Mailbag

From the mailbag – Do I need client insurance?

This question arrived today from a friend and engineering consulting colleague.  Once in a while a company will request a “General Liability” insurance certificate.

Hi Daryl,

I’ve run into this requirement (client insurance) a handful of times. Most companies don’t ask for it, but some are asking to be named on my insurance policy. Do you know the reason why they might want that?

Here is my response. The beautiful irony is that just today my “General Liability” insurance was cancelled, after 20 years with no claims, and zero probability of a future claim.

As far as I know, there is no good reason (but I’m not an attorney.)  Rather, it is the result of good lobbying by the insurance industry.

We ran into that a few times. The request was usually for “General Liability”, not “Professional Liability.” The former covers things like driving you car into their lobby. The latter covers “errors and omissions.”

If you have a GL policy, ask for a certificate naming the client. It’s just a piece of paper, and should cost nothing.

Do you really need a GL policy?  I don’t think so. We went without a policy for many years.

But after fighting it a few times and to save time, Bill and I caved in and got a GL policy — about $1000/year for both of us. Upon our attorney’s advice, we never carried PL, since EMC has such a low risk.

If we had been doing product safety, we would have carried PL too.

The IEEE has both, but when I last checked, they would not sell the GL alone. We got our policy through a broker.

When Bill passed away, they reduced the premium to $500, so I renewed it. A total waste of money in my opinion, but still easier than fighting about it. Haven’t had a request for several years now.

As a coincidence, just today I got a certified letter canceling my General Liability insurance.

Seems some underwriter visited my web site, and panicked when they saw “medical devices, vehicular electronics, military systems, industrial controls, etc.” Even though the web site clearly states I no longer consult, but only do training.

My guess is some bureaucrat with no common sense did this. Probably their chance to make a “big decision.” But a stupid decision, as it was easy money for them.

As an side, my older son started with Hartford (the carrier) right out of college. He left in less than a year. Like his dad, he has a low tolerance for petty bureaucrats.

My plan is to forget the insurance. If somebody insists on it, my response will be to either waive the requirement of find somebody else.

Before getting insurance, I did that several times with success. I found that engineering VPs/directors/managers can and will override purchasing if they really want you, and need to do so.

And if they don’t want you, do you really want to do business with them?

Don’t want you to think I’m a jerk about these things. As a rule, I go out of my to be polite and professional.

But at the same time, I don’t let petty bureaucrats intimidate me. Neither should you.

As always, check with your attorney and/or accountant.  We carried General Liability insurance for many years, simply because it was easier to do so than argue about it.

But other than saving time, it was a waste of money. We never lost any business when we did not have it.

© 2016, jumptoconsulting.com. All rights reserved.

What do you do when it no longer works?

Received an email a while back from a fellow engineer whose consulting firm is struggling. The question was what to do now?

First, a little background. To protect privacy, I’ll be purposefully vague.

He started a consulting firm some years ago, but it recently began to slide. Rather than give up, he kept putting money into the business – but with a negative impact on his finances and retirement. Cash flow is now a key concern.

So the question posed to me was not about starting a consulting practice, but rather –  What do you do when it no longer works?

That is a tough one. Here is my sanitized reply:

Wish I could say I had never heard your story before. Sadly, I have. The good news is things usually get better, but not without some pain.

Here are three examples:

  • Former neighbors (in their 50s) who owned two small restaurants for many years. When the business slump hit in 2008, they refinanced their house to keep things going. In the process, they lost the businesses and almost lost the house. But they are now recovering, as they went back into the corporate world. The good news is that they found jobs where they could use their valuable skills and knowledge.
  • My older son (in his 40s) who was ousted from his position (after an acquisition.) Small thanks for helping grow a small company by 10X and handling the complex financial details of the transaction. So he took his proceeds and hung out his shingle as a business consultant, but within a year it was obvious it wasn’t working fast enough to provide an adequate income. The good news was that one of his clients (a start-up) hired him.
  • Me (in my 30s). Fired one day from a start-up I helped launch, I hung out my shingle. That only lasted a couple of months until I realized it wasn’t going to work – for now anyway.  So I went to “Plan B” and found another corporate engineering job. Of course, that was easier then as I was much younger.

Two common thread on all three cases were:

  • Recognizing the business was not making it (at least fast enough to provide sustenance)
  • Changing direction (while still gaining valuable experience and knowledge.)

My first thought is to see if any firms have an interest in hiring, even on a part-time or sub-contract basis. These firms might be other consulting firms, past/present clients, or even vendors serving  his technical community.

Your knowledge, contacts and experience are valuable. This would let you focus on the technical side of the business and not worry about the sales/marketing/management side of the business.

A second thought is to check with technical contracting firms. Some are small, and some are large (like Manpower.) I know several engineering colleagues who have gone this route.

One caveat – do NOT pay anybody ANY money up front. The legitimate firms make their money when they place engineers with their clients. Many also offer group insurance and related benefits.

In both cases, the business still exists – just in a different form.  Incidentally, nothing wrong with changing directions. Sometimes it is better to stop the bleeding, and start the recovery.

As a fellow boomer, these approaches are likely more successful than seeking a full time position. Many companies want to hire the younger people full-time, but are willing to take on us old-timers part-time. Of course, if you find a suitable full-time position, go for it!

My sincere best wishes, and feel free to write again if you have additional questions or comments.

If you are in this situation, don’t despair — it took me two tries to make it as a consultant, and four tries for the training part of our business. And there have been several ups and downs along the way.

Finally, there are no guarantees for success in any business, consulting or otherwise. Change is inevitable, and the key is to be flexible.

© 2015, jumptoconsulting.com. All rights reserved.

From the mailbag…Book recommendations

Just received this query from India. Wow — we have an international following!

But as I’ve noted here before, consulting is both international and location independent. Assuming others might find this useful, I’m sharing it here.

Hi,

Your website is highly informative.

I ask you a question because you have real time experience as an independent consultant.

I am a full time programmer from India . I have 15 years of software development experience. Do you recommend any book on consulting?

I want to read before implementing steps to become independent consultant.

What about Business Consulting Buzz by Michael Zipursky? You mentioned it.

Here is my reply:

Hi,

Thank you for the kind comments on my blog!

My favorite author on consulting is Howard Shenson. Here are links to two of his books that I like and recommend:

(1) Complete Guide to Consulting Success

(2) Shenson on Consulting – Success Strategies

Here is a link on JumpToConsulting regarding Shenson.

For many years, Shenson conducted short seminars on consulting. I attended one in 1978, and it started me on my consulting journey.

He published many books, so anything else by Shenson is worth reading.  Sadly, he died at a relatively young age in 1991. Otherwise I’m sure he would still be writing and teaching today.

His materials are very practical, with an emphasis on marketing (getting the business.)  Much of my materials are patterned after Shenson, so if you like my blog, you will like his books too.

I’ve also found Michael Zipursky’s website to be useful. His focus is on business (management) consulting rather than technical consulting. I’ve not read his book, but I’m sure it has useful ideas too.

With fifteen years experience, you certainly have the necessary technical experience. (When I went full time, I had nineteen years experience.)

But the technical experience alone is not enough — you must start thinking like a business person.

This is where many technical people fail when starting a consulting practice. They focus on the technology rather than running a business.

Probably the biggest business challenge is marketing/sales — attracting the business and then booking it!

All the other business issues – legal, accounting, contracts, etc. are easy and can be done in a few weeks. But the marketing never ends — you must continually dedicate some time to these efforts.

I’ve always considered marketing as just another technical challenge, with a new set of skills to master. It can be done, but it does require some work and study.  Shenson can help (as I hope my blog can too.)

Hope this has helped, and good luck as you make your own JumpToConsulting!

Thanks for writing! Drop me a line if YOU have a question. (We’ll protect your privacy if we use your question/answer as a post.)

© 2014, jumptoconsulting.com. All rights reserved.

Setting up shop… some questions…

From the mailbag: Just last week an engineering colleague (and reader of this blog) announced he was making his own JumpToConsulting. Way to go, Glen!

His announcement e-mail also had several specific questions. After addressing them, I decided to share my comments here.

(1) Quotations & Proposals

We use a two page format. The first page defines the project and tasks, and the second contains “boiler plate” such as terms, rates, etc. That makes it easy to respond – just fill in the blanks on page 1.

Here is a sample, which we send on a letterhead:

****** Quotation ******

Client: XYZ Corp.
1234 Main Street
Somewhere, AZ XXXXX
ATTN: John Smith

Purpose: The client designs and manufacturers military doodads, and is failing MIL-STD-461 radiated emissions tests.

Tasks: The consultant, an electrical engineer specializing in EMI/EMC design and troubleshooting, will assist XYZ as follows:
— On site troubleshooting and reviews at XYZ facility in Somewhere, AZ
— Optional summary report (4-8 pages typical)

Schedule: By mutual agreement (or actual date if scheduled)

Budget: $XXXXX, based on 5 days (4 days on site plus 1 day travel time) plus estimated travel expenses of $2,500. Add $XXXX for optional report.

Please note this is a budgetary estimate. Actual time and expenses will be invoiced. Quotation will not be exceeded without prior client approval.

Terms: Net 30 upon invoice. Purchase order and advance travel retainer of $2500 prior to travel. Quotation valid for 60 days.

Daryl Gerke, PE                                                              April 3, 2014
Kimmel Gerke Associates, Ltd.
EMC Consulting Engineers

I don’t believe in lengthy contracts (keep it simple.) But if you are doing a longer term project, more detail might be needed such as progress payments, etc.

Some companies will have their own consulting agreements. Don’t hesitate to change them if there is something you don’t like.

For example, we remove any limitations on working for others. There is nothing proprietary about what we do. If we limited ourselves to one computer company/one medical company/etc. we’d be out of business in a year.

We do sign standard NDAs (Non-Disclosure Agreements) as long as they do not contain any non-compete restrictions.

(2) Business Insurance

You will probably need a General Liability insurance policy, which most companies now require. We got ours through an insurance broker – about $800/year for two of us. Your accountant or attorney can recommend a broker.

You may or may not need Errors and Omissions insurance. Also known as malpractice insurance, it depends on your area of expertise. Although we are engineers, we don’t carry O&E as our area has little risk of litigation. If we were civil engineers or architects, however, we’d carry it.

(3) Business Bank Account

You also need to set up a separate business bank account. You may need to wait until you have incorporated depending on the bank.

Incidentally, I recommend having an attorney handle an incorporation. Don’t do it yourself to save a few bucks. The attorney will recommend the best legal structure for you – LLC, Sub-Chapter S, C Corporation, etc. The attorney can also handle filings, registrations, and tax documents and IDs.

Finally, these administrative details are pretty simple. The big issue is the marketing – getting the business. But for smooth operations, now is the time to get these details in place.

P.S. Got a question? Drop me a line through the ASK DARYL page.

© 2014, jumptoconsulting.com. All rights reserved.

A question on workshops…

Here is a question from Cheryl at the Business Consulting Buzz group:

Has anyone had luck at using workshops as a sales tool?

I am considering this in my area at no charge to increase my client base. Has anyone been successful doing this? If so, what have you found to be the best time of day for larger attendance?

Does anyone think this is a really bad idea?

And here is my comment:

Cheryl — I think workshops and seminars are a great idea! They have been a major marketing tool in our engineering consulting practice for the past 25 years.

I agree with Bob Richard regarding conferences — always good to have a sponsor. We started with free workshops (1-3 hours typical), primarily at technical conferences. This provides a ready audience of highly qualified prospects (both interested in the topic, AND able to get money to go to a conference in the first place.)

Later, some of these grew into paid offerings, although we still do the freebies. In fact, the paid seminars now generate a significant part of our revenues. Over the years, we morphed from a pure consulting firm into a consulting/training firm.

Along with conferences, don’t overlook talks/workshops for local organizations (monthly chapter meetings, etc.) Just make sure you are talking to the right people with the right topic.

Two final final bits of advice:
— Keep is simple. You are not trying to impress your peers, but rather you are trying to reach those who need your help. Think tutorials.
— Don’t sell. Nothing turns people off quicker than a sales pitch. Deliver useful information. The acid test for us is “Even if we never do business, has this session been helpful?”

More details right here at JumpToConsulting – just check the archives under Marketing.

© 2013, jumptoconsulting.com. All rights reserved.

Question on Referral Fees…

Should you pay referral fees? That question was recently posted at LinkedIn on the Business Consulting Buzz group:

Referral Fees for Independent Consultants?

Interested in your opinions: As an independent Consultant, would you be willing to pay and/or receive referral fees?

Here is my reply:

As consulting engineers, we are concerned that referral fees might be perceived as conflicts of interest. As such, we do not accept (nor pay) any fees from the vendors serving our technical community.

When asked for vendor recommendations, we give clients at least two. If asked for our preference, we will share that with an explanation. Our vendors understand that no fee is expected, but we hope that the courtesy of a recommendation will be reciprocated.

We do, however, pay a referral fee to marketing partners for consulting business. These currently include a manufacturer’s rep (we are on their line card), and a training firm (we are in their catalog.) We also have agreement letters in place.

The percentages vary from 10 to 30% of the fee, depending on the effort. 10% is for a qualified lead that we pursue/close; 20% for a purchase order; and 30% for collecting the payment and sending us a check for our share. We pay referrals only when we get paid, and only on the fee (not expenses, as we do not mark up client expenses.)

Also, we don’t partner with consulting colleagues. We tried sub-contracting for a while, but it was more hassle than it was worth. When appropriate, we simply pass along leads with no strings attached. We make sure our clients understand that no money changes hands on referrals, and that we are out of the loop. In other words, we passed along a name — please make your own business decisions.

Hope this helps. Feel free to contact me. Been at this consulting gig 30+ years, happy to share, and still learning…

If you are on LinkedIn, you may want to join this group. If you are not on LinkedIn, what are you waiting for?  LinkedIn is where the professionals hang out.

© 2013, jumptoconsulting.com. All rights reserved.

Do I Need An Elevator Speech?

Another quick question from reader C, that generated the grist for this post. Thanks, C!

I’m going to a networking event for small business/non-profits, and it has occurred to me that I need a quick elevator speech.

Like “Hi I’m C from … we help people view and analyze their data by using maps”

Most people know that they need a database but most don’t know that you can actually take that data and view it in a different way.

I realize that I need a quick attention grabber – that describes what I do without getting too technical because it is definitely technical.

What do you think?

Here is my reply. Incidentally, C is consulting on the side (always a good way to start), but to protect her confidentiality, I haven’t included full information.  Don’t want to jeopardize the day job.

Hi C,

I agree that an “elevator speech” can help — although I doubt that anyone ever got any business in an elevator 🙂

I’d focus it a bit. WHAT you do, WHO you do it for, and HOW it will improve things for the client. Emphasize the results, not the technical details (you can always explain that later.)

What about this?  “Hi, I’m C. My firm helps non-profits better organize, analyze, and use their client/member databases. This helps improve both services and contributions.”

By the way, “contributions” are important — most non-profits constantly struggle with their revenues. You could add “small businesses” to the non-profits, but it sounds like you are targeting non-profits at this time.

If/when asked for more details, then you can explain using mapping technology that was developed for government applications, and how you are now applying it to non-profits and small businesses.

Keep it simple. Maybe a phrase like “You own customized Google Maps…” or some such thing.  I love simple analogies, and often explain my consulting practice as the “Ghost Busters” for electronic systems.

I also agree that you need to be careful of getting too technical. (I say that as an engineer who loves technology,  and who could spend all day and all night talking about it.)

Technology is just a tool to solve problems. Or, as the old saying goes, “Last year, millions of quarter inch drill bits were sold. But not because people wanted quarter inch drill bits, but because people wanted quarter inch holes!”  Focus on the results, and how things will improve.

Finally, you should consider offering a range of services. Initially, you could offer to “do it all”, taking the data, massaging it, and then advising the client on how to best use it. Perhaps even setting up a database if the don’t have one already.

Make it as easy as possible for them to use your expertise. As they become proficient, you could even offer to train someone in their organization on how to use the data themselves.

Some clients just want solutions, while others want to eventually bring the expertise in house, so be prepared to give them both options. Think like an accountant — you can just do the taxes, or you can handle the bookkeeping and other details as well.

Hope this helps,

Daryl

PS to Blog Readers —  If you have a quick question, drop me an email  – which may get answered in a future post (disguised of course.)

PPS – Been a little lax on this end which will probably continue as I take some vacation time.  But stay tuned — more stuff coming!

© 2013, jumptoconsulting.com. All rights reserved.

Question on fees…

As a follow up to an earlier post on LLCs, reader C asked about fees. Here is my response:

Hi Daryl,

Thanks for the advice on LLCs…

Another quick question — how do you go about setting up your fees?

C

Hi C,

Glad my advice helped. Still remember the questions I had many years ago and how others helped me.

Ah, fees. The number two question I hear, after “How do I get clients?”

I plan to do some detailed posts on fees, but here are some quick comments:

– Three popular methods are hourly/daily, project based, or value based. Starting out, you’ll likely use a combination of hourly/daily and project based fees.

– You will need to establish an hourly rate for internal use. It is also helpful when someone just wants a few hours of your time. For longer term projects, you want to move into project based fees.

Most people want to know a project estimate, not your internal billing rate. Think like a remodeler — how much will it cost to redo my bathroom? Not, how much do you charge by the hour?

– Incidentally, value based fees are great if/when you can get them. I think they are better suited for management consultants, where you can charge based on anticipated ROI.

This is a bit harder for technical consultants, which is where you would seem to fit. In those cases, most people want a solution to a specific problem, and want an idea of the overall project cost.

– Back to the hourly rate. You fee should include your salary, overhead, and a profit.

For a very quick estimate, take your existing salary and multiply by 2. Then add a profit of 20% — after all, you are in business and entitled to a profit. These numbers are typical of many businesses today, and should put you in the ballpark.

As such, this is what it would cost a client if they hired you outright (except you get the profit…) These figures can be refined, of course, but are a good place to start.

So, if your salary is $100,000/year, figure $240,000. Divide that by 261 days, and you have a daily rate of  $920/day or $115/hour. This is a MINIMUM — if you work for less than this, you might as well stay employed.

Even if you are part time, you should shoot for this as a minimum, as the market already shows you are worth this to an employer. You can use this rate to estimate project costs.

– Another method is to ask others in your business area. Most consultants will share that info if they don’t see you as a threat. You can also often get that info through professional organiztions.

Once you get a range, shoot for the 1/2 to upper 2/3 point when starting out. You want to be neither too cheap nor too expensive.

Whatever you do, do NOT lower your rates to buy business. A client that buys solely on cost is NOT a good client, and often more trouble than they are worth. (Incidentally, that is a little experience speaking there.)

– If you can charge more, then by all means do so. You do need to charge a premium for short term projects, as your down time and marketing costs are higher.

For example, we do a lot of short term (week or less) projects, so we charge about double what long term consulting or contract engineers charge.

We also charge a premium above that for training projects. Occasionally I’ll get a pushback, but I point out that we “hit the ground running.”

– If you are bidding projects, you need to spell out very specifically what IS covered and what IS NOT covered. You can always do extra work, but only for an extra fee.

Along that line, if someone wants to negotiate, NEVER reduce the fee without reducing the scope. Sometimes people are just fishing around (particularly if you are new,) so hold your ground.

If they do agree to a lower scope, that is fine — maybe they truly don’t have the funds to do everything they wanted to do in the first place.

Anyway, hope this helps. Looks like I have the makings of another blog post here 🙂

Best Wishes,

Daryl

Thanks for the response and all the great information. I’ve got a lot to think about and get prepared.

C

My pleasure.  Stick with it – I’m sure you will do well.   — Daryl

P.S. To my blog followers:

–If you have a quick questions, please drop me an email – which may get answered in a future post (disguised of course.) NO CHARGE for brief questions – they make great post fodder! Plus I simply enjoy hearing from my readers.

–If you want in-depth personal help, I’ve decided to add individual “telephone advising” for a nominal fee. See the new Services page.

–As an alternate to the above, I’ll also soon be including a FREE monthly group call-in session. (Watch my blog – still setting that up.)

© 2013, jumptoconsulting.com. All rights reserved.

Questions from a reader on LLCs…

Here is the synopsis of a recent e-mail exchange from a JTC candidate that you may find of interest.

I’ve edited it and sanitized it (personal information is left out), but I’m sure C will recognize herself.

Hi Daryl,

I came to your website from Mister Money Mustache, and I’ve decided to throw my hat in the circle and JumpToConsulting.

I currently work for XXX and intend to do the consulting on the side.  We are planning to follow the MMM path and retire in 5 years, so I decided I wanted to try and make the stash bigger.

I’ve already picked the company name. I am currently working on the website and need to register my trade name.

I’ve received different advice regarding setting up as a sole practitioner or as an LLC. Can you share some advice?

Finally, would you put LLC on your business cards?

C

Hello C,

Congratulations on your decision to make your own JumpToConsulting! It sounds like it is a good fit with your with your retirement plans too.

By the way, I am a big MMM fan myself. (Hey, he’s another engineer who broke free…)

Here are some comments:

Recommend the LLC over a sole practitioner. From a marketing perspective, I think it lends more credibility — it shows you are serious. It may also provide some legal protection, but you should talk to an attorney for clarification.

Recommend using an attorney to do the paperwork. Yes, you can do it yourself, but to me it is worth a few hundred bucks to know it has been done right.

– Ask around to find an attorney who specializes in small businesses. I prefer small firms (one or two lawyers) as they generally cost less and are more personal. Plus, I just like dealing with small practices. I also do the same thing with accounting, and have used a two person CPA firm for many years.

However, if you are just testing the waters, the sole practitioner may be OK for now. We did that for nine years as part time consultants, but incorporated as a Subchapter S corp when we we went full time in 1987. (LLCs were not popular then, so the Sub S made the most sense.) If you change later, however, you may need to update printed materials (letterhead, cards, brochures, etc.) to reflect the LLC status.

Regarding LLC on your business cards, my understanding is that if you are an LLC (or any other type of corp) you should put that on your business cards. Check with your attorney, but I believe that gives notice to your clients that you are incorporated. I’d do it anyway as it enhances your marketing image.

Really like your company name! Yes, you want to register it. You may want to trademark it too. We trademarked EMIGURU which is our website and which we use in our advertising. Glad we did, as it gave us leverage when a cyber-squatter picked up the .net and .org extensions and then used them in a competitive way. Because of the trademark, we were able to stop that. However, it cost us about $2K to resolve the issue.

– So, when you register your domain, pick up the .net and .org extensions, in addition to .com. You might want to pick up others, too, but those are the most common.

It sounds like you have identified your initial market place – needs, geography, type of business, etc. This is good, as it lets you focus your marketing efforts. But be ready to make changes as you move into those markets as you learn more.

— The markets will guide you. Try not to spread yourself too thin, though, or go in too many directions. “Do a little, do it well — you’ve done a lot.”

-One more piece of advice. Since you will be consulting part time, be particularly careful to avoid conflicts of interest. You don’t want to jeopardize your day job. And keep a low profile — petty jealousies can arise (the voice of experience speaking.)

Finally, I applaud your decisions, both the MMM-path and the JTC-path. I’ve followed both paths for many years, and they have paid off for me.

Thanks for reading my blog, and best wishes in your new adventures!

-Daryl

Have your own quick question? Drop me an email (just use the Contact form)  and perhaps you’ll be featured in a blog post too.

© 2013, jumptoconsulting.com. All rights reserved.

From the mailbag…re “Are Engineers Really in Demand?”

This is a response to Jim, who commented on “Are Engineers Really in Demand.” Thought this deserved a blog post, rather than just a response from me.

Of all the things that offer consulting opportunities Engineering, with the exception of Civil, is way down on the list. With all the non disclosure agreements and req 4 security clearances its almost impossible to be a real engineering consultant. Besides Companies find engineering the most outsourced, easily replaceable ppl prod today. Companies can hire temp Engrs today by the handful. Unlike things that take that special personality to make it successful Engrs have finally become the new grunt labor seen by Mgmt as “the ppl not smart enough 4 a real business career.” Wake up its 2012 not 1962!

Thanks for the comment, and for reading my blog! In fact, you’ve given me ideas for a new post.

First, I respectfully disagree that engineering consulting is not viable. Having done this full time for 25 years (and having made a very good living at it), I’ve also met a number of other successful full time engineering consultants across multiple disciplines — electrical, mechanical, civil, and more.  Even collaborated on projects with some, when we needed to leverage our individual strengths.

I also disagree that nondisclosures and security clearances are a barrier. We regularly sign nondisclosure agreements, although we do NOT sign non-compete agreements. (If we agreed to work with only one auto company, one medical company, one computer company… we’d soon be out of business.)

Regarding security clearances, we’ve worked on classified programs without clearances. We’ve held clearances in the past, so we appreciate this concern.  Fortunately, our engineering specialty does not deal with classified data, so we work around it.

But the military/defense sector is only a small part of industry — there are a myriad of opportunities in other areas (commercial, facilities, medical, industrial controls, and much more) that do not require security clearances.

Incidentally, we decided early on NOT to focus solely on defense, and have been better off for it. (Didn’t want all our proverbial eggs in one basket.)

I do agree that engineering is being outsourced, and to I share your concerns. But is it realistic to expect that we in the US should “own” all the engineering?

After all, there is a world wide market for our products.  My experience with non-US engineers has been positive — smart, innovative, and driven with a passion for engineering. (Maybe that explains some of the outsourcing — companies seek talent where they can.)

At the same time, there are many medium and smaller companies who employ local talent. In fact, they are among my favorite clients. Many of the engineers are refugees from big companies, and are more interested in changing the world than climbing the ladder.

Ditto the management. Many are engineers themselves and appreciate the contributions of their employees — and also their consultants!

Regarding the latter, these companies are often fertile ground for consulting, particularly if you have unique talents and experience such as power electronics, analog design,  RF design, EMI/EMC (our area), etc. These smaller companies often need help, but not on a full time basis. Yes, they often “outsource” too, but to consultants.

Finally, I agree with your displeasure with unenlightened management. I spend the first half of my career in the corporate environment (big and small), and was twice suddenly out of a job due to corporate bungling and egotism.(Also two reasons why I eventually decided to hang out my own consulting shingle.)

But I also worked for several good companies with great bosses where I learned a lot. Ditto my clients — I’ve seen some great managers in both large and small companies.

So if you don’t want to be on your own, rest assured there are good managers out there — but you do need to seek them out.

I hope this helped. When I responded to the IEEE article (Are Engineers Really in Demand?), I sensed a lot of frustration, just as in your comments. That’s OK — I’ve been there too. But my goal was to show there are viable alternatives, with consulting as one of them. Good luck in 2012, and beyond!

© 2012 – 2013, jumptoconsulting.com. All rights reserved.

Questions from a reader on starting out…

Here is a recent email exchange that I though some of you might find of interest. I’ve hidden the name for confidentiality, but I’m sure S will recognize himself.

Hi Daryl,

My name is S.  I’m also a follower of  your blog. How are you doing with that these days?

I’ve noticed you’re an engineer who had a lifestyle-enabling consulting business. Were you able to liberate yourself with the income and time required to live your ideal lifestyle?

Always love to learn what my fellow community members are up to, and the obstacles they are facing.

S

Hi S,

So far, so good. After 25 years as a full time consulting engineer, I think it might work 🙂

Seriously, it has worked well. The consulting business has been a lot of fun — probably more than had I stayed in the corporate environment. Freedom is more important to me than status or a lot of money. I prefer to be the captain of my own ship, even if it is just a little rowboat.

A couple of secrets I’ve learned. Live below your means, and sock away money for retirement and/or lean times. I draw a relatively low salary to cover living expenses, which usually leaves a bonus at year end for savings and funding a Keogh, etc. This also smoothes out the cash flow, and prevents the lifestyle from rising to the income peaks.

No great obstacles. The biggest initial challenge was bringing in the business, which required a lot of up-front marketing effort. Now that I’m established, that part is easier but it still requires some attention. Kind of like tending a garden.

I assume you are an engineer, too. I’ve found consulting a great way to practice the profession. It took me a while to make it work, but it has been worth it.

Best Wishes,

Daryl

Daryl,

I’m not an engineer… I am however focused on using the recipe to make more free time for myself.

I enjoyed reading your answers. There is one thing that I would like to learn more from you: how did you specifically bring in the business and execute the up-front marketing initially?

Thanks,

S

Hi S,

Ah, the number one question I hear — how do you get the business? The short answer — peddle, peddle, peddle…

Seriously, we have used a number of methods to get business over the years. There is no simple “silver bullet”, and it takes both time and effort. Here are some things we’ve done:

  • Write – articles, newsletters, books
  • Speak – local meetings, national symposiums
  • Network – professional organizations, trade shows
  • Internet – Web site, blog, LinkedIn
  • Collateral – business cards, letterhead, simple brochure

Many of these are discussed in more detail in my blog. Not all have been addressed yet.

We didn’t do all of these at once. We started with writing tutorial articles for the local business magazines and for the “second tier” technical magazines. Both can get you published in 90 days or less. We also got active in our local professional organization.

Probably more important in the very beginning, however, was identifying a couple of potential clients, and then working with them. Our first two major clients were a test lab and a training company. We subcontracted to both of them for several years.

  • For the test lab, we were like substitute teachers, filling in as needed. That meant we did a lot of second and third shift work, often called at the last minute.
  • For the training company, we spent a lot of time on the road the first couple of years. Neither were full time. In our “spare time”, we actively pursued other clients.

So, as you can see, at first it was a lot of work. To be blunt, if your goal is more free time, starting a business may NOT be the way to go. In the early years, you’ll likely work much harder than you ever would with a full time job, and probably make less money.

In closing, I’m fond of analogies. Starting a business is a like the old pioneers who homesteaded on the prairie (as several of my great-grandparents did out in Nebraska.)

  • First, you start out in a dirt (sod) house, made after you busted the sod yourself.
  • Next, you plant a garden & orchard, but you scrape by until they start to produce.
  • Soon after that, you build a barn for your cow and horse, and then work from sunup to sundown to feed and tend them.
  • Finally, if you are lucky (no tornadoes, droughts, or other disasters), in several years you start to get ahead.

But even then, you don’t get rich. Such is the price of freedom to do your own thing. Would I do it again? Absolutely! But it was a LOT of work, with very little free time in the beginning.

Good luck in your pursuits,

Daryl

PS – It just occurred to me that my message might be a bit negative.

Yes, if you want to start a full time consulting practice, plan on a lot of work. On the other hand, if you are looking for a PART TIME practice, and don’t need to make a full time living, then consulting can be a very viable way to make more free time for yourself.

I’m kind of slipping into that mode myself, as I become “semi-retired.” The real goal, of course, is to free up time to do other stuff I want to do — such as this blog.

Daryl,

No worries. I’ve been emailing enough people to hear similarly toned opinions before.

I can currently live on a part-time income while spending the rest of my time on a product (i.e. front-loading my work time right now so that I’m not making decisions based on financial consequences later).

Best wishes to you too,

S

And good luck to all of you! Similar questions?  Drop me an email at daryl (at) jumptoconsulting (dot) com, and maybe you’ll appear here too.

© 2012 – 2013, jumptoconsulting.com. All rights reserved.

Are Engineers Really In Demand?

Here is my reply to a recent IEEE article “Are Engineers Really in Demand?” The authors posed this question in response to a recent  Washington Post story that discussed unemployment among engineers. Being a geek myself,  I was intrigued.

What disturbed me, however, were the comments that followed.  Way too much griping about how the government, big business, or foreigners (H1B visas) were to blame. Whoa!  What happened to being responsible for your own career?

So here was my response:

Lot’s of complaining here. Let me offer an alternate (more positive) view.

After being laid off twice early in my career, I decided to hang out my shingle as a consulting engineer. After 30+ years (25 in full time practice,) I can say it has been great. The technical work is interesting, the pay is better, and the respect is even better yet. Not only that, as you get older, the perception is that your experience is even more valuable — rather refreshing.

The down side is that you no longer have the “security” of a company behind you. But as most of us know, that is a myth anyway. In fact, with consulting it is quite the opposite — no one client can put me out of business.

But you DO need to hustle for the business, something that frightens many engineers. I just look at getting new business as another technical challenge. After all, we’re supposed to be problem solvers, right?

Frankly, I wish more engineers would adopt the mindset of working for themselves, rather than depending on the corporate bean counters for sustenance. If doctors, lawyers, and accountants can be in practice for themselves, why not engineers?

Food for thought. Finally, if you are considering this, get your PE license. You’ll need it to open some doors. Then start hustling — you might be pleasantly surprised with the results. I’ve certainly enjoyed my way of practicing engineering. Good luck!

The results? A bit disappointing. One troll did respond with a rather bizarre comment “… You escape for now. The giant vampire squid of capital is seeking the small leaks next…”  Huh?  Missed the point, or really bitter I guess.

But I shall remain positive. If you are reading this, you are presumably not willing to depend on  “the man” to give you a job.  Creating your own can be a satisfying alternative — consulting or otherwise. You have my encouragement…

P.S. Will do a talk on consulting at the Start Your Own Business Workshop this Saturday in Chandler AZ. The workshop is sponsored by LaidOffCamp, a great program for those who have lost their jobs.

Who knows — maybe we’ll even help launch some new consultants!

© 2012 – 2013, jumptoconsulting.com. All rights reserved.

Don’t wake up at 60 wishing…

Adding a new category to this blog — Encouragement. The original intent of this blog was to provide “nuts and bolts” information for those considering making the JumpToConsulting. You know — if you just knew how to do it (or how others had done it), the rest would be a piece of cake.

But recently it hit me that fear and uncertainty were even bigger issues. Not that I’ve never been afraid, but I don’t recall being paralyzed by fear either. Particularly in business situations — after all, as Bob Parsons (founder and CEO of GoDaddy) says in his Rule #4 , “…if it doesn’t work, they can’t eat you…”

The epiphany occurred at a recent one day workshop by Alan Weiss, the Million Dollar Consultant (TM.) It was part of his Friday Wrap (TM) program, which I enjoy as a thought provoking weekly tonic on the consulting business. When he brought up the importance of self-esteem, however, the floodgates opened.

I sat there amazed as several very successful and intelligent attendees confided their irrational fears. Some were concerned about achieving success (Can I do it?), and some were concerned about handling success (Do I really deserve it?) One even confessed fears about losing it (What if I can’t repeat it?)

Thus, the new category — Encouragement. No, this won’t be rah-rah stuff, but I’ll occasionally share some ideas, along with some helpful references.

To kick this off, here is a reply to a recent posting by Chris Gullibeau at the Art of Non Conformity (a favorite blog of mine.)

Chris tells of Rachel, his young seat mate on a recent international flight. She was very successful, but quite discontented with her job. The problem —  it was a “good job” and thus hard to leave. If nothing else, what would people think? After all, she had spent years to get two financial degrees, and was now jetting around the world for her employer. She was a “success,” but clearly unhappy.

Judging by the numerous replies, many others felt the same. So, to offer some encouragement, I submitted the following:

  • It seems like only yesterday I pondered these questions. One guiding principle for me – “I didn’t want to wake up at 60 and regret not even trying…”
  • So I made changes. Scary at times, but most worked out fine.
  • At age 30, left a comfortable job as an engineer to try sales. Scary at first, but had fun. Made some new friends. Learned a lot.
  • At age 34, left to join a startup. Fun a first, less fun later, lost money. (Even got fired one day.) Learned a lot.
  • At age 36, started a consulting firm. Failed. Crawled back into a corporate job. Learned a lot.
  • At age 38, went back into field sales. Great fun, made good money, made more friends. Learned a lot.
  • At age 41, started consulting company again. Market crashed the first day in business. Succeeded anyway. Been a blast. Made more friends. Learned a lot.
  • Age 64, still consulting. No regrets. Financially secure. Also raised two sons, married 43 years. Still learning, still having fun. But where has the time gone?
  • Big lesson to share Life is way too short to waste doing something you no longer enjoy! Don’t wake up at 60 wishing…

In short, I did it, and you can too. No horn tooting here — just offering some encouragement.

So let me know if you found this helpful. And remember what Franklin Roosevelt said the day after Pearl Harbor — “The only thing we have to fear is fear itself.” True in 1941, and still true today.

© 2011 – 2013, jumptoconsulting.com. All rights reserved.