Monthly Archives: October 2012
Monday, October 19, 1987… the day the stock market crashed… was also my first day as a full time consulting engineer with the company I confounded. The crash was scary, but we obviously survived. Now we just reminisce that the first day in business was the worst day in business. It has been better ever since.
After consulting part time for nine years, it was time to take the plunge. At age 41, the time seemed right. I didn’t want to wake up at 60 regretting that I had not even tried. Besides, the worst possible outcome was not fatal — it just meant having to crawl back into the corporate world again.
Since we didn’t want to sink the business right away, I stepped out first. The original plan was to for me to work on projects while drumming enough additional business to support both of us. We thought this might take six months or more, but we were wrong.
In spite of the market crash, my business partner was able to jump in a few months later. We had done a lot of planning, and it paid off. We also had socked away enough money to sustain us for several months with no business, and a year with moderate business. That let us focus on building the business, rather than worrying about paychecks.
Looking back, there have been quite a few adventures that most likely would have been missed in a regular job. These include several interesting foreign assignments:
- Korea – Two trips to teach classes to about 100 engineers. What a pretty and gracious country! And who knew there were so many types of kim chee?
- Kuwait – One trip to teach a class for the Kuwait National Petroleum Company. This was after the Iraq/Iran war, but just before Kuwait was invaded. Met a bunch of fine young engineers there, and I hope they all survived the Iraq invasion.
- Singapore – Ten days working on an experimental plasma incinerator. Boy, did that ever cause some interesting electromagnetic interference issues. Fixed it though, and enjoyed the multicultural influence on this very interesting city-state.
- Alaska – OK, technically not a foreign country, but spent two weeks teaching classes at Prudhoe Bay, the wellhead of the Alaska pipeline. This was a treat, as my brother (a civil engineer) was responsible for many of the buildings in the oil camps. Also experienced -50F, even colder than Minnesota.
- Others – Several trips to the UK, Germany, Amsterdam, Canada, and Mexico for both teaching and consulting projects. Enjoyed them all.
There have also been a number of very interesting engineering projects across a wide range of industries. Here are some memorable ones:
- Diesel locomotives. A highlight was sitting in the cab, looking for the cord to blow the whistle. Disappointed, however, when I discovered it was jut a button on a console. Oh well…
- Airplanes. Worked on a lot of avionics projects, but another highlight was sitting in the cockpit of a Gulfstream pretending I was a pilot. My client even said it was OK to make airplane sounds. Now do engineers know how to have fun, or what?
- Spacecraft. Worked on a bunch of these too. A highlight here is knowing one of those projects is still orbiting overhead gathering scientific data, and well in excess of its expected life.
- Nuclear power plants. One time when I asked where the reactor was, I was told it was only a few feet away through solid concrete. No, I don’t glow in the dark, but the real disappointment was that I didn’t start regrowing hair.
- Medical devices. Probably among the most satisfying projects, realizing that my efforts have helped improve products that save lives.
In total, I’ve worked on a couple of hundred projects across a wide range of industries (details here), yielding several lifetimes of engineering experiences. In addition, my business partner and I have trained over 10,000 engineers in our technical specialty — sharing what we’ve learned with a new generation of engineers — a reward in itself.
Would I do it again? In a heartbeat. It has been quite the adventure!
Incidentally, this post was not meant to brag, but rather to offer an example and encouragement to anyone considering their own JumpToConsulting.
What will the next 25 years bring you?
P.S. – Won’t be posting for a couple of weeks – time for a little vacation. But, like the Terminator, “I’ll be baaack..”
© 2012, jumptoconsulting.com. All rights reserved.
Just finished reading this book. A great resource for anyone (including consultants and wannabe consultants) seeking financial freedom along with occupational freedom. This is the latest book by Dr. Thomas Stanley, author of the bestsellers The Millionaire Next Door and The Millionaire Mind.
Unlike too many financial guides with their special formulas on getting rich, Dr. Stanley’s book shows HOW others have already done it. For the past 20+ years, he has conducted extensive research on the lifestyles and behaviors of the affluent. As an engineer, I love it — don’t just give me a theory — show me the data!
His results are revealing. As it turns out, most high net worth individuals are not who you think they are. Surprisingly, your plumber or hardware store owner driving the beat up pickup truck may well be a multimillionaire — while your doctor in the McMansion with the Mercedes, (or even your corporate boss) may be worth a lot less.
The difference is in what Stanley calls balance-sheet affluence (BA) versus income-statement affluence (IA). It turns out that many who earn high incomes squander their wealth in high consumption (or as he calls it, hyperconsumption.) As a result, they fail to convert their high earnings into wealth.
- Among the worst offenders — doctors, attorneys, and mid-level managers. With their high incomes and high status jobs comes an expectation of high consumption. They often live beyond their means, with big houses, fancy cars, expensive suits, gourmet food and wines, and more.
- Among the best wealth builders — business owners (including independent consultants), engineers (yea my fellow geeks), and college professors. Although by no means poor, many of these folks practice frugal living, living below their means and investing the difference. One day they wake up wealthy — and not from winning the lottery.
Stanley’s arbitrary criteria for affluence is a million dollars in net worth (assets minus liabilities). He likes to exclude non-investment real estate, since as we have seen in the past few years this represents illusionary wealth that can quickly evaporate.
The real question, of course, is how long can you live off your assets and their passive earnings? With proper management, a million dollars in assets can last a LONG time…
So what does this have to do with consulting?
- First, you don’t need a million dollars to start a consulting business. You do need, however, to have your finances under control. That means minimal debt combined with a frugal mind set. A modest mortgage is OK, but big car payments and lots of credit card debt are NOT OK.
- Second, if you are not in a solid financial condition, I suggest fixing your financial problems prior to making a JumpToConsulting. And when you do make the jump, you’re not likely to get rich right away, but done right you can make a decent living and untimately create your own financial independence.
- Third, once you do make the jump, keep the frugal mind set. Don’t put your money into a fancy car or office to impress clients. Rather, put your time and money into building your business through diligent sales, marketing, and delivery of services. Continue to live below your means.
- Fourth, as soon as you can, set up a Keogh or other retirement plan, and treat it as a necessary business expense. If you set aside 25% of your W-2 income every year, it forces you to live on 80% of the full income (plus that 25% is tax deferred) As Stanley points out, the 80% method is a great way to build wealth in a relatively painless way.
For those of you who love stats and examples, here are just a few:
- Only about 3.5 % of the US population has a net worth of over a million dollars. This translates to about 3.5 million households.
- Only about 0.1% of the US population has a net worth of over ten million dollars. And only a tiny fraction of those are sport stars or celebrities. According to Stanley, you are more likely to catch malaria in the US that to have a net worth over ten million dollars.
- Most true millionaires (not the pretenders) live in houses that cost under $400,000, drive Toyotas or Hondas, wear Timex or Seiko watches, and have never paid more than $400 for a suit. So much for emulating the lifestyle of the rich and famous.
Finally, why did I include this in a blog on consulting?
Because Uncle Daryl Wants You — To Be Free. Starting and building your own consulting practice is one way to do this, and I wanted to share my experiences and advice here. There are a multitude of other ways, but virtually all of them share a common theme of managing your finances wisely to create your wealth.
And in case you are wondering — yes, my wife and I are financially independent. That was not the case when I started my consulting practice 30+ years ago, but thanks to working hard, a successful practice, and frugally living beneath our means, we made it. You can too!
Stop Acting Rich… and Start Living Like a Real Millionaire
Thomas J. Stanley, Ph.D.. — Wiley — 2009
Web Site: http://www.thomasjstanley.com/
PS – Interested in more of this? Check out Mr. Money Mustache, a blog I just discovered on financial independence by a fellow geeky engineer who retired eight years ago at age 30. Married, with a kid no less, so it can be done by a family — not just single persons.
© 2012, jumptoconsulting.com. All rights reserved.
Life is way to short and goes by way too fast.
Or, as Bob Parson, the founder GoDaddy says, “We’re not here for a long time, we’re here for a good time!” ” See Rule 16.
Good advice from a very successful businessman (twice over) who also enjoys life!
© 2012, jumptoconsulting.com. All rights reserved.
Teaching can be a great lead generator. It is how I got started in consulting over thirty years ago, and it continues to a nice source of business and income today. Here are five good reasons to consider teaching.
1 – You can begin right away. You don’t need to do extensive marketing or build a customer base. Just check your local university, junior college, or adult education program. Many are begging for consultants (or potential consultants) to share their real world experience, and would love to add you to their catalogs.
2 – Gives you immediate credibility and visibility. Teaching a class implies you know what you are doing, and that you have been vetted by the teaching organization. Of course, you do need to deliver, but if you have the right experience, you are already on the right track.
3 – You can make a few bucks. You won’t get rich teaching, but you can make this marketing method pay for itself, and help support your other marketing efforts.
4 – Develops your presentation skills. This is a very important skill for consultants, and there is nothing like practice to improve those skills. (With over 200 classes under my belt, I’m still learning…)
5 – Showcases your knowledge and experience to potential clients. No, don’t do a hard sell, but if they need more help, you’ll be among the first they will ask. After all, presumably you have already helped them through your teaching.
This marketing method is ideal for potential or part time consultants. Teaching a class presents a very low threat to your employer, and even enhances your value. Along with skills and experience, you’ll be seen as someone with initiative to improve both yourself and your students.
Teaching is how it all began for me. My business partner was already teaching an adult evening class at a local vo-tech (vocational technical school), and recruited me to teach a class. These were introductory electronics classes, so as electrical engineers we were pretty well qualified. The real challenge was to keep it simple.
Even so, at first I wasn’t sure. I’d never taught, but it sounded interesting. Besides, the school was in a bit of a panic, as the instructor for my class had to back out at the last minute due to health problems. So I jumped in, and have never regretted it.
The teaching assignment led to several interesting projects, which only served to whet our appetites for consulting. For several years, the school was our primary client. And yes, we got paid for these extracurricular projects.
- Our first project was to clean up the adult electronics curriculum for the vo-tech. The classes were disjointed, and they wanted to make them more cohesive. We identified several new classes to fill in the gaps, and even recruited engineering colleagues to teach them. Both the school and our colleagues were delighted.
- A big project emerged to develop a two year program on printed circuit board design. Unknown to us, the school had received a state grant, and needed someone to do the technical work. It turned out to be a lot of work, but the grant was generous enough that we made a very nice profit on the project.
- Another interesting project was to develop a seminar on how to select a business computer. This was when the IBM PC first arrived, and the local business community was hungry for unbiased advice. The school wanted to do a semester class, but we suggested a three hour seminar instead. This was quite successful, and gave us or first experience with focused seminars.
- The classes started to generated external consulting. Our first independent project was helping select a computer system for a local medical society. The clients had attended our computer seminar. Other similar projects followed.
As a bonus, the teaching experience gave us the confidence and the skills to offer our own seminars and workshops some years later as full time consultants. These eventually became a significant part of our income. (We have now trained over 10,000 students in our technical specialty, greatly enhancing our client base.) But without the early teaching, we might not have done it.
So where do you start? Check out your local adult education programs (colleges, junior colleges, libraries, etc.) They make it simple for you, as they provide the venue and do all the marketing. They may have prepared classes they want taught, such as introductory accounting, business law, web design, computer programming, etc. They may also have some elementary training for new instructors.
Another option is for-profit training companies. These companies often use contract instructors to deliver their materials. Most are also open to new classes if you are ready to develop your own materials. Keep in mind, thought, that this can turn into a lot more work than expected. Nevertheless, if you have a topic you feel strongly about, this can be a good option.
Can you do this? Yes, if you have the interest and experience. I had a speech class in college and hated it, but when I started teaching basic electronics, I was amazed at how easy and fun it was. The latter is important — there is no thrill quite like seeing the “light go on” when a student “gets it.”
Finally, keep it simple. Stick to the basics. You are not trying to impress your peers — rather, you are trying to convey introductory information. If your students want more advanced information, they may eventually turn into clients. But if not, you’ll still have the satisfaction of helping someone learn more about your subject.
In closing, consider teaching as a potential stepping stone to your own JumpToConsulting.
P.S. – What about your own seminars/workshops/webinars? Another variation on teaching, but much more work up front. As such, generally not recommended until you are establisehd. We’ll cover those in more detail in a future post.
© 2012 – 2013, jumptoconsulting.com. All rights reserved.
To be avoided at all costs! Your credibility and reputation depend on avoiding even the hint of a conflict of interest.
Your primary responsibility is to your client. Period. No ifs — ands — or buts. Keep your mouth shut about their business, and protect their proprietary information. If something just doesn’t feel right, then don’t do it. This includes even simple things like using client office supplies, or worse, padding time or travel expenses.
What about Nondisclosure (NDA) Agreements? We regularly sign standard NDAs, and treat clients who don’t request them as if they have one. By standard agreements, we mean those that simply limit disclosures of proprietary information for a limited amount of time (typically 1-3 years.) Data already known or in the public domain is excluded.
If you don’t like the terms, modify them. Don’t make this a confrontation — just be professional. But do have everything in order before you proceed with your efforts
What about Non-Compete Agreements? We do NOT sign them. If we only agreed to work for one computer company, one medical company, etc… we’d soon be out of business. We also do not sign patent terms, agreeing to give up patent rights, etc. Sometimes a lawyer may try to include those terms, but we simply cross them out before signing any agreement.
Most of our consultations are short term. The non-compete/patent issues might be appropriate for a long term contract. If faced with this issue, have your lawyer review any contract first. He or she will probably include some reasonable limitations.
- We’ve never lost business over these administrative issues. Once had a case, however, where a small company lawyer was pushing hard for a non-compete. He insinuated perhaps I had something to hide. My comment to the engineering manager – “Well, if your lawyer is so smart, perhaps he can fix your problem.” Incidentally, I got the job after the young hot-shot was overruled.
What about part-time consulting? This adds extra concerns. In addition to client issues, you should avoid consulting for your company’s customers, competitors, or suppliers. You also need to avoid using your company’s resources or working on company time.
An acid test for part time consulting is to ask yourself, “What would I feel if confronted by the president of my company?” If you can honestly say it is none of the company’s business what you do with my your free time, you are on a solid ethical footing.
If you have singed an employment contract that prohibits outside activities, however, you may be stuck. Unfortunately, many companies today (large and small) think they own you 24/7. You may want to review any agreements with your lawyer. Nevertheless, any outside consulting may jeopardize your full time job, regardless of the legal status. So tread carefully.
One final piece of part-time advice. Keep a low profile with your outside activities. Office politics and petty jealousies can and do cause problems. We’ve seen it happen — enough said.
The bottom line — be ethical! Trust and reputation are fragile. The test is simple — if your actions might embarrass you with your client (or your mother), then don’t do it!
© 2012, jumptoconsulting.com. All rights reserved.
Been a while since I did a resource review. For this month, I’ve selected the Happiness Project by Gretchen Rubin. It seems appropriate, since happiness (as in job/career satisfaction )is a common goal for those making a JumpToConsulting.
Recently picked this book up at the Omaha airport (Go Huskers…) Although vaguely aware of the book and her accompanying blog, I’d never read her materials. What a pleasant surprise! And a bit inspiring too, as it got me off the dime regarding what I wanted to focus on next.
A successful writer with a loving family, Gretchen was already reasonably happy. But one day (while riding a bus) she had an epiphany summarized as “The days are long, but the years are short.” Was life passing her by, and was she enjoying the journey as much of it as she could?
So, she initiated the Happiness Project, a year long effort which she documented in a blog and later as a book. To avoid being overwhelmed, she picked twelve topics and focused on one topic per month. Certainly better than making twelve New Year’s Resolutions and giving up by mid-February.
She measured and recorded her progress, using Benjamin Franklin’s methods as a model. Equally important, she supplemented her personal experiments with in-depth research. This ranged from modern psychology to the wisdom of the ancients.
The result — a delightful and thought provoking journey of self discovery, with a range of ideas we can all put into place as applicable. Two that resonated with me were “Do what you TRULY like, not what you think you should like,” and “Be Yourself.”
Both good advice if/when you make your own JumpToConsulting.
The Happiness Project, by Gretchen Rubin
PS – Gretchen just released a sequel titled Happier at Home. Haven’t read it yet but plan to soon.
© 2012, jumptoconsulting.com. All rights reserved.