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Jake Carroll was a program manager at a growth-stage fintech company for more than five years, learning the ins and outs of the business and the industry. Ultimately, Carroll found he was more interested in the what and why of product development than in the when and how. He took the skills he had acquired and launched a tech consulting company, Create Kaizen, to focus on product development, coaching collaboration, and managing culture change in tech companies.
“The biggest thing that I’ve learned is to not take the administrative burden that your company takes on for granted,” said Carroll. For a business to thrive, you not only need to provide a quality product or service, but you also need to manage the administration of the business.
Perhaps you, too, have a passion project that could grow into a full-time career. If you’ve been thinking of going the tech consultancy route, here are the things you need to know to get started.
Gavin Halse is a business strategist coaching tech specialists who want to become better leaders. He says that the best tech consultants have these 11 attributes:
You know that you have to bring in enough money to pay the bills and keep the lights on to start, and then have a strategy to grow your business and make it profitable. But what does that really mean?
Drew Gerber is something of a serial entrepreneur and has started several successful ventures including a public relations (PR) company, a financial planning company, and a tech company. He says that a good rule of thumb is to have six months’ worth of your fixed expenses on hand at startup. This can help you survive during the startup stage or any client dry spells.
“Identify your customers before you open the door, so you can have a way to start covering those expenses,” Gerber says. A good place to start is to ask your existing consulting projects if they need more work.
You’ll have upfront expenses and regular monthly expenses. These may include:
Getting a handle on your monthly expenses is essential to building a sustainable business. You may want to check out the expense calculator at the Small Business Administration (SBA). The SBA also has a worksheet you can use to help itemize and estimate your monthly expenses.
When you are preparing to launch your tech consulting career, there are some steps you can take to help get ready. If you’ve been working side jobs, hopefully you’ve developed some initial clients that can help you get started. Your business plan and estimate of expenses will help you determine how many clients you need to meet your financial goals. Once you make it a full-time career, you have to plan for the ebb and flow of business. You’ll need to figure out how many clients you need and the length of time you need to work with them to meet your goal. Here are Carroll’s five tips for turning your side gig into a full-time gig.
No doubt you’ve heard this piece of wisdom before: “Look before you leap.” It applies in business as well as in life. You need to consider the possible consequences of moving into tech consulting full time.
“Even if it’s joining a Facebook group that relates to your niche and asking questions, gathering information will help inform your next step and may lead you to pivot your business before starting, saving you a lot of time and money.”
It’s not just about evaluating whether you can make a living as a tech consultant; it’s also about whether you’ll enjoy the work. “Don’t be afraid to try things out of your comfort zone; it’s the quickest way you’ll learn if you enjoy that particular type of work or not,” said Carroll.
Line up testimonials from past clients, create the digital components (like a website and LinkedIn page), and develop all the collateral you need, including:
Scott Edinger, the founder of Edinger Consulting, says that there is no better source of leads and revenue than referrals. “Make referral business a central part of your go-to-market strategy,” Edinger says. Asking for referrals from satisfied clients creates an implied endorsement and can give you a foot in the door with prospects.
A study by JPMorgan Chase reports that half of all small businesses maintain a cash buffer that will last them more than a month. These businesses could last just 27 days if cash flow stops. The median cash buffer for companies providing high-tech services fared just slightly better, at 33 days. Don’t forget Drew Gerber’s advice for keeping enough cash ready to cover at least six months of business and personal expenses.
Besides counsel from a lawyer, an accountant, and insurance reps, it helps to find mentors that can help you navigate the journey. “When you go out on your own, you really understand the gravity of what it takes to start and build out a business,” so leaning on others who have been down this road will be important, says Carroll.
One of the biggest things you need to worry about when leaping into a full-time career as a tech consultant is having enough clients and business to support you, but also not accepting too many jobs that pigeonhole you in a niche you’re not happy with.
The real focus, Carroll said, is to constantly assess how much “runway” you have, meaning how many months your business can keep operating before it’s out of money. This helps you make decisions about the amount of business you need, how quickly you spend cash, and whether you need to adjust your business plan or raise capital.
It helps to have a clear set of goals and regularly scheduled reviews to assess performance. Carroll says that he developed a set of key indicators to assess his runway. “Some trigger points inform me that I need to shift to more consistent work that I can acquire a bit easier (low interest/low challenge work), and some inform me that this is unsustainable and that I’ll need to get additional sources of income,” he said. There are also metrics that let him know he’s on the right track, which helps with setting priorities.
Depending on how you set up your company, you may need to register for a business license, file papers for incorporation or as a limited liability company (LLC), and register with your state’s taxing authority. You may also need to develop articles of incorporation, partnership agreements, and a host of other legal paperwork.
A tech startup will need legal support. Even if you are operating as a sole proprietor or an independent contractor, you will still want to develop legal agreements to cover the scope of work you are performing for your clients and the terms that will define your relationships, deliverables, fees, and payment schedules.
Another consideration will be who owns the rights to your work product. During your consulting work, you may create intellectual property (IP) for your clients that may be entitled to copyright protection. If you haven’t clearly defined the IP in an agreement, your work may be considered “work for hire,” and you will lose the rights to your work product in the future. This is why creating contracts will be important for your firm.
As a tech consultant, you’ll also need protection from actions or lawsuits brought against you by clients or other companies. The cost of defending even a frivolous lawsuit can easily drive you out of business. Insurance options available for small businesses include the following:
Running your own business — especially if it’s doing something you love — can be a rewarding and lucrative way to earn a living. “Define what it takes to start and operate your business, identify what level of seed funding (or income) you will need to get everything off the ground, and set key trigger points for your first year,” says Jake Carroll. This can help inform you if you’re on the right track, wrong track, or no track at all.
Image courtesy of iStock.com/RossHelen
Last updated on Jul 24, 2024.
Originally published on Oct 18, 2021.
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Chaunie Brusie, BSN, RN Jul 24, 2024
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