Why long-term IT consulting engagements may be preferable

Next week marks the 17th anniversary of when Chip Camden became an independent IT consultant. Read his reflections about some of his consulting engagements, and find out why he thinks it makes more sense to pursue long-term contracts.

One week from today will be the 17 year anniversary of when I became an independent IT consultant. During that time, I've had 50 clients, seven of whom are still active (I'm arbitrarily defining active clients as ones I billed in the last six months).

Including the seven active clients, my average client keeps paying me for 1.7 years, but there's a lot of variance from that mean. The mode and median are very low, with 25 clients lasting a month or less; three clients stuck around for more than 10 years; and five clients are in the four to ten year range. On average, I bill five clients per month; however, I've billed as many as 10 clients in one month (how in the heck did I survive June 1997?) and as few as one client in a month (thankfully, I haven't had any goose eggs yet).

The variance in these numbers reflects the varied nature of my IT consulting engagements. I get a lot of "quickies," which are clients that want a solution or some advice on one specific problem, and then they're off. I also have clients who provide a continuous stream of work year after year; these folks put the beans in my coffee, and I can never show them enough appreciation.

Getting new clients on board takes a lot of time and effort -- time that can't always be billed, and effort that is sometimes wasted. My best year for signing up new clients was 1997 (I signed up 10), but it wasn't even close to being my most lucrative year; I spent so much time landing contracts that I didn't do as much billable work. And of those 10 new engagements, only three lasted more than a year.

On the other hand, when you only have a few big contracts, it increases your dependency on your relationships with a small set of clients. What happens if they drop you? I have three clients who have each paid me more than a quarter of a million dollars over the years. If one of them suddenly felt like they had grounds to sue me, I'd be yellow all the way down to my socks. There is less risk with smaller engagements, but then again, nothing is gained without risk; plus, the long-term relationships I have built with these clients makes it less likely that they would suddenly turn on me.

In spite of the risk of mono-egg-basket syndrome, I think it makes more sense to pursue long-term contracts that provide steady work, rather than to hedge your bets by diversifying too much.

Of course, it's important to keep clients once you've got them -- unless they're total jerks. Most of the time, you'll retain clients by doing good work. But if you're billing hourly, you may hear a voice in your head telling you that if you finish this project too quickly you'll be out of a job. Don't listen to that voice. Chances are, if you do a good job in a timely fashion, the client will find more work for you to do. And, even if they don't, you will improve your reputation, which can only lead to good things. Conversely, dragging out a project just to secure your revenue stream would most likely lead to a contract termination -- and no good referrals.

So how do your IT consulting experiences compare with mine? Do your IT consulting engagements typically run for days, months, or years? How long do you typically keep a client? How many clients do you sign up in a year? How many clients go inactive? Share your experiences in the discussion forum.