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10 Things You Need to Know Before You Go Consulting

2012/07/03

NextStage: Predictive Intelligence, Persuasion Engineering, Interactive Analytics and Behavioral MetricsSo you’ve decided you’re going to be a consultant.

Good for you!

We use to define consultants as “unemployed with a briefcase”. That “unemployed” part is increasingly true in this economy. NextStage has been consulting since before it was officially “NextStage” (I started consulting in 1999. We became NextStage in 2001) and we’ve managed to keep going while others larger and smaller faded away, some quietly, some in blazes of unglory.

But good for you, seriously. Here’s some things that may help you before you get too far down a road you can’t follow.

1) Have an Active Client List Before You Start

The Devil they knowThere is a standard rule that customer acquisition is far more expensive than customer retention. Acquisition is more expensive than retention because, from the client’s side, the devil you know is better than the devil you don’t. In other words, clients may be getting rubbed raw by their existing consultants but they know they’re going to get rubbed raw, have a pretty good idea how raw they’ll get, how much it’ll hurt, how long the pain will last and what they’ll need to do to alleviate it.

You, however, are completely unknown to them. They have no idea how much pain you’re going to give them, how raw you’ll rub them, how long the particular type of pain you provide will last or if they’ll be able to alleviate it.

Realistically, who would you go with?

Everybody’s making promises to them and your promises are no different. You can even say “Give me a chance, no charge, and if things work, hire me for more” and they’ll balk because seasoned businesses know what you’re really saying is “Let me get a foot in the door and I’ll dig in deeper than an Alabama tick. You’ll never be able to get rid of me”.

So, before you hang out your shingle announcing yourself to the world, make sure you already have some portion of the world willing to come under your shingle. And get written commitments. Potential clients can still back away and if it’s in writing it’s a little more embarrassing for them should they need to hire other consultants.

2) Make Sure Those Clients Speak Well of You

Ever heard

It takes 47 attaboys to make up for one ohsh?t

The above is extremely true in the world of consulting because word-of-mouth can make or break you. Spend what you want on search engine listings, fancy websites, brochures, conference booths and the like, one bad referral and your business is ruined.

That noted, don’t cave in to idiots. Stand your ground, hold your own, and always present yourself in the best terms possible. The business world may work with idiots at the helms of certain companies because it has to and that doesn’t mean it wants to. Another of my favorite sayings is

If the butchers, the bakers and the candlestick makers think you’re an idiot, then you’re probably an idiot. However, if the butchers and the bakers think you’re great and the candlestick makers think you’re an idiot, the problem’s with the candlestick makers and you’re probably okay.

Like all rules, the Butcher-Baker-CandleStick Maker rule needs to be applied carefully and apply it you must, especially when you’re consulting.

3) Get Advisors

Part of the ability to identify prospects, partners, friends and yes, idiots, is in our social wiring. We learned a lot of it on the playground growing up. Another part of it comes from experience and as Steven Wright says

Experience is something you don’t get until just after you need it.

You can get experience before you need it by asking people to advise you on business matters.

I recommend you seek out the counsel of others on all matters, actually, not just business because (and as we’ll note further down in this list) any one part of your life will affect all parts of your life. A painful personal relationship will affect business et cetera et cetera. The only way to avoid this kind of cross pollination is to have some one part of your life dominate all parts of your life. The person who is always “working” is an example of this and all things come with a price. If you’re always working then you’re not living and of the two, I’ll chose the latter. I’ve never heard “If only I spent more time in the office…” as anybody’s deathbed lament.

4) Be Prepared to Spend the Bulk of Your Time Finding New Business

You may be lucky enough to bring a full rolodex of clients to your consultancy. Good for you. Are they going to be clients forever? Are their businesses set up as legacies so that when new management comes in, your position with that business remains intact or will new management bring new consultants with them?

People move on, retire and die. You need to keep your sales funnel full. Keeping it full means, as noted above, getting out where prospects can both find you and interview you. Often this “interviewing” takes place at conferences and conventions after the presentations and panel sessions are over. The technical term is schmoozing.

Willie Sutton, a wise manSchmoozing is an art and part of that art is, paraphrasing Willie Sutton, going where the money is.

For consultants, going where the money is means finding the conventions, conferences, networking groups, et al, where your prospects will be. It’s perfectly useless to spend money on a booth, brochures, presentations, panels, keynotes, et cetera, for a conference/convention/networking event that isn’t the best possible audience for your product/service/offering.

Most consultants work with limited budgets and wise spending is paramount. Find the correct audience first, learn where they go and go after them. One minor thing I’ve learned that’s proven invaluable is to preface any schmoozing with “Mind talking a little business?” or “Mind not talking about business?” These phrases immediately convey my goals, let others know my boundaries, so on and so forth.

If nothing else, if guarantees you and they won’t waste each others’ time.

5) Choose Your Networks Carefully

You can go nuts preparing for, traveling to and attending conferences. As noted above, I recommend finding those that will return the most benefit to you.

Right along with that and usually much more accessible are local networking events. Networking events are where bunches of unemployed people with briefcases (consultants, remember?) gather to exchange business cards, leads, ideas, partners and the like.

And there are both online and offline networks. Online networks have blossomed in the past year, it seems. I get at least one invitation a week from a “close friend” — usually someone I don’t actually know — to join some new kind of business network. Some offer to pay me for making referrals for others, some offer free services for making referrals, there’s always some kind of offer that makes them better than the invitation I received last week.

Same rules apply. Before you join an online network, check out the membership. Are the members prospects for what you do or offer? Can they bring you new business? Will they bring you new business? Are you just another notch in their belt or another dollar in their pocket (for their referral) or can you really benefit them and be benefitted in return?

Decide accordingly.

6) There Are Peers and There Are Peers

You’ve got advisors, you know which conferences/conventions/networks to go to and you know who’s opinion matters.

Put them all together and you can figure out who’s your peer. Sometimes peers are nemeses — they show up when you don’t want them to and most often keep you in line when you’d like to step over that line a bit — sometimes peers are allies, sometimes peers are adversaries and sometimes they are enemies. I prefer the nemeses because they help keep you honest. Exaggerate or misstate and they’ll let everybody know. They keep you on your toes and that, I think, is a good thing.

But when you’re going to see a client and need some backup? Pick an ally, pick them well and carefully.

Adversaries are not enemies. Sometimes adversaries can be allies and most often a good adversary ends up as a friend. Adversaries are merely those who are going after the same jobs you are. Spend time with them, learn about and from them. It’s the only way to be better than them.

Enemies just want to hurt you. Leave them be. If you must respond to them, respond honestly. And document everything.

7) Be Prepared to Spend the Bulk of Your Time Investigating the Tried&True and New&Blue in Your Field

Prospecting and staying on top of your field are going to vie for time once you’re a consultant. Prospecting is covered in item 4.

How does one stay on top of their field? Fortunately, some of that comes from networking. There’s also reading, writing, going to conferences and conventions, taking webinars, …

So the first thing you’ll notice is that a lot of staying on top of your field can be done via what we’ve listed already. Good.

Now comes the more interesting part, a variation of “There are peers and there are peers.” This time it takes the form “Learn how to discriminate between news and marketing fluff.”

And there’s a lot of marketing fluff out there. One promoter pleaded with me to do a presentation and balked when I stated my fee. “There are many people interested in speaking at this event because they want the exposure and because they want to be seen as thought leaders in this emerging social analytics industry. Due to this fact, the market dictates that I cannot pay speakers when so many are lining up and eager to speak anyway (even though I am quite eager to get you on board).”

So if conferences are really marketing events, do you want to subsidize some presenter’s sales pitch?

Most people I know have been going to conventions and conferences on social passes. A social pass allows you access to the exhibitors’ floor and not much else. No sessions, no keynotes, no workshops or trainings. It probably gives you access to the schmoozing sessions and that’s reason enough to go…sometimes.

The reason social passes are so popular is because exhibitors pay big dollars for floor space on the exhibitors’ floor and speakers often have to pay for access to the audience. I’m told that all but the top keynoters have to pay for the right to keynote.

What entices exhibitors, speakers and keynoters to pay up? The promise of high attendance.

But attendance was dropping a few years back because the sessions were repetitive, there was rarely anything new presented, the workshops et cetera were glorified sales presentations, …

So how do promoters promise high attendance when the conventions themselves are no longer the draw?

Social passes. They cost much less and they keep attendance numbers up.

So unless there’s a real good reason for you to attend the actual sessions, workshops, keynotes and the like, you can stay on top of your field for a much lower price by going social. That and reading something other than marketing hype in your field, talking with your peers to learn what they know and are doing, so on and so forth.

8) Take a Class in Negotiating

The best definition of negotiating I’ve heard is

The art of getting as much as you can of what you want while giving away as little as you can of what they want.

Consultants need to know how to negotiate. Most large clients have rules in place regarding services/products rendered and payments made, most small clients don’t and my experience is that the smaller the client the more they’ll want for as little as possible.

Negotiating is necessary for lots of reasons. Perhaps the most important is that the majority of people new to consulting don’t know what they’re worth, hence price themselves out of their market either positively or negatively, give too much away in the name of business development, give nothing away and always there’s some mix of the above.

Another important reason to develop negotiation skills is to learn what jobs you shouldn’t take on, what clients you don’t want to sign.

And if you’re beginning to see that new consultants need to know what to stay away from, you’re on the right track.

9) Make Sure You Get Paid

There are two types of clients: those who pay you in coin of the realm and those who pay you in promises to pay you in coin of the realm. Have you ever heard “Promises make a thin soup”? Learn it. It’s true.

Clients that pay you are the ones you want. You can take that payment and pay your bills, buy nice things for those you care about, generally keep yourself and your business going.

Clients that don’t pay you won’t pay you for lots of reasons. Surprisingly, many of those non-payment reasons have little to do with you, your product, service or offering in general. Most times non-payment occurs as part of a power play from client to vendor and closely resembles victimizing behavior. Sadly, this denial of payment most often occurs after you’ve demonstrated good value. The most insidious form involves having you in for an “interview” wherein the client asks how you’d solve some problem, you provide a working solution, they thank you but never call you back to implement. The giveaway to the latter is that they or their second in command takes lots of notes, but not when you talk about past engagements or references.

My suggestion, should this or something similar occur to you, is to quietly walk away. But do share your experience when you go networking. That one outing may have cost you but the benefit you bring others will come back to reward you.

Good and worthy clients will pay you and promptly because, should you go out of business for lack of funds, they’ve lost a trusted and worthy vendor. Letting a vendor go under does not help anybody’s business so good and worthy clients will make sure you’re paid or let you know well in advance there may be a hitch in payment, some of which may involve renegotiating your fee. Remember that in this case these people are having troubles of their own and want to negotiate in good faith. Forget any pound of flesh getting, they’ll remember that you helped them and come back over time.

Again, good business, that.

10) Make Sure You Have Family Support

Most important for consultants is to have family support. Family support and a partner making sufficient income to support the family while your consulting business grows. It’s great to have family members believe in you, its better to have family members that don’t suffer because they believe in you.

Not suffering can take lots of forms. Is everybody willing to pull together? Is everybody prepared to deal with a major change in financial lifestyle? Can your family take the strain of you having no work for three months then too much work on the fourth?

So before you go the consulting route, make sure your family is with you. More than being with you, make sure they’re staying with you.

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2 Comments leave one →
  1. felix dan okofene permalink
    2013/06/27 12:47 pm

    I love the simplicity of your written, and the smooth ways that you used to navigate the idea of being a consultant. Thanks

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