Banking

So you want to be a consultant?

You're thinking of taking the plunge and going into business for yourself as an independent consultant, but you're uncertain about your chances. From my experience as an independent consultant for the last 16 years, here are a few pointers:

  1. Make the transition as easy for yourself as possible. If you can keep your day job while you're developing your own gig, you'll ensure that you won't run out of money before you can get your business on its feet. On the other hand, a regular job can take too much of your time, so that you never really get going on your own. You'll need to weigh that out. I started my own business and did very little with it for almost a year while I was still employed by a software company. Once I was finally ready to resign, I was able to put my whole effort into my new venture.
  2. Don't jump into a void. Get at least one good client lined up for business before hanging out your shingle. How do you find that client? Use your network of contacts, and sell your core strengths. What qualities do you have that would make you a good consultant? Who would find those qualities useful?
  3. Stick with your strong suit. Sure, there will be times when you'll need to take on tangential work in order to pay the bills, but always try to acquire business in the areas of your particular strengths and interests. Your clients will be happier with your work, you'll be happier doing it, and you'll...
  4. Develop a niche. Don't be just another #{technology-du-jour} consultant. If you can become an expert in a particular segment of the industry, you'll rarely lack for work that's profitable and interesting (unless you get tired of that segment). As a software development consultant, I'm widely considered one of the foremost experts in Synergy/DE. It's a development platform that most people have never heard of, but because I'm the expert I get to do a lot of the high-paying fun work instead of the day-to-day application programming. So how do you become an expert? Just spend a lot of time learning as much as you can in one area, while not ignoring other related areas. How do pick your niche? Usually, it picks you. Go with what interests you, especially if little is known about it or if it can still use a lot of development. But make sure it isn't so esoteric that nobody needs it.
  5. Consider the financials. Talk to a tax accountant. In the US, you probably won't have tax withheld from your fees, but you'll have to make estimated payments throughout the year. Plus, you'll probably have to pay Self-Employment Tax, which is a big chunk of your net income. Depending on where you locate your business, you'll also have costs for business licensing and state and local business taxes. You may have additional costs for hardware, software licenses, and office supplies. While your market and your abilities will primarily determine the rates you charge your customers, you need to include these other costs in thinking about whether you can really pull this off.
  6. What rates will you charge? Some clients may decide this for you, but mostly I've found that they ask me what I charge. You don't want to say, "Gee, uh, I dunno... what sounds fair?" Have a number in mind, and then negotiate from there, if you can — personally I've found that once you stick a number out there, they either say yes or no. So you want your number to be ideal — not so high that they resent paying you, and not so low that you resent working for it. A number of online services, like Real Rates, can give you an idea of what other people are charging — but remember that your value can be augmented by your particular strengths. Make sure your prospect knows about those before s/he hears a dollar figure.
  7. How will you charge? By the hour, day, week, month, or project? Or will you require a retainer in addition to hourly? Charging by the project can be dangerous — bugs and feature creep can keep you working a long time for free unless you spell out ahead of time how those eventualities will be compensated. I've only used that method on a few short, easily delineated projects. Mostly, I charge by the hour, with no retainer. That lets me shuffle time between clients without feeling like they're paying for nothing. On the other hand, you have to be disciplined to give your client top notch attention for every hour you bill them.
  8. Never work without a contract. Some firms will require you to use their standard consulting agreement. Get a lawyer to review it with you, and don't be shy about challenging any red flags. For most of your clients, though, you'll need to present your contract to them. Get your lawyer to help you craft a standard contract that you can use for any client, and that's fair to both parties. If you're a software developer, pay particular attention to the rights and licenses you grant and retain to the work you create.
  9. Be dedicated to your clients. Making them successful is ultimately what they're paying you for. Think beyond their requirements to what they really need, and propose those ideas to them. Even if they don't accept them, they'll see that you're interested in providing insight into their business. That's why they call you a consultant, after all.
  10. Are you self-motivated? If you'll be working remotely from your own office, you'll need to be able to fight the procrastination demons. Set limits on how much time you'll spend gaming, blogging, surfing the net, doing household chores, etc. and stick to it. It's best if you can clearly delineate on-time vs. off-time.

What else am I forgetting? Do you disagree with any of the above?

About

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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