A Project Management Article by Steve Arhancet
Article Summary: Today there is more opportunity than ever for PMPs to leverage their experience and skills to become independent consultants. Flexibility, control and a better work-life balance are all reasons for considering the transition. But is it right for you, and if so, where do you start? This article provides common motivations for starting an independent career and 9 key steps that will start you on your journey from employee to consultant.
Does it make sense for a project management professional to consider independent consulting as a career path? The first sign that this may be a key area in which to acquire experience is economic. Today, we are moving towards a project-based economy where work is divided into small pieces, each with a clearly defined scope and concrete deliverables. While many project roles are still traditional “inside” roles, project work is migrating to experienced professionals who can run and manage one or many projects for multiple clients at a time without working full-time for any one of them. It is partly due to trends like this that the independent workforce already more than 16 million strong in the United States is projected to add 4 million or more to its ranks by 2013. For Project Management Professionals already accustomed to working project-by-project, Independent Consulting can be a natural – and financially rewarding - progression in their career.
Only 19% of independent professionals in the U.S. today expect to return to full time employment once they experience life as an independent consultant. The statistic makes sense when you consider that independent consulting gives you the freedom to choose your own clients, set your own rates for work and is absent of the constraints and politics inherent in traditional employment.
When should PMPs consider Independent Consulting? Below are go/no go checkpoints used by other PMPs that can help you decide.
- Over the years you have developed relationships with a network of clients, colleagues and peers that can vouch for your skill and experience. With experience, a proven track record and a network you are ready to make the move to consulting.
- You have been with the same company for a decade or more, but organizational changes have you considering a different direction. The management style, or services offered have changed and decisions are mired in red tape. You want the freedom to simply do work you love minus the corporate politics.
- You have no plans to become independent in the next 6-12 months but are beginning to think of the future. A life changing event has resulted in more income or reduced expenses. Perhaps your once dependent children are self-sufficient, or your mortgage has been paid, but the result is greater freedom to take a risk on a second career choice.
- You are retired and financially independent, but you want to work and continue to contribute, but on your own terms.
- You are retired but financially you still need to work to supplement retirement income and support your lifestyle.
- Your entrepreneurial fire is burning hot and you want to start your own business, maybe even create your own small consulting firm using the talent in your network.
- Out of work, you need income, whether it comes from a traditional W2 job or as an independent consultant.
Now that you know why PMPs choose an independent career, here is a nine-step path to get your first project:
Step 1: Ramp Up for the Journey with Key Success Factors
- Know your defined, verifiable expertise – you must have specialized skills and knowledge
- Show and illustrate your code of ethics – nothing is more important than your reputation
- Be comfortable with marketing and self-promotion – it’s up to you market your services and talk to potential clients about how you can solve their problems
- Become your client’s best friend - establish and develop high quality, enduring relationships with clients and other professionals – your success is measured by the success of your clients and your network
- Build up your business acumen – running a business is more than being good at what you do, learn the steps or find a partner who specializes in helping with the business details
Step 2: Address any Contractual Obstacles
If employed, you need to have an honest, confident conversation with your employer. Be clear that this is a personal decision and assure them that you would not do anything to position them in a negative light -this includes stealing their customers. If you have a non-compete, don’t assume the worst. You can be casual, “by the way, we have this non-compete and I want to make sure we discuss it.” Non-compete agreements are non-enforceable in many states but the best way to handle is to be honest and professional.
Step 3: Plan Your Contingency Reserve
Figure out your cash flow before making the transition. Once you find your first project, you may be able to invoice weekly, but often monthly. The standard net payment terms in the industry are thirty days. While you might be able to be paid sooner, you should still have a cash reserve set aside that covers you for three months of expenses to help get you started.
Step 4: Advertising, Branding is the Cart before the Horse
You do not need to invest in office space, logos, websites and branding material –that can come after your first or second project. An independent engagement contract can give you all the protections you need and remove the obstacle of business structure from the initial launch of your business. Focus on finding a contract – paying work is the best way to stay on the happy path of independence.
Step 5: Communicate your Transition to your Natural Market
Talk to trusted mentors and colleagues in confidence to help you define your message and offering. After you have defined what you are offering, tell the world – your employer, colleagues, friends and family. In my experience of helping over 1,500 PMP consultants find their first project, I observed nearly all (close to 90%) found their first contract through their personal and professional network.
Step 6: Mitigate risk through Insurance and find the Benefits You Need
Assess how you will protect yourself, family, business and your retirement. Find out the costs associated with health, life and business insurances. You can use COBRA as a baseline for your medical cost comparisons, or use the benefits available through a spouse if possible. Shop around and go through the underwriting process but only with well known, reputable insurance companies. Talk with brokers about the types of business insurance you may need, like General Liability and possibly Errors and Omissions and Workers Compensation. There are also companies, like mine, that can offer a comprehensive infrastructure that takes care of the administrative back office support including benefits while allowing you to remain independent. Be willing to use them, to save yourself the headache of dealing with subjects outside your core competency.
Step 7: Have a plan for dealing with Billing, Expenses, Taxes
As an independent consultant you are now responsible for doing your own quarterly estimated taxes since taxes will not be withheld from the payments you or your business receive. You’ll need to keep records on your billable and non-billable expenses. These administrative functions also include things like invoicing, collections and vendor set-up. There are a number of DIY programs such as Quicken, Excel, and Freshbooks. Alternatively, you can hire a CPA, but look for one that specializes in your area. You may also need an attorney to advise you on specific regulatory issues pertinent to your industry and/or region. One of the reasons many consultants choose to work with a firm like MBO Partners that specializes in helping independents, is that they can now plug into a cloud of services where they have access to these back-office functions so they can spend more time working and finding their next project.
Step 8: Finding Your First Contract
Develop and nurture your network, as this will be your best and most likely source of work. Join groups and expand your professional circle to create a community that provides a flow of information and pipeline of opportunity. Use the power of social networks, like LinkedIn to nurture these relationships. Create a well-defined message that you can send to your connections, that explains the exact types of services and specializations you are offering to clients.
Even before you make the transition from employee to independent, become proficient at identifying opportunities. Begin to see your work day through the eyes of your new role. What problems exist that you could solve as a consultant?
Identify the list of potential clients who desire your services. If you are having trouble coming up with the list of clients in your area, check out the Book of Lists, published through The Business Journals, a division of ACBJ (http://www.bizjournals.com/commerce/?ana=bsh_bol%3fsource=gooaw&gclid=CO-soNClnasCFZB35Qodb3WAJA).
If you are having trouble landing that first contract, a staffing firm is another option. This can be a good start to get the first one or two projects under your belt to build your client portfolio. Stick to reputable firms that work with your particular specialty. Other tips to keep in mind:
- Let them know you’re knowledgeable
- Protect the integrity of your resume
- Protect your references
- Protect your freedom to work directly (do not sign broad non-competes)
- Establish a corporate-to-corporate contract
Step 9: Figure out how to charge for your services
Give thought to how you will charge for your services. You may want to bill by the hour, the job, a retainer or even a combination. Look to the market and figure out how other consultants in your area of expertise are charging for their services. Use bill rate calculators available via the Web to determine what you will net when you charge a 1099 consulting rate to your clients. You may consider offering a special deal or introductory rate to land your first contract. Let them know that you want good references and are willing to offer a special deal to get started. Match your expertise to what they need and provide an incentive for them to take a risk on you. Give them a small discount in your rate or throw in a small supplemental service. Each client should be confident that they are getting access to highly specialized skills and experience at an introductory rate.
My Last Piece of Advice
Reputation is everything to an independent consultant, so never burn bridges. Never oversell your abilities or over promise on what you can deliver. Always operate with the highest degree of integrity and be very comfortable promoting and selling yourself – you need to be confident in what you can do and explain it to people with ease.
Independent Consulting is not for everyone. It requires an entrepreneurial mindset and a comfort level with the inherent risks. However, if after reading this you are ready, getting started is not as difficult as it may seem first seem.
Note: this article reflects the viewpoint of the author, Steve Arhancet, and does not necessarily represent the views of PMIWDC. If you disagree with or object to the views expressed here, please let us know