Welcome to this week's
    Practical IT Manager Tips Newsletter

This week's article:
      15 Tips before venturing into a consulting role

But first, a word from our sponsor. That's me !
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It is finally completed !

Practical IT Policies and Procedures has been the most challenging project yet, but I think we have produced a winner.

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Additional information is at  www.mde.net/policies .


"Early buyers" and IT Manager Institute participants, use your special discount code for your 40% and 50% discount.

This is a title I never really wanted to write but so many have asked for it that I put it to the top of the list. Almost 100 people purchased this one before it was completed.

It was a difficult topic but I'm glad we did it . Practical IT Policies and Procedures becomes the 13th book in MDE's IT Manager series.

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This week's article, , ,
15 Tips before venturing into a consulting role

A recent subscriber asked me about my insight in getting into the consulting arena full time. He has twenty years of experience and is apparently very interested in pursuing the opportunity of working for himself.

I have been on my own for just over three years now, and I can say that although I thought I was fully prepared to run my own company, there were some things that I had to learn the hard way.

I'm very fortunate in that my book sales and training programs do very well. I love what I do and enjoy the work. Even so, there are things missing in my business that I really enjoyed in a corporate environment.

Here is how I responded to the question. It might be worthwhile if you are contemplating a future consulting career.

Here are thoughts I have based upon being on my own for three years now after more than 25 years as an IT Manager and CIO in the corporate world.

1.  Try to insure you have 1 to 3 solid clients to start with that will provide a minimal level of revenue for you. The amount you need is dependent upon your own personal situation. You need to establish positive references quickly and having more than one client will help you get started quickly.

2.  Marketing and sales is the most important part of growing your business unless you are very lucky and word of mouth grows it for you. The technology services market is very competitive so don't assume you will have clients by simply displaying your company sign.  Talk to most consultants and you will hear them say that there is a constant need to develop new clients through marketing and selling. Do not underestimate the importance of this aspect.

3.  It always takes longer to develop new business initiatives than you think. It took me three to four months to research, select, and implement a shopping cart and credit card process for my web site in 2001. I'm glad I took the time because I have been very pleased with the service I chose. Similarly, many of the basic products and services I now take for granted were developed after many hours of effort only because I had never done it before. When you can, connect with someone who has already gone through what you are trying to do and take advantage of their prior learning effort and experience; you will get there quicker.

4.  Plan to work harder and longer, especially in the formative years of your business. I log conservatively 80-100 hours a week and I have no commute and almost no travel. Part of that is just me enjoying what I do, but the other part is that it takes more effort on your part when you are a small company.

5.  Don't invest in people until you have sufficient business to cover it. What I mean by this is that your business should be generating sufficient revenue before adding new employees unless you have a funding source to cover it. Unless you have plenty of funds set aside or some very lucrative revenue producing clients, you need to keep your overhead expenses low.

6.  As much as possible you want to avoid building up Accounts Receivables. My business is great in that I'm almost always paid before delivering the service or product, but that's unusual. In my consulting work, I'm obviously paid after the fact in many situations. I have intentionally converted my business model from 99% consulting to 60% training/education, 30% Internet sales, and only 10% consulting. It has taken three years to get there but it's a model that allows me to avoid the "work an hour to be paid an hour" scenario that is prevalent in a pure consulting model.  In a startup, you can't afford to have many "slow paying clients".

7.  If you can, look for ways to generate recurring revenue. It's the key to establishing financial stability and leveraging your capabilities. Creating a business that generates a predictable recurring revenue every month can position you to be more flexible and allow you to take risks that otherwise you may not want to when you are chasing the revenue every month.

8.  Think about developing white papers or short, practical "how to" documents in your area of expertise or interest. It gives you the ability to take what you are doing for a single client and make the knowledge available for people all over the world. It creates  leverage. You will need a web site, shopping cart with credit card processing capability, a product, and the ability to generate lots of awareness. I can tell you from personal experience that if you have information that helps others and can make them aware of it, you can generate additional revenue for your business that essentially runs on autopilot. This creates additional flexibility and helps your company grow.

9.  Clearly define your products and services so it is easy to tell someone about your services and easy for them to understand what you offer. Your potential clients must be able to describe your service or products before they will buy. Develop a mission statement and state what you do in the simplest terms possible that describes what you do.

10.  Networking is key. Again, you will be more successful if you have minimal capability but great marketing and sales ability than if you have great consulting capability but are weak in marketing and sales. I'm convinced that I could have tripled my income over the past three years with only 10-20% of the assets I have to offer if I had superior marketing ability. Networking with those who need your services will be key so take the time to develop a marketing strategy that gets your message to your target market.

11.  There are lots of incidental costs but the tax deductions are better in having your own business. Don't forget to take into consideration the income taxes you owe. Just because it goes into the bank doesn't mean it's all yours. The government wants their fair share.

12.  Build a business plan. I believe most companies fail because they don't clearly define their objectives and how they are going to achieve them. Take the time to create a business plan that spells out what your project initiatives are going to be, how you will gain new clients, and above all the budget you plan to operate by. After finishing the plan, increase the budget by 25% to 50% because the reality will probably be that it costs you considerably more to operate than you think it will.

13.  Create an office space that is conducive to getting work done. All too many people miss this one. We all work differently to a certain extent. In my case, I can get quite a lot done with family nearby because I can shut them out (to my wife's dismay at times). If you need total quiet to be productive, then by all means create a cave where you have the solitude you need to get your important work accomplished. Your productivity and livelihood counts on it.

14.  Be sure you are prepared for the potential isolation effect in working on your own. Many have a hard time making the transition from a more structured corporate environment to an entrepreneurial one. This has probably been the toughest part for me. I miss the involvement with professional staff on a daily basis and being part of a larger organization at times.

15.  Many companies go out of business because of being under capitalized. To give your new business the startup time it really needs, you should have the funds identified to carry you for two years or more. Having sufficient capital will allow you to weather unexpected surprises and the tendency for things to materialize later than what you plan for.

Consulting or working on your own is not for everyone. It takes a strong sense of commitment and perseverance to do what it takes to run a small business.

The great thing is that you can create an image that rivals the big companies today, but when it comes to getting everything done, it still requires lots of work.

Unless you are fortunate to fall into a sector of consulting where the demand is extremely high and the resources far and few between, pay close attention to the importance marketing and selling plays into a company.