Her “dependency” on a hefty paycheck and a generous benefits package kept Alexandria Jimenez in professional shackles for years. Then, dissatisfied with a decade-long COBOL programming career for a major financial firm in New York, and pining for more creative ventures, Jimenez seized the opportunity during a round of company layoffs to volunteer for a buyout.
Jimenez said her 11-months' severance pay on a six-figure income gave her nearly two years of living expenses and the opportunity to create her dream Web design and development firm.
When her business, Capricorn Web Designs, opens in the spring of 2003, Jimenez will join nearly 16 million individually owned and operated businesses in the United States, according to the U.S. Small Business Administration.
IT professionals who are consulting but still working salaried day jobs or are facing major professional changes may want to consider the following in deciding when it's time to take the leap into full-time consulting.
You're considered an expert in your field
After leading IT groups in major reorganization projects for seven years as a vice president at both MBNA and FirstUSA financial firms, and two stints as a CTO in Internet startups, CJ Rhoads decided last year that she was ready to work as an independent IT consultant.
With more than a decade of experience that included working on mainframe projects, e-commerce, and CRM software, Rhoads now consults from her office in Douglasville, PA, with organizations on how to best use their IT infrastructure.
Having such specialized skills is what Rhoads credits with her ongoing success, even through a sluggish economy.
"You have to be able to distinguish yourself. Early on, you have to have people point to you and say, 'She was so good at that, she was just wonderful,'" Rhoads said. "If I don't have people who love what I do, then I'm not going to get any referrals to keep the business going."
Gaining such technical and managerial expertise takes time and training throughout one's professional lifetime, said Trudy Reeves, president of The Success Resource, a small business and entrepreneurial consulting firm in Carmel, CA.
Reeves stressed that for consultants-to-be, some skills attained during the five-year Internet boom, like Web development aptitude or business savvy, don’t necessarily qualify you as an "expert." Instead, be sure you can back up your expertise claim with experience in successful projects, research, authoring books or white papers, additional references, certification, degrees, or awards to demonstrate to potential clients your level of knowledge.
You have a business vision that passes critique
Having a business vision and plan is the consultant-to-be’s next hurdle, according to Michael Gerber, author of The E-Myth Contractor: Why Most Contractors' Businesses Don't Work and What to Do About It.
Gerber said your business and financial outline should address three critical areas:
- Lead generation
- Lead conversion
- Client fulfillment
As IT professionals are skilled in the "fulfillment" aspect of their trade, the other two areas, how to find clients and the ability to seal a deal, present the biggest challenges. Then you have to be able to articulate your vision clearly to somebody who doesn't necessarily buy your pitch, said Gerber. The proposal, first done in writing, and then delivered verbally, should include:
- The business’ specialty.
- How you will find potential clients.
- How you will attain client jobs.
- How you will deliver on each project.
- How much time you will devote to each of these three areas.
- How much profit you expect the business will make.
Business and financial visioning are actually more critical than having a market that supports your skills, according to Gerber.
"The fact is, no matter what the market is like, to not do what I'm describing will actually create disaster no matter how good it is," said Gerber. "Because in the best market of all, which we've gone through, even then, people were falling like flies."
You have money saved
Besides having the expertise and business vision to begin consulting, being able to financially withstand the startup process and a variable market requires several months of living expenses, Reeves said.
Before Rhoads began her firm, Enterprise Technology Management Associates, she had a cushion of nearly seven months of living expenses, which helped as she put her business infrastructure in place.
Jimenez's nearly two years' worth of savings allowed her the opportunity to attend classes and seminars, do research on setting up the business, and further educate herself in the development field.
"That is an absolute criteria," Reeves said, especially when a consultant requires more training.
Having a financial cushion can also compensate for the amount of time it takes clients to pay a consultant during the course of a project or after a project is complete; it’s not unusual for organizations to require between 30 and 90 days to deliver a check.
For initial payments, the process can take even longer. A padded savings account can get you through the lean times until the checks arrive.
You can handle the business infrastructure
Unlike having a salaried job, where a paycheck appears every two weeks and benefits packages are handled by the human resources department, being an independent consultant obviously means you’re in business for yourself.
Besides invoice payments, benefits, taxes, and bills, attending to administrative tasks, understanding client and project management, and building client relationship also fall under your business infrastructure. Even if you operate as a sole proprietor and do not hire employees, you’re still considered a small practice, said Gerber.
IT consultants fail, said Gerber, because usually "they are technicians suffering from an entrepreneurial seizure, believing in the fatal assumption that because they understand how to do the work, they understand how to create a business of their own that does that work."
Because Rhoads recognized that running a business was not her area of expertise, she put a bookkeeper, financial consultant, and administrative assistant on short-term contracts. The contractors allow Rhoads the freedom to concentrate on bringing in new clients and consulting.
"If you spend all your time doing everything yourself, you don't have any time or energy left over for the client," Rhoads said.
An intense amount of reading and research, coupled with free seminars by the U.S. Small Business Administration, have helped educate Jimenez, who anticipates doing the business work herself.
The fact that you may need help in the actual running of your business is a realization most IT consultants don’t make, said Gerber. Consultants put themselves at risk of driving their business into the ground by spending 40 hours or more a week on clients and projects and additional time in the marketing, billing, and management of the organization.
"Even if it's going to be a very, very small venture, if you don't approach it as a business, you'll be dead, because ultimately you'll exhaust yourself. You'll burn out," Gerber said.
You're ready to sell yourself
The final step for most consultants-to-be is the ability to put a dollar value on your skills, expertise, and services. For many IT professionals in salaried positions, this is one of the most difficult steps, according to Rhoads, because they’re often accustomed to fulfilling technical requests, not negotiating a dollar amount for each piece of work.
"A consultant has to learn how not to give away their services. It's the hardest thing for someone who used to be a salaried person jumping into a consultant role," Rhoads said.
Because she realized she needed a boost in how to sell herself and value her services, Rhoads also contracted a sales coach. The coach helped her triple the amount of business she had within a few months by teaching her how to sell her services more effectively and to a more targeted audience.
For example, initially, Rhoads had insisted on spending a few thousand dollars in newspaper advertising, against the advice of her sales coach. When the result was "zero," she instead listened to his recommendation to offer seminars to better meet potential clients.
Being your own advocate and being able to sell your services, as well as negotiate contractual terms, are the areas in which Reeves said she sees IT consultants suffer the most. She recommends finding an advisor or coach who can work with you on the process.
"Many people go through this process and automatically think they'll be able to handle the marketing and negotiating: It's the entrepreneurial self-confidence," Reeves said. "When they finally have to do it, they either hate it, or they don't do it well. The self-critic kicks in, and they have pulled the rug out from underneath themselves before they get started."