It’s your move: Deciding if independent HR consulting is right for you
So you think you might like to hang out your shingle and become an independent HR consultant. It’s a tempting prospect for many who have achieved a significant level of skill and knowledge in their field, and it can be a very satisfying career option if it’s right for you.
Before you leap, however, do some clear thinking. Let these questions guide you and take the time to reflect honestly at the many “Go or No Go” decision points throughout the analysis.
Why do you want to do this?
The first question to ask is: Why become an independent consultant? Your answers might include one or several of the following:
•You have developed substantial expertise in a particular area of HR, and would like to focus exclusively on your specialty.
•You are a generalist, and look forward to advising organizations that need to augment their internal HR capability.
•The prospect of working for a variety of clients is appealing.
•You want a flexible work schedule and the opportunity to establish your office at the location of your choice.
•You’re tired of bureaucracy, and want to be your own boss.
•You think you can earn more money working independently.
•There aren’t any appropriate job opportunities for you, and you want to work.
All of the above, even the last one, are credible reasons to choose this employment option. It’s important that you be honest with yourself and keep your original objectives in mind as you develop your business. If you don’t, it’s easy to let the realities of what the market wants pull you in directions that you never want to go and don’t particularly like.
Go or No Go decision point: What’s your primary motive? If you are merely getting away from something undesirable you might not project enough enthusiasm about your venture to attract clients. It’s better to be moving toward an exciting new opportunity for positive reasons.
Is independent consulting a good career fit for you?
Successful entrepreneurs come in all shapes and sizes, and yet, there are common threads. Among the most important are characteristics that predict your capability as a business developer, your comfort working alone and your tolerance for not being a decision-maker. Many capable consultants ultimately give up their practice because they tire of having their ideas go un-implemented.
While there is no magic formula that will predict success, the following attributes are usually present in successful independent consultants:
•perseverance;
•desire and willingness to take the initiative;
•competitiveness;
•self-reliance;
•self-confidence;
•good physical health and a high energy level;
•willingness to take a financial risk;
•versatility;
•desire to be creative;
•ability to tolerate uncertainty;
•client service focus; and
•good communication skills, both written and verbal.
The first five characteristics listed above are crucial for business development. If you are not strong in these, proceed with due caution unless you have clients lined up before you start.
Go or No Go decision point: Are you really cut out for this kind of work?
What work would you like to do?
Some consultants get involved only at the highest level of strategy, either providing expertise or facilitating a client’s process for strategy formation. Some work on strategy plus implementation. Others roll up their sleeves and literally become another pair of hands to get a client through a project or to cover a temporary vacancy.
Where can you add value? What work do you truly enjoy? Which of the HR functions — change management, organizational development, talent management, compensation/benefits/pension, learning, recruiting, diversity or any other — will be the core of your business?
Be clear about which services you would like to provide. Let your comfort level with the functions, your depth of experience and your interest in them be your guide. Be ready to prove your capability by recalling and preparing to explain your accomplishments in these service areas.
Go or No Go decision point: Do you have confidence in your abilities and enthusiasm for your proposed line of work? Can you substantiate your ability to add value?
How much will you charge?
Start by figuring out what you need to earn. To do this properly, consider working with an independent financial planner or an accountant who works on a fee-for-service basis. Be sure to include the cost of insurance and benefits, and make provision for unpaid vacations, sick leave, compassionate leave and professional development. Consider how much you need to save for retirement. Remember that until you feel comfortable charging clients for out-of-pocket expenses, you will be paying for your own mileage and parking, plus any entertaining that you do. You’ll probably need to aim for 25 per cent more than the compensation earned in a traditional job to compensate for these missing perks.
Once you have established the minimum that you need, do not let it limit what you charge. Successful consultants set pricing to reflect the value they deliver to clients. Analyze how much money you will save a client in the short or long run. Try to quantify the potential cost to the client of not proceeding with the project at hand.
What you can charge for your services will vary greatly by location, the nature of your client base, the kind of work you do and the market’s perception of your level of expertise. There is no way to figure this out without networking. You need to find out how much your potential clients typically pay similar consultants and what they would pay someone to do this work internally. Keep talking with people until you discover the price range that your market will bear for your work.
Do not try to win business by undercutting the market price. The cost of your service will have an effect on a client’s perception of your value. If you undercut, you send the subtle message that you are not worth as much as others in the market.
Go or No Go decision point: Can you earn enough money as an independent consultant and do you have enough financial cushion to allow time for your business to build?
Who will pay for your services?
Having defined what you want to do, you need to analyze which organizations might need your help and whether you can gain access to the right people in those organizations. Is your target market defined by industry, size of company, organizational structure or by your geographic reach? No doubt, you will eventually find that this initial analysis of your market is incomplete. Stay flexible and accept assignments from a variety of clients as long as you are doing the work you want to do at the right price.
It can be discouraging to have promising conversations with prospective clients that go nowhere. Worse is the conversation where you offer insight and advice, only to learn that the prospect took your ideas and implemented them without engaging you. Be ready to ask for an assignment directly. Be careful to reserve the meat of your advice until you have a contract.
Use your own market knowledge. Do your research and use your network of close and trusted advisors and friends to develop a realistic list.
Go or No Go decision point: Can you identify a few prospective clients who have the ability and appetite to hire a consultant? Do you have access to the decision-makers?
Will you network?
This is where the serious contenders are separated from the wannabes. As an independent consultant you will need to network for several reasons: collegial support, knowledge exchange, a trusted referral network for passing along work that you don’t want or can’t handle and, of course, for business development.
The steps to good networking are:
•know your service offering and your market;
•have a clear and concise pitch;
•make a comprehensive list of potential contacts;
•prioritize the list according to your comfort level and their accessibility;
•plan your approach one person at a time;
•phone to ask for a meeting — never try to sell your service over the phone;
•prepare carefully for the meeting by doing research on your contact and the person’s organization;
•conduct the meeting professionally and purposefully;
•ask for business and/or additional networking contacts;
•write a thank you letter following the meeting;
•follow up as you committed;
•keep your network informed;
•keep detailed records; and
•use good judgment when sharing your network.
Go or No Go decision point: Will you pick up the phone and make the calls, asking for meetings? Will you ask for business, and follow up diligently? Will you nurture your network carefully?
Can you sell yourself?
This is only the beginning. To move ahead you’ll need marketing material and perhaps a website. You need to develop a format for proposals and perhaps a model for your consulting process. There are many good books to guide you, one of the best being Flawless Consulting by Peter Block. (As well, look for more information on HR consulting in Ray Brillinger's HR Manager's Bookshelf, by following the link below.)
If you’ve done your homework, and you’re ready to make the leap, here’s wishing you every success.
Marge Watters is the author of It’s Your Move, and a founder of KWA Partners, a national career management services firm. She can be reached at [email protected].
Before you leap, however, do some clear thinking. Let these questions guide you and take the time to reflect honestly at the many “Go or No Go” decision points throughout the analysis.
Why do you want to do this?
The first question to ask is: Why become an independent consultant? Your answers might include one or several of the following:
•You have developed substantial expertise in a particular area of HR, and would like to focus exclusively on your specialty.
•You are a generalist, and look forward to advising organizations that need to augment their internal HR capability.
•The prospect of working for a variety of clients is appealing.
•You want a flexible work schedule and the opportunity to establish your office at the location of your choice.
•You’re tired of bureaucracy, and want to be your own boss.
•You think you can earn more money working independently.
•There aren’t any appropriate job opportunities for you, and you want to work.
All of the above, even the last one, are credible reasons to choose this employment option. It’s important that you be honest with yourself and keep your original objectives in mind as you develop your business. If you don’t, it’s easy to let the realities of what the market wants pull you in directions that you never want to go and don’t particularly like.
Go or No Go decision point: What’s your primary motive? If you are merely getting away from something undesirable you might not project enough enthusiasm about your venture to attract clients. It’s better to be moving toward an exciting new opportunity for positive reasons.
Is independent consulting a good career fit for you?
Successful entrepreneurs come in all shapes and sizes, and yet, there are common threads. Among the most important are characteristics that predict your capability as a business developer, your comfort working alone and your tolerance for not being a decision-maker. Many capable consultants ultimately give up their practice because they tire of having their ideas go un-implemented.
While there is no magic formula that will predict success, the following attributes are usually present in successful independent consultants:
•perseverance;
•desire and willingness to take the initiative;
•competitiveness;
•self-reliance;
•self-confidence;
•good physical health and a high energy level;
•willingness to take a financial risk;
•versatility;
•desire to be creative;
•ability to tolerate uncertainty;
•client service focus; and
•good communication skills, both written and verbal.
The first five characteristics listed above are crucial for business development. If you are not strong in these, proceed with due caution unless you have clients lined up before you start.
Go or No Go decision point: Are you really cut out for this kind of work?
What work would you like to do?
Some consultants get involved only at the highest level of strategy, either providing expertise or facilitating a client’s process for strategy formation. Some work on strategy plus implementation. Others roll up their sleeves and literally become another pair of hands to get a client through a project or to cover a temporary vacancy.
Where can you add value? What work do you truly enjoy? Which of the HR functions — change management, organizational development, talent management, compensation/benefits/pension, learning, recruiting, diversity or any other — will be the core of your business?
Be clear about which services you would like to provide. Let your comfort level with the functions, your depth of experience and your interest in them be your guide. Be ready to prove your capability by recalling and preparing to explain your accomplishments in these service areas.
Go or No Go decision point: Do you have confidence in your abilities and enthusiasm for your proposed line of work? Can you substantiate your ability to add value?
How much will you charge?
Start by figuring out what you need to earn. To do this properly, consider working with an independent financial planner or an accountant who works on a fee-for-service basis. Be sure to include the cost of insurance and benefits, and make provision for unpaid vacations, sick leave, compassionate leave and professional development. Consider how much you need to save for retirement. Remember that until you feel comfortable charging clients for out-of-pocket expenses, you will be paying for your own mileage and parking, plus any entertaining that you do. You’ll probably need to aim for 25 per cent more than the compensation earned in a traditional job to compensate for these missing perks.
Once you have established the minimum that you need, do not let it limit what you charge. Successful consultants set pricing to reflect the value they deliver to clients. Analyze how much money you will save a client in the short or long run. Try to quantify the potential cost to the client of not proceeding with the project at hand.
What you can charge for your services will vary greatly by location, the nature of your client base, the kind of work you do and the market’s perception of your level of expertise. There is no way to figure this out without networking. You need to find out how much your potential clients typically pay similar consultants and what they would pay someone to do this work internally. Keep talking with people until you discover the price range that your market will bear for your work.
Do not try to win business by undercutting the market price. The cost of your service will have an effect on a client’s perception of your value. If you undercut, you send the subtle message that you are not worth as much as others in the market.
Go or No Go decision point: Can you earn enough money as an independent consultant and do you have enough financial cushion to allow time for your business to build?
Who will pay for your services?
Having defined what you want to do, you need to analyze which organizations might need your help and whether you can gain access to the right people in those organizations. Is your target market defined by industry, size of company, organizational structure or by your geographic reach? No doubt, you will eventually find that this initial analysis of your market is incomplete. Stay flexible and accept assignments from a variety of clients as long as you are doing the work you want to do at the right price.
It can be discouraging to have promising conversations with prospective clients that go nowhere. Worse is the conversation where you offer insight and advice, only to learn that the prospect took your ideas and implemented them without engaging you. Be ready to ask for an assignment directly. Be careful to reserve the meat of your advice until you have a contract.
Use your own market knowledge. Do your research and use your network of close and trusted advisors and friends to develop a realistic list.
Go or No Go decision point: Can you identify a few prospective clients who have the ability and appetite to hire a consultant? Do you have access to the decision-makers?
Will you network?
This is where the serious contenders are separated from the wannabes. As an independent consultant you will need to network for several reasons: collegial support, knowledge exchange, a trusted referral network for passing along work that you don’t want or can’t handle and, of course, for business development.
The steps to good networking are:
•know your service offering and your market;
•have a clear and concise pitch;
•make a comprehensive list of potential contacts;
•prioritize the list according to your comfort level and their accessibility;
•plan your approach one person at a time;
•phone to ask for a meeting — never try to sell your service over the phone;
•prepare carefully for the meeting by doing research on your contact and the person’s organization;
•conduct the meeting professionally and purposefully;
•ask for business and/or additional networking contacts;
•write a thank you letter following the meeting;
•follow up as you committed;
•keep your network informed;
•keep detailed records; and
•use good judgment when sharing your network.
Go or No Go decision point: Will you pick up the phone and make the calls, asking for meetings? Will you ask for business, and follow up diligently? Will you nurture your network carefully?
Can you sell yourself?
This is only the beginning. To move ahead you’ll need marketing material and perhaps a website. You need to develop a format for proposals and perhaps a model for your consulting process. There are many good books to guide you, one of the best being Flawless Consulting by Peter Block. (As well, look for more information on HR consulting in Ray Brillinger's HR Manager's Bookshelf, by following the link below.)
If you’ve done your homework, and you’re ready to make the leap, here’s wishing you every success.
Marge Watters is the author of It’s Your Move, and a founder of KWA Partners, a national career management services firm. She can be reached at [email protected].
