Transitioning from one contract to the next doesn't necessarily get easier the longer you work in consulting. Learn two ways to reduce the pain of contract transitions.
A reader recently sent me an email, in which he noted that although he has been consulting for 18 years he still finds that the "transition from one direct contract to the next one has not been smooth." I replied to him that the best way to smooth that transition is to not have to make it. That probably sounds a little flippant, so let me explain.
I try to cultivate long-term relationships, so even though they go through ups and downs they never fully disappear. Some of my clients have been with me for more than a decade. To make that happen, your business proposal needs to be relationship-oriented, rather than project-oriented.
My contract doesn't say anything about a specific project. Rather, it describes how we'll do business together in ways that apply to any project. Billing for time and materials, rather than for specific deliverables, helps make this approach work, though I think it might be possible to creatively construct a contract that accounts for the other approach by separating out the specifics into supplemental agreements. I generally make my contract good for a year, with an explicit option to renew. I want to set the expectation that the client will renew as a matter of course, unless I screw things up.
To keep that relationship from dying on the vine, the consultant needs to become involved in their client's business strategy. Don't just focus on the little piecework that they hand you to complete. Think about how it fits into their larger plans. Ask questions, and suggest alternatives. This won't work with all clients, but some of them will see your interest and aptitude and will gladly make use of your talents in their next phase, and the one after that.
Nevertheless, inevitably clients will drop off from time to time. The road can get a little bumpy when that happens. It feels like you dropped off the end of the pavement, but if you only have one active client, then the pavement ends at a missing bridge. You should always strive to keep more than one client active at a time. For some forms of consulting, the more clients you have the better. For my line of work (software development), too many clients means I don't get anything done for any of them. I find that about three clients at a time is just right. That will keep me busy even if I'm waiting for direction from two of them, yet it doesn't overload me (most of the time). If one of them drops out, I suffer at most a 33% reduction in income until I find a replacement. Often I can find ways to scale up my contributions for the other two in the meantime.
To summarize, I've outlined two defenses against the shock of contract transition: reduce their frequency by concentrating on client longevity, and minimize their impact by having more alternatives already developed. Can you suggest other ways to reduce the pain? How often do you cycle through clients? How many do you actively take on at once?