Taking Control: The Argument for Consulting
Confession: I started Precision Solutions on a bet.
In the early '90s, I was a staff programmer spending countless hours building a solution for my employer. In exchange, I was getting to the end of each pay period with a negative bank balance. With a wife and two children, living in an apartment with a tendency to catch fire at unexpected times, it wasn't exactly what you might call a dream.
That year, one of my team members at work decided to leave and hang a shingle as an independent consultant. Losing her expertise was very difficult for those of us left behind, but we went on. A year later, my story begins...
During a lunch with this same colleague, she told me that I simply must get out of the daily grind and get into consulting. She knew my family was struggling financially. She said that in the past year, she had made more money than the last five years of my income combined. Yet, while I hated having a fire extinguisher at the ready — a comfort I could hardly afford - the thought of going from a steady but insufficient paycheck to, potentially, no check at all was pretty darn terrifying.
Not to be daunted, she turned it into a bet. Specifically, she said, "I bet you that if you do this, in one year, you'll be successful." And to my eternal shame, I took that challenge. I was literally betting that in one year I would fail. Fortunately, I lost that bet. Twenty-five-plus years later, and still going strong, I can tell you that betting against yourself is a really, really bad idea!
With that in mind, I'd like to share a few lessons learned through growing a one-year consulting experiment into a twenty-five-year-old software company.
Lesson #1: You can do this.
Once I had a couple wins, it became clear that success was not only possible; it was plausible. Unlike working for an employer, where someone else controlled whether I was employed or not, in this arrangement my future was mine to make or break. I started thinking of consulting as having multiple bosses, where each one had some control over my future, but no single boss had universal control. When one customer moved on, another filled the gap, and the business continued uninterrupted.
One of my favorite quotes is "I am the best hope they have." Despite what appears to be blatant narcissism, it's a reminder that if I don't believe in me, why should anyone else?
Lesson #2: You and Your Business Are Separate Entities.
In the consulting world, people often think of their businesses as an extension of their personal lives. While it's important to have that ownership perspective, when it comes to what's on paper, you and your business should be completely independent entities. Don't run your business out of a personal checking account. Create specific accounts for the business to keep that income and expense separate from your personal income and expense.
One of the hardest things to overcome in the U.S. is that when you have a sole proprietorship type of business, banks, insurance companies, and even the government look at you as being "self-employed". While accurate, that identity can become a significant disadvantage when getting loans or insurance for yourself or for your business. To overcome this, incorporate (either as a S-Corp or LLC in the U.S.) You'll still be self-employed, but outside organizations will take your business more seriously.
Lesson #3: Accounting Is Essential
At the beginning, I used spreadsheets to keep track of income and expense, for the sole purpose of not being surprised by taxes at the end of the year. And guess what, that first year was SUPER SURPRISING for taxes! Yes, there was a record of what was earned and spent, but virtually no visibility to how any of it worked together. Fortunately, there was almost enough money to cover the tax bill, so it wasn't a tragedy. But keep in mind that knowing where you are is the only way to keep track of where you're going.
Get some good accounting software to keep track of it all. Be able to generate Profit and Loss, Balance Sheet, and Income and Expense statements. And understand what each of those things do to help you understand your business. Your banker will thank you for it. Most importantly, keep a watch on your trend lines (earnings vs. spending) to see how your business is doing.
Finally, if you get to the end of a period and have any money left over, sock it away in some account and do your best to forget about it. Always be saving for a rainy day because there will be storms along the way!
Lesson #4: Adapt, Adapt, Adapt!
At the beginning, I didn't have a computer of my own. All my work was on other people's machines. When I bought that first PC, it stunned me. As a person making a living as a programmer, this machine in my home was completely unprogrammable for me. This led to a constant search for more knowledge, from Windows to Unix to Web to Mobile to virtualization to containers to … the quest continues.
Never be satisfied with "I'm a ___________." (Fill in the blank with anything you like, from Multivalue programmer to Java to Web to Python to … anything.) With the wealth of resources available today, the best way to ensure survival is to stay agile in adapting to an ever-changing technology landscape. Never stop learning.
Business today is not the same as it was a year ago, and it's certainly not the same as it was twenty-five years ago. Limitations are for your competitors. Without being misleading, be a master of the "irresponsible yes". Be willing to say yes to projects that will require you to learn something new, not just projects which only require your existing knowledge. Take the initiative to stay up to date on current technologies so a ground shift is more of a speed bump than a cataclysmic event.
Lesson #5: Surround Yourself With Like-minded People
Whether employees, subcontractors, vendors, customers, bankers, or baristas, surround yourself with like minded people who are all working to make each other better. I have been blessed with an amazing staff that is driving our company in positive directions. You see, after twenty-five years, it's not about me. In fact, it never has been. It's about our customers, our staff, and the relationships we have built through the years that produce real results for real people.
But Wait, There's More
Now, there's a thousand other lessons that have been learned through experimentation, stress and hours of intense work. And it's so very true, every business is different so your mileage may vary. But these are something to consider if you're looking for a new chapter.
Having a business has been an amazing ride, filled with ups, downs, joys, sorrows, all of it. I like to think I've lived two lives: one as a person and another as a business owner. That said, I'm really happy I lost that bet.
