Believe it or not, one good way to find an excellent job working for someone else has always been to try as effectively as you can to become a self-employed consultant.
Ironic? Indeed, but true.
The prospective clients you must solicit to establish a consulting practice, are some of the same people you’d reach through job-hunting involvement with your personal contacts and networking among strangers.
Moreover, these influential people are likely to react far more favorably when called about a meeting to discuss an intriguing consulting proposal, than when hit for the 500th time with the dreary “I’m in the
process of making a career change and would like to have the benefit of your thoughts and advice.”
As a consultant, you meet and interact with people who have an ideal opportunity to evaluate you, your thinking, and your work. Eventually there’s a good chance that one of your clients will decide that he or she would rather “own the cow than keep on buying the milk.” You’ll be offered an on-payroll position.
However, by the time that happens you may be doing so well that you value your independence far too much to give it up.
Who knows which option—in the end—you’ll prefer? Fortunately, it’s “heads you win…tails you win.”
Should you try to be a consultant?
Let’s be very clear on what we’re talking about. We’re not discussing the common resume cover-up of a gap between jobs with an entry that says “Self-employed Consultant,” even though the writer didn’t aggressively seek assignments, and didn’t handle any worth mentioning. We’re talking about actually trying to sell consulting engagements, with the intention of doing a fine job and, hopefully, building a lucrative practice.
Only if you really want to become a consultant, will your solicitations have any credibility. If you ask for an appointment to discuss consulting and then come in and try to wheedle your way onto the payroll, you’ll have zero credibility…both as a consultant and as a potential employee. So don’t even consider the consulting option unless you:
1. have expertise that would benefit clients;
2. have the skills and personal characteristics to be a consultant; and
3. are willing to accept the advantages and disadvantages of a consulting career.
We’ll consider these three issues separately. Then if “all systems are go,” we’ll take a look at how trying to become a consultant not only won’t encumber your search for a salaried position, but may in the end lead to the happy dilemma of self-employment and tempting on-payroll offers.
What expertise do you have that can lead to successful consulting engagements?
Almost every $100,000+…or $400,000+…executive has knowledge that could be valuable to clients. Analyzing problems and opportunities, and figuring out what actions to take, are what every executive does. Consulting merely applies those processes to someone else’s problems.
However, the most successful consultants…especially individuals, in contrast to the huge generalist outfits like Bain, McKinsey, A. T. Kearney, Cresap McCormick & Paget, and Booz Allen & Hamilton…generally have a personal specialty, which they obviously know more about than a crew of MBAs from one of the giants.
To illustrate, here are four enormously successful individuals who now consult for a living, after leaving the payrolls of large corporations:
1. Mr. W headed Marketing for one of America’s leading magazine-publishing and direct-marketing companies. Deposed along with his boss, the Chief Operating Officer, in a political upheaval more than 25 years ago, Mr. W immediately offered himself as a consultant to all the other major print media and direct marketing companies. Then only in his 30s and already making an impressive mid-six-figure salary, he immediately earned more money consulting than he ever made on payroll… and his earnings have more than kept up with inflation Today he still works out of his home with no secretary and only voice mail to take his calls. Over all the years—and still today—many of his former competitors have been the consulting clients who support his handsome lifestyle.
2. Mr. X was Chief Executive of a medium-sized public company (10-figure sales), which he led through a very successful decade of growth, both by internally generated new products and through acquisitions. Deposed by his Board, not for poor performance but allegedly for a drinking problem, Mr. X became a consultant to a competitive corporation with the sole mission of scouting small companies for acquisition. Operating on an annual retainer discountable against brokerage fees on the deals he arranged, for several later years he earned “double what I did as CEO.”
3. Ms. Y, a brilliant and widely traveled international marketing executive with one of America’s largest corporations lost her job when the unit she worked for was divested and the acquirer already had someone in her role. Her global networking to find employment uncovered an opportunity to barter huge quantities of two basic commodities. “I knew lots of people all over the world,” she says, “but nothing about bartering or about those products.” She put her first deal together, “with wall-to-wall help from my friends.” Now she makes her living (and what a living!) as “an international finder and trader.”
4. Mr. Z retired as a senior scientist with a major chemical company while still too youthful to become inactive. Today he helps foreign chemical companies avoid transgressing U.S. patents, and advises them on whether technology they have developed may be patentable in the U.S. He does no work that requires an expensive laboratory or a research staff. He merely draws on his personal expertise and the resources of a public patent library.
Notice that each of these successful consultants offers a personalized specialty. None is a jack-of-all-trades in competition with the large national consulting firms. What comparably special contribution could you make… and to whom? Only you can say. But here are some possibilities:
1. CEOs and Division heads of companies in your field might value a “second opinion” on basic issues. Or they might welcome “take charge” handling of special projects.
2. Perhaps there are companies in fields related to yours, that should consider diversification into categories you know more about than they do.
3. If you’re from a large company, you may have sophistication that smaller firms can’t afford to keep on payroll. Offer project assistance. Or perhaps several days per month on a continuing retainer.
4. Foreign companies wanting to penetrate the U.S. market might need your help.
5. Conversely, domestic companies might benefit from your international experience.
6. If you’re on the leading edge of any specialty, there are always “trailing” edge companies, who are potential clients.
7. And all around us are web-related startups of all sorts that need experienced counsel and do not yet have enough capitalization to fill every key slot on the organization chart.
Do you have the skills and personal traits to be an independent consultant?
Okay, let’s assume you’ve figured out how your expertise could help corporate clients. There’s still the question of whether you have the right personal attributes. Working for Bain, Cresap, Booz, McKinsey, or A. T. Kearney is another major-company job. To succeed independently you need everything “large-firm” consultants have…and more:
Salesmanship. Except for “repeats” and referrals from current clients…and starting out you won’t have any…every assignment will be one you’ve had to sell. If you can’t approach new people, and can’t tolerate rejection, don’t go into consulting.
Analytical, Bright, Logical Mind. Clear, insightful thinking is…along with your special expertise…what you’re selling.
Written and Oral Communication. Sometimes you’ll present informally. But expect to deliver written reports and projected presentations. If your pen and platform skills aren’t good, don’t enter consulting.
Self-Start and Self-Discipline. Performing what you promise when you promise is mandatory. And no supervisor will check your progress toward deadlines.
Creativity, Open-Mindedness, Resourcefulness, Versatility, and Adaptability. Being able to invent, improvise, ad lib, and generally deal with the unexpected and unfamiliar is essential. “By-the-book” people have little to offer as consultants.
Common Sense, Practicality, and Pragmatism. Down-to-earth, easy-to-implement recommendations are the best kind.
Service Attitude. Unfortunately, consulting is a service business. If you’d much rather be accommodated than accommodate, consulting is not for you.
Ability to Cope with Financial Insecurity. There’s feast and famine…no regular payday.
Fortunately, traits that may handicap you in large organizations are tolerated…and even desired…in an independent consultant.
Do you have these characteristics? If so, you may be more welcome on retainer than on payroll.
Obvious Personal Brilliance. The same superior who feels threatened by a subordinate with an off-the-chart IQ is delighted to find such brain-power in an outside consultant.
Strong Self-Assurance and Matching Ego. Same goes for a strong, sure touch and lack of self-doubt…scary in a subordinate or a peer, but excellent in a consultant who can be summoned and dismissed at will.
Task Orientation and Political Aloofness. A consultant must be politically sensitive. But he or she can concentrate on the work, safely ignoring the day-to-day skirmishes that can undermine the too-task-oriented corporate employee.
If you’re not average, not a team player, don’t care about petty politics, don’t suffer fools (other than paying clients) gladly, and tend to challenge authority and to be outspoken…then perhaps you can do the corporation, and yourself, more good as a paid observer than as a salaried participant.
Indeed, even if you have patently undesirable characteristics from a corporate point of view, you may be able to get by with them as an outside consultant. Maybe you like to work three 18-hour days and take a week off. Maybe you have a drinking problem but can discipline yourself to keep critically important commitments. Maybe you’re brilliant, but have a loathsome personality and are insufferable as both a boss and a subordinate; yet you’re capable of exquisite charm when you choose to display it. Show your clients only the good side of your Jekyll & Hyde personality, and you can succeed as a consultant.
Don’t get into consulting unless you can endure some very negative aspects.
The withdrawal pangs are excruciating!
As a $100,000+ or a $600,000+ executive, you’re used to having power. People at your beck and call. The prerogative to decide. Even when you have to seek higher endorsement, you determine what is or isn’t considered.
Every executive who’s had power and suddenly becomes a consultant is shocked by the role reversal. Nothing I say can adequately prepare you.
As an executive, you can call meetings to which any number of people must come…some of them perhaps far more prominent and wealthy than you are. And you preside. One by one the participants tell what they’ve done to further your objectives since the last meeting, and what they propose to do in the future. Finally, you assess their contributions, and you assign further work in preparation for the next meeting.
How different when you become a consultant.
You can still call a meeting. But this time it’s probably a fact-finding session, at which you take notes. And if a report has to be written, you write it. Maybe, on the other hand, your meeting is a “progress report” to your client. Elapsed-time-pressure was building up, and you called her before she called you. But now you’re the supplier. What have you accomplished since the last meeting? And what will you do prior to the next one? The shoe’s on the other foot. And until you get used to it, it pinches!
Moreover, what you produce will be analysis and recommendations. You don’t control whether…nor how well…your advice will be carried out. And you may become very frustrated that lots of your time and hard work produces minimal benefit. Welcome to the world of consulting. You merely study and suggest. You no longer decide.
Another pain will be the lack of big-company support services. Your computer and laser printer, plus online informational resources, will substitute for personal assistants at the outset. But you’ll miss the research department, and the reproduction and mailing people…not to mention all your other capable subordinates. Indeed, you’ll even miss the social interaction and the sounding board for ideas that were afforded by the sheer numbers of people around you.
And of course there’s the fundamental insecurity of not having a predictable paycheck. Every dollar you get is for a consulting engagement you’ve sold, and for work you’ve done…or as general contractor farmed out to others, verified, and submitted to your client. No selling? Then no engagement… no money. Poor performance? Then no repeat business…no referrals…no money. The marketplace is a stern and objective judge. Submitting yourself to it is a gutsy move that shouldn’t be taken lightly and, indeed, shouldn’t be taken at all by some people.
On the other hand, there are very real advantages to being a self-employed consultant.
True, you don’t have a scheduled paycheck. But then you can’t be fired. You can lose clients and you can go broke. But through lush and lean, you have a job. There’s some security and self-confidence in having even that much control over your life.
And when you make money, only you and the IRS decide what to do with it. Moreover, since you and your accountant will set up an advantageous corporate vehicle and tax-planning program, you’ll build net worth faster on your own than on a corporate payroll, if your gross profit matches your former salary.
You will, of course, be wallowing in trivia as you set up your office and begin to generate paperwork. On the other hand, your contacts as a consultant will tend to be at very high levels, probably CEOs and heads of divisions and functions. And you’ll mainly be dealing with major issues.
Also, for some unfathomable reason, outside consultants seem to be treated with more courtesy and respect than subordinates and peers on the corporate payroll. If you’re successful and can revel in prestige-without-power, you won’t feel you’ve gone down in the world.
The freedom and flexibility of a consulting lifestyle is another “plus.” You can probably do much of your work at home, or at your place in the country or at the shore. And working hours are entirely up to you.
Moreover, consulting is the one form of self-employment that won’t risk your life savings. Your first office will probably be at home, and you can equip it with a first-class computer, word-processing and other software, a printer, copy/fax equipment, a simple brochure, elegant stationery, and cards, for $12,000…maybe less.
If you’ve ever wanted to be a consultant, the time to “go for it” is immediately after you become unemployed.
To the $100,000+ or $500,000+ executive, loss of job—regardless of reason— is a crushing blow. He feels worse if his boss simply wants to replace him, than if his company is acquired and there’s no need for two Chief Financial Officers. But not much worse. Either way he’s devastated.
Even if he’s protected by a generous severance, the worst of the situation is the uncertainty. What next? He does everything possible as fast as possible. Yet he still worries, “How long until my next job?”
But suppose that our former CFO has thought about services he might offer as an independent consultant, if he ever gets an opportunity to become one. He has some intriguing ideas that should appeal to CEOs and CFOs of mega-companies at the top of Fortune’s list. And he also has some concepts that might interest the CEOs of relatively unsophisticated companies in the $50 to $75 million range…maybe even the entrepreneurs of promising pre-IPO “early stage companies.”
In walks the grim reaper, just as before. But this time our hero is ready. Even before negotiating his final severance arrangement, he visits the printer to order stationery, cards, and a simple but elegant, triple-folded 8½” × 11” brochure. Day one of his “unemployment” becomes the first day of his consulting practice.
“Death, where is thy sting? Grave, where is thy victory?” Far from being traumatized and immobilized, our new consultant is busy. He may still be receiving money from various sources as a result of his “unemployment.” But he’s also developing a new income stream. Today he’s his own boss… hard at work for a sensible, pragmatic taskmaster. Yes, he feels pain, disappointment, and self-doubt. But far less of it than most other people in his circumstances, because he hasn’t taken time out to be unemployed!
If you’re going to try consulting, don’t waste your “personal contact” and “networking” opportunities on ordinary job-hunting.
Some people solicit consulting assignments only as a desperate “stop gap” measure after they’ve tried several weeks of personal contact and networking in an effort to get another job. This is entirely the wrong sequence for two reasons:
1. Their approach has been unnecessarily weak and vague.
2. Having labeled themselves job-seekers, they have destroyed their credibility as consultants.
Let’s look at the “job-applicant-first” scenario. Here’s what’s said to the personal contact by the applicant who hasn’t read Chapter 4:
“Have you got a job for me, Barbara? I’m leaving X Corp.”
If the applicant has read Chapter 4:
“Barbara, I’m leaving X Corp., and I wonder if you might be a reference for me on our years together at Y Corp.”
And to the networking contact, following the classic script:
“Mr. Kindly, I’m in the process of considering a career move, and I wonder if I might have just a few minutes of your time to get the benefit of your thoughts and suggestions.” Now imagine going back to these same people weeks or months later and professing to be a consultant. Whether they’ll bluntly state it or not, people you’ve previously contacted as a job-seeker will think:
“So nobody would hire you. And now you’re down to seeking part-time work!”
Failure to find full-time employment doesn’t enhance anyone’s credentials. Why even consider someone who’s a consultant only because she couldn’t get a regular job?
A timely consulting proposal shows you off as a potential employee.
Generally speaking, a sales call as a consultant is a much better “show-case” for your abilities, experience, and achievements than an ordinary “personal contact” or “networking” call as a job-seeker. Consider these advantages:
High level contact. Your consulting targets will be CEO, Division President, Group Officer, or VP-Chief-of-Function. Networking, unfortunately, takes you randomly to whomever your preceding contacts happen to know…maybe the ideal people to evaluate and “sponsor” you, and maybe far from ideal.
Something meaningful to talk about. The most pathetic aspect of a networking appointment from the job-seeker’s point of view… and the most irritating from his host’s…is the flimsiness of purpose: “a chance to get your insights and suggestions.” People worth seeing are busy. Probably your half-hour no-agenda meeting—if you can get it—will cause your host an extra half-hour of homework. How much better to discuss a consulting proposal geared to his needs. He’ll feel more interested and receptive…less manipulated and imposed upon.
You MUST show your credentials. When offering to do consulting, you have to hand out and discuss something on paper that states your services and qualifications. Your expertise is what’s being sold. And after presenting your consultant’s “puff” piece, you can also provide your chronological “sales representative” resume, as a more forthright disclosure than most consultants are willing to make. But be sure there’s no “Position Desired” or “Descriptive Summary” that implies ordinary job hunting.
You operate in a “selling” format. Moreover, on a sales call you’re much more in charge of your presentation than you are in the “social conversation” of an interview, and the “brain picking” of a networking call.
You have greater opportunity to “sample” yourself. Provide a specific proposal that’s written as well as oral. If well done, it’s a persuasive free sample of your work. You submit it as a consultant. But it also demonstrates what a good conceptualist you’d be as an employee.
You don’t have to be said “no” to. “Personal contact” and “networking” visits cry out for a disclaimer from your host:
“I wish, Sandra, that we had a position for you here. Unfortunately, there isn’t anything right now.”
On the other hand, your consulting presentation tends to get the standard reaction we always give to salespeople…a courteous hearing and a noncommittal answer:
“Well, I don’t know. Let me think about it.”
The psychology is just like asking a personal contact for a reference instead of a job. He’s left with a matter that’s still somewhat open in his mind. And you have an opportunity to come back with another proposal, based on what you learned at your meeting.
You’re easy to say “yes” to. Hiring you as a consultant is low-risk, compared with putting you on payroll. Your assignment is like a “budget-priced trial size” of a consumer product. There’s enough to measure performance, but no big investment to lose if the product is disappointing.
Without disrupting his current organization, your client can evaluate your performance, and how he enjoys working with you. He may “make you an offer you can’t refuse.” Or he may pay for your project—which has probably been worthwhile in any event—and say goodbye.
Pitch, Performance, and Payment …Getting Started as a Consultant.
In all earlier editions of Rites I mentioned briefly how consultants—from individuals to giant firms—traditionally solicit and bill clients.
The Usual Way
Regardless of whether the client company or the consultant thinks up the project, it’s usually done in segments, with a separate fee or estimate for each “phase.” Phase I may be a preliminary study of the issues. Phase II, if warranted by I, expands the investigation or begins to implement the findings of I. And Phase III (plus perhaps others) completes the project. This is the way you will probably be structuring your consulting proposals.
The Selling vs. Doing Dilemma
However, there’s a classic problem when any individual tries to function alone as a consultant: “When you’re selling, you can’t be doing, and when you’re doing, you can’t be selling.” To thrive you must do superb work. Unfortunately, that may leave too little time to go out seeking new clients and projects to keep you busy after your current projects are finished.
Crandall’s Way
The first of the four consultants I described earlier was one of my executive recruiting clients until he and his boss were suddenly ousted in a corporate political war. The next day my client and good friend, whom we’ll call Crandall, had a phone line for his consulting practice hooked up in his den. Soon, with no support beyond his personal computer, he was advising almost every competitive company in his industry. Right from the start, he said he was making more money on his own than he’d made on payroll. Today, years later, he’s still going strong, even though he’s so financially secure that he surely doesn’t need to work.
A few years ago, I asked “Crandall’s” permission to tell you the secret of his success and he agreed. Notice how radically he departs from the traditional formula:
“I never quote on a ‘per-project’ or a ‘per-phase’ basis. Instead I negotiate a low monthly billing rate…one the client is extremely comfortable with and will never consider excessive or wasteful. And for that I gladly do whatever they want. If they demand too much, I can ask for a higher monthly rate. And if I’m no longer useful, they can fire me. My low price and flexibility make for an easy sale.
“But notice the advantages: Once a client is signed up, I never have to resell them or convince them to proceed. The ‘can’t-sell-while-you’re-doing’ problem disappears. And my monthly bill becomes a fixed part of their overhead. It’s always in the budget.
“Also, because my bill arrives every month whether they use me or not, the young people in the company feel free to call for my advice. There’s no bill to defend. Senior management people are usually too busy to call; so if I were uppity and only dealt with them, they’d cut me off because of infrequent use. But they like to have me training their young folks. The young people know that. So they cite me in their proposals and reports to senior management. That keeps my name alive in the company. And pretty soon senior management is asking the more junior people, ‘Have you checked this out with Crandall?’ I become part of the team. As you know, I’ve got clients who’ve been with me for 25 years.”
How’s that for a different and absolutely brilliant approach! Thank you, “Crandall,” for sharing it.
When do you get your job offer… when you “pitch” your consulting proposal or after you’ve performed?
Obviously, an offer could come at either time.
However, I can’t caution you strongly enough not to go in with a phony offer of consulting services, which is really a thinly disguised request for employment. If that becomes your game, it’s dishonest; it’s transparently obvious; it deserves to fail; and it almost certainly will fail.
Frankly, if a prospective client is going to offer you a job, you’re better off if the marriage comes after a successful consulting engagement, not before. By then your prospective boss knows you and your work. There’s less chance that he or she will preempt your independence, only to become disillusioned and discard you later.
Meanwhile, you’ve also found out some beneficial information. You know lots more about the client company. You know whether you enjoy consulting. And, after your “firm’s” pension and profit-sharing plans are in place, you know how much more you’re salting away when working for yourself, rather than a large corporation. This is probably your one-and-only shot at independence. Don’t toss it away casually.
On the other hand, your earnest pitch for a consulting assignment will show you off to advantage. Therefore, it very possibly may lead to an excellent employment offer, instead of a consulting contract. If so…and if you accept… congratulations and best wishes! You’ve found a job by not looking for one.
But suppose you don’t get an employment offer. You just keep on working for several employers.
Is that so bad…if you make good money and enjoy your work?
Consider two statistical facts:
1. America’s largest corporations are cutting the number of executives they employ (and other employees too).
2. America’s small- and medium-sized companies are still creating most of the new jobs at all levels.
That’s right. More jobs—at all levels—are ending than are being created by our biggest corporations. Fortunately for the nation, and for you if you’re seeking employment, our smaller companies are creating more new jobs at every level, including executive, than the largest corporations are ending. Unfortunately, smaller companies struggling to grow can’t afford—at their stage of development—to pay high salaries.
So the good news is that smaller companies may have employment for you when the bigger ones don’t. The bad news is that, being smaller, they can’t afford to pay you as much as you’d make with MegaCorp.
However, with luck, you may get equity participation in a smaller company that can make you far, far richer than if you’d stayed at MegaCorp earning three times the salary for a few more years, while watching your MC options sink under water.
Which brings me to the wise words of my friend Paul, 59 years old, who was tossed out of his Senior VP - Marketing & Sales job after 29 years with the same company:
“I discovered two things, John: It’s true that there aren’t always that many jobs. But there’s always plenty of work!”
Acting on this insight, Paul, who’d led a hundred people at headquarters and a thousand in the field sales force, immediately got in touch with the presidents of smaller companies marketing to the same types of customers he’d dealt with for 29 years. He also contacted the presidents of customer companies he’d sold to. And several of those CEOs realized that Paul had a great deal of knowledge they could use.
As a result, Paul got “Crandall-type” continuing relationships with three smaller companies, working the scattered-day equivalent of one-week-per-month for each. He also secured exclusive distribution rights to a couple product lines within his tri-state area.
The bottom line for Paul is employment. The three consulting activities generate about the same money he was making in his corporate job. But now he has much more economic security. He can lose any one of his part-time deals and still have a good solid income. Meanwhile, his personal distributorship business continues to grow, entirely separate from his three relationships with other companies. Paul has found the best of all worlds…a chance to become entrepreneur of his own young business, while retaining an income from other people’s established businesses.