This HBR article has a catchy title: Why Consultants Quit Their Jobs and Go Independent (July 2019). You can easily guess the top 3 reasons: 1) More work-life balance 2) Better compensation, sometimes 3) Less internal politics. The potential downsides are equally obvious: 1) Fewer / no benefits 2) More swings in income.
I know a few hundred consultants, and a few hundred ex-consultants, so thought I’d weigh in on this article:
Get a (better) sample size
This article cites an online survey with a sample size of 307. n=307? Hmm, that’s a small number of people who self-selected to take this survey. This # belies the diversity of consulting practices, geographies, industries, and stage of finder, minder, grinder development. So, definitely get your own data; interview people who do what you do.
For example, this article cites that 90% of consultants started their independent business proactively, while only 10% were forced to go solo because they were asked to leave by their firm. This looks like sampling bias, or lying.
Consulting vs. Staff augmentation vs. Sales vs. Training vs. Coaching
The term “consultant” is very loosey-goosey. More than 700,000 people in the US self-declare as consultants on their tax form. This includes financial consultants, wedding consultants, speech consultants, and political consultants. If the work does not require scoping, does not require cross-functional alignment, does not require leadership, does not require change, does not entail project delivery risk – I would argue, it’s not consulting.
Yes, you might be a trainer, executive coach, public speaker, researcher, marketer, salesperson.
No shade on you, but need to be clear that being “solo” does not mean that you are doing the same work you did as a management consultant. It’s not necessarily the same, so need to be okay with that.
Yes, people want more control
This is complaint #1 of management consulting. Travel, time-consuming clients, lack of work-life balance. Opinions will differ, but my guess is that the grass is rarely greener on the other side. Assumption: you want consulting-level of salary and interesting/challenging work. Result: any right-minded firm will require 50/hrs+ a week and require travel. Professional services is a market. You get big pay when you solve big problems.
As Ravikant might say, “silly games, silly prizes.”
Get rare and valuable skills first
Cal Newport, Georgetown professor, author of Be So Good They Can’t Ignore You (affiliate link), emphasizes the importance of getting rare and valuable skills. Once you build up sufficient career capital, you get more control of your work, and environment. You can slowly start dictating more terms. He does mention 2 control traps. . .
Watch out for control trap #1 – learn to swim first
Newport warns that some people want control too early in their career. Novices – not yet experts at anything – may have demands, but don’t deliver commensurate value. Unfortunately, this can lead to career confusion – bouncing around from one interest, “passion”, topic to another. Yes, it may look like freedom, but without expertise, and an economic engine (read: $$$) behind the work, it’s an illusion. Unchannelled energy. You need to be so good they can’t ignore you. Namely, you need to know how to swim before you should leave the safety of the cove.
Watch out for control trap #2 – don’t get stuck
As Picasso said, “Learn the rules like a pro, so you can break them like an artist.”
If you’ve gained career capital, if you’ve consistently raised your bill rate, if you’ve attracted business because of your unique value, it’s time to flex your career muscles. Here, perhaps, it’s a chance for you to get more control of your career, work environment, projects, teams, and potentially, independence.
Good is predictable, great varies.
Large consulting firms use a leverage model to scale, repeatable solutions; sometimes, this creates a factory-mentality which does not adapt to the specific needs of great performers. Dude, I see this all the time.
Smart – thoughtful – firms will find ways to offer flexibility, control, and ownership to great consultants. Smart firms will bend, and draw a fence around those high-potentials, and keep them in the fold. Sadly, smart firms are rare.
Ask, “Am I finder?”
At the top of any professional services pyramid are the Finders. The managing directors, the partners. These are the ones who FIND the business. They hunt the bear, and bring it back to the cave to feed the rest of the family.
Can you hunt?
In contrast, managers are often farmers, who do a great job managing teams, keeping the client happy, and farming the client’s problems. Yes, they may garner add-on work, here and there, but solo consulting is different.
No question, the brand, network, and know-how of big 4, big 4 consulting firms helps to sell work. As a solo, you are full-time hunting AND full-time farming. At a minimum, run a quick audit and ask yourself a few questions:
- How long can I afford (read: survive) without getting paid for my first project?
- How many previous clients could I call on for repeat, or new business?
- What proof-points do I have of my work? Is my portfolio readily available to show?
- Which firms or other consultants can I split fees with to get started?
- How many (future) clients are prospects are currently asking me for help?
- What’s my competitive advantage? Is it sustainable? What’s my economic moat?
Better compensation? Maybe.
In theory, this makes sense. If you can maintain your bill rate, and keep a similar utilization, you will definitely make more money. Remember, professional services has very little fixed costs (maybe your car, computer, research subscriptions). Ravikant would chime in that you are taking more ownership, equity, and risk. Let’s not forget that you will doing most of this work yourself, from the first proposal all the way to the accounts receivable.
If you are taking on 2-3x the work, you definitely deserve to get 2-3x more money and/or time.
Solo consultants, chime in
Don’t let me give advice that’s not right. What are key questions that management consultants need to ask before venturing out on their own? This is a huge mindset shift from W2 (salaried employee) to 1099 (contractor) status. What are we missing?
Link to a blog for solo consultants from Daryl, a 30 year veteran here.
I am a veteran in the digital media space and got tired of the agency politics and in most cases, a lot of dysfunction. My last agency I left without having a job (like several others there). It was that bad. I’m grateful looking back because it encouraged me to go out on my own and freelance. I’ve been doing that for the past 3 1/2 years and I love it! I work from home, I choose what I work on and who I work with, have the utmost of flexibility. There are highs and lows in volume of work and I can honestly say – both extreme lows and extreme high volume of work is equally not fun. I’ve been fortunate, being in the business 15+ years, to have an iron clad network. Because of that I get work that comes to me and so far (knock-on-wood) I don’t have to go hunt for work. It’s not for everyone, but it definitely works very well for me. Also, as mentioned in the article, I do make more money than I did working as a senior ad exec. I make more even taking into account I pay more on taxes (self-employment taxes for I-9 contracts are about 10% than W-2 contracts) … and I pay my own health/dental…and I do not get paid time off! Plus, I work fewer hours than I did as a senior ad exec salaried vs hourly. I love my job!!
Pam – that is super encouraging and awesome. Yes, your are taking more accountability and equity in your life, ups and downs. Thanks for sharing.
I was a Partner in one of the leading firms heading the consulting services. I moved out of my job to start my own consulting firm. I regret not having made the move earlier. I am better off by far not only on bottom line, but in all forms, and not forgetting that I am my own boss and FREE from ALL partnership GOSSIPS AND POLITICS. Today I am INSANELY PASSIONATE about my job!
Super winning.
Having lived this – great article and wise warnings.
Thanks for the comment – there is a separate series of posts related to scaling up a consulting practice from 1 to 10 to 100 people, right?
I hate to ask, but I cannot find the posts related to scaling up a consulting practice. Could you please let me know what the title is?
Hello,
It is not 1 post, but a combination of 2-3:
1) Scalability, generally:
https://www.consultantsmind.com/2014/05/25/scalability/
2) Leverage model: finding the least expensive resources to do the job well, reliability
https://www.consultantsmind.com/2014/03/16/consultant-whats-your-leverage-model/
3) Having everyone work at the “top of their license” to do great work, keep growing, keep getting more valuable.
https://www.consultantsmind.com/2014/01/28/finders-minders-and-grinders/
Hope this helps,
If you’re a consultant for the longer run (more than 2 years) demonstrable intelligence, motivation, and interpersonal skills are your calling cards, but the career path of grinder/minder/finder is not everyone’s cup of grappa. When getting over that hill feels more like falling into the abyss, successful individuals have the common trait of working their referral networks for options. The single shingle folks have typically honed a skill/niche in a market where demand is strong, and they can enjoy a role either as a sole practitioner in a client environment, or as a valued-add to an existing client/consulting firm project team. Also, for people who enjoy what they do, the comp takes care of itself, because there is a decent working range between an individual’s set billing rate and the larger firm leveraged rates. As noted, the breadth of consulting offerings allows for a variety of leverage models, so staff or side-kicks are not always necessary. Overall, online resources have expanded the opportunities for individuals with varied risk/reward appetites and lifestyle demands.
Spoken like a true partner. Thank you for the words of encouragement to readers – there are a lot of ways of winning in the professional services world. Find your own cup of grappa.
Well said Bob. Took me a while to adopt a leverage mindset as a SP and become a ‘gap filler’ or more established networks.
Important article, good advice. As a solo from the get go I had no life balance, traveled constantly and found finding and grinding at odds with each other. Networks disappear quickly in my experience and tending them while working on another continent impossible e.g. my network in France disappeared while working in Arizona and S.E.Asia due to government reorg of local development agencies and subsequent scattering of staff. It was exciting work in a lot of different places but there is a price to pay! Bob’s comment is right on for all the right reasons.
Pierre, thank you for your perspective. So much to learn from each other. . . keep going.
I’ve been working for myself for more than 20 years and had strong experience before I began. The comment about hunting/farming is important because some of us begin with automatic customers but then have to learn to find customers, if we want to continue consulting.
As for travel and salary, in my industry, there are even W-2 jobs posted that state they require 100% travel (no, I’m not kidding) and many of the larger services groups find it easier to sell resources to work on-site. It definitely makes each sale larger for the sales reps if they can include travel expenses. We’re not a group that tend to stay at the high-end hotels but we’re also not taking the flights with two stopovers when there’s an available direct flight. But the markups are quite large coming down from some of the big services groups. So, for those who can keep themselves working, our salary is much better even if we’re not that careful with our overhead.
As for travel, I was a bit surprised when an early customer asked me, “Do you have to come here to our site? We’d rather spend the money on getting the work done and we really don’t have a place to put you, either.” I realized that they already knew me and trusted me. They didn’t feel they also had to watch me. In addition, everyone is always running out of space, it seems.
This was an unexpected benefit but, since customers are dealing with me, an individual with a good reputation, it’s not the same as having some generic person sent to them whom they know nothing about.
But one other reason for going off on one’s own is the possibility to get better opportunities. Technology people, especially consultants, tend to find few good career paths open to them. Going off and working for myself, I’ve been invited to speak at conferences, write for industry publications, and be a conference chair. When I worked for other people, I would never have been allowed to do any of that. When a new and interesting type of opportunity comes along, I’m no longer the last person in line to get the opportunity.
If you overcome the initial hurdle of finding ways to stay in business after the first few customers are done, you have an opportunity to have much more control over your career from many aspects, including being better able to grow to be something more than whatever you began with.
Incredibly wise and generous advice. Keep going.
True going independent is the way to go but one must work on the networks through which business is located. This requires heavy investment in reaching to old colleagues, joining clubs and associations, and even offering free talks.
Yes, yes, yes. Massive ownership.