’ ethics and the ethics of associates and affiliates.



Personal ethics deals with how you wish to operate your business in the marketplace. There are many issues here, but chief among them is the question of what you will or will not do as part of your consulting. For example, will you lie on behalf of a client, will you lie to a client, and will you misrepresent yourself to a client’s competitor for purposes of market research. Having considered your principles beforehand will make it easier to recognize questionable situations before they happen.



As important as our own personal ethics may be, we must also consider the ethical values of those prospects that wish to become our clients. There is such a thing as “bad business” and a client whose ethics are at odds with our own may not be one worth having in the long term.



Finally, as we develop our network of associates and as we choose professional affiliations it is wise to consider the ethical values held by those associates and affiliates. To develop a relationship with people or organizations with which you do not share basic values is to ask for trouble.




Mentoring



Much has been written about the importance of having a mentor in big business. There are even web sites touting the benefits of having a mentor such as Who Mentored You. For an independent consultant, a small business owner, it is even more important. Running your own business can be a lonely experience even if you take steps to surround



yourself with associates or employees. It is lonely because you are now the ultimate decision maker about your company; there is no boss to guide you.



In larger companies, there is a company board that can act as advisors and some companies even establish product or advisory groups to aid them. But as an independent consultant you are on your own. Finding a mentor or coach who is independent of your company who can be the source of advice and counsel is critical.



When choosing a mentor or coach, it is important not to pick someone with a vested interest in you or your company such as family, friends or even employees. You need someone who can and will be honest and forthright about you and your company – someone independent.



Fortunately, today there are many sources for mentors or coaches. First, there are a number of independent consultants who specialize in coaching and who are often willing to even work over the phone. Secondly, many professional associations offer coaching or mentoring as part of their member benefits. Finally, through networking, you may find a business peer you can use as a mentor or coach.



It may be uncomfortable to consider getting a coach, but consider that even highly successful athletes such as Tiger Woods have a coach.


Infrastructure



Too often new consultants overwork the area of infrastructure before they have addressed some of the more fundamental issues outlined above. That is not to say infrastructure is unimportant, but it should not be your first priority in starting up. Of the many things you can worry about in infrastructure, e.g. computers, filing space, desks, lighting, office location, etc. the ones to be dealt with first should be those that involve communication: email and phones.



Communication is the lifeblood of a consultant. If you cannot be reached you must have a reliable way to get a message whether it is a prospect, client or network contact that is trying to reach you. Nothing says “unprofessional” more than poor or delayed communications.



You need to have an email address that reflects your professional brand. Ideally, this is an email with your own domain name, but it should not look like one your kids can get for free.



In today’s world of the ubiquitous cell phone, a cell phone for your business is virtually a necessity. You may not need all the service bells and whistles, but it should have good service and reliable voice mail and it needs to be on almost all the time. That you are





reachable and respond quickly to prospects and clients says more about you than a dozen glossy brochures with fancy words and color.


Conclusion



The rewards of independent consulting can be great, both financially and personally. It is not sufficient to be smart and talented as a consultant, you also need to be a prepared and savvy business owner.



There are many critical success factors for starting and sustaining a successful small business as an independent consultant. The items above are some of the most critical, but none of them are worth anything if you are not enjoying what you are doing. Independent consulting can be both fun and highly rewarding. If you enjoy helping to solve business problems and you enjoy working with a wide variety of clients and businesses then all the pain and energy of starting and running your own business will be worth it.


References



The EMyth Revisited, Michael E. Gerber, Harper Business, New York, 1995



The Secrets of Consulting, Gerald M. Weinberg, Dorset House, New York, 1985



Do-it-Yourself Advertising & Promotion, Fred E. Hahn, Bob Killian, Wiley, New Jersey, Third Edition, 2003



Million Dollar Consulting, Alan Weiss, McGraw Hill, New York, 2003



Masters of Networking, Ivan R. Misner, Ph.D., Bard Press, Atlanta, 2000



The 7 Habits Of Highly Effective People, Stephen R. Covey, Free Press, New York, 1989



Competitive Strategy, Michael E. Porter, Free Press, New York, 1980



The Heart Of Coaching, Thomas G. Crane, FTA Press, San Diego, 2002

Related Articles
  WHAT MAKES A MANAGEMENT CONSULTANT GREAT? Part II of III
  Why Use a Franchise Consultant?
  Small Business Owners - What Should You Look For In An Offer Made By Business Consultants?
  Why Use a Franchise Consultant?
  Reasons to Use a Franchise Consultant

Article Tags: consulting company, creative control, deliberate decision, emyth, entrepreneurial seizure, financial uncertainty, first five years, independent consultant, independent consulting, initial stage, michael gerber, reality sets, realization, rewarding career, rewards, sba, small businesses, social infrastructure, starting your own business, successful small business



Related Forum Posts
Re: what position to request? - Hi Michael, Great suggestion from David, or you could try something around a design consultancy, How about Website Design Consultant, Design and Development Manager, Website Support and Development Manager or maybe Internet Business Development Consultant. Ultimately whatever you are comfortable with and good luck for the future, Mal.
Why pay a Consultant? - Consultants can bring you into contact with a Funding Source but how do you tell whether a consultant will be successful beforehand? Professional Consultants ALWAYS ask for some kind of retainer so that they can feel they're not being used by a 'chancer'. However, when raising funding, a real consultant will offer to REFUND THAT RETAINER out of the % BROKERAGE he charges, payable once he finds your Funding Source, and payable from initial disbursements. Retainers only cover part of the costs that a consultant has to pay while working on behalf of the Client. Their real wages come from the agreed upon Brokerage, received when they are successful on the Client's behalf.
Re: Today's Hottest Franchise? - I try to keep up on some of the hot franchises, I have noticed an increase in interest in the service industries. Lower cost, lower overhead etc... I think this is because most folks have less to invest or less they are willing to risk. John Henning Franchise Consultant
Any experience with McManus UK Ltd.? - Did anybody already deal with any of the McManus UK Ltd offshore entities? I do have a program, but not enough cash. I have been advised that they can fund investors with access to Private Placement Programs but they don’t want to joint venture with me. They want a fee for the service. This is why I want to find out if anybody has had first hand experience with this group? Patrick Ohara, Financial Consultant
Re: How to finance your independent movie - Hi, The video doesn't come up with its own URL... But it's the very bottom video on the page. Here's the description of it: Financing, Production and Social Impact of Feature Films Host- Carol Atwood - Founder, Spartacus Media Enterprises Panelists: Bill Johnson - Co-Founder and Partner, Inferno Distribution Steven Haft - Producer, Media Consultant Michael Goorjian - Actor, Producer, Writer


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Earn More Money - Easy Home Business Ideas

How to Handle the “I Am Not Interested” Objection

Top Ten Home-Based Businesses

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.