I have been working in the nonprofit sector for more than ten years.  I am beginning to explore the opportunity to transition from “salaried employee” (with all those benefits that make the job so secure!) to consultant.  Some consultants in this field have told me they are so busy that they are turning away business. Do you have any words of advice for making the transition to being self-employed and launching my own consulting venture?

What are the cons of consulting?

We often hear a lot about the “pros” of consulting, and many “salary slaves” secretly daydream about the prospect of working for themselves, setting their own hours, working from home, working on exciting projects, with better work-life balance, and many more such benefits. As with anything in life, the reality we face can be very different from those initial dreams – for better or worse.

Consulting dreams and realities

The first step is to take off your rose-coloured glasses and try to see the future in as realistic terms as possible. You are possibly making a very dramatic change to your current career and lifestyle, and there can be serious consequences, so this transition must be well thought out. You could well be living out your dream, but you could just as easily be walking into a living nightmare. The good news is that you are doing your homework now, before you’ve made the “plunge”. The more you know, the better decisions you will make, and the more likely you will be to ultimately succeed.

What does a consulting job look like?

As most practicing consultants will tell you, a typical consulting career by definition means that you need to wear many hats. Especially when you start out, YOU are the company. You need to worry about sales calls, taxes, sales calls, payroll (even if it’s just your own), sales calls, government forms, sales calls, service provision, sales calls, computer problems – the list goes on. In your current job, there are usually specialists who can easily handle those tasks so everyone else can focus on their individual jobs. So being a generalist can certainly help you succeed as a consultant, but it is by no means a fatal detriment to success if you’re not, since you can simply hire (and pay!) others to do the work you can’t.

Did I mention sales calls?

One VERY critical skill mentioned several times above is the ability to SELL your services to get the business. Nothing happens until you get the contract, and no one is going to sell your services for you. That means if you are not comfortable cold-calling prospective clients, consulting may not be very lucrative for you. This is one of the main reasons why consultants fail – a lack of new business. Talk to some consultants you know and arrange for an informational interview to really get an insight into what is involved in selling. As you are chatting, envision yourself in the same environment, and see whether you would like to perform those activities. You may also find that some of those initial dreams, i.e. “Spending more quality time with my family because I’m working from home,” may look more like, “I’ll feel guilty about my family time since I’ll have to work 70 or 80 hours a week to get everything done, with constant distractions from the kids to worry about,” or “Wow, I would really miss the interaction with my co-workers in this environment – it’s lonely on your own.”

Do you have the skills to succeed?

As noted above, one of the primary skills you need is to be able to sell yourself and your services. Some of the consultants you have talked to have spent years building and maintaining relationships, perhaps to the extent that clients will call them and offer business. But even at that level, the network has to be constantly maintained or you will see a decline in your billings in short order. You may have a head start if you are well-known in the industry or niche in which you operate, but this is no guarantee of success. You need to generate an image of yourself as a subject matter expert, writing articles, making speaking engagements (often for free), and generally making your name known among the decision-makers. This can take time, and as they say, time is money.

Are you sufficiently capitalized?

While you are busy building your business, you will need cash to pay for your existence – eating, clothing, living, etc. You should have a budget for these expenses and have AT LEAST six months of living costs in the bank. Many promising consultants have been forced to throw in the towel at the precise moment that their initial marketing efforts were beginning to give them contracts, simply because they ran out of money. Remember, even if you have a contract on your first day as a consultant, you are not going to see most or any of the money for some time, so have a VERY conservative financial plan before you start – assume lower than expected revenues, and higher than expected costs for the first year. Even though there might be lots of business out there now, the environment can change very quickly. Don’t get lured into the trap of seeing $50, $100 or even $200 per hour rates and then multiply it by the 2,000 or so hours most people work in a year. Many, many hours are not billable to any client (i.e. you make $0 per hour in a lot of hours, which brings the average down quickly).

Try it, you (might) like it!

While not easy, consulting is a career that can be done part-time on evenings and weekends. You may wish to consider this approach at first until you build up sufficient billings to go full-time. Ask those currently busy consultants if they can either forward their client contact information to you, or arrange to have you subcontract, so they line up the business and you do the work in your spare time. The money you earn can be socked away to build your capital.

Consulting can be a very rewarding career, but it is certainly not for everyone. Do your research now to minimize the risks involved in this move, and as always, good luck!

Michael Mayne, M.B.A., CMA, is Managing Partner and a Certified Professional Career Counsellor at Catalyst Careers, a Career Transition, Counselling, and Outplacement firm. Michael has been involved in the not-for-profit sector for many years, and is Past President and Treasurer of ALS Canada. To contact Michael, visit: www.catalystcareers.com.

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Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.