Everything You Wanted to Know About Consulting but Were Afraid to Ask

Panel discussion explores the ins and outs of becoming a consultant

27 July 2011

In today’s economy, with full-time jobs fewer and farther between, consulting is beginning to look like a hopeful opportunity for many employment seekers. If you’re considering it, do you have what it takes? Do you understand the challenges of working for yourself? What do you need to know before you start?

Such questions were addressed in April during a meeting of the IEEE Consultants Network Boston chapter. Each year, the chapter holds a panel discussion called “Everything You Wanted to Know About Being a Consultant but Were Afraid to Ask.” Speakers this time included Senior Member Larry G. Nelson Sr., president of Nelson Research, in Webster, Mass.; Member Michael Stiefel, principal of Reliable Software, in Boston; and Senior Member Craig Goldman, a consultant with 25 years of experience in embedded microprocessor and microcontroller-based systems.

“People typically decide to become a consultant after they retire or get laid off,” Nelson says. “But they don’t realize the amount of work behind that decision. For example, you always need to plan how to market yourself. It doesn’t matter whether you’re busy or not, if you don’t constantly market yourself, your business will be cyclical.” That means you might have too much work at once, or all your jobs might come to an end around the same time, with nothing in the pipeline.

How does a consultant market himself? First, figure out where your strengths lie. “Have a world-class skill,” Goldman says. “Find out what you’re really good at and sell that.”

Don’t forget that there are different ways to promote yourself. “Everything is marketing,” Stiefel says. “I've written two books. I also write articles, blog, and speak at conferences.” The broad exposure combines to create an image of a professional who is knowledgeable in his field.

Make sure, Stiefel cautions, that the technical content in your presentations or published work is on a high level and appropriate for your audience.

A few simple choices can help create a professional image. “Nothing turns me off more than a poor e-mail address,” Goldman says. Instead of using a free e-mail service such as Yahoo or Gmail, pay for a Web domain name and e-mail forwarding—which can cost as little as US $10 per year. Goldman, for example, uses the Web domain coautomation.com, which embodies the type of work that he does. “It just looks better to have a professional e-mail address,” he says. Your IEEE e-mail alias might be an excellent option.

Money Matters
Set up a separate bank account for your business, and hire an accountant to make sure you are handling your finances properly. “I also recommend that everybody retain a lawyer,” Nelson says. “It’s worth paying lawyers’ fees to have them review your contracts and make sure the terms are in your best interest.”

Consultants need to be fiscally conservative, according to Nelson. “You’re going to have dry periods, and you’re going to have highs,” he says. “I often see people who get a big contract and spend a lot of money on new equipment. Then they have nothing to live on.” He recommends trying to have enough money in the bank to survive for one year, just to be safe.

It can take time to get paid—which means your first consulting assignment might not bring in any money for several months. “Even if you bill your clients weekly, payment is done on a business-to-business basis,” Goldman says. And businesses typically pay their accounts 30 days after an invoice is tendered. “That means they cut a check after 30 days have expired, so be prepared for checks to show up 45 days after you bill, or later."

How should you set your rates? That, the panelists said, is the most common question they get.

For one thing, you need to realize that not all your work is going to be in billable hours, Goldman says. You might work 40 or even 60 hours per week, but a good portion of that time will be spent on paperwork, phone calls, and other tasks that you shouldn’t bill to your clients. “I consider billing 32 hours a week as doing pretty well,” Goldman says.

Determining the best rates for your work might take a bit of research, as well as some trial and error. “If you give a quote and you hear your client groan, but he agrees to pay it, you’re at the right amount,” Nelson says. “But if he says yes too quickly, you were probably too low.”

Setting your rates too low actually can turn some clients off. “I once got a job because the other consultant I was going up against bid too low, and that didn’t create confidence in the client,” Nelson says.

If you hang out your shingle as a consultant, it’s important to plan on doing it for the long haul, not just a few months. “One of the worst things I see is when someone loses their job, they say they’re a consultant rather than saying they’re unemployed,” Nelson says. Such people often start a consulting job, but meanwhile their real efforts are in finding full-time employment, and they don’t put enough attention to their consulting assignments. “They get a client’s expectation up, and then they get a real job and leave the assignment,” Nelson says.

“Consulting is a lot like science,” Stiefel says, “because you need the stick-to-itiveness. Otherwise, you won’t have a good reputation. And being a consultant is all about staying in business for the long term.

“Be true to yourself,” he adds. “If you’re not really interested in a particular technical area, don’t plunge into it just because it’s hot. You have to do what you love. If you aren’t doing what you love, you aren’t going to do a good job.”

In the end, your reputation and integrity are what will determine your success as a consultant, Nelson says: “All you’ve got is your word, and your integrity. It takes just one negative comment to cancel out dozens of positive comments, if not hundreds.”

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