In my last post in this series of articles on consulting, I suggested that you’re better off if you don’t have to spend a lot of unbillable overhead time searching for work.  The article covers several ways to position yourself so that you’re more likely to run into unsolicited contract offers– “make the work come to you” rather than having to go find your next assignment yourself.

Another mechanism for putting yourself into the path of potential job offers is to build a reputation as an expert in your chosen field.  This kind of reputation is more than just a way of getting your name in front of potential clients.  It also leads to more interesting and higher-paying jobs as a general rule.  Of course, it can also sometimes discourage people from calling– “Oh, they’d be too expensive to hire!”  But these are likely not people who you would want as customers.

Being recognized as an expert can “just happen” to some people who are at the right place at the right time, but it is also a reputation that can be developed through continuous improvement.  I actually started this process during my time as a full-time employee, 5-6 years before I went out on my own as a consultant.  You can start right now.

Leveling Up

Building your reputation as an expert is not unlike “leveling up” in your favorite computer game universe.  You start out as a novice and gradually work your way up through challenges, each of which unlocks the next level of challenges.

Before you start out on your quest, you must first identify the subject matter area to specialize in:

• It should be something marketable. Becoming the world’s foremost authority in underwater basket-weaving might be extremely interesting, but it’s unlikely to bring in much cash.
• Pick something that’s hard.  This ties into being marketable.  I’m sure you’ve heard the expression, “If it was easy everyone would be doing it.”  The consultant’s corollary is, “If everybody’s doing it, you can’t bill much money for it.”  Pick a field where there are significant technical “barriers to entry” for people getting into the field.
• Don’t get too specific. Particularly in the technology field, becoming an expert in a specific technology niche hurts you when that technology ultimately gets abandoned in favor of the next big thing.  Yes, there are still COBOL programmers making lots of money, but fewer and fewer every year.
• Don’t get too general.  “Jack of all trades, master of none” doesn’t help you sell your services.  Plus there’s too much to learn everything.  Pick a field and a specialization– my consulting business started out doing Unix administration and security, focusing heavily on Solaris, which was the most popular enterprise Unix platform at the time.
• Pick something you enjoy doing.  Yes, you need money to live.  But you should also have fun with what you do for a living.

The next step is to build up knowledge in your chosen field.  You’re not enough of an expert to go out and consult, so you’ll probably spend some time learning on the job.  Look for jobs that stretch your capabilities and force you to learn new things about the area you’re interested in.  Yes, you’ll also likely be playing around with things in your own home lab environment.  But you need to face “real world” scenarios where you must balance competing forces: from the purely technical, to the political, to the budgetary.  If you only know something from doing it in a lab, then you don’t really know it.  And you don’t yet know what you don’t know.

The next step is what I think of as “getting on the radar”, or creating your initial body of work.  Most likely, this will take the form of blog postings and other self-published work.  Presenting at local user group meetings is another good mechanism for introducing yourself to the community.  Submit papers for conferences, but be prepared for rejection.  Learn from the feedback you get, and keep submitting better proposals until you get accepted.

Over a period of what can take several years, you will gradually work your way up into more prestigious venues that gets your work more visibility.  For example, you might transition from writing blog posts to getting your work published in journals and trade magazines (as the former Technical Editor for Sys Admin Magazine, I can tell you that technical publications are always desperate for good content).  Your local user group talks will move from regional to national venues and possibly even international events.

There are some signs to look for to show that you’re really starting to “break through” into expert status.  Getting invited to present at a conference is one indicator.  Other experts referencing or citing your work is another.  The clearest indicator is when you start to get paid for your writing and speaking.  Congratulations!  You’re an expert, though you may not feel that different from when you were a novice.  The more you know about a field, the more you realize how much you have to learn.

The other important aspect of this “leveling up” process is that it forces you to participate in the community and creates a professional network that you can fall back on when you do go out on your own.  And if you’re shy or introverted, you will be forced to come up with a strategy for coping with that so that you can succeed.  Also, teaching something to other people really makes you learn the subject to an amazing level of depth.

It’s also worth thinking about the possibility of writing a book.  Everybody’s heard of the person who “wrote the book” on a certain subject.  There’s a reason that phrase is in common usage– being the person who literally “wrote the book” is an invaluable calling card and addition to your stature in the field.  That being said, reputation is pretty much the only reason to write a book.  If you look at it as a short-term financial transaction, your “hourly rate”– amount of money you get as the author divided by the amount of time you spent writing– is trivial compared to what you could be earning on your job or as a consultant.  So you may want to write that book before you start consulting.

Ultimately, work will start finding you. Initially, it will probably take the form of full-time job offers.  This is great.  You can pick the ones that seem the most interesting and which have the most to teach you.  If you end up finding your happiness in a succession of full-time jobs and you never end up consulting, that’s great too.  You didn’t waste your time “leveling up” to expert status.  All that effort helped you land the sweet jobs you get offered.

My experience was that after working in the industry for about 10 years with ever-increasing seniority, I had “topped out” in the technical track.  At this point a weird thing happens: most companies try to make you a manager.  Try it, you might like it.  Personally, I hated it because I like being “hands on” with technology.  The only role left for senior people who wish to stay “hands on” is consulting.  After being a manager for 18 months, I worked through my professional network to find a former co-worker who needed a consultant for a six-month engagement.  I signed the contract, and gave two weeks notice at my last employer.  I’ve never looked back.

Keeping It Up

The tricky part about being perceived as an expert is that it’s an ongoing process.  Our field is constantly evolving and you have to keep learning and publishing to stay ahead of the curve.  I spend a great deal of unbillable time on continuing education.  I will earn some money for writing articles about my research, and much of what I learn ultimately gets turned into training that I get paid for as well.  But in the final analysis, this “overhead” or opportunity cost for the time I spend on research is my sales and marketing budget.  And it’s a lot more interesting than printing glossy brochures or throwing expensive parties.

I give a lot of my work away for free.  Like my friend Celeste says, “Contribution is marketing.”  People often ask me if I think it hurts my business to give information away for free.  Not at all.  Consider:

• If it’s easy enough to do that somebody could just read one of my articles or presentations and do it themselves, then it’s probably so uninteresting that I wouldn’t want to do it myself.  And I wouldn’t be able to charge much money for it if I did.
• Even if an organization has the technical capability to do something, they may lack the resources to get it done.  In those instances, they’re going to call me, the person who “wrote the book” (or article or blog post as the case may be).

And ultimately, I do it because it’s just the right thing to do.  I get enormous value out of what others are contributing to the community.  I’m just trying to give back some of that value.

One thing I haven’t addressed in this series on consulting is how to go about finding work for yourself.  This is a huge topic in and of itself, and I’ll likely spend several posts covering this subject.

At a high level, there are two basic approaches to getting your next assignment: you can go find the job, or it can come find you.  Going and finding the job means watching mailing lists and job boards for possible openings, and running down the leads.  Possibly you’re looking at even “cold calling” organizations in your area to see if they can use your expertise.  This is process is quite a bit of work, which you must remember ends up on the unbillable “overhead” side of the ledger.  It can also be difficult to conduct this kind of search while you’re working another contract.  And as I mentioned in a previous post, it’s desirable to have your next assignment lined up before your current one ends.

One option is to out-source your job search to somebody else– whether that’s a recruiter or a professional sales organization.  This, of course, has a cost associated with it.  I’ve never entered into such a deal myself, so I can’t speak to the exact costs, but you’ll have to decide whether the amount of work you get is worth the cost of acquiring the business through one of these means.  If you’re a solo consultant like me, I imagine a really motivated external sales person could bring in way more work than I could handle, which would make the whole arrangement less valuable on both sides.

So as you can no doubt guess by now, I’m going to advocate for the “let the work come to you” strategy.  First there’s the benefit of less overhead costs in finding your next assignment.  Second, you can generally command a higher billing rate.  Consider that the organization contacting you has identified a problem they’re having and recognized that you may have the expertise to help them solve it.  They wouldn’t be calling you if it weren’t urgent.  And the combination of those factors makes it easier to get the billing rate you want, and with less negotiation.

While it’s all very nice to say, “I want my work to come to me”, you can’t just wish things were that way.  You have to put yourself into a situation where that’s likely to happen.  So think about some of the directions that unsolicited work can come from and then position yourself in the path of those forces so that the work hits you.

Repeat Business

This one might seem obvious, but I often feel that a lot of consultants don’t think enough about this.  The best customer to acquire is one you already have. You already have a trusted working relationship in place, and you’ve probably already dealt with the annoying contract and accounts payable issues that waste time at the beginning of every new engagement.  So from a “cost of acquisition” perspective, getting additional work from a current or former client is a no-brainer.

Also, the more work you do for an organization, the more valuable you become to them.  You have knowledge of their processes, procedures, and systems– perhaps because you’ve implemented many of them!  You know the people at the company and have probably identified the “gate-keepers” who can either facilitate or thwart new projects.  That means you can (and should) demand higher billing rates on subsequent contracts.  And it will be worth it to the client because you’ll spend less time “ramping up” on their environment.  So while your hourly rate will be higher, you’ll still cost the customer less than bringing in a brand new firm to do the same job.

And even if you don’t end up doing multiple contracts for a given firm, there’s still the chance that they may recommend you to their friends in other organizations.  Referral business is great, because a “trusted third-party” is vouching for you with the new firm.  And this is one of many reasons why you need to work hard and focus on doing an outstanding job on each engagement.  Because nothing sells your service in the future better than your past performance with your clients.

Referral Arrangments

While we’re on the subject of referral business, it is possible to formalize such arrangements.  One approach is to create an arrangement to provide specialized services to an organization that can’t or doesn’t wish to maintain an in-house capability.  For example, this would be me making a deal to provide forensic services for a law firm that perhaps doesn’t have enough need to employ somebody full-time.  If I could make arrangements of this type with several smaller firms, then I’d likely have as much work as I could handle.

Another example would be a sub-contracting arrangement, similar to the one I currently have going with Mandiant.  When they get busy, they have a small group of consultants that they can call on to help deal with the overload.  Obviously, if I’m on another assignment when they call then they’ll have to get somebody else to fill in.  And when they’re less busy, I still need to find my own work.  But so far the arrangement has been quite agreeable.

Finally, as a individual, there are often times when job offers come in while I’m busy on another contract.  It’s better to be able to at least give the prospective client a referral to somebody else than it is to just say, “I’m too busy”, and leave them to find somebody for themselves.  People will remember you helped them, even if that help is getting them to the person who did the work for them.

So it’s good to have your own network of trusted friends in the consulting business who you would feel good about referring the business to.  You can try formalizing this arrangement if you want.  At various times I’ve made agreements with other consultants to receive a “finder’s fee” for work we refer to each other.  But because this is such a small industry, keeping track of how a given firm actually acquired a particular customer can be a difficult headache.  And there can be hard feelings if one side of the arrangement thinks they’re not getting their fair fees.  I find it’s better in the long run to just refer business without expecting direct compensation in return.  Karma is a powerful force– believe that you’ll eventually get what you deserve.  Because you will.

Professional Networking

But in order to have a trusted group of people to refer business to, you have to get out and network with your peers in the industry and figure out who’s smart and trustworthy.  So this means a level of interaction greater than just shaking somebody’s hand and exchanging business cards at some social event.  This is one of the reasons why technical gatherings like conferences and local user group meetings are so important.  You have the chance to meet people– sometimes at multiple events– and see how they interact with their peers when discussing technical challenges.  And of course you have the opportunity to model your own behaviors under the  same conditions, which makes it something of a double-edged sword.

To leverage your professional network for business, you need to “stand out” in a positive way and not just be somebody who’s there but fades into the background.  That means providing value to the community you’re interacting with.  Value can come from doing your own research and publishing the findings, giving presentations, answering questions in a helpful, timely manner on community mailing lists and forums, organizing events and gatherings, and even just making people in the community or who are new to the community feel more comfortable and accepted.

How did I end up in this subcontracting arrangement with Mandiant?  Because of my professional network.  Rob Lee and I are both active in the SANS Instructor Community and had talked a lot about issues in Forensics.  And I’d helped him with Linux questions and issues with the SIFT Workstation.  So when he was looking for people to help Mandiant, I was a “trusted entity” he felt good about calling on.  And I got involved with SANS in the first place (almost 20 years ago now) through my professional network as well: one of my former co-workers, Michele Guel.

So your professional network is one of your most important tools.  Try to give more than you take, and you’ll do great.  Besides the unsolicited referrals you may get from other members of your community, people will be more likely to help you when you ask them directly.  The trick is to build up enough good will so that when you do have to make an “ask” request, people will be motivated to help you.

Introduction

January 2012 will mark the 15th anniversary of the founding of the consulting business I run with my wife.  Lately I’ve had a number of people asking me questions about consulting– how to get started, how it works, pitfalls, etc.  I’m more than happy to answer these sorts of questions because I’m still “paying it forward” for all of the great advice I received when I was just starting out.

However, in an effort to reach a larger audience and to not have to repeat myself as much, I’ve decided to devote some blog space to the basic advice that I cover in my usual consulting talks.  This is a huge topic area, and I’m expecting to write several posts to cover just the foundational stuff.  I’ll crank them out as time allows.  If there’s anything you’re particularly curious about, be sure to leave a comment and I’ll try to address questions as the series rolls along.

In this first installment, I wanted to talk about some of the basic pro/con arguments you hear about being a consultant, and give you the view from where I sit.  Let’s call this installment…

The Case for Consulting

Pro: Consultants Make a Lot of Money

This is definitely one of the first items that piques people’s interest in becoming a consultant.  You hear about consultants making hundreds of dollars per hour, divide your annual salary by 2000 hrs/yr, and start thinking the grass is greener on the consulting side of the fence.

Yes, top consultants bill at hundreds of dollars per hour.  But guess what?  We don’t get to bill 2000 hours per year.  There are all sorts of unbillable “overhead” tasks that take away from our billable time:

• Marketing, finding new clients
• Invoicing, collections, time and expense reporting
• Taxes and other official paperwork
• Arranging insurance and other benefits
• Continuing education, training

The list goes on, but the point is that when you become a consultant you’re really working two jobs: the work you’re doing for your client that you get paid for, and the work you do to keep your own business running which you do as “overhead”.

Also, there are costs that you pay when you’re on your own that you never see as a full-time employee (FTE, for short).  Normally your employer covers a portion of your healthcare and other benefits and sometimes contributes to a retirement account on your behalf, as well as paying the employer’s share of taxes.  If you talk to your employer, you’ll find that they typically figure these costs as being 50-100% of the employees’ base salary (you’ll hear this referred to as an employee’s “loaded salary”).  So you have to factor in these costs when trying to figure the net take home pay as a consultant.

The compensation discussion is a huge topic in itself, and will be covered in detail in a later post in this series.  Yes, if you have financial discipline and a clear understanding of your costs, you can make a lot of money as a consultant.  But be wary of straight “apples to apples” comparisons between full-time employees and consultants, because things are never that simple.

Con: Consulting is “Risky”

People ask me all the time if I’m worried about where my next job is coming from.  In fifteen years, I’ve lived through two major downturns.  Yes, there have been times when consulting work has been scarce.  This is another reason that consultants bill at such high hourly rates– we’re factoring the inevitable cost of being out of work.  Sometimes this is just a brief period while were transitioning from one contract to the next, and sometimes there’s a protracted drought.

The difference between a successful consultant and somebody who’s going hungry is an understanding that downturns happen and preparing for them.  The best advice I ever got when I was first starting out what to make sure I had six months of expenses (rent/mortgage, utilities, car/insurance payments, food, medical, etc) in the bank before I started my consulting business.  I’m going to come back to this point over and over because it’s important in lots of ways, but at its most basic your “six months in the bank” is shelter against bad times.

What fascinates me, however, is the belief that a lot of people seem to have that as a FTE they somehow have more job security than your average consultant.  In practice, I believe these people couldn’t be more wrong.  At least here in the United States, most people are “at will” employees and they can be let go at any time at the complete discretion of their employers and with little or no notice.  So really we’re all what the HR types like to refer to as “contingent employees”.  Why shouldn’t you be compensated like one?

I know that many people can understand this argument intellectually and still have a hard time with the notion of going out their own.  Sometimes our gut overrules our brain and makes the consulting lifestyle untenable.  But even if you don’t end up as a consultant, I recommend you think about putting some money away for the rainy day when you might be out of work.

Pro: Consultants Have “Freedom”

I usually hear this one from folks who are unhappy with their current job duties and are envious of my ability to “pick and choose” the work that I take on.  During good economic times, I do have a certain amount of leeway on the jobs I decide to take on and can optimize for more interesting assignments.  But during the bad times, you take whatever you can get.

Also, having taken on an assignment, you have to see it through to the end.  As an independent consultant, I have a limited of “bandwidth” and can typically only support one or two major clients at a time.  If a really interesting project comes along when I’m busy with other work, I have to let it go by or risk alienating my current clients.  In this business your reputation is the key to your success.  Doing a bad or incomplete job because you let yourself be distracted by the new, shiny contract is a sure path to the end of your consulting career.

Another consulting freedom that I hear FTEs envy is the ability for consultants to take time off “whenever they feel like it”.  Sure, if a client is not expecting me on-site and I don’t have any pressing deadlines, I can take time off whenever I feel like it.  It’s definitely a benefit of my lifestyle.

But you have to understand that I don’t get paid during this time.  Vacation, medical leave, and all other periods of “downtime” that are necessary to ensure your health/sanity and prevent burn-out are all part of that unbillable “overhead” I talked about earlier.  So a better way to talk about this freedom is to say consultants can take time off whenever they can afford to.

One more consulting freedom I wanted to mention is the freedom from a certain amount of organizational politics.  Normally, by the time an organization has made the choice to hire a high-priced expert, they’ve already realized that they have a significant problem and have “cleared the decks” of the typical political impediments to making the problem go away.  This is a wonderful thing.

In Summation

I love the consulting lifestyle, but recognize that it’s not for everybody.  There is substantial risk and you spend a lot of time working on mundane aspects of running your business.  But you can earn good money and enjoy substantial freedoms unavailable to FTEs.  I hope you’ll join me for future articles in this series when I drill down on specific details like figuring your billing rate and managing your cash flow, finding and managing clients, and classic blunders that all new consultants commit.