Want to succeed as a consultant? Kill your fears about talking money
To succeed as a consultant, you need to decisively step out of employee mode and wear the mantle of consultant – even if you’re not yet comfortable with it, writes Jacq Hackett.
To succeed as a consultant, you need to decisively step out of employee mode and wear the mantle of consultant – even if you’re not yet comfortable with it.
There are so many aspects of your working life that are different when you transition from employee to consultant. However, when you first start out, it can be tricky not to fall back into playing the familiar role. Especially when you’re not quite sure what the new role is yet.
Here’s three key things you need to master early to move into the right mindset.
1. Get used to talking about money
I had a coaching session with ‘Jane’ the other day. She had recently left her senior public service job and was very excited about moving to consulting. But she was almost immobilised by having to decide her daily rate and put it out there. She was well equipped for consulting in so many ways, but found it excruciating talking about the $$ side of things.
As well as giving her some concrete strategies around setting her daily rate, I also had to give her some tough love about ‘getting over it’. I get that being open and transparent about money and what our time and expertise are ‘worth’ can be uncomfortable, but the reality is as a consultant, you are now in a ‘time for money’ business. And that means getting over your discomfort about talking about money and negotiating terms.
Setting your daily rate and quoting for projects is just the start. Now that you work for yourself, every day you are working for a client is a day you should be paid for. Unlike your previous boss, your client can’t just decide to lumber you with additional tasks or change the scope of what they’ve asked you to do.
If they want you to do something other than what they’ve contracted you for, this is a negotiation, not a given. And if what they want will involve more of your time, that means there will be additional costs. You will also need to take the lead on initiating this negotiation – the client is unlikely to.
I’ve coached a lot of new consultants around their discomfort around money; and specifically about translating their value into monetary terms. But this is what it means to be a consultant – you just have to put on the mantle and treat it as your new normal.
Don’t forget, one of the most common reasons people move to consulting is for more freedom and more income. This is the prize – and it’s totally worth it. But winning the prize relies on getting over your fear of talking about money
2. Figure out the consultant/client relationship
The consultant/client relationship is unique. And in your early days as a consultant it can be tricky to figure out the rules of engagement of this new relationship. It’s a big mistake not to think about this; to presume it will just all come to you naturally. It’s an even bigger mistake to just go on behaving like an employee.
Here’s a couple of pointers….
You need to be a close confidante – but you also need to remain at arm’s length
Sounds like a contradiction I know. Let me explain….
As consultants, we’re often invited into an organisation at a difficult time, for example, during a restructure or review. We are almost always dealing with challenging issues faced by an organisation. Clients use our services because, for whatever reason, they are unable to resolve their problem or challenge internally. In these circumstances, clients will certainly take you into their confidence. [In fact, you may be surprised by some of the things they are willing to disclose to you about their organisation or their people]. They do this in good faith. The more transparent they are, the more likely you’ll be able to diagnose and problem solve.
But at the same time, you need to maintain some distance. It doesn’t pay to get too close to the client – they are not your colleague in the way you have previously experienced this. At some point down the track, you may well need to tell the client some things they don’t want to hear; your findings may not be what they were hoping for. To do this effectively, you’ll need to maintain a degree of distance.
And a word of caution – many consultants get their first consulting gig in the organisation they have recently left. There’s nothing wrong with that. Over time you will need to develop a broader client base, but this is how many consultants get their start. But if your client is someone you’ve had a previous working relationship with, maybe as a line manager, a direct report, or a close colleague, establishing an appropriate consultant/client relationship may be tricky, but even more critical.
You report to your client – but you must also remain independent
Yes, you are definitely answerable to your client in terms of delivering on the project and all of its agreed outputs and deadlines. You are in a contractual arrangement with them – and indeed, are on their payroll for the duration of the project.
But as a consultant you must remain independent in terms of your findings and recommendations.
There have only been a handful of times in my 19 years of consulting when a client has wanted me to change my findings – or to overly influence them. In all cases, it wasn’t because they disagreed with my findings, but because accepting them presented them with a much more difficult way forward than they were prepared for. Retaining my integrity as a consultant is essential – my reputation relies on it – so changing my findings is not an option.
Managing these kinds of situations with diplomacy while retaining the confidence of your client relies on you having a solid understanding of the consultant/client relationship, which can be hard to pin down. It involves treading a fine line somewhere between being on the client’s side and having their back, and being prepared to provide ‘frank and fearless’ advice, even if it’s not what the client was hoping to hear.
3. Think and act like a small business owner
When you’re an employee, especially when you’ve been in the workforce for a long time, the rules of engagement are crystal clear. You understand completely what it means to be an employee; what’s expected of you.
Suddenly you’re not just a ‘consultant’ – you’re operating your own small business. Yikes.
And one of the most common mistakes I see new consultants make is not adjusting their persona and mindset to this fact.
Here are a few key things the new small business part of your brain needs to get used to.
It’s a scary term. Nearly all new consultants I talk to struggle with it. I struggled with it. But here’s the thing – if you don’t embrace it, you won’t succeed. I’m not talking about anything sleazy or cold calling strangers. Or anything expensive. But the fact is, you are now selling your services, so you need to generate interest, leads and referrals. I can hear you squirm.
Usually it’s not getting the first project that trips people up. People often make the move when a consulting opportunity presents itself through a known colleague. The timing feels right, so they get their first gig easily and think ‘great, I’m on my way’. They do no marketing while they’re undertaking that first project, and when it comes to an end, they realise there is nothing on the horizon. No projects; no income; panic sets in.
Despite the general anxiety, marketing as a consultant is relatively straightforward. Our work invariably comes from the sector we know well, often via known colleagues or through referrals. As solo consultants, we are generally in the market for those small to medium projects which are not advertised on tender portals. Instead, they materialise from senior managers and bureaucrats who have a ‘list’ in their head of potential consultants they can call on. So, it’s all about getting on the radar of those potential clients so that when a project opportunity is available, you’re on that list. Working your network is the primary strategy.
While it’s all relatively easy, it can have us in a tailspin if we’ve never run our own business before. And it can have some people bury their head in the sand. Never a good strategy. Being a small business owner brings specific responsibilities for reporting, taxation, insurance and record keeping. Information about requirements for your jurisdiction will be readily available online, so familiarise yourself and put in place the systems you need. I’ve seen people move to consulting without doing this and it’s never pretty to sort out down the track. Here are some tips:
- Separate personal and business banking [way too messy otherwise]
- Hire a bookkeeper [worth their weight in gold]
- Use a cloud accounting system [simple and mostly paperless]
- Always pay tax quarterly [rather than waiting for a potentially nasty surprise at the end of the financial year]
Develop a basic financial plan for your business
Getting used to the ebb and flow of income as a consultant can be nerve-wracking after a lifetime of a regular salary. The dreaded cash flow [or lack of it] is commonly a major cause of anxiety. One strategy that helps to reduce anxiety is to have a basic financial plan in place. It’s all about taking a medium-term view, looking across the year ahead at what income you want/need to generate, balanced against the estimated costs of running the business, paying yourself, paying tax etc. Then you can calculate how many fee-earning days you’ll need over the year to generate the necessary income. You can then prepare a simple spreadsheet to chart your progress as you win consulting projects. If I only looked at my bank account to figure out how the business is travelling financially, there would definitely times when I would be panicking; the spreadsheet generally tells a different story.
In my experience, most people who make the move to consulting have what it takes to succeed. They generally come with a wealth of experience in their sector, credibility, a solid toolkit of skills and a strong network of colleagues who respect them. Despite this, many don’t make it. In many cases, it’s because they haven’t grappled with what it means to be a consultant. They haven’t spent the time figuring out what this specific role is and how to operate differently. Don’t let that be you – instead work at developing the consultant persona and mindset.
If you’re making the transition and want a head start on the basics, including figuring out your consulting niche and your marketing strategy, then you might be interested in my new short email course Solo Consulting 101: Getting Started.