IT consulting is a tough, competitive field, and there are ample opportunities to mishandle the job. Erik Eckel offers some cautionary advice for IT consultants who are just starting out.
IT consulting is a difficult, complex industry. I've seen numerous competitors enter the market, only to fail. Everyone from large electronic chains (does anyone remember CompUSA's business consulting effort or Circuit City's Firedog initiative?) to local independents have come and gone. Despite frighteningly large marketing budgets (including symposium sponsorships, television commercials, and print advertising), complex marketing strategies, splashy fleet vehicles, and eerie team-building propaganda, competitors often fail within just months.
And there's a reason. IT consulting is a dynamic, ever-changing industry that requires practitioners to maintain multiple skills. Rapid technological shifts frequently change the way you work, the tools you use, and the operational procedures you require. To meet that challenge and stay in the game, you must learn early on how to avoid some of the more preventable pitfalls. Here are 10 mistakes that consultants often make when they're starting out.
1: Underestimating total project time
None of us is perfect. Unforeseen issues always arise. There are no "simple" projects. Consultants must take those issues into account when preparing project cost estimates.
The very first time I ever estimated a simple Windows Small Business Server rollout for a client with seven employees in two locations, I budgeted eight hours to "deploy the server." In developing my estimate, I included time to unbox and install the server, set up DNS, configure the VPN, join the second location to the VPN, register the domain name, configure MX records, create data shares, set permissions, and configure and test email accounts. Let's just say it took longer.
New consultants must be particularly careful to review project plans before settling on a final estimate that is forwarded to the client. Such estimates should be first run by veteran IT staff for feedback whenever possible.
2: Failing to properly document project scope
Why did my first server deploy take longer? In conversations with the client, when discussing the project, I was focused on the tasks associated with deploying the server. The client already had a peer-to-peer network in place. I saw my role as simply dropping the server on the network, joining workstations to the domain, configuring a VPN to give a remote but key employee data access, and introducing email.
But the client thought a "server deployment" included installing a couple network printers with network scanning functionality, upgrading Microsoft Office software on eight workstations, implementing site-wide antivirus, and other tasks. Such disconnects are the IT consultant's fault.
Clients are not technology experts. It is the consultant's responsibility to ensure that the client's business needs and objectives are understood and that the technology deployed matches them. Whenever estimating a project now, I provide clients with a project plan that lists specific bullet points. I don't just state "deploy server," "configure DNS," etc., as most clients don't know what that even means. Instead, before starting a project, I go through a project plan with the client that reviews tasks I will perform and the specific functionality those tasks will provide ("Users will store their files on the server's X drive," All users will send/receive email using Microsoft Outlook 2007 on their desktop workstations," "A new network printer will enable scanning documents and storing them over the network to a Z drive hosted on the new server," etc.).
3: Underestimating hardware costs
Just as it's easy to underestimate the time and labor required to properly complete a project, hardware costs frequently become a source of trouble. Here's one common scenario: An IT consultant specifies a particular gigabit switch or router when assembling a project budget using a temporary price because a vendor is offering promotional pricing (and the temporary price cut may NOT be evident when researching pricing). Or a server configuration may be priced using unique components. Ten days may pass before the client approves the purchase. Then, when the consultant proceeds to order the items, the server configuration and promotional pricing (or both!) are no longer available.
I see it all the time, even with one leading Texas-based computer vendor's promise of 30-day price locks. And I've yet to see one of these changes work in the consultant's favor. Whenever preparing project estimates, always note that hardware costs are subject to change. Be sure, too, to always include shipping costs in estimates. Clients should find no surprises when receiving a final invoice, but if the consultant neglects to include shipping costs in preliminary conversations, such fees will prove problematic.
4: Trying to master all technologies
An IT consultant cannot master all the technologies clients require. It's not going to happen. Some busy consultants will service three or four clients a day. There's no way that consultant is going to develop comprehensive expertise with all the myriad applications clients wield, such as Dentrix (dental), Timberline (accounting), QuickBooks (financial management), Intergy (physician practice), Act (database), Prolog (project management), Aloha (restaurant), and SEMCI Partner (insurance), as well as routing platforms (Cisco, SonicWALL, WatchGuard, etc.), Windows desktop and server operating systems, antivirus solutions, Exchange email, and others.
Determine which platforms you'll master. Then make sure you know who to call for assistance when troubleshooting problems with the remainder. Whether you're contacting the software manufacturer or another consultant to assist when servicing a platform with which you don't have expertise, you're performing a service for the client. Ultimately, clients typically don't care that you know every nuance of every program - they just want a dependable partner they can call when they encounter technology issues.
5: Waiting to send invoices
Consultants, especially those starting a new business, are particularly eager to jump on new projects. It's seemingly best to always be billing. Given the choice between taking downtime to develop and mail invoices or go onsite to complete another service call, rookie consultants almost always favor knocking out additional service calls. But there's no cash flow when invoices aren't going out.
New consultants must schedule time, daily whenever possible, to write and distribute invoices. A CPA client gave me great advice. He recommended I always send invoices within a day of completing work. He told me studies reveal customer satisfaction is highest when invoices are received quickly.
It makes sense. Every day a consultant delays sending an invoice, clients forget a little more the pressing need that demanded the repair or service. When bills arrive three weeks or a month later, cash flow not only suffers, but customers are more likely to believe charges are excessive. This is because the business and operations interruptions and resulting trauma and downtime the consultant corrected have been forgotten.
6: Scheduling too many calls
When planning a typical workday, consultants should schedule one or two hours of time for every hour billed. Essentially, that means two to four service calls are the most that can be reasonably accommodated on any given day. A fair rule of thumb is that each member of an IT consultancy traveling onsite to resolve client issues should bill 20 to 25 hours per week. Any more than that, and you begin stretching resources too thin.
When scheduling client calls (I aim for four billable hours per day, which I have consistently met for years), you must include time for administrative and operational work. Numerous tasks require a consultant's attention, including managing payroll, accounting, QuickBooks data entry, internal IT, advertising, and marketing tasks.
7: Failing to market the business
Rookie consultants, whether working for a firm they own or as an employee within a consultancy, typically strive to maximize billable hours. The desire for billable hours sometimes comes at the expense of obtaining new clients and chasing larger projects. These consultants should do more than just report to work and service existing clients. They must take time to attend BNI, chamber, Rotary, and other networking meetings. They should distribute business cards at every opportunity.
Some consultants don't believe they have time for additional marketing responsibilities. That's a common mistake. The fact is, many business networking events end before 8:00 AM, so there's no excuse for new consultants not rise early and attend networking events before their regular work day begins. Recently, a longtime friend and insurance agent reminded me that, by scheduling 7:00 AM and 7:30 AM meetings every day, he's opened an additional 250 meetings a year on his calendar. That's impressive.
8: Overlooking travel costs
Many consultants, especially those new to consulting, don't realize the costs of travel time. Traffic is expensive. Very.
Consider the facts. If an IT consultant charges $115 an hour for onsite commercial work, and traveling to client sites consumes just six hours a week (it's likely much more), the opportunity cost of traffic and travel time to the consultant exceeds $30,000 annually.
Those costs must be captured. Typically, IT consultancies capture them in the form of onsite service fees, inflated first-half-hour rates, or other surcharges. Just this past week, a plumber completed work at my residence. The bill included a $35 "truck fee." That's nothing but fair. In addition to paying for fuel and wear-and-tear on a fleet vehicle, the plumbing shop needs to cover the time spent traveling to my home.
New IT consultants must remember to charge 30% to 40% more than their regular onsite rate for the first half-hour or simply add a flat-rate callout fee.
9: Charging too little
There's a natural temptation, especially among new technology consultants, to believe the rates they charge are expensive. But running a business costs money, lots of it, and technology solutions are complex. Consultants must remember that their expertise, and the delivery of onsite service especially, possess great value. Hourly onsite support rates vary from $85 to $125 or more per hour. But that doesn't mean a new consultant must charge just $85 per hour.
To the contrary. Local market conditions are usually the largest factor. The costs of delivering services is higher in Boston, where taxes, fees, parking, and other expenses are naturally higher than in Louisville, KY, where the costs of living are less. Thus, an IT consultant in Boston should expect to earn a higher hourly rate than a consultant in Louisville.
10: Working Saturdays
Technology consultants operate within a pressure-packed environment. This is likely the single greatest factor I underestimated when opening my own consulting shop almost four years ago.
Most clients don't call for help before critical systems fail. Instead, they wait. Then they try to fix it themselves. Next, they enlist the assistance of the local computer geek on staff. Often, the consultant is called only after these efforts - and those of the business owners' friends, colleagues, and neighbors - have failed to resolve the problem. As a result, IT consultants spend much of their time running from raging and complicated fires to blisteringly complex crises. It is fatiguing work. Many days, my technicians and I are physically and mentally exhausted by 2:00 PM.
Inevitably, clients request that consultants work weekends. I almost always say no. It's not that I so feverishly guard my personal time. Instead, as I mature and spend more time within the industry, I've come to understand the importance of approaching complicated issues with a fresh mind and properly fed body (of which I'm not making light; too often my staff and I must skip lunch because of new-client crises). How many times have you struggled with a complicated Windows issue at 1:00 AM, only to quickly solve it the next morning after getting some sleep and a decent breakfast?
The same principle is true within a consulting firm. Rookie consultants must take time to help their bodies, physically and mentally, recover from the rigors of their profession. That means minimizing weekend work, for better or for worse.
What works for you?
My office staff and I are passionate about technology. We truly enjoy diagnosing and repairing technology problems for clients. But the work is stressful, administrative tasks can prove maddening, and some days are more rewarding than others. What tips or tricks have you discovered that help technology consultants run smoother operations? Post your comments below.