You don’t need to be Financially Independent to start a consulting practice…
No, you don’t need to be fully Financially Independent (FI), but you should have enough in the bank to last you six months to year. That is exactly what I did — the second time around – and it finally worked.
My first attempt was precipitated by a layoff/firing. I had been moonlighting, and decided to try full time consulting as the itch was pretty bad.
Although I had some savings, it was not enough. The economy was down, so after about three months I (wisely) threw in the towel and climbed back into the corporate womb.
As a result, I do NOT recommend starting a consulting business after a layoff unless you can survive financially for six months to a year.
My second attempt a couple of years later was planned in advance, with at least six months money in the bank, plus commitments from future clients. The unplanned event was the stock market crash the first day in business, but thanks to my financial reserves I succeeded.
Even on the second attempt, I was not yet fully FI. That came a few years later. But with enough F-You money in the bank, I felt confident and succeeded. The timing was good, and I’m not sure it would have been as successful had I delayed my jump a few more years.
My point is this — you don’t need to be fully FI to start — you just need enough to get you to positive cash flow. You also need a vision of why and what your are jumping into!
In recent years the FIRE (Financially Independent Retire Early) movement has taken off. I enjoy following the financial adventures of FIRE bloggers, and applaud the fiscal prudence they advocate and follow. (It works — I followed that path myself.)
Unhappy with their current jobs, however, often the emphasis seems to be on the Retire Early (RE) part of FIRE, with little thought of what to do next.
Hating your current job is not a good business plan, consulting or otherwise. Better to focus on what you want do with your life, not on what you want to escape. Jump TO… not FROM. That can take some serious soul searching, but in the end is worth it.
Finally, give some thought to WHO you want to serve. That is the essence of consulting – serving clients by solving problems and/or helping them achieve dreams.
Figure that out, and I’ll do my best to help you with the mechanics of making your own JumpToConsulting.
Cheers,
Uncle Daryl
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