This Isn't A Good Time To Become A Consultant

There is a good time and a bad time to become a consultant. Tragically, most people decide to become consultants at the worst possible time.

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Here’s a pattern I’ve noticed:

When times are good, fewer people opt to become a consultant.

When times are bad, far more people set up a consulting practice.

One reason for this is obvious; redundancies.

Many people lose their jobs (especially tech jobs) and, noticing a lack of comparable opportunities, decide to try consulting.

(Aside: This violates my number one rule for becoming a consultant: build demand before you become a consultant.)

The second reason is more important — the false belief that starting a consulting practice is easier than finding a new job. Even in the best times, building a successful consulting practice is harder (and more rewarding) than employment.

But if you’ve been made redundant due to a market downturn, remember that consultants are a variable expense. Before a company executes a layoff (or at least alongside layoffs), it’s already cut its variable expenses to the bone. The only difference is that consultants don’t typically take to LinkedIn to share how many clients they’ve lost.

This means many people decide to become consultants when there is less consulting work, the budgets are much smaller, and there is suddenly a lot more competition.

Everyone Tries, Few Thrive

I can think of almost twenty people I personally know who decided to become a consultant during the 2022 - 2023 layoffs; none managed to build a successful consulting practice.

Judging by several heartbreaking LinkedIn posts recently, they rapidly burned through their savings while hoping to attract clients.

It would have been far better to accept a lower-paying job to make ends meet until the market turned around.

The other problem is that people who decide to become consultants after a redundancy don’t want to be consultants; they’ve been forced to be consultants.

They need the money quickly. Instead of trying to become a pillar of the community and create a gravitational pull to attract clients, they are more likely to pursue direct sales tactics, which will be less successful and more frustrating.

Ultimately, if you become a consultant after a redundancy, your odds of success are stacked against you.

Your goal in these times is simply to earn money to keep putting food on the table and avoid burning through your savings. This might involve a combination of:

• Reducing household expenses and putting back major expenses.

• Accepting freelance work on the freelance marketplace sites.

• Setting the ego aside and accepting a lower-paying job for now.

In the meantime, you can keep your eyes open for better-paying jobs, but unless you have clear consulting opportunities lined up, this would be a bad time to enter the field.

Aside…

You can see how I attracted my first clients and how much I earned in my first five years. But it’s worth noting that:

1. I got a lucky break.

2. I was blogging for years before becoming a consultant.

I wasn’t starting from scratch. I started with a mailing list of thousands of people already consuming my content. Without that, things will be extremely difficult.

Golden Rule: Become A Consultant When Times Are Good

The best time to become a consultant is when your market is booming (this sounds obvious, but it’s the opposite of what usually happens).

When the market is booming, employment is low, and organisations often need consultants because they have:

1. Lots of problems to solve quickly. Growing organisations typically encounter challenges they don’t know how to solve. These are challenges you can help them solve.

2. Lots of money to invest (often by the end of a financial period). In good times you often get the ‘We have ,$ to spend by the end of the week’ calls. More importantly, you have organisations willing to invest money in projects which are riskier than in hard times.

3. Can’t find staff to do highly specialised tasks. There are fewer people to hire. Thus, it’s more likely that organisations will turn to external consultants for support.

The other reason to become a consultant when times are good is less competition. In good times, a bounty of safer, well-paid jobs are available. Most people would prefer the comfort of a regular paycheck to try to build a consultancy from scratch. Leaving a well-paid job to become a consultant is far riskier than trying to become a consultant after a redundancy.

You will probably already know if your market is booming or not. But it’s paying attention to major economic indicators for your sector for signs the market is beginning to turn (or is booming).

• The share prices of the major companies are growing (Yahoo Finance).

• The level of venture capital investment by industry (look at Crunchbase, Pitchbook).

• Growing number of job opportunities in that sector (HiringLab, LinkedIn Economic Graph, Glassdoor economic research).

Summary

1. Too many people become consultants after a redundancy, which is the worst time to do so.

2. There’s less consulting work and more competition in difficult times.

3. If you’ve been made redundant, it’s probably better to focus on freelancing or lower-paid jobs and wait for the market to turn.

4. Keep an eye on the major economic indicators for your sector and decide when to become a consultant when times are good.

Recommended Reading

• Should you use evergreen or time-sensitive content? by

  David McIlroy
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• The Proof You Can Stop Listening To Gurus And Best Practices by

  Alberto Cabas Vidani
  .

• You can build multiple things but not all at once by

  Anna Mackenzie

Thanks for reading.

Richard Millington