Too Many People Become Consultants For The Wrong Reason
There are four good reasons to become a consultant and plenty of very bad reasons. The key is knowing what your primary motivation is and align your actions and strategies to match.
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Why did you choose to become an independent consultant?
Some people give multiple answers to this question.
That’s a problem. It means they’re often unsure which is most important.
If you’re not 100% clear about why you’re becoming, you’re probably never going to be happy being one
Many people become consultants to be their own boss. But they soon find they’ve replaced one boss with five bossy clients.
Likewise, you might replace your morning commute with monthly transatlantic flights.
Or find yourself working more hours for less money.
Clarity is key.
For example, if you get into consulting to increase your income, then it might make sense to be up late on a Friday night hammering on a project. It aligns with your goals. Extra effort equals extra money (far more directly than being an employee).
But if your goal is freedom and flexibility - that would be a clear failure.
Be clear about your north star and align your actions to that.
You can see the four options below and the pros and cons of each
Let’s quickly go through each.
1) Maximise Income
If you’re willing to accept the risk of earning $0, there’s no cap on what you can earn
If you accept the risk of earning zero, there is no cap on the maximum amount of money you can earn as an independent consultant.
This is the major trade-off between starting a consultancy practice vs. being an employee. As an employee, you get the safety of a monthly paycheck - but your earnings are capped. As an independent consultant, you have neither.
The downside is that it takes time to build a sustainable practice, and you might wind up working longer hours and taking on projects that don’t excite you. Another downside is that you have no safety net (other than insurance) if anything happens to you.
The lack of predictable income can create anxiety (and difficulty when applying for a mortgage). I’ve had months where I’ve earned $0 and months where I’ve earned six figures.
2) Build A Business
Build a sustainable practice which earns money in your sleep.
Another great reason to become an independent consultant is to build a practice that can survive without you. This is an asset that ‘earns money in your sleep’, and you might one day be able to sell it for a significant sum of money (typically 2x to 3x net profits).
In this approach, your efforts will focus on building sustainable practices and developing employees to make yourself increasingly unnecessary to the business's day-to-day operations.
Critically, you must focus on retainer-based client projects rather than one-off projects.
This completely changes the type of work you do and how you deliver it. You will earn less in the short term, but if it works, you will have an asset that will generate a constant source of income (until you sell it).
3) Maximise Freedom
Work for anyone, anywhere, at any time that suits you (theoretically)
Freedom can mean many things. It might mean making your own decisions (being your own boss), taking on the projects you want, working hours that suit you, or working from anywhere you like.
If maximising freedom is your goal, you must 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 a.m. You might also only work with clients who meet specific criteria and offer services within strict boundaries. You have to think about where you want to live and the time zones of where most of your clients are based.
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.
The downside is that it can be lonely, you might earn less, and the lifestyle might be less glamorous than Instagram suggested.
4) Maximise Impact
Make a dent in the universe
You might become a consultant because you want to have a specific impact in the world.
For example, I know a consultant who is consumed by a passion for sustainability and offers consultancy on how to become more energy-efficient to organisations of all sizes. Because it’s his passion, he doesn’t just work with the biggest organisations; he works with the organisations 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 to have a great impact. If you get clients due to 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 that most effectively further your mission. You might earn less overall but have a high sense of personal fulfilment.
Pursue Your North Star Unapologetically
Whatever you select, make sure you align your actions do it and pursue it in good conscience
Last week, I returned from three weeks away (I am writing this on March 24). The initial plan was for a two-week trip to Taiwan. But towards the end, I felt like doing some scuba diving in Thailand, so I simply extended my trip. I responded to a few emails and Slack messages, but that was about it.
Will the trip cost me some money in the long term? Quite probably. But because my goal is freedom and flexibility - I feel completely happy with that.
Whatever your north star is, whether it’s earning income, freedom, or impact - make sure you deliberately pursue it and don’t get sucked into following the wrong path.
You became an independent consultant for a reason - make sure you live that reason in your daily activities. It should impact every decision you make.
Thanks for reading.
Between the previous article on timing and this one about North Star(s) you're onto something.
Truth to be told, I started consulting by accident and it shows: most people would think it was hard at the beginning and then it became easier over time.
It didn't: I benefited from entering the consulting market in a period of frenzy, and when that waned off (last two years) things became more difficult – and a lot of experienced and "accidental" consultants are learning this the hard way, not only the newcomers.
I'm not sure those North Stars should be considered as mutually exclusive though: I treat them as cardinal directions of sort, you weave through them as you go along learning a bit more about yourself and the business, instead of choosing one and sticking to it.
Income maximization could come as a temporary opportunity and not being something you can do at your exclusively because you want it badly, whereas building a business might be something that you constantly underestimate or even ignore at your own risk (that's me, for example).
You might have lots of freedom and discover that you don't know what to do with too much of it and as for making an impact, well, I've found people have a very subjective definition of whatever "impact" means for them.
I think a lot of people start after a layoff or drift into it by dumb luck.
Success certainly isn't linear - I've found it comes and goes over time.
I definitely agree that a lot of consultants right now realise just how difficult it is - especially if your marketing isn't strong.
I'd say treat the north star framework in whatever way works best for you :-)