This HBR article has a catchy title: Why Consultants Quit Their Jobs and Go Independent (July 2019). You can easily guess the top 3 reasons: 1) More work-life balance 2) Better compensation, sometimes 3) Less internal politics. The potential downsides are equally obvious: 1) Fewer / no benefits 2) More swings in income.
I know a few hundred consultants, and a few hundred ex-consultants, so thought I’d weigh in on this article:
Get a (better) sample size
This article cites an online survey with a sample size of 307. n=307? Hmm, that’s a small number of people who self-selected to take this survey. This # belies the diversity of consulting practices, geographies, industries, and stage of finder, minder, grinder development. So, definitely get your own data; interview people who do what you do.
For example, this article cites that 90% of consultants started their independent business proactively, while only 10% were forced to go solo because they were asked to leave by their firm. This looks like sampling bias, or lying.
Consulting vs. Staff augmentation vs. Sales vs. Training vs. Coaching
The term “consultant” is very loosey-goosey. More than 700,000 people in the US self-declare as consultants on their tax form. This includes financial consultants, wedding consultants, speech consultants, and political consultants. If the work does not require scoping, does not require cross-functional alignment, does not require leadership, does not require change, does not entail project delivery risk – I would argue, it’s not consulting.
Yes, you might be a trainer, executive coach, public speaker, researcher, marketer, salesperson.
No shade on you, but need to be clear that being “solo” does not mean that you are doing the same work you did as a management consultant. It’s not necessarily the same, so need to be okay with that.
Yes, people want more control
This is complaint #1 of management consulting. Travel, time-consuming clients, lack of work-life balance. Opinions will differ, but my guess is that the grass is rarely greener on the other side. Assumption: you want consulting-level of salary and interesting/challenging work. Result: any right-minded firm will require 50/hrs+ a week and require travel. Professional services is a market. You get big pay when you solve big problems.
As Ravikant might say, “silly games, silly prizes.”
Get rare and valuable skills first
Cal Newport, Georgetown professor, author of Be So Good They Can’t Ignore You (affiliate link), emphasizes the importance of getting rare and valuable skills. Once you build up sufficient career capital, you get more control of your work, and environment. You can slowly start dictating more terms. He does mention 2 control traps. . .
Watch out for control trap #1 – learn to swim first
Newport warns that some people want control too early in their career. Novices – not yet experts at anything – may have demands, but don’t deliver commensurate value. Unfortunately, this can lead to career confusion – bouncing around from one interest, “passion”, topic to another. Yes, it may look like freedom, but without expertise, and an economic engine (read: $$$) behind the work, it’s an illusion. Unchannelled energy. You need to be so good they can’t ignore you. Namely, you need to know how to swim before you should leave the safety of the cove.
Watch out for control trap #2 – don’t get stuck
As Picasso said, “Learn the rules like a pro, so you can break them like an artist.”
If you’ve gained career capital, if you’ve consistently raised your bill rate, if you’ve attracted business because of your unique value, it’s time to flex your career muscles. Here, perhaps, it’s a chance for you to get more control of your career, work environment, projects, teams, and potentially, independence.
Good is predictable, great varies.
Large consulting firms use a leverage model to scale, repeatable solutions; sometimes, this creates a factory-mentality which does not adapt to the specific needs of great performers. Dude, I see this all the time.
Smart – thoughtful – firms will find ways to offer flexibility, control, and ownership to great consultants. Smart firms will bend, and draw a fence around those high-potentials, and keep them in the fold. Sadly, smart firms are rare.
Ask, “Am I finder?”
At the top of any professional services pyramid are the Finders. The managing directors, the partners. These are the ones who FIND the business. They hunt the bear, and bring it back to the cave to feed the rest of the family.
Can you hunt?
In contrast, managers are often farmers, who do a great job managing teams, keeping the client happy, and farming the client’s problems. Yes, they may garner add-on work, here and there, but solo consulting is different.
No question, the brand, network, and know-how of big 4, big 4 consulting firms helps to sell work. As a solo, you are full-time hunting AND full-time farming. At a minimum, run a quick audit and ask yourself a few questions:
- How long can I afford (read: survive) without getting paid for my first project?
- How many previous clients could I call on for repeat, or new business?
- What proof-points do I have of my work? Is my portfolio readily available to show?
- Which firms or other consultants can I split fees with to get started?
- How many (future) clients are prospects are currently asking me for help?
- What’s my competitive advantage? Is it sustainable? What’s my economic moat?
Better compensation? Maybe.
In theory, this makes sense. If you can maintain your bill rate, and keep a similar utilization, you will definitely make more money. Remember, professional services has very little fixed costs (maybe your car, computer, research subscriptions). Ravikant would chime in that you are taking more ownership, equity, and risk. Let’s not forget that you will doing most of this work yourself, from the first proposal all the way to the accounts receivable.
If you are taking on 2-3x the work, you definitely deserve to get 2-3x more money and/or time.
Solo consultants, chime in
Don’t let me give advice that’s not right. What are key questions that management consultants need to ask before venturing out on their own? This is a huge mindset shift from W2 (salaried employee) to 1099 (contractor) status. What are we missing?
Link to a blog for solo consultants from Daryl, a 30 year veteran here.