CXO

Advice for IT managers who are considering consulting on the side

If you take the right steps and avoid making key mistakes, taking on a side gig as a consultant can be a real boon--both financially and professionally. Here's one IT manager's first-hand advice on how to have a successful moonlighting consulting job.


This article was originally published on our sister site, TechRepublic.

If you’re an IT manager for a small firm, you might find that it’s easy to get bored with the monotony of the same systems and the same issues day after day. After all, many IT managers are highly intelligent, and if you are like me, you can find yourself playing a mental game of chess while you solve the daily, mundane problems.

Consulting on the side can be an excellent way to cure the boredom blues, while keeping current with technology and issues you likely aren’t dealing with during your day job.

However, before you start moonlighting as a consultant, there are a number of issues you should consider so that you don’t get in over your head. In this article, I will explain how I got started as a part-time consultant, how I built my client base, and how I avoided or resolved conflicts with my day job. I’ll also list several pitfalls you should take care to avoid.

How to hit the ground running
Like many IT professionals, I have a number of friends who are people I met in school, computer clubs, or on bulletin board systems. Ron and I had been best friends in high school, and every time our paths crossed as adults, we would reminisce about the old days. So when I met Ron at a New Year’s party one year, I was flattered when he asked if I would like to subcontract some minor consulting work from him.

We did not discuss the particulars at that point, but that is exactly how my foray into consulting started. And as my satisfied client base grew, I got more referrals and before long, I was a bona fide consultant.

One key to my success is that I’m always up front with my clients. As I was working fulltime when my side gig began, I would always tell the client I had a day job, and that I was more than happy to work evenings, weekends, and the occasional lunch hour.

With few exceptions, the clients were happy with this, and, before I knew it, my plate was full. However, I did not want to land in hot water with my employer, so I made sure that my day job always took precedence. My clients all had my pager number, but they knew that any call during office hours would be returned either during my lunch hour or at five o’clock. Though all my clients knew where I worked, they all respected my rules, and not once did I get a call at my desk. I knew that this was partly due to me laying down the law, but it was also due to the fact that I returned every page when I said I would.

The boss discussion
No matter how hard you strive to keep day work and side work from meeting up, your employer will likely discover that you are working on the side.

A few months into my new endeavor, my boss called me in for a meeting and asked me about my moonlighting, and how it could be possible for me to do it without encroaching on company time. Though he accepted my explanation, I could tell I was being watched after that. Small companies have no secrets, and I made doubly sure to keep my consulting outside of company hours.

I was hired on a handshake several years ago, so my boss had no further recourse—there was no contractual stipulation that I couldn’t do the consulting work. And that’s the first issue you need to review when considering moonlighting.

Many companies have standard employment contracts that include exclusivity clauses. This clause may be universal (precluding you from working for any other company in any other field), or they may be specific, stating that you cannot go to work for the competition or work as an IT manager for another company for the term of your employment. If this is the case, you might want to consult an attorney to see if this includes independent consulting, but remember that any benefits and monies you may earn consulting will probably not cover costly attorney fees if your company sues you for breach of contract.

You also need to know, from the start, that you have to maintain or improve your value to the company, as you aren’t aiming to lose your day job.

Most companies are concerned with two issues: the bottom line and trust. If your boss sees that your performance has slipped since you began consulting, it may not matter if the two are related. If you are consulting, you should be more vigilant that you do your job better than before.

If you can show the company that it benefits directly, such as from courses you take or from experience you gain while consulting, then your boss may be more tolerant of your moonlighting. If you were to start strutting around as if you don’t need the company now that you are a big-shot consultant, it would be less likely to be accepted.

The need for strong separation
You have to completely separate your day job from your side job. This may seem axiomatic, but it is worth pointing out because I have found myself in situations where I knew that I could enlist new business, but because I was on company time, I refrained.

I deal with many company clients who like me and would probably hire me if I solicited their business, but not only is that unprofessional, it would also make me vulnerable to betrayal. Remember that the first person that goes back to your boss and reports the conversation is probably the first nail in your coffin, because your boss will no longer trust you.

If you have a good relationship with your boss and are up front with him or her from the beginning, you stand a better chance of staying in good standing with your firm.

Avoiding typical pitfalls
Deciding to consult is the first step of a journey that offers many benefits, as well as some danger. Some of the worst perils can be avoided by remembering a few simple points:
  • The need to consult with your accountant
  • The need to put money aside for the tax man
  • The need to keep ethics in mind

The value of an accountant
You need to find a good accountant who’s knowledgeable about running a side business, so that you avoid common mistakes. Depending on the volume of business you plan to do, he or she may recommend incorporating or registering a company. He or she will tell you if you have to charge sales tax, how to do this, and how much you need to charge. He or she may tell you that the extra income would have a negative benefit on your bottom line because of tax loopholes. The hour or two you spend with your accountant will be money and time well invested.

Keeping taxes in mind
Even if you are collecting and remitting sales tax on a monthly basis, remember that you will also have to pay income taxes in April. Depending on your jurisdiction, you should make a point to set aside 35 percent to 60 percent of extra income to cover that eventuality. If you spend it all now, in April you will regret it.

Consulting ethics are a must
When it comes to murky or unethical client issues, the ones I find myself faced with most often are software licensing, pricing, and warranties.

Like most consultants, I walk around with a CD case filled with the latest software, and occasionally a client will ask if I would do them a favor and install a program for them.

I refuse, not only because it is wrong and illegal, but also because I stand to lose my certifications if I do. I politely tell them that I cannot do it, and they understand. Keep in mind that if your client is raided, they will tell the authorities where they got the illegal software 100 percent of the time.

As for warranties, any product I sell, I deliver. I make it clear to the client that the warranty does not include on-site service calls, replacement units, or 24-hour service. All are, of course, available, at a cost, but do not wait until crunch time to surprise your client with this fact. As I said before, be up front and honest about your policies, and your clients will never be able to say you held back important information.

While following all these tips and advice will not guarantee success in balancing consulting with a day job, it can go a long way to getting your consultancy shop up and running on a good footing.

These tips can also certainly help in maintaining a harmonious balance between a good day job and a successful, consulting side career.

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