consulting

Consider this Part 4 of my “build your consulting business” series that began last week. It’s about focus. Focus is a huge advantage for a consultant.

And I don’t mean just the obvious first level of focus, as in you’re consulting as an expert in business planning, marketing, advertising or web development. No, I mean the second level of focus is a significant advantage and, in some cases, the third level as well.

I was just browsing for an example, and came across John Emmerling. Click here for his website and see if you get his special focus. I found him in a web search. I’ve never met him or even heard of him before, but he came up in a search, which is exactly the point. He’s not just a marketing consultant, not just a strategic consultant, but a brainstorming-with-cartoons consultant.

You don’t want to be just a business consultant. Focus in planning, strategy, marketing or, much better, planning for a certain type of industry or strategy, or marketing for a certain type of industry. If you can, go even narrower than that. Instead of planning for construction and remodelers, be business planning for construction and remodelers interested in green buildings. Or open offices. Or low-income housing. Or country clubs. Specialize, and focus.

Why does that matter? At least two reasons. First, it builds credibility. The narrower the focus, the more likely you really know something. Second, it creates marketing strategy. John Emmerlich, for example, has a much more targeted and narrow focus for his search engine optimization and AdWords marketing than if he were just consulting in marketing or strategy, or marketing strategy. Focus can help you figure out how to market using seminars, or magazine or web articles–what’s your expertise?

When I started out in consulting, I had my fancy business degree and an interest and some experience in business planning, but that alone wouldn’t have done it for me. What worked for me (and, ironically, I didn’t know it until afterward) was the combination of business planning with a specialization in high-tech and–because high tech specialists are quite common–special ties to Latin America (I had lived in Mexico City as a journalist before I went to business school; my Spanish was fluent).

You can probably think of your second-level focus if you work on it. For some, it’s automatic.

Often that focus is something like a beachhead. You go from there in other directions but keep roots, as in relationships and clients, in your home area. In my case, I ended up on the founding board of directors of Borland International, which was important to me, my career and my bank account (Borland went from zero to publicly traded in less than four years) because of business planning, but not Latin America. I was recommended by somebody and that worked out.

For others, your focus evolves, a matter of market and opportunity.

Later on, because my planning work led to channels, I ended up doing a lot of work for high-tech channels of distribution. It was a contiguous focus. I got interested, worked in that area, did the research, met people and stayed interested.

Extra tidbits . . . (or bonus material). I’ve been getting some very useful comments on this series, which have led me to recommend some additional sites on consulting:

For example, Andrea from consultantjournal.com posted a good comment. I visited that site, and it looks very good. And I mentioned Pam Campagna of Blue Sage Consulting earlier, because she has added several very useful comments. And Ken Pirok‘s healthy skepticsm in his comment to Part 3 is more useful than my overly optimistic view in that post–believe him first, not me, on the point of receivables and collections.

Thanks for adding to this topic.

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So I’m having trouble not posting about the huge economic news today, but the series I started earlier this week on starting a consulting business seems even more relevant today.

Also, Pam Campagna of Blue Sage Consulting posted a comment to my Part 1 that deserves repetition. She wrote:

My story is a bit similar to yours: After 13 years in the corporate world, I decided to “light out.”  … and that was in 1997. I’ve never looked back.

I’d like to add a few things that I’ve learned along the way:

1. There’s a real difference between “consulting” and “contracting.” A consultant practices the art of consulting and invests in the long-term value of building a business. A contractor typically looks for work while in-between jobs. It’s useful to be clear which of these two roads you’re heading down.
2. If you decide to head down the consulting road, set limits for yourself. If you’re not successful/haven’t landed a client/don’t have defined products and services within a certain period of time, then acknowledge it and move on. The worst thing that could happen is that you have to look for a job (one of my personal mantras).
3. Starting a consulting practice is a difficult thing. Don’t be fooled by many of us who “make it look easy.” There are no shortcuts, but if you stay with it, the rewards are well worth the investment.

Although that’s already showing in the comments, I thought it was worth an additional post here as well. I’m not organized enough to do guest posts, but this was so very much on point, so I wanted to share.

And since this is a bit of a catch-all post, I want to add some additional tips here, to accompany Pam’s. These are about selling.

As a consultant, on your own, you just became a salesperson. All your expertise is completely irrelevant until you have the client. If you’ve always hated selling, you’re in trouble. Deal with it, or do something else. Here are some tips that might help:

1. Some vocabulary: It’s not a job, it’s an engagement. The consulting equivalent of asking for the order is asking the client to sign the letter of engagement. And deliverables is a good word for what you’re going to do for the client (presentation, analysis, report, business plan, facilitation or whatever). Fees are what you charge.
2. Not everybody would agree with me, so take this with some healthy skepticism, but I believe in a simple letter of engagement written in plain English that defines deliverables and fees and establishes a schedule for both.
3. Results–deliverables–are much easier to sell than hours, days or weeks. While I read about consultants on clocks and meters, nobody I know who was successful did it that way. It was by the job or the milestone.
4. The job or milestone strategy, however, introduces scope creep into the mix. As you write the letter of engagement, be mindful of scope creep. Write your deliverables in a way that makes scope creep obvious. That’s when the client agrees on one thing but doesn’t accept it and gets you to do a lot more. There’s no easy way to deal with this (later on, you prune your clients; but in the beginning, you can’t).
5. My advice, which might be wrong, is don’t get lost in contracts. Keep it in simple English. If you end up unhappy with the client, or the client with you, you’re not going to be fighting over the contract anyway. Furthermore, you’ve got as much chance collecting with a simple signed letter than with a formal contract. In my opinion.
6. If you make it, you’re going to thank me for this tip (if you remember): Don’t set your schedule in calendar dates; set it in days or weeks after the signing of the letter of engagement.
7. For the record, I never did that advance payment or deposit stuff with clients. Businesses don’t expect to have to pay upfront, and mine never did. The good news is that I never had an invoice that wasn’t paid.
8. Take risks on the client paying. Don’t ask them to take risks on you.
9. Start small. Find a small piece of the bigger job that will be easy to deliver and easy to demonstrate value. Do a small, visible job first, do it well, and then your client will be much more likely to continue to bigger things.
10. Always focus on repeat business. Even in the middle of the night before the presentation, when it’s 2 a.m. and you’re tired and mad that you got caught in scope creep and annoyed at the client, remember that it’s infinitely easier to generate repeat business with an existing client than to find a new client.

So, wow, 10 points, from me, plus 3 from Pam. And I think this is just starting to scratch the surface. I haven’t even stated to talk about strategic focus, who isn’t your client and figuring out how to manage accounts receivable.

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I could subtitle this post: Leave with a lifeline.

One of the more important questions about your new consulting business is whether you have a choice. These are tough times. Are you consulting because you want that as a business, because you want to be on your own? Or are we talking about something that happened to you, not something you chose?

In my post on this yesterday I cited Risks Yes, Structure No from The New York Times, a good piece for the classic consulting business that you plan carefully and start on purpose.

If you’re that other kind of consulting startup, if you’re even worried about having that happen to you, then focus first on building the retainer relationship with the company that is letting you go.

Think about this before it happens: Often you get just a very quick conversation about it with the boss who’s letting you go. In that moment, at all costs maintain an attitude that makes it seem like you’d be easy to work with as a consultant, after you’re no longer an employee.

Maybe you can even offer, then and there, to continue working on the projects you’re now doing, but as a consultant, for a fair rate.

Think of the possibility: The boss doesn’t want to let you go, but has to. If you do your exit right, you make that very difficult talk much easier for both of you, you solve some problems your employer will have in getting on without you, and you get a consulting client you can work with to get your consulting business started.

Even if you just want consulting as a catch-loss strategy until you get another job, think of how good it will sound during the interview for the next job when they ask you how you left your last job: “I started my consulting business, and they were my first client.”

Do you not have a project you can cling to on a consulting basis? That’s a bad sign. Think fast, come up with that project your boss has been wanting to do, or one he or she will approve of, one that solves a problem he or she hasn’t been able to get to.

Get the lifeline to hold onto while you leave.

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Be a consultant, they say. Enjoy freedom. Be your own boss. Be the expert. Charge big bucks for a few hours’ or a few days’ work, then hang out. Right — in your dreams.

Setting yourself up as a consultant is certainly a timely topic these days–financial disasters and all–but I think I owe it to you to add some realism to the concept. While traveling this weekend (down to San Francisco for a couple of days), I picked up The New York Times and saw “Risk Yes, Structure No” in the careers section, written by Eilene Zimmerman. It’s about consulting. More specifically, it’s about the move from consulting as a job with a paycheck and a boss to consulting on your own.

Let me start by saying I’ve been there. And for me, it worked. So don’t take all the warnings and concerns I have to add as entirely negative.

By “been there,” I mean that out of business school I took a job with McKinsey Management Consulting, which I didn’t like. They didn’t like me much, either, so I lasted only a few months–but that’s a different post. I spent three years as a consultant with Creative Strategies, ending up as a vice president. Then in 1983–in the middle of a recession as bad as this one–I ventured out on my own. That, too, is a different post. In fact, it’s several, actually: one about how it started . . . and another about the home office.

Zimmerman goes through a series of questions and asks successful consultants to answer. Her piece is well done, and truly the talk of the times, too. But still, I think there’s another whole side to it that I need to add. I’ll get to that in a minute, but first, in answer to the question “Am I ready to quit a consulting job and go on my own?” she says:

Compared with corporate workers who take direction from a boss and receive regular paychecks, consultants lead lives with much less structure and much more risk. You need to know whether you can handle a new level of uncertainty and self-direction.

Before you decide to take the plunge, understand that consulting doesn’t always provide consistent income.

“You may have the best-laid plans, but you still don’t know when you will land that first client or when your income will become regular,” said Edith Onderick-Harvey, president of Change Dynamics Consulting, a leadership development firm in Andover, Mass. Also realize that you will need to spend a significant amount of time marketing your skills.

“Sometimes 75 percent of your time will be spent selling yourself and often that’s just networking, not even real job opportunities,” Ms. Onderick-Harvey said.

That’s all true for sure. Just to add flavor, I’ll give you a specific example: me and my wife, Vange, and, as they grew up, our five kids. From June of 1983 until sometime in 1995 when Business Plan Pro took off, we never really knew where the money was coming from beyond two or three months. I made a good living, when I look back on it, but the uncertainty was hard to live with.

I had one very significant advantage which I hope you’ll also acquire: a very strong, long-term client. I managed to build a relationship with Apple Computer that lasted and became a long-term platform for repeat business lasting 12 years.

I had another, shorter-term advantage that I hope you’ll have as well: a good, strong relationship (meaning somewhat reliable monthly business) with the employer I was leaving. I left Creative Strategies to start out on my own (lighting out, as one of my favorite blogs calls it) but took a monthly retainer for a newsletter contract with me.

And finally, a third advantage that came shortly afterward: another monthly retainer from a second client, one I had met while a vice president, who contacted me afterward and negotiated the monthly retainer.

When I think of just lighting out on my own without these fundamentals to rest on (the Apple relationship and the two retainers), it chills my spine. It could have happened, though, because I lit out first and cemented the key relationships later.

And, it could have gone otherwise. We almost lost our house six months after I started. We were two and a half months late on the mortgage.

So I’d suggest, before you go out on your own, you consider

1. Do you have a choice? and then, if you do,
2. Where is the money really coming from?

By the way, buried in The New York Times story is this reference:

Write a business plan that establishes how revenue will be generated and how you will handle sales, marketing, finance, operations, expenses and fees.

Yes. I consider that a magnificent understatement.

More on this in part 2, tomorrow.

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