After years of contracting, you may find yourself more interested in working as a consultant to share your skills and enable change for clients. In part 1 we examined the differences between contracting and consulting. In Part 2 we looked at the consulting approach.
This is the third and final part in our consultant guide and provides some tips on making the transition from contractor to consultant.
Tip 1: Develop a pipeline of business
Before deciding to move into full-time consulting, it’s vital to have some paying business lined up.
Many would-be consultants end their contracts, and then spend 6-12 months unemployed trying to secure business. Money runs out and they are forced back into contracting with a glaring hole in their CV.
The smarter approach is to build a strong pipeline of prospective business whilst you are contracting.
Ideally you should have one good chunk of work, agreed and signed by both parties, before you make the leap.
Tip 2: Build up a war chest
Even with one piece of initial work there’s the risk that there’ll be no more after that for a while.
There’s also a risk of bad debt –not getting paid. Independent consultants, working without the safety net of a big reputable agency, are at far greater risk when clients decide not to pay.
You should aim to have enough money to get by (and cover your sales costs) for at least 6 months.
Tip 3: Get organised
You should have a business plan that includes a sales forecast to give you some idea of how much business you might be doing each month.
An important document is the consultants diary. You’ll want to know what you’ll be doing, where you’ll be doing it, and how much you’ll be making, for every available day in your schedule.
When your client is paying for your time, your time is your most precious commodity. Manage it wisely.
Tip 4: Do some marketing
You’ll need to market yourself well in advance to fill up those empty spaces in the diary.
The way most consultants bring in new business is, strangely enough, to give away free advice.
You need to build a brand, and a reputable one at that, so you should be looking for ways to get your name around and build your credibility at the same time.
Conferences, publications and web sites are good mediums for raising your profile and establishing your credibility. A well-received presentation at a workshop one day might generate leads several months later, so start early.
Consultants who don’t give free advice, speak at conferences, write for publications, or publish material on their web site are doing themselves a disservice. They might be too busy earning money now to care, but what about tomorrow?
Remember that good PR takes time, effort and expense, and you’re totally self-funding.
Tip 5: Make some friends
The most powerful source of business for any consultant is networking - the people you know.
A personal recommendation from a friend or colleague to their client or employer carries a lot of weight.
There is probably a community of professionals and “thought leaders” that are active in your particular area. You’ll have a lot in common and a lot to talk about.
But wary of being too blatant when trying to generate leads through your network. Other consultants don’t take kindly to people who are obviously only interested in getting sales leads out of them. If you’re genuinely interested and excited about what you do, that won’t be a problem.
You could also consider forming a partnership or association with other independent consultants. Pooling your resources and using a common business infrastructure can significantly cut your expenses and has the added advantage of creating a bigger, and potentially stronger, brand.
Fred-in-the-shed consulting companies are harder for clients to take seriously. If you are a team of ten with your own offices, a slick web site and stationary, and a proper receptionist you will set a better impression and win bigger and better business.
If you do go down the partnership route, make sure you’re comfortable with your partners, and get the legalities sorted out before you start doing business. In particular, the equivalent of a “pre-nuptial” agreement can help protect any intellectual property you bring to the partnership, and help avoid the usual nastiness that can ensue when things are later dissolved.
Consult a solicitor – preferably one who specialises in partnerships and contracts – before you sign anything.
Tip 6: Ask for the money
Speaking for free at conferences or publishing papers reaches a wide audience, raises your profile and builds your credibility as an expert in your field.
The same doesn’t necessarily apply in one-to-one situations with potential clients. It’s not that clients are out to squeeze free consulting out of you, but some can be a little thoughtless about the independent consultant’s precarious financial position. If they’re not paying you, then who is?
There’s a delicate balance that needs to be struck here. You need to build a relationship with potential clients and earn their trust, which requires you to demonstrate your knowledge and expertise. At the same time, you need to make a living. At some point you have to stop answering their questions and ask them to sign on the dotted line.
You need to avoid being driven out of business by prospective clients who use up all your time and never actually raise a purchase order.
It is advisable to set out a clear process when engaging with potential clients that let’s them know that at some point that they will have to start paying. This could be after one visit, two visits, three weeks, etc. You’ll need to use your judgement to know when to ask them when they’d like you to start.
Tip 7: Contracts and Billing
Never start an engagement without all the necessary legal paperwork.
Bill as early as your consulting agreement allows to make sure your invoices go through their accounting systems smoothly. Payment terms longer than 30 days are something you should actively avoid.
If possible try to get partially paid before the engagement finishes and the client’s had everything they wanted. If they still want more, then that’s an extra incentive to pay you promptly.
Chasing invoices can be an uncomfortable experience for consultants, but once you lose the protective barrier of the agency it is all down to you.
Some clients will act affronted when you confront them with late payments. This is sometimes designed to try to make you back down. Bottom line is, if they’re late paying, then they’re in the wrong and you should feel affronted by their lack of consideration for your position as an independent consultant.
Tip 8: Get the feedback quickly
For all sorts of reasons, including improving your services, adding value to what you do, and making it more likely you’ll actually get paid, it’s important to solicit feedback throughout a consulting assignment.
Find out what you’re doing right, and what you can improve on. If the client says “we’re not happy with X”, then drop everything and go and fix and keep fixing it until their feedback says they are happy.
Some clients are never happy, but ignoring area X and moving onto Y could result in you giving them X for free. Watch out.
If clients continually reject your work, and you are sure it’s of a good standard and what was asked for, then consider approaching an independent 3rd party to arbitrate – a considered expert who knows good from bad. It’s rarely necessary, but you might like to add something to the small print in your terms and conditions just in case you need it.
There is plenty more to learn about consulting than we have highlighted here, but if you can get the basics right, then you’ll have plenty of time to learn the ropes and find a way of working that suits you best.