Decide Which Of These Four Options Motivates You
Decide Which Of These Four Options Motivates You
Select From One Of These Four Motivations
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Four Reasons To Become A Consultant (Pick One)
There are plenty of reasons you might become a consultant.
I’ll go through the four I’ve countered most frequently and the impacts they will have on your decision-making.
1) Maximise Income
I remember asking one new consultant if this was the reason they became a consultant and they looked offended. Of course not, they insisted, it was because they wanted freedom and to pursue their goals.
There is nothing wrong with deciding to become a consultant to increase personal wealth. This is what paid employees do every day when they move jobs with higher salaries. They might pretend it’s for other reasons, but a salary increase is usually a primary motivator.
One of the major benefits of being a consultant is it provides you with the opportunity to earn far more than you ever could as an employee. If you’re willing to accept the risk of earning zero, there is no cap on the maximum amount of money you can earn.
This is the major trade-off between starting a business instead of becoming an employee.
When you start a business, you have no cap on income, but you also risk earning nothing (or even losing money!). Employees don’t have that risk, but earnings are typically capped too.
If maximising income is your goal, that’s great. But be honest about it and align your actions accordingly.
In this approach, you might take 80% of your post-tax revenue and pay it as a dividend to yourself each year (instead of leaving it in the business). You’re also likely to cherry-pick the projects which bring in the most revenue as opposed to those which might be particularly interesting or exciting to work on.
2) Maximise Wealth
As many have mentioned before, the difference between a solo practitioner and a business is a business earns money while you sleep. This essentially means there are processes in place where the business will attract and serve customers without you directly being involved in the day-to-day operations.
The major benefit of building a business which can run without you is you can sell it at a multiple of earnings. The higher the net profits, the more you can sell the business.
If this is your goal, you will spend far more time developing employees and processes so the business can run without you. You will focus on retainer-based clients over project-based work. When you try to turn your consultancy practice into a business, it’s also very likely your income in the short term will be far lower. Your focus in this approach is less on doing the day-to-day client work and more on building and improving the systems.
In this approach, you will take less money out of the business. You might invest 50% or more of your post-tax profits back into the business itself. It’s higher risk, but also potentially much higher reward. If you are lucky, you might be able to sell the business for 2x to 3x its net profits.
3) Maximise Freedom
Some people become consultants because they want more freedom in their life.
Sometimes they want the freedom to make their own decisions (be their own boss).
Sometimes it’s because they want to be able to do what they want when they want.
Sometimes it’s simply because they want to avoid the morning commute.
Be careful if this is your motivation. It’s easy to replace one boss with a dozen and switch your morning commute with weekly flights across the country (or, in my case, across the Atlantic).
If maximising freedom is your goal, you have to be very careful about the type of organisations you choose to work with, the number of clients you will take on at any given time, and the boundaries you will communicate in advance when working with that client.
For example, you might set boundaries against international travel or calls before 10 am. You might only work with clients who meet specific criteria and only offer services within strict boundaries.
You might set aside one or two months a year to travel (as I do). If things go south, you might leave plenty of money in the business to give you a long runway. In many cases, you might set fixed days where you work and days when no matter what you don’t.
4) Maximise Impact
In this approach, your goal is to have a beneficial impact on the world.
For example, I know a consultant who is consumed by a passion for sustainability and offers organisations of all sizes consultancy on how they can become more energy efficient. Because it’s his passion, he doesn’t just work with the biggest organisations. He works with the organisation where he believes he can have the biggest impact.
In this approach, you aim to build and leverage your influence to pursue the causes you care about. You might host events and proactively build groups that can collaborate together to have a great impact. If you get clients as a result of your activities, that’s great, but you’re not optimising for getting clients - you’re optimising for reaching and impacting as many people as possible.
Financially, you might invest money in causes you care about or in activities which do the most to further your mission.
Can you do more than one? Yes. Quite probably.
But you should always know your priority.
If you want to pursue multiple options at once, assign them a percentage weighting.
This weighting should reflect where you will invest your time and effort. Be mindful too that it's tricky to maximise personal wealth and freedom at the same time.
Obviously, some options seem more socially acceptable to admit than others. But don’t let that sway you. Be honest with yourself about your motivations. Sure, the acquisition of personal wealth has a stigma to it. But as long as you pay your taxes, you would still be contributing more than the average person into the tax purse. Feel good about that.
This isn’t really a decision you make, it’s something you should feel in your gut. You should be able to read the four options above and just know which one matters most to you. All we’re doing here is bringing the spotlight of awareness to it so we can align our behaviours to our goals.
A Question For You
A question for my fellow consultants reading this, what is your motivation?
Be honest, leave your response in the comments below.