Advice for would-be IT consultants: Plan accordingly

Dear Bob …

Because of the global economy, some of us are turning into independent consultant-contractor. What are your rules for consulting?

[ Also on InfoWorld: Bob offers some tips for the newly self-employed in “When starting a business, are LinkedIn and Facebook enough?” | Get sage advice on IT careers and management from Bob Lewis in InfoWorld’s Advice Line newsletter. ]

– Independent-minded

Dear Independent …

Not all quick questions have quick answers — yours is one of them. Here’s my long and tedious approach, starting with Rule No. 1: Don’t compete with me. If you don’t plan to follow this rule, I’d advise you to make sure you have no idea what you’re selling, who might be interested in buying it, or why they should choose you. What — you think I need more competition?

Assuming you plan to follow Rule No. 1, though, here are some more thoughts you might find helpful.

If you plan to contract — that is, to sell skilled labor:

• Make sure you’re in a field where demand exceeds supply and where your abilities place you in the top 10 to 20 percent of the local talent pool. And by talent pool I mean employees as well as other contractors — you’re competing with both.
• Check the price list — what others currently charge for the services you plan to offer. Contracting isn’t commodity work — the best can and do charge more — but economics have enough to do with the decision that you need to make sure you can charge enough to make the living you want to make, figuring that if you’re successful you’ll probably receive a paycheck maybe 40 weeks out of the year.
• Do some introspection — make sure you’re going to be able to work in a situation where you’re a second-class citizen socially and where you know before you begin that your interpersonal connections will be temporary. That isn’t for everyone.
• Never mind whether you can do the work. Decide whether you can sell your services. If you can, go for it. If you can’t, you’re going to end up working with a staff augmentation firm. Some are great companies; others are quite sleazy. Do your due diligence.
• How’s your health? You’re going to need health insurance, unless you’re married and your spouse is employed with benefits. Unless and until health care reform passes and is implemented, you’ll have to cover the cost, and if you have pre-existing conditions, you’ll find health care isn’t exactly cheap. After health care reform passes, if it does, you’ll still have to cover the cost — it isn’t going to be free, although it will probably be less expensive for those whose health isn’t excellent.

If you plan to consult — that is, to sell knowledge and advice:

• How good are you at selling? You aren’t going to be able to work through a staff augmentation firm, so you’ll be on your own. If you can’t sell, forget the rest.
• Be clear about the services you’re selling and why anyone should choose you instead of a competitor. That might mean you’re in a known field with a well-defined set of skills (such as ITIL implementation consulting). It also might mean you’ve chosen a path where what you do or how you do it is different from how any of your competitors approach things. “Here’s how I differ from my competitors” is a more interesting selling proposition than “I’m one ITIL implementation consultant among many. You should choose me because I’m very good at it.”
• Know who your customers will be. That’s who will make the buying decision, and I mean specific individuals, identified to role and title and eventually to names. It’s also the type and size of organization.
• Choose a field where demand exceeds supply, and where your abilities place you in the top 10 to 20 percent of the global (or at least national) talent pool. With consulting, you’re competing with anyone who can fly in to do the job, and you aren’t competing on price.
• Speaking of price: Figure that if you’re successful you’ll receive a paycheck maybe 26 weeks each year. Decide what you’ll need to charge, and ask around to make sure it isn’t way out of line for the service you plan to offer.
• Do some introspection — make sure you’re going to be able to work in a situation where you’ll make few and very temporary interpersonal connections. Solo consulting can be a lonely profession.
• Get a name and domain. Set up a decent-looking Web site, and use the domain for your e-mail address. Gmail and Hotmail addresses make even good consultants look like amateurs.
• You’re going to need health insurance. See the last bullet for contractors, above. The same applies here.

That should be enough to get you started … or to warn you off! Good luck either way.

– Bob

This story, “Advice for would-be IT consultants: Plan accordingly,” was originally published at InfoWorld.com.