Government Proposal Consulting | Becoming a Proposal Consultant

  |  August 30, 2010

 

In this article, I will address what is involved in proposal consulting. There are two parts to the article.  First, I will describe how I did it.  Next, I will describe how I think you should do it, based on hindsight.

My Experience Becoming an Independent Proposal Consultant

There are two ways you can get into the consulting career path: (a) With a carefully laid plan; or (b) As a result of unforeseen circumstances.  With me, it was number “b.”  I was working in Virginia Beach at a progressive small business named Computer Dynamics.  Following a company-wide reorganization, my position was abolished.  Suddenly, I was on the street with no employment. 

I looked for work unsuccessfully for a couple of months; then some walk-in business appeared from a company needing consultant assistance.  I did the assignment successfully and said to myself, “I can do this.”  So I hung out my shingle to consult, and suddenly I was in the business of working as an independent consultant. 

As could be expected, getting into the consultant business with no previous plan was a challenge.  I spent a lot of time over long days and weeks marketing for business.  I connected with a few assignments and did them successfully.  However, it’s no surprise to learn, the volume of work was not enough to make a good living at first.  I found that I was spending about 35-40% of my time looking for work and 60 – 65% of my time on actual paying assignments. 

About eight months after my job had ended I found a customer that needed a lot of service.  They used about 60% of my time, and I filled in the rest with other small assignments.  As a result of having the one major customer with smaller assignments to fill in, I had the most prosperous year of my life up to that time. 

However, at the end of the year, my major customer changed its business plan and ceased using consultants.  Since I had concentrated most of my time with them, I found I didn’t have enough other business connections to make a good living.  I was unable to quickly find a replacement for the large customer, and I was also unable to get assignments through the only proposal consultant agency I knew about at that time (TechMedia). Consequently, my second year as an independent consultant was the lowest of my career financially.  Just going to McDonald’s for a burger became a challenge.

During my third year, I spent a lot of time marketing for business, and I was able to build up a more profitable business.   Now 25 years have passed, and our company has become a major player in the proposal services industry.  As a result of my experience, I have an added insight into how to enter business as an independent consultant – hopefully, with less struggle than I experienced.

A Better Way to Enter the Market as a Consultant

The first question, which you must ask and answer – before even deciding to enter the market – is should you become an independent consultant at all?  In order to answer this critical question you must consider: Do you have senior-level professional capabilities? If so, then you are potentially qualified.   Would you enjoy a more entrepreneurial lifestyle, where the tradeoff is more total income but less certainty than a salaried position? If so, then this career may be good for you.  Another key qualifier is personality.  Do you have an agreeable personality with a proven group work capability?  If so, then you are a potentially a good fit in a market niche that is usually not friendly to unconventional personalities.

Let’s assume you have carefully weighed the odds, and you have determined to take the plunge into consulting.  Having a plan before entering the market provides a huge advantage.  The two primary components of the plan include: (a) Developing leads to consulting opportunities in advance; and (b) Saving enough money to carry you through two lean years. 

Leads to business opportunities come in two forms:  (a) Connections with government contracting firms that use outside consultants; and (b) Connections with agencies that place consultants on assignments with end-user companies.  My experience suggests that about 85% of consultants get their business either wholly or in part through agencies; and about 15% have sufficient connections to get their work directly with the end-user companies.   The average consultant has two or three agencies they work through, as well as a few companies with which they work directly. 

The secret is to have sufficient connectivity with agencies and / or companies to provide a sufficient stream of business.  If you are in a position that provides a lot of exposure and contacts with business development groups in companies, then it may be possible to form your alliances with proposal groups that will hire you directly.  If you do not have such exposure, then the most efficient route is to make your alliances with the proposal services agencies.  If you set up those connections and alliances before going out to consultant, you can be in a much more profitable position than I was in when I entered the market.

It is impossible to predict how long it will take to reach a status of profitability when you enter the market.  If you have a lot of friends in positions to hire you, this may occur quickly.  However, if your experience is more normal, then you will likely need two or three years to build your business to the level of profitability.  Those who successfully make the transition can expect to earn, according to my estimate, 20-30% more in real dollars than those who have a salaried position.  But the trick is making the transition. 

Just for argument’s sake, let’s say you have been earning $100,000 per year as an employee.  You are going into consulting, and you estimate you will earn $75,000 the first year; $95,000 the second year; and $115,000 the third year.  Then you can do the math and estimate how much expendable savings you need to make the transition.  Another factor in the estimate is allowing probably 20-25% when you convert from salaried employment with benefits to independent employment without benefits.

Also, there are some hidden or unexpected factors you will encounter when making the transition.  Undoubtedly one of the most important is your spouse or significant other.  Not having enough cash, or not having REGULAR cash flow, is guaranteed to create anguish on the part of many spouses.  The way around this is to save more cash in advance or possibly educate your spouse about the advantage of having a better income path when you have made the transition.  This area can be a pretty wrenching problem. 

Another unexpected complication is the lead-time required to collect your fees.  If you are used to waiting 2 weeks for your current paycheck, then you can add an additional 2 to 6 weeks to this cycle when you go into consulting.  Let’s assume you go into consulting and you are one of the lucky ones who immediately have good customers and sell a lot of work.  You still have an added need for capital, because your fees are tied up in your payable cycles that will be, in general, a month to six weeks slower than your pay was at your salaried position.

Consulting is not for everyone.  However, for entrepreneurial souls the advantages are great – more exciting work, greater variety of assignments, and higher pay.  As the saying goes, “When you consult, you also get paid for your second 40 hours in the week.”

 

 

Comments

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    Tom Harmon

    Thanks for this article, Russell. I am also in category b) and I greatly appreciate your open advisory insight. I’d also like to read about the comprehensive tax, license, and incorporation aspects of being an effective independent consultant. I am off to the Virginia unemployment office for more information.

    Reply