Questions independents should consider before joining a consulting firm

Before signing on with a consulting firm during difficult economic times, Chip Camden advises you to ask yourself four tough questions and get thorough answers.

Independent consultants always have to keep an eye open for new business. Our pipeline can drain quickly and leave us high and dry. During lean economic times such as we have recently endured, the search for new business can sometimes turn desperate. You might even be tempted to try working for someone else for a while, and let them worry about finding the business so you can concentrate on putting in billable hours.

Before you hire on with a consulting firm, though, you'd better ask some tough questions and obtain thorough answers.

What's the financial impact?

These people don't work for free, so their take has to come from one or both of two places: (a) what you charge your clients, or (b) what you get to take home. In my experience, consulting firms lean heavily towards (b). In fact, they rarely charge clients as much per hour as I do, yet they expect the person doing the work to receive an even smaller share. Perhaps if you have no better prospects you're thinking that you'll take what you can get, but make sure that it's enough to pay the bills or it isn't worth the trouble.

Are they worth it?

In consideration for their cut, in what ways does the consulting firm enhance your business? In all fairness, there could be several ways in which they might add value: marketing, closing deals, accounting, billing, collections, project management, client liason, training, customer support, etc. List out all of the duties that the firm will provide, and then consider whether that compensates for what they take out of your fee. If you had a choice, would you pay someone that much to perform those duties? Hint: you do have a choice.

What will this do to your reputation?

Before you sign your name to their roster, ask yourself if you want to be known as one of "those people." Find out what their past and current clients think of them. Do they have a history of one-time engagements? If so, maybe there's a reason for that. Not only do you want to protect your reputation from contamination, but your practices will also suffer if you allow yourself to get used to working in an organization that mistreats its clients. You'll not only seem worse, you'll become worse. On the other hand, if the firm has a stellar reputation, then working for them could be good for both your resume and your business practices. Let me know if you find such a firm.

Will it crimp your future?

Naturally, you won't be allowed to compete with the consulting firm for the same business, but do they allow you to take other jobs outside of the firm — or must everything go through them? Read the agreement carefully. What about after you leave the firm? Even if non-compete clauses won't stand up in court, they could still make trouble for you if you sign one. Furthermore, make sure you understand all of the agreements with regard to copyright and patents. These agreements are often worded so broadly that they might be construed to grant the firm a right to use all of your work for any purpose they see fit, as long as it "relates to current or contemplated business" — even if you developed it completely outside your assigned projects.

If the answers you get to these questions satisfy you (and you're not just hearing what you want to hear), then perhaps working for someone else might be a good option. Personally, I've never been happy to trust others with my business to that degree.

Another option, if you're just having trouble getting business, might be to use a recruiting firm. They still take a cut, but it's probably less. Furthermore, in my experience they usually know what they're looking for even less than the client does, so you often end up paying their fee for a barrier instead of an improvement to communications. Even though it's a lot of work, I still think scaring up your own business leads to better results. Your Mileage May Vary.

Thanks to TechRepublic member Bob Eisenhardt (reisen55) for suggesting yet another great topic.


Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

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