Stepping into the World of Independent Management Consulting: Do's and Don'ts
It's no secret that freelance consultant platforms have made independent management consulting more accessible. Independent consultants are now firmly part of the gig economy, as technology lowers the barriers to entry.
If you have the consultant skills and want to step into this world, you may wonder what the do’s and don'ts are and whether any are different from the advice that would apply in the traditional consulting model.
I've elaborated on a few do's that I think are important for those just getting started
- Being realistic about your chances of success
- Focus and prioritization
- Deciding on a working model
- Setting clear expectations with clients
In my view, most of these rules are relevant, whether you are part of the online consulting marketplace or not. However, perhaps you'll agree with me that freelance consultant platforms may make them easier to apply.
Be Realistic About Your Chances for Success
Wishful thinking is not a sound basis for starting a business. Rather be clear-eyed about the likelihood of success and satisfaction. And be honest with yourself about whether you are an entrepreneur or not.
Understand the statistics
These statistics may give you reason to pause:
- The failure rate for small businesses seems to be about 23% in the first year, 50% within five years, with only about a third surviving to the 10th year.
- CBInsights gives a lack of a market need as the number one reason for business failure. No matter how clever your idea or solution, it cannot succeed unless enough people are willing to pay for it. The second reason is lack of funds, i.e., bankruptcy.
- Statistics from Global Entrepreneurship Model show that nearly half of the people surveyed believed it was a good idea to start an independent business. However, this might reflect some misconception, as 40% also said that they thought it was easy to set up a business, and 49% said they had what it took to do it!
Fortunately, there are some statistics to encourage you:
- Corporations are turning to freelance consultant platforms for hard-to-find skills.
- About 27 million professionals are part of the gig economy, with about 3,3 million earning more than $100,000 in 2018.
- 97% of self-employed professionals say they would never go back to traditional employment.
- Technology has removed most geographic constraints for freelance consultants.
Decide whether you are an entrepreneur or not
Independent consulting has many attractions: being your own boss, having no cap on your earnings, using your consultant skills to work on the projects you enjoy, time flexibility. On the other hand, it comes with risks: having no income guarantees or perks such as paid vacations and health care, no limits on the hours worked, rejections that will feel personal at times.
Some consultants have also started in business on what Michael Gerber, author of The E-Myth Revisited, calls an entrepreneurial spasm. They had a good idea or service that saw early support but was not sustainable as the business base in the long term. This is when the hard work and risk of being an entrepreneur kicks in.
The truth is that independence can take a considerable toll on your financial, physical, emotional, and spiritual wellbeing – and some people just don't have the stomach for it.
Focus and Prioritize
Distraction and procrastination have sunk the ship of many would-be entrepreneurs. Here are some tips to avoid these hazards.
Procrastination vs. prioritization
Managing your time with no boss looking over your shoulder is part of being independent. Sometimes, though, you are working hard but not achieving what you want. This may be the time to step back and prioritize your tasks.
Top management consultants use Steven Covey's Eisenhower Matrix (distinguishing the important from the urgent) as the go-to tool for clients. It's useful for themselves too.
The matrix considers long-term outcomes of your daily tasks and recommends that you prioritize them like this:
Urgent and Important: Do it now
- These are tasks with precise deadlines and consequences for not taking immediate action.
- They might include finishing a client project, submitting an article to meet a publishing deadline, responding to a client with a pressing problem
Important but not urgent: Schedule it
- Activities without a set deadline that bring you closer to your goals
- They might include strategic planning, professional development, networking, research and analysis
Urgent but not important: Delegate it
- Things that need to be done but don't require your specific skills
- They might include interruptions, ordering office supplies, paying the bills, responding to requests from outsiders, running errands
Not urgent and not important: Delete it
- These are distractions that may be okay in moderation but can make you feel bad afterward
- They may include spending time on social media, watching TV, exploring a new business idea that will not help your current business
While we might know all of this in theory, in practice we prioritize tasks with a deadline (i.e., the urgent), even if others are more important and offer greater long-term rewards. Instead of scheduling the important but not urgent into our diaries, we procrastinate until they become urgent. This is a sure recipe for being busy and burnt-out.
Outside the distractions in the not urgent/not important category, there will be times when others encourage you to step back into the corporate world or join them in different enterprises. When you are having a lean time in your own business, perhaps having trouble with sales or profit margins, this can be tempting.
However, you cannot afford distraction. The only answer is to give 100% attention to solving your current problem and doing the work that will pay off in the long term.
Decide on Your Working Model
Many top management consultants work on their own and prefer to do that. In fact, finding staff or partners is one of the most challenging decisions for entrepreneurs to make.
Set Expectations Early With Your Client
Your initial project proposal should set out the conditions of your offer. It is a good idea to follow this up with an initial meeting with a new client:
- Avoid project creep by clarifying such issues as length of the project, specifics about what is included and excluded, your role, and the role of key players in the client's organization.
- Sometimes award decisions take a long time, and the client expects you to be part of several steps along the way. Decide how much time you are prepared to devote to this process and how much you will do for free.
- Fees, expenses, and payment terms are best agreed upfront. There is nothing worse than having a great project with a good client and having everything soured by disagreements about money.
- Don't undervalue your expertise when setting fees. Sometimes you will agree to work at a somewhat lower rate to get your foot in the door. If you intend to increase the rate for any further work, be comfortable with this yourself and be clear with the client.
To Be or Not To Be?
Deciding whether to become an independent consultant cannot be taken lightly. However, the indications for success today seem significantly better than they were before.
The gig economy is a testament to the number of people worldwide who understand the benefits of entrepreneurship. Freelance consulting platforms open the world for those with the necessary consultant skills and the willingness and discipline to do the right things to set up sustainable businesses.