In 2011, I registered my first LLC with the Colorado Secretary of State. I knew that I wanted to consult, to put my training in organization development to good use, but I didn’t know what that looked like in terms of a business model. A lot of great people helped me and gave me good advice.
Occasionally, I even got my act together enough to take it!
It took a while to get clarity and I learned a lot of valuable lessons on the way, so many that I don’t regret the years I spent in what I have come to think of as my “starter business.” As I begin to play a greater role in the consulting community while starting a new endeavor (serving scholar-practitioners and “big idea people” looking for sustainable, viable business models), it feels right to share a few lessons born of blood left on the battlefield. Here are twelve items for the budding consultant to consider.
For some of these items, you may smile knowingly and say, “Been there. Done that. Got that tee shirt.” For other items, hopefully there will be an “aha” moment or an opportunity to sidestep an obstacle as you come out of the starting gate.
1) Location does matter.
Sure you can travel anywhere.
Of course you’re mobile, connected, and tech-savvy enough to be virtual!
Yet where you hang your hat makes a difference. Some communities are better than others in terms of supporting entrepreneurship. Some communities may be more inviting than others to YOU and YOUR unique ideas.
During the early phases of building a business you need clients, new clients since you don't already have them. That means, that starting a business in a small or medium sized city can be difficult for a consultant who does not already have clients lined up before hanging a shingle.
“Bloom where you are planted!” makes sense in many cases, but think twice before planting your seeds in rocky soil.
2) Beggars can’t be choosers when it comes to getting your foot in the door and building trust.
Occasionally you may have to take in work that isn't exactly what you had hoped to do. I recall passing up a few opportunities straight out of the gate because they didn't meet my definition of what my job "should" be.
WHAT was I thinking???
Had I taken those jobs, they may very well have led to more satisfying opportunities with the same clients or people they knew. In any case, the cash flow was not something I could afford to pass up.
3) Treat your spending as if you were taking out a loan.
It is tempting to justify unproductive spending simply because it's YOUR money and you don't need someone else's permission. When investing your own money, it is wise to enlist the aid of trusted advisors and screen your own proposals as if you were borrowing money from a bank.
Count every penny in the early years because if you don’t have a healthy respect for your pennies, the dollars will fly out the door at lightning speed.
Financial planning and budgeting experts often stress assigning a purpose to every dollar you earn (savings, rent, etc.).
Your business dollars are no different.
4) Consider hiring some help so that you can stay focused on what is important.
No matter how efficient and effective you may be, no matter how varied your skill set, there are things you will have to outsource as an independent consultant.
Unless you are fortunate enough to have a few big clients with steady work that you can manage on your own, it is wise to consider what can be outsourced. That may mean marketing, invoicing, collections, scheduling, taxes, or something else.
If you want to consult you likely prefer working with clients and doing creative work to bookkeeping. I sure do! At a minimum, leverage technology to simplify these tasks to the extent possible.
5) Sales are part of the game.
To consult independently, requires a solid value proposition, social skills, negotiation skills, and the confidence to ask for the sale.
While I have developed the skills over time, had I understood their importance and learn them up front, it would've been a much easier journey.
6) Consider getting out of the living room.
When I stopped meeting potential clients at Starbucks, and established an office of my own two things happened. First, I started taking myself more seriously— and so did everyone else. Second, I developed a group of colleagues who are also entrepreneurs renting space in the same complex. This network proved to be a source of moral support, referrals, and mutual promotion. We even got involved in community service together, expanding all of our networks in productive ways. I found a group of people with specifics skills who I could trust— a real plus when it comes to outsourcing!
It may seem like a lot to take on the obligation of making rent, but there are plenty of office spaces where entrepreneurship is the norm, and where other tenants can be of help to you.
7) Putting off bookkeeping is insane.
I am not a fan of accounting, nor do I enjoy bookkeeping.
QuickBooks and I are NOT friends.
However, recent software updates have made accounting programs more user-friendly. At a minimum, I wish I had always leveraged technology like I do now. Today we have a plethora of apps and simple solutions for automatically uploading of transactions.
On a related note, finding a good accountant who pays attention to detail and will talk to you in person is really important. Don't settle for uploading your completed files at tax time and trusting that all will be well. Mistakes can be made and you also leave money on the table by not knowing more about tracking mileage, philanthropy, etc.
8) Be very careful about collaboration.
Stick with similarly qualified professionals whom you trust and have had long-term exposure to.
Collaborative efforts with other entrepreneurs can be very productive and profitable, IF you're all on the same page. Yet more often than not, everyone gets excited about a plan and then when the first obstacle pops up, your coffee buddies head for the hills. Worse yet— YOU may realize later on that it’s not a good project for you and let other people down. (Reputation wrecking red flag alert!)
Unless there is a clear business model that aligns with all of your interests, and REAL commitment (not just verbal but evidenced by consistent action), you may want to politely decline.
As start-ups with limited resources, most of us simply cannot afford the opportunity cost of a project that takes months and then goes nowhere.
9) Your season of life, and your personal life, matter.
I started my first business as a middle-aged doctoral student and working mom, then dove into it full-time a year later, in the wake multiple life tragedies. I truly believed I was “on my game” despite everything, but had I pursued something more certain and less dependent on my ability to sell, things might've been easier. Ask yourself these two questions.
“Am I able really to devote sufficient, focused, quality time to this?"
"How Calm am I most days?"
If you are constantly responding to (or recovering from) a period of life spent in crisis mode, you may struggle to find success when it comes to convincing people you just met to trust you. No matter how good you are at your job or how well-trained you are. People will often sense your stress level before you even get your foot in the door— and that causes strangers to avoid taking a chance and working with you.
10) It is not uncommon to have a "starter business.
Just like real estate, where new homeowners start with a small house, which they quickly outgrow and move on from, business owners often make a huge investment in something that they quickly outgrow.
Maybe it was in the wrong neighborhood, or the neighborhood changed.
Maybe the foundation was not sound.
Sometimes the cost of upkeep is simply too much.
To ultimately move into that “dream business” frequently requires some painful lessons the first time around. If this happens to you, the important thing is to learn from it and get back on the horse.
11) It is important to have an exit plan, even if you are sure this is the business you will run for the rest of your life.
Ask yourself, " How long can I afford to do this if business is slow?"
This is where your exit plan comes in. Before you throw your entire life savings on the table, ask yourself at what point you will end this venture, if things do not go according to plan.
12) If it is not your intention to freelance as a solo-preneur, keep your personal brand separate from the business brand.
As consultants we tend to have a broad range of skills.
This is especially true of those of us with a few years of experience under our belts. The full complement of YOU and your many talents may be confusing to prospective clients. It may make sense to market different kinds of services, which have different niche clients, under separate business names called DBAs (doing business as). This helps minimize brand confusion in the eyes of would be clients.
There are many lessons like this! The important thing is to get clear on your vision, decide if you will consult independently or build a larger form firm, think things through, and then begin the process of execution.
So what about you? Let's hear from other entrepreneur-consultants!
What lessons would you share with others who might like to walk a mile in your moccasins?
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