I be making $4 million or building a $40 million firm? Perhaps. Maybe it's even probable. But I have no interest in doing so. Remember that wealth is discretionary time.
I would urge you to consider the advantages of a solo practice and the vast disadvantages of building a firm. If you need affiliation, find it in other ways and by other means. Building a company is a very expensive and awkward way to create colleagues.
A very basic model for successful consulting appears in Figure 2.3. There's no reason in the world you can't do it yourself.
And remember: We're all refugees from larger firms, but in launching solo careers sometimes we have a worse boss. Give yourself a break.
Notes
1 1. There are more reasons to list, but I don't want to use too much of my time or yours. One example: To reclaim value‐added tax (VAT) from the United Kingdom when there on business, you have to have an IRS document that proves you are a corporation currently doing business in the United States.
2 2. U.S. Copyright Office: www.copyright.gov/.
3 3. U.S. Patent and Trademark Office: www.uspto.gov/about/offices/trademarks/index.jsp.
4 4. For you and for subcontractors, the IRS has rules about when a subcontractor becomes an employee, including that 80 percent or more of the person's income is derived from that single source. Check with the IRS web site or your financial advisor.
5 5. It went to 65 percent, then got reduced to 40 percent, hovered at 25 percent, and in the past few years has been less than 15 percent when I'm away and my wife is not traveling with me.
6 6. With rare exceptions, and when they do you can welcome them into your home or rent a private conference room in a hotel or club.
Chapter 3 Philosophy: What You Believe Will Inform How You Act
Hydraulics: Raise Fees and Reduce Labor
We've established that wealth is represented by discretionary time, not money in the bank or huge yachts or a dozen homes. Money can be fuel for wealth, but since we're all refugees from large companies, our passion has to be about freedom and agency, not coins.
The Gospel
If you don't believe that wealth is discretionary time, the next time you make another sale try to concurrently make another hour.
To reduce your labor intensity commensurate with raising fees is not oxymoronic but rather synergistic. That's because we know that your presence isn't what's important, and the less presence the less labor.
A good financial advisor will tell you that paying down debt is as important as saving. The parallel is tight: Reducing labor is as important as making money.
What are your corporate friends and acquaintances doing? They're up at dawn, commuting by 7:30, working until 5:30, commuting until 7 and then trying to have dinner, talk to the kids, play with the dog, chat with the spouse, watch some TV, and get to bed. I'm exhausted just writing that. It makes no sense to have two homes if you can only live in one. I have four vehicles in my garage and I have plenty of time to drive all of them.
Here's how to market your services while reducing your time and labor:
1 Do not deal with non‐buyers.People in human resources or learning and development are rarely buyers. (I call HR “hardly relevant,” but that's me.) Never engage in a relationship with someone who can say “no” but can't say “yes”! You can use these people to get to the buyer, to obtain an introduction, but if you're seen as a peer of low‐level people, you'll never be seen as a peer of their superiors. Always ascertain you're talking to a buyer and, if you aren't, then use that connection to be introduced to the buyer. You can't name an exclusively HR executive of a Fortune 500 company who became the CEO in the last ten years. This is the La Brea Tar Pit of energy and innovation, and it's likely if you insist on staying you'll see a triceratops horn or stegosaurus bone.
2 Streamline your delivery model.Too many of us are in love with methodology and techniques. We want to take them off the shelf for every single occasion, despite relevance or interest. If we have six steps to sales improvement, then, by God, you're going to accept all six! The obvious danger is that you're committing to X degree of labor to implement all this dusty stuff and creating that expectation on the part of your buyer. Never accept a consulting alternative from the client: “We need a four‐day leadership retreat.” Instead of quoting fees and getting out your calculator, simply ask, “Why do you need that?” That will take you to the larger objective (“Because we're not making decisions consistent with our strategy”) and an advisory role potential, rather than a long weekend. Every request for a proposal (RFP) is actually an alternative molded by low‐level client people who don't understand the real problem or issue. When Mercedes Benz North America became obstinate about this, I told them, “Here's the deal: I won't tell you how to make brake pads and you won't tell me how to consult.”1
3 Use the client's resources.There's an advantage in transferring skills to the client. Use client personnel to schedule, facilitate, interview, perform technical work, keep records, provide refreshments, and so on. In your proposal, which we'll discuss later on, there will be a section for “client accountabilities.”I learned to run strategy formulation programs by plastering the room with easel sheets, often 60 or more. They had to be placed in order, edited, transcribed, and circulated after the session, which was more work and harder work than the actual interactions.Finally, it occurred to me to require that a trusted client administrative person be present, take notes, retrieve the easel sheets, transcribe, and submit to me for final approval before dissemination. That saves me a week of work over the course of a 90‐day relationship. And it makes far more sense for client personnel to do this than someone you would hire.Today, I've created my own, one‐day strategic approach, Sentient Strategy®, and I (and the people I certify) can deliver it remotely in one day or two mornings.
4 Outsource and delegate.I outsource graphics, web design, printing, bookkeeping, accounting, and a host of other “tasks” that too many people do personally. I also subcontract so that others can do routine client tasks, such as observations, interviews, and facilitation. Unless it's part of the relationship of the business (i.e., marketing or asking for referrals), it can be outsourced at hourly rates or fixed prices.
5 Subcontract.There are a great many people who can't market but can deliver quite well, and they would be happy to work for you. Don't hire them as employees, but as situational subcontractors (metaphorically, a pair of hands). Consultants tend to overpay delivery people because they believe that methodology is king, but results are the ace that trumps the king. Your relationship and generation of results are the key to long‐term client projects and referrals.
The methodology and implementation are merely the engine room. You need stokers, not engineers.2
Here are ideal reasons to use subcontractors for a day or a month:
There is legitimate high volume—focus groups, interviews, classroom sessions, customer visits, and so forth.
You