Look before you leap into consulting

JOYCE M. ROSENBERG
08/01/2001

New York - After the depression and panic that comes with a layoff notice, many executives or managers start thinking about what's next. Many consider becoming a consultant.
It sounds great - earning a living by advising companies or other people about your field of expertise. But consultants will tell you it's more complicated from a small-business viewpoint.
Steve Kuper has lived the would-be consultant's dream.

Kuper, whose job at United Airlines involved creating training programs, decided early last year he wanted to be a consultant doing similar work for clients. But he didn't see himself as a fulltime business owner.
"I had no intention of resigning from United," he said. "I was going to grow the business slowly and retire when that age came."

Kuper, based in Milwaukee, got two big clients in the first two months of the venture. The next call came from a United manager who asked Kuper to handle all the training of the airline's onboard supervisors. He negotiated a deal with the company and a year ago quit his job to become a full-time consultant.
Kuper had an incredible first year. His accountant said he should give himself a $30,000 bonus.
It sounds like nirvana. But it also means hard work and taking risks.

Elaine Biech, a consultant based in Portage, Wis., and author of "The Consultant's Quick Start Guide," said anyone planning to consult must do some research first. "You need to determine whether there is a market for your product or service," she said.
If you're confident that people or companies will pay you to be a consultant, you have to start promoting yourself.

A natural place to start is your former employer. Even a firm that has laid off employees might be interested in giving work to a consultant.
"Sometimes they'll hire you as a consultant because they don't have to pay all the overhead such as benefits," said William Cohen, a business professor at California State University in Los Angeles and author of "How To Make it Big as a Consultant."
But even if you get your first client that way, you'll need to learn marketing basics and expect to keep on marketing yourself.

"When I'm not at United, I'm still knocking at doors. Probably for every 10 people you meet with, you have one to work with," Kuper said.

Many established consultants are naturally upbeat about their business. But someone starting out now might find it's harder to get clients in a weakened economy.

"It's not a good market for someone going into consulting at this point," said Daniel Diamond, a professor of economics at the Stern School of Business at New York University. "Most companies are retrenching. In this uncertain period, they're not going to be reaching out to consultants."
Economic conditions aside, consulting is not guaranteed to work for everyone. Diamond estimated that only one out of 10 people who try consulting stick with it.

Perhaps one reason some consultants give up is they find themselves dealing with business basics such as cash flow, taxes, expenses and invoicing.
"It's critical for them to recognize that they're not just going off to do a job," Biech said. "They're now business owners and they have to do the business as well as the consulting work."
She also cautioned that consultants face the same personal sacrifices that many business owners must make.

"How are you going to feel about paying for your own health insurance? How will you feel on Sunday afternoon when your family's on a picnic but you had computer problems during the week and now you have to do a proposal?" she said. Moreover, working solo will likely be a huge adjustment if you've been an employee for many years. Biech's suggestion is, "Talk to other consultants and ask them, 'What's your biggest problem? What do you hate the, most?' "
Keep in mind, even success stories have their struggles.

Kuper said of putting the business together, "It sounds easy, but it's a time when you don't know what you're doing."