5 Steps to a Better #IT Consulting Business

Posted on July 25, 2013. Filed under: Consulting/Contracting | Tags: , |

IT consultingIn the age of consulting that we seem to be in, you would think that education programs would abound for contract work as they do for other types of management/career improvement measures. Yet, you would be hard-pressed to find too many courses out there. For some reason, as professionals we seem to have no trouble lining up (and paying for) for the next leadership seminar or the next certification training, but somehow when the decision is made to strike out alone and begin our IT consulting, we charge ahead with little-to-no training as if starting our own business were something we do all the time.

Yet having the right knowledgebase is a key component to running any business, especially a consulting one, and in particular, understanding that you can’t/don’t know everything is the first step in a long line of humbling steps you will have to take as an independent contractor.

Believe me, the lucrative opportunities that are out there will only go to the most prepared. And survival is really just for a select few (sad but true). In other words, the days of dumb luck and blind squirrels are over once you take the plunge into self-employment.

So to help get you better positioned for success in the IT consulting arena, we have put together 5 key steps.

1. Treat it like a business.

Most professionals start consulting because an opportunity to do so comes along, usually for either a past employer or with some company they had a working relationship with at some point in their career. The company offers the option of working as a consultant, and the person jumps on it…thinking that it will be pretty much the same as when he or she worked on staff.

And in some ways, it can seem the same. We show up at a corporate office. We work alongside in-house employees. We develop strong ties and relationships. We become loyal to the projects and companies we serve. We attend functions and celebrate staff birthdays. We have a direct report.

BUT we could be in for a rude awakening if we let ourselves forget that our arrangement with the company is anything more than just a contract agreement between two businesses in exchange for specific services. The company is your client, not your employer, and your relationship technically is only as good as the contract you signed with your client. Period. When contracts expire or budgets change, you’re out. It can be as simple as that.

That is why it is important to make sure that you understand how to set up and operate your business. And that you figure out the right nuance between acting like a business owner providing a service and like “one of the gang.”

2. It’s not personal.

Because your IT consulting services operate as a business, like it or not, you forfeit the right to take things personally. (Of course, you still do privately, but you can no longer act on it publicly.) Employees can go in and complain to HR. They can try to maneuver around their bosses in some way. They can just up and quit. (Now, none of these approaches may be advantageous, but the employee has the freedom to do them; you really don’t.)

As a business, you may have people who work for you. You certainly have a business image to protect. And there may be some serious ramifications to up and quitting beyond just losing out on this contract. Therefore, your approach to dealing with issues that come up has to be thought out differently, and there is little room for a reactionary response…at least not if you want a chance of having your contract renewed or of not being blacklisted from other project opportunities.

Although this might seem like a negative, it can be positive because by removing the personal from the relationship with the client, you can showcase how you as a consultant are a different class of asset from an employee. Your professionalism and ability to speak with the client as one business to another is likely to go further than an approach that appeals to the personal side of things.

3. Have a clear focus, and be accountable.

Most consultants lack focus. They are just looking for work, and they don’t have a clear sense of what parameters they are looking for. Yet, these parameters are essential in building a successful consulting firm. What does your target client look like? What type of environment are you looking for? What contract requirements do you have?

The reason these parameters lead to success is that the more clearly they are defined, the easier they are for you to articulate. Clients then have a better sense of the type of consultant you are, and they know how to refer you to other potential clients. “Jacks of all trades” rarely do well in the consulting arena.

So specialize your services. Then focus on mastering business ownership.

4. Know your exit strategy.

The best consultants understand that business arrangements end. And they have a plan in place for that. Unlike employees you have to hang their hat on one place, the consultant does not…and should not. Those who become consultants expecting to work for one place the entire time are really just looking for full-time employment at some point in the road. If it works out, great. If not, they haven’t built much of a business for themselves. And they have missed out on all the ways consulting can be a great career.

5. Learn the tax code.

My personal belief is that every person who works, employee or consultant, should spend time learning the tax code and learning how to reduce his or her tax burden beyond the basic tax deductions. But this is especially true for small business owners because we are also subject to the self-employment tax, which can be hard-hitting when we aren’t prepared for it. Also, the government rewards certain types of entities that provide certain types of things or that invest in certain types of things. It is wise to learn more about those things and to find ways to set up your consulting entity to take the best advantage.

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[…] discussed some important issues to keep in mind when transitioning to a consulting role (“Five Steps to a Better IT Consulting Business” and “Hey, Consultants Are Entrepreneurs Too“)….the biggest one being that […]

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