Becoming independent after management consulting
In mid-2020, I left a Director position with a Big 4 firm. Due to Covid and changes in firm’s priorities, the path to Partnership was not realistic in the immediate future. Before that I had been a consultant for 15 years: strategy, Big 4, boutique consulting and independent.
Before my last consulting job, I looked into being independent. At the time it did not appear a sustainable career path, projects were few and far between. It felt lonely and was missing opportunities to exchange and learn. I discovered that my consulting experience did not prepared me well for independence. I was a generalist, as being a narrow expert in a consulting firm is a sure path to low utilization. A swiss army knife consultant always gets a new project. As an independent however, there is a premium for specialization. The world’s top expert in the narrowest of fields, can still do it for the entire world. Especially given the changes in technology and how we work.
I still yearn for independence, at this mid-point of my career. Perhaps is the belief that I have something to offer beyond the consulting brand or the desire to be to be in control of my work, life and priorities. I shall give it another shot. As father and husband with responsibilities to provide and a limited runway, I need to make it worthwhile and sustainable.
My yardstick for success as independent has a different shape now. On one dimension is broader — earning through own efforts, network and expertise (not necessarily project or time based) and on other narrower — own client relationships, without an intermediary sourcing the business. I see these as a necessary condition towards sustainability.
The economics of consulting industry is as follows. Junior consultants start from $80K to $100K+ (at well-known consulting firms, but not only). After a few years earnings can double and more. The most experienced senior partners at prestigious firms earn few millions dollar salaries. The driver of increased compensation is not the intrinsic value the consultant provides and the price it commands (quantified by the daily rates). With seniority, daily rate increase by orders of magnitude, however the number of hours charged to a client decline. Partners and directors bring projects and manage teams and share in the contribution margin that junior consultants generate (hourly compensation is a small percentage of the charged fees for junior consultants).
Independent consultants do not have this leverage. Earning potential is capped by the time worked. Additionally, an intermediary sourcing projects will get a significant finder’s fee (generally between 20–50%).
The role “Independent consultant” is now more popular than ever. There are more than 1.5m search results on LinkedIn. For some independent consultant is a placeholder title, something to do between jobs, for few others, a career choice.
I am exploring two possible paths:
1. Independent consultant 2.0
2. Build a tool/software product.
Independent consultant 2.0
As being independent did not appear sustainable a few year ago, I shall do things differently. I talked to more than 100 independent consultants and for the vast majority, the ongoing challenge is to find the next project.
There are now a lot more independent consultant networks (see some of them in the picture below). These are marketplaces matching consultants to clients. Some of these networks sell projects, other sell shorter interactions (expert calls) and then identify in their database interesting candidates.
Some independent consultants join many networks to increase the chances to get staffed. Few are happy, but most have too few requests. Some are not aware of these networks or will not join due to the offered daily rates (and the fees that the networks charge).
I signed-up with some of the networks and have received two interesting opportunities in the past few months. I am OK with the daily rates. This option does not meet my definition of independence, however it can extend my runway.
There are other models to sell one’s expertise (courses, training videos, e-books) as “productized services” with many successful examples. I still have more questions than answers on how to generate a meaningful income.
Building software
I started with few ideas on what I perceived not to work well in consulting: consulting is still very manual, finding experts is hard (for clients and consultant staffing teams) and many projects do not achieve benefits.
Several ideas went through some validation: a tool to identify tasks required to solve any business problem (with a mix of automation and human expertise), a subscription service for independent consultants, a tool for clients to manage the consulting selection and deliverables.
I aimed to talk to many potential clients. It was a huge effort, requiring lots of leads and follow-up. I used a mix of freelancer supported lead research and marketing automation + CRM to keep track of all the ongoing conversations. I learned the hard way that it is very easy to be fooled that a direction is valuable, if you do not ask the right questions. I found some great sources on how to talk to customers and what questions to ask. I doubt though I would have appreciated this advice, without the experience of being led down the wrong path.
I am not a developer, and this is a challenge. I worked with freelancers (mostly on Upwork) and made many mistakes: from building things that are not useful or not managing the freelancers well. The biggest mistake however was thinking I need to build a lot more before I can test there is a need.
I chose for now bootstrapping (self-funding) rather than finding investors, as the later could help with scaling and I am not there yet..
After many iterations, I am working on the problem I care most about: helping more consultants and experts earn independently. I have a plan, that will undoubtedly evolve in the process.
You can follow me on Twitter to find where the journey leads me and what I learn in the process.
