Starting contracting/consulting

[ilike]

I know there are some successful consultants on this board such as Gio so I thought I could ask for some advice.

 

Currently I am working as a pretty technical business intelligence analyst at a mobile app company. In this work I get exposure to trendy fields such as "big data"-analytics as well as knowledge in building products on the fremium business model. Lately I have been thinking about striking out on my own since i realised contractors get paid twice of what I do and in many ways actually seems to have an easier life.

 

Some questions.

 

- Is there any book on starting out you can highly recommend?

 

- Any ideas on getting clients and how to sell myself with little consulting/contracting experience? Most say start with your network and I intend to do that but since a large part of my network is at my current company that might be hard to land as a first gig. Other ideas?

 

- In general there are multiple angles I could take when selling myself but I am unsure what direction to go. I guess this to a large extend depend on the market. But in general I feel I either have to either sell myself as a technical person that will get you the information you need about your product from your systems or more as a business person who will interpret that information for you and tell you how to improve your product. In reality this probably could be the same person but I have noticed a skepticism here from most managers on taking advice from a tech person. Any thoughts about this?

 

- Some other things I should know of?

 

Thanks in advance.

[VAL9000]

What is your goal?  Are you looking to be a long term independent contractor, or are you looking to build a business / grow a company?

 

Is this more about money or more about lifestyle?

 

Are you better at sales or execution?

 

Tip #1 is don't leave your current place of employ without a contract to go to.  If you can't find a contract while already committed to a project, then you will always struggle to pipeline your work - it's a good sign that being employed is probably a better choice for you.

 

The easiest way to dip your toe in the water is to find a couple of good recruiters and have them hunt down a contract for you.  Spend the next 6 months setting up your business and learning the ropes, then you can work your network harder to find a better paying gig.

 

[ilike]

What is your goal?  Are you looking to be a long term independent contractor, or are you looking to build a business / grow a company?

 

Is this more about money or more about lifestyle?

 

Mostly about the lifestyle. Sweden, where I live, have a really progressive tax system on earned income making it not that interesting to increase your salary over the amount where I am. Being a permanent employee working less than full time is usually a hard sell so if I could contract for double my salary being booked half of the year I would be about in the same situations. This time I could use to improve my investing (surprisingly a very low taxed kind of income), starting a business or do something else.

 

That said if the market is good building a "real" business of it could be interesting but I realise that is totally another game.

 

Are you better at sales or execution?

 

Execution at the moment but I think I could improve in the sales side if I could learn from someone.

 

Tip #1 is don't leave your current place of employ without a contract to go to.  If you can't find a contract while already committed to a project, then you will always struggle to pipeline your work - it's a good sign that being employed is probably a better choice for you.

 

The easiest way to dip your toe in the water is to find a couple of good recruiters and have them hunt down a contract for you.  Spend the next 6 months setting up your business and learning the ropes, then you can work your network harder to find a better paying gig.

 

Great tips! I get regularly contacted by recruiters looking to fill permanent positions. How do you suggest to play this. Ask them straight away if they would be interesting in presenting me as a contractor to their clients for a cut? I think these people are generally quite low level and working for an external recruiting company.

 

The more sneaky way would be to try to figure out who they represent and then contact them directly.

[giofranchi]

I know there are some successful consultants on this board such as Gio so I thought I could ask for some advice.

 

Sorry, I hadn’t read your thread until now… But I have to leave the office, therefore I am going to post my thoughts on this subject tomorrow. ;)

 

Cheers,

 

Gio

 

[giofranchi]

Hi ilike,

Yours are very good questions!

 

So, let me tell you what I think about a consulting business: it is extremely difficult to differentiate yourself from the competition, and therefore it basically is a matter of being the lowest cost player in the field. First of all then I would make sure you can beat the competition on the price you charge for your services.

 

Take my case, for instance: I run a for profit post-graduate master school and a civil engineering company. As you might imagine, lots of synergies can be exploited between the two. Therefore, most of the times I am able to sell at a cheaper price than other engineering companies.

 

The first question I would ask myself if I were you is: am I able to undercut the competition? And how exactly?

 

Then, if the answer to the first question is YES, and you can devise a precise plan to achieve that, I’d suggest you to realize that consulting is basically a PR business: you must enjoy staying among people, going to parties, living the country club, or golf club, or tennis club, etc. lifestyle, getting into different organizations of any kind, getting somehow involved with politics (even if politics might matter more in my field than yours)… In other words you must make yourself known to as many people as possible, and enjoy showing off!

 

The second question I would ask myself if I were you is: do I love always surrounding myself with new people and selling them my expertise? Or am I more the free and intellectual type, who enjoys the solitude of his office?

 

If you like reading all the time like I do (I am half the consultant I could be!), chances are you will encounter difficulties in consulting, even if you beat the competition on prices… My experience is in other kinds of business you might (at least in part!) find a solution hiring a good and effective sales person… But not so in consulting! In consulting you must sell yourself, and no one could do that for you…

 

Good news is, if your are comfortable with both questions of mine, I am almost positive you have all it takes to start a thriving and successful business!

 

Good luck!

 

Gio

 

[frommi]

I can tell you what i have done. Try to get your employer as a first customer. Build a product as a reference project, preferably one that your current employer needs. Find a company/website that lends out consultants or matches consultants to projects. In germany there is gulp, i don`t know about sweden. There you should be able to see what other consultants in your field and with your experience are earning. Don`t undercut everybody on price here, that way you only get stupid projects on budget limited companies that try to squeeze the last minute from you. Try find find projects that make you happy, its a lot easier to differentiate yourself from the rest when you have fun working.

 

And realize that its only possible to work as a consultant and earn double the amount of money because there is a huge demand for IT professionals and only a small amount of supply each year. But that is not a situation that is guaranteed to stay forever, so forget about only working 6 months and get your ass off to get to FI as fast as possible. Investment returns are irrelevant in the first 4-5 years of savings and since you have found this website you already have a huge headstart.

[ilike]

Thanks both Gio and frommi for your input.

 

@giofranschi

Your post makes me realise I am probably not the right person to for building a consulting firm. I have absolutely no interest in living the "country club life" and even if that might take a different form in my line of work it is nothing I like too much. If I go into this it is by myself with the intention of profiting as much as possible while this opportunity lasts.

 

On the other hand I am a bit surprised by that you say the price competition is so high. I guess that it is largely dependant on the field and scale of your business. I can see that when you are selling bigger projects with many consultants involved in a formal procurement situation this is extremely important.

 

@frommi

I am a bit confused on your plan. I think it would be pretty unlikely I could get my current employer as a first customer given that would make anyone currently working in my position to want the same deal. I think it would not be impossible as a second or third gig but i think some time must pass first. I am also a bit unsure what you mean by building a product? You mean a case study?

 

I agree though that opportunities should not be wasted. What I meant with the 6 month a year was that even if I could only have 50% utilisation I would be not worse off then before and I can always take a job again.

 

 

 

 

[frommi]

@frommi

I am a bit confused on your plan. I think it would be pretty unlikely I could get my current employer as a first customer given that would make anyone currently working in my position to want the same deal. I think it would not be impossible as a second or third gig but i think some time must pass first. I am also a bit unsure what you mean by building a product? You mean a case study?

 

I agree though that opportunities should not be wasted. What I meant with the 6 month a year was that even if I could only have 50% utilisation I would be not worse off then before and I can always take a job again.

 

You said you have your network at your current employer, so don`t you think that its in the companies best interest to keep you contracted in some form? Are you easily replaceable or do you carry a lot of knowledge?

I built a software library for other software developers with a colleague that we than sold some copies of. That was a good way to get direct contacts and show that we have the knowledge to do projects. The product itself was not very successful, but it opened some doors and resulted in some multi-year consultant contracts.  I don`t know if you can do something similar in your position. Are you a developer or just an idea creator?

[giofranchi]

On the other hand I am a bit surprised by that you say the price competition is so high. I guess that it is largely dependant on the field and scale of your business. I can see that when you are selling bigger projects with many consultants involved in a formal procurement situation this is extremely important.

 

Yeah! In fact I must admit I know very little about the IT sector… You believe you might enjoy other kind of advantages than charging the lowest price for your services? Very well then! Of course, the more advantages you enjoy, the less important a low price becomes! ;)

 

Gio