Many computing professionals, at some point in their careers, consider establishing a consulting business. Consulting offers an opportunity to leave the traditional workplace, work independently, and become your own boss. Specialists in the computing profession are fortunate that the skills they use in their jobs often have real value in a consulting context. And in tough economic times, when employment-based jobs aren’t always available or considered secure, it’s nice to have the flexibility to pursue a consulting option.
Steve Epner, innovator in residence at Saint Louis University and founder of the Independent Computer Consultants Association, and Duane Strong, a member of the board of directors of the IEEE Consultants’ Network of Silicon Valley and an IEEE Senior Member who holds a Computer Society Certified Software Development Professional (CSDP) certificate, offers these tips on how to be a successful consultant:
Tip 1: Decide What Type of Consultant You Want to Be.
There are many types of consultants. At one end of the spectrum is a consultant who provides a high-level advisory role to a company and at the other end is a consultant who provides very specific technology expertise. And there’s a range of other consulting roles in between. Decide where in this context you want to fit. The type of role you pursue will influence the number of opportunities available to you, the nature of the relationships you’ll have with your clients and how much you’ll get paid, among other things.
Tip 2: Find Your Niche.
It’s generally not practical to be a generalist, because it won’t help you compete against those with specific knowledge. Establish yourself as an expert in a particular niche, and make yourself known in that field. If your skills are diverse and you can select from a variety of niche specialties, pick one that has personal meaning to you. “People like to pick a consultant who’s passionate about their specialty,” Epner advises. “Pick the thing you are most passionate about, and unless it is something really esoteric, there will be an audience for it.”
Tip 3: Establish and Maintain a Professional Profile.
Even if you’ve found your niche, you still need to differentiate yourself and become known and respected for what you do.
Both Epner and Strong emphasize the need to establish your professional identity. Join professional organizations and start attending meetings so that people become familiar with you and your work. Publish articles on matters of interest to the industry and potential clients, and find speaking opportunities at conferences. Keep your name out there. The venues don’t have to be top tier. Even if you’re speaking at a local meeting, Epner advises, “It means that someone is holding you up as a recognized expert,” he says. This type of recognition makes it easier for potential clients to justify hiring you.
Another way to go about this, Strong suggests, is to write a white paper on a topic you have expertise in and hand it to potential clients when you meet with them. Make sure the paper is well written and that you have an “editorial board” of experts review it before you finalize it. List the names and affiliations of the editorial board members on the cover sheet. The paper will give you “instant credibility” when you hand it to your potential client, Strong says.
Tip 4: Invest in Your Professional Identity.
A common mistake consultants make when establishing their professional identities, Strong believes, is trying to do it alone. They don’t think it’s worth the money to hire someone to perform a service they need, and with the convenience of computer applications and do-it-yourself Web design tools, many consultants think they don’t have to bring in experts for these and other services.
“Yet that’s exactly what you want your clients to do,” Strong says. He insists that you get a specialist to design your website and your business cards. Make sure your website and your email address are from the same domain to further establish your professional presence and your brand.
Tip 5: Establish Appropriate Fees.
New consultants always find it difficult to settle on the best billing rate, especially in the computing field, because rates vary widely. The first thing to consider is what the market will bear for the services you perform. Strong recommends consulting the IEEE-USA website (www.ieeeusa.org). The organization routinely conducts national fee studies and publishes its findings. One caveat: due to the economy, today’s rates are not what they were two years ago, Strong says. Almost all consultants have had to compromise on their fees and even negotiate to get projects.
In general, consultants tend to use two business models: a fixed-fee or time-and-materials. Strong warns that software consultants find it almost impossible work on a fixed-fee basis due to the iterative nature of the work. Do not agree to a fixed-fee structure unless your contract includes a clause requiring a fee review if the scope or nature of the work changes, he advises. On the other hand, as soon as that change-order clause is employed, the project essentially becomes a time-and-materials project. One way to deal with the uncertainty in these types of projects if a fixed-fee is necessary, Strong suggests, is to charge per iteration.
A consultant also needs to consider how much money they need to live on and charge a rate that will supply that income. Epner offers several tips for doing this: First, figure out how many weeks per year you can work. Cap that number at 45 weeks to allow time for business development, vacation, and other non-billable time. If you’re starting out as a consultant, however, do not expect to work more than 30 weeks. “You won’t be that busy in the first year or so,” he cautions.
Assuming you’ll be able to generate 30 weeks of work at 40 hours per week, you’ll have 1,200 billable hours. Don’t expect more than that. Consider the income you need to live on and divide it by 1,200 to establish minimum hourly rate you need.
Tip 6: Manage Your Money.
Set money aside to cover those periods of time when you won’t be making any money. If you’re planning to begin consulting at some point in the future, try to save enough money to cover your bills and your business startup costs for a year. If you’ve lost your job and need income now, begin looking for clients immediately.
Epner suggest that you expect to wait at least five months before you receive any income from your consulting business. That’s because it will take two to three months at least to find your first consulting job, another month before you submit your first invoice and another month before you get paid.
Once you have an income, be sure that you understand and observe what Epner calls “the consultant’s paradox.” The paradox is that when you’re working, you’re not selling your business. And when you’re selling your business, you’re not working. It means that no matter how busy you are during productive periods, you can’t let up on your marketing efforts. “If you’re willing to market when you’re busy, you can eliminate the famine period,” Epner promises.
Tip 7: Stay Relevant.
It’s not enough to just establish the business and serve your clients. You need to stay current with the industry and your profession. “You have to keep at it, invest in yourself, and go to classes,” Strong insists. “Our business is changing every hour. What is a marketable skill now won’t be in a couple years.”
Tip 8: Learn How to Accept Rejection.
One of the hardest things for engineers to deal with is rejection. They are used to controlling the outcome of their work. But consulting is not that controllable. Some people are lucky and find clients right away, and other people have to work harder to break in.
“You’ve got to accept rejection or you won’t last,” Epner says. His advice: Accept the fact that rejection will come, and find a way to use it in a positive way. Assume that you will get turned down 15 times (or another number you want to use) before you land a consulting job. Create a metric around it. For each rejection you receive, mark it off that list. “Just remember, every no brings you closer to a yes,” Epner says.
Tip 9: Don’t Get Caught With More Work Than You Can Handle.
There often comes the day when you have too much work to handle. To prepare for that possibility, ally yourself with others in your field who you know and respect who can provide you with additional support or backup if needed. Partner with others who have complementary skills that you might need from time to time. They’ll do the same for you.
Tip 10: Expect New Regulatory Requirements.
In addition to routine regulatory issues consultants must address, like getting a business license or deciding if they should form a LLC, software consultants will be facing new regulatory requirements within five years, when all states will begin requiring software engineers to be licensed, Strong warns.
If you’re a traditional employee for a company, you will be exempt from this requirement. But if you’re a consultant, you will come under the new, nationwide requirements. “The handwriting is on the wall,” Strong advises. “If you want to call yourself a consultant and get jobs that have any regulatory bent, start looking into it.” CW (16 August, 2010)
Additional Resources from Epner and Strong
Both Epner and Strong offered further assistance to IEEE Computer Society members.
Strong has just co-published a white paper with John Gale, another IEEE CNSV board member, which recommends best practices for professional consulting. The paper can be found at the IEEE CNSV’s site, www.californiaconsultants.org.
Epner encourages members to contact him directly if they’d like to converse with him about consulting. Email him at email@example.com. Be sure to identify yourself as an IEEE CS member in the subject line.