Does a successful consulting career mean you should only work for yourself? David Klee insists you first need to become a skilled consultant with the right kind of reputation. In episode 310, part two of our focused discussion on the nuances of consulting, we dive into the realities—and the pros and cons—of contracting, working full-time for a consulting firm, and the independence of running your own business. These represent 3 of the 4 ways someone could work as a consultant. Building on last week’s conversation about what makes a great consultant, we discuss the importance of developing a reputation and some tips for how to do it. David also shares his approach to assessing consulting talent, highlighting the key traits that make a consultant stand out. And we’ll also hear why, after 11 years owning a consulting firm, David can’t see himself doing anything else.
Original Recording Date: 12-18-2024
David Klee is the founder of a niche consulting company called Heraflux Technologies. If you missed part 1 of this discussion with David, check out Episode 309.
Topics – Contract Work as a Consultant, Working for a Consulting Only Firm, Starting a Consulting Firm / Doing Your Own Thing, Keeping Consulting Enjoyable
2:25 – Contract Work as a Consultant
Another way to do consulting work is to be a contractor. How does this work differently than full-time employment?Full-time employment could be 1 project for 40 hours per week, but it is unlikely. It will more often be a certain number of hours per day working on a few (or even several) different projects.“Things just kind of float to where you’re juggling anywhere from 3 or 4 to 20 projects at the same time. A contract is going to be a tightly defined scope for a block of time for either per day, per week, whatever. And it’s going to run a duration such as 2 months, 6 months, a year…something like that where you’re able to refine what you do. It’s generally speaking going to be a task or a set of tasks, and that’s what you do.” – David Klee, contrasting being a consultant working full-time for an employer that does more than just consulting with being a contractorA project you work on as a contractor is controlled. You know when it starts, what to expect, and when it ends.A contractor has to line up the next project once one ends. Knowing the endpoint can help you understand when it’s time to begin looking for the next project.Contracting might allow focusing or going deeper on the work you are tasked to do instead of getting too broad. David gives the example of needing to build a data warehouse for a specific ERP system within 6 months.David says contract work is safe and sustainable. In fact, one of the first projects after David started Heraflux was a contract engagement which required travel to Connecticut and working 5 days per week at a customer location for 6 months.Where can people find contract job openings? Are these on company websites, on LinkedIn, only available through headhunters, etc.?David says it works best if you can go through a headhunting entity. Companies may post contract positions on LinkedIn or popular job sites, but a headhunter can evaluate someone’s skill set and share a set of projects that align to that skill set. The candidate can then select which projects they would like to interview for, and the interview may be with the headhunter, with the end customer, or possibly both.“It’s a way where instead of you looking (and there may be phantom jobs or people just fishing for who is out there) the headhunter is usually going to be a lot more serious. If it’s through a headhunter, the right might be a little lower than if you would go direct; however, the headhunter might also be able to provide you healthcare…and that goes a long, long way…. There are some benefits like that that really do help.” – David Klee, on contract work through headhuntersA headhunting firm could potentially provide the healthcare benefits for 6 months or 12 months while you are working on a project so you don’t have to look for it yourself.The headhunting firm may also be able to handle tax withholdings from your paycheck so you don’t have to handle it after the fact. Contract workers would likely be paid via a 1099 form in the United States.What type of headhunters should people who want to do contract work seek out? Are there big names to be aware of?There are national chains that do this as well as regional and local. Each one will have benefits.A national chain may be more likely to offer you interviews for projects that require air travel to a customer location each week.Regional headhunting firms may have some travel, but you can easily get a feel for their reputation. You can speak to people who have worked with them as contractors as well as companies who have worked with them. This can help you get an idea as to whether the firm is a fit for what you want to do as well as a cultural and a people fit.“The national chains will almost certainly have more opportunities. You may have to travel for it. The regional stuff you’ll be able to get to know them a little bit better, and after enough time they may actually know to call you if they have a project of a certain type…. And there’s no reason to say you only have to work with one headhunter.” – David Klee, on contracting and working with headhunting firmsDavid mentions he has gotten to know a number of good firms in the Omaha and Lincoln, Nebraska area.When a project ends and the headhunting firm you have been working with doesn’t have more projects that fit you, nothing is stopping you from working with a different firm.Working with the headhunting firm can help spread your reputation to multiple end customers because of the reach of the firm.Would a headhunting firm or end customer pay for travel if you are working on a contract basis, or would the contractor need to pay for it themselves?David says it should be that someone else pays for the travel, but this can work in many different ways.Sometimes the headhunting firm may book all your travel arrangements as part of any travel you do. If this happens, beware of getting placed in very inexpensive accommodations.Sometimes you may be given a travel budget, and it’s up to you to figure out how to use it. Exceeding that budget would come out of your own pocket, but if you come in under budget you may get to keep the difference.Some people may do contract work as a side gig in addition to their full-time job in the form of moonlighting.David says you have to ensure your contract for your full-time job does not prohibit you from doing this kind of thing.For some full-time employers, doing extra work on the side is not a problem as long as there’s no conflict of interest.“…The side stuff should never get in the way of the full-time job…. Some companies out there, including some big ones, they’ll let you moonlight as long as you disclose it and as long as there’s no chance that it could ever conflict and hurt the mission of the full-time job.” – David Klee, on doing part-time contract work in addition to your full-time jobDavid says moonlighting is a great way to gain experience consulting, but you need to make sure no one expects you to be available during normal business hours. This can be challenging as many companies might want things fixed during the day.David gives the examples of database index tuning and custom programming that should be fine to work on after hours. But you should always make sure the company you’re moonlighting is ok with your hours of availability.What about the stability and volume of contract work during difficult economic times?Contract work according to David will ebb and flow usually with what the economy is doing.In difficult times, companies will pause projects that involve outside contractors or maybe just slow them down / decrease the hours.David cites a customer he worked with who leveraged contractors and consultants for 75% of the IT workforce. During tough times this company would pause or suspend the projects, making sure they never had to lay off full-time employees.Being on a time-bound project as a contractor does not protect you from difficult economic times. Companies can still pause the project or end it.“A lot of people I knew were on contracts during 9/11. And boom. A lot changed, and these projects were just done. Within a couple of days a whole bunch of stuff changed, and a lot of people were out of work. Now it didn’t last that long for them thankfully. But, there’s always a clause in there that says these contracts can be terminated at will.” – David Klee, on contract workDavid shares the story of leading some SQL Server migration projects for a large airline and the changes that happened when the pandemic hit in 2020.“I get an e-mail at 10 o’clock in the morning saying, ‘stop what you’re doing. Document everything you can through the end of the day. That’s it.’ …Because the airlines shutdown, it was cost savings panic mode, and every external project with external people suspended immediately.” – David KleeHow do hiring managers for full-time roles look at candidates who have done a lot of contracting?David doesn’t see someone doing contract work as a bad thing, but it depends.He would want to know why the person was choosing to go back to full-time work somewhere. Did the person get a poor reputation from doing contract work, or do they just want benefits like healthcare, paid time off, a 401K, etc.?“Those are a lot of reasons why a lot of folks get out of consulting and go back to being an FTE. There’s stability. There’s job security. There’s benefits. If you’re tired of the constant churn of different projects, you now have a controlled environment, and you know what you’re working with there. And there is nothing wrong with that.” – David KleeHow is the interview process for contract work different from full-time employment? Is it shorter?David says usually it is shorter, but it also depends.Interviewing for a full-time role might be 5 or 6 interviews because the company wants to make sure you’re a cultural fit in addition to just being a technical fit.When interviewing contractors, people might be more concerned about the ability to get the job done rather than the cultural fit. When interviewing for a contract role proof of competency and ability to get the job done are going to be the most important things.David says the contractor may have 2 interviews as opposed to 3, 4, or 5.Thanks to his reputation for doing good work in the industry, David’s average interview / pre-sales call is 30 to 60 minutes. After that it’s either a fit or it isn’t (on both sides).“People know what we do, and by the time it gets to us, they know we’re qualified for what they’re going to ask us to do. The question is…how long is it going to take? When are we going to start? Thankfully, after being in business 11 years, we’ve finally gotten to that point where we can say…we can do this, and you know we can because you know us.” – David Klee, on developing a reputation17:14 – Working for a Consulting Only Firm
Another option for people who want to do consulting is to work for an established consulting firm (i.e. a company whose sole business is to do consulting). Are there things to look for in a consulting firm to work for?Talk to people in your professional network about the firm’s reputation in the industry.David would also recommend speaking with consultants who work there already (i.e. future teammates).David would advise considering the following questions. Some may be the same as what we have previously discussed, but some are very different.Are current employees of the firm happy?Are projects a “bait and switch” approach or are they completed to meet and exceed expectations of everyone involved (customers, consulting firm employees, etc.)?What is the caliber of the firm’s customers? What size companies are they, and can the client hold up their end of any project?What kind of travel is required?Will you need to serve as part of an on-call rotation?What’s the breadth of customers you should expect to work with, and how many projects should you expect to work on in a given week? If this firm does remotely managed services, for example, you could be working with 20 different customers in a single day. Are you ok with context switching like this?Are you responsible in any way for pre-sales as well as delivery / post-sales? What does the split look like?What will you be expected to do?Is working for a consulting firm in one specific niche ideal, or should someone target a consulting firm servicing many areas?“If a consulting company has a super tight niche, are they changing with the times? It gets really interesting. If the company has enough business to do XYZ and that is all they do and then some revolutionary technology comes out of the woodwork…guess what? They’re done.” – David KleeDavid shares the story of someone he knew in college who was a talented Adobe Flash programmer and didn’t want to learn anything else.David mentions being on-call 24/7/365 for most of his employers (including holidays).Ask a consulting firm where you might want to work how hard they push this and what constitutes an after hours call.If you take a vacation, will they call you while you’re on vacation? Are you expected to check e-mail on vacation?What will the firm do to help keep your technical skills current?Do they want you to get certifications?Will they send you to conferences?Will you be given time each week for professional development?Some firms might just expect you to keep up with the technology on your own but may not encourage it or support it, while others may be very good in this area.David knows many people in the SQL Server community who would support someone attending a conference or a SQL Saturday and ensuring that person can be present to learn and network with people (i.e. the workload would be covered by others at the firm).“They benefit. You benefit. You’re happier. You’re not going to jump ship to somebody else that’s going to do this.” – David Klee, on training and professional developmentCould training employees / allowing them to get certifications be looked at as just making them more expensive?David says the firm can justify billing more for a person because the person has increased capabilities.Do consultants have insight into how much the consulting firm is charging compared to how much the consultant makes?David says this is rare.“When I was consulting for somebody else, I would always see the technical details of the paperwork. I would never see the money side. You knew what companies were capable of charging. You never knew what they were actually doing.” – David KleeThere is another layer. The company you work for may be a subcontractor to another company. The markup to the end customer of your company’s services can be considerable.Is it a safer choice to work for a company whose main business is consulting (i.e. it’s not just something they do in addition to selling technology)?David says it depends.“If you’re working for a company whose sole mission is consulting, that’s their revenue stream. If you’re working for a company who sells software and then consults on the software, if things slow down, they still have the revenue stream from selling the software…. So that’s the safer route. However, if a company is solely purposes with selling you and they’re good and the rates are reasonable and they know how to market, you shouldn’t be concerned…because they should have enough…to say, ‘if we don’t have a project for you for a couple weeks, it’s ok. We’ve got the money banked, and we’ve got another one coming soon.’” – David KleeIs there a natural progression for the consultant through the options we’ve discussed so far?David doesn’t see people move away from roles at companies that do more than just consulting very often.Usually, those folks who do contract work tend to enjoy it and consistently move on to the next contract without too much trouble.If you are a consultant working for a company that only does consulting, there are a couple of paths forward:Progress through the ranks and outgrowing consultingThose who get tired of the grind will likely go to contracting, to a full-time employer somewhere, or choose to do their own thing / start their own business.25:14 – Starting a Consulting Firm / Doing Your Own Thing
When should you seek to go out on your own? Is it only if some of the other options aren’t possible?“I would say you should do one of the other 3 to prepare you to be a consultant for yourself.” – David KleeOwning your own consulting firm juggling multiple projects means you are responsible for everything – pre-sales, delivery, marketing, paperwork, and much more.Projects may not last as long as if you were doing contract work. You need to be ready for this as a consulting firm owner.David says you have to know how to talk, how to sell, how to deliver, and how to upsell.“You need to know where your next project is coming from.” – David KleeDavid tells us upselling is not to be taken in the used car salesman sense. It’s about spotting legitimate problems within the realm of your expertise and pointing them out to your customer.“It’s other problems that you can solve that you know how to do, and you have to know how to say, ‘I’m better than the other people at being able to solve this problem. And I already know you. I already know your environment. I’m better suited to solve this because I’m already here.” – David Klee, on upsellingWhen people like the work David’s firm has done, they call them back for return projects. Because he trains people to solve their own problems internally, a customer generally does not call him back for the same problem.This goes back to reputation.“But the hard part is…how do you get the reputation? Consult for somebody else. Get the contracts, and get to know people. And put yourself out there…. The biggest fallacy is that you might be good at something technically. And a lot of people…I don’t know where they get it from, but they seem to think that they can just hang a sign on their front door that says ‘I’m good and I’m open for business’ and that people will just come flooding in…. It unfortunately doesn’t work like that…. That’s what a lot of folks think, and then they go 6 months and they’re barely making minimum wage or less. People run into trouble with that, and it’s tough…. I’m good. I know what I’m doing. Why can’t I get the projects? People don’t know that you’re there.” – David Klee, on going into business when you don’t have an established reputationDoing presentations and going to user groups is good marketing just as we discussed earlier. Nick encourages people who have been laid off to attend user groups to build connections with new people.David mentions he recently won a project because someone remembered a presentation he gave several years ago at a SQL Saturday event. This was about word-of-mouth reputation.If I’m a consulting firm owner who has developed a reputation and needs to expand the firm by hiring more people, is it more attractive to hire contractors or full-time employees?David says it varies. You need to consider your project flow and revenue first. Do you have enough to support bringing someone on board and to train them to do the project work needed?Can you find someone with the skills you need, and can you charge enough to afford the person? Will you have enough to pay for the person if at any point you do not have enough work to keep them busy?“Take whatever you think you make. The employer is paying about 40% more between healthcare and taxes and all that stuff. They’ve got to be able to cover that bill, and some people are not cheap.” – David KleeDavid has developed a ring of contractors and consultants he works with now (meaning the paperwork is in place to do so as schedules allow). Though the cost is more per hour for these people, he does not have to pay to keep them on the bench as full-time employees if there are no projects for them.David did try the full-time employee approach at first, but people were recruited away.The other side of this is David cannot dictate a contractor’s time like he could a full-time employee.If the projects that you work on are flexible, David tells us there are a lot of independent subcontractors who are really good. But it also goes back to who you know that does the type of work fitting the help you need.What is David looking for in contractors and consultants who work for / with him?“I look for people that genuinely love what they do. It shows in the work.” – David KleeDavid likes to ask people things like:How much of your free time is spent keeping up with technology?What was the last new technology you picked up and learned, and how long did it take you? And why did you do it?What kind of a home test lab do you have?Name people in the industry who publicize how-tos and training videos and blog posts.“Tell me the last time you did a technical presentation. What was the topic? How many people were there? Did you enjoy it? What did you learn from doing the presentation? What could you have done better on the presentation? And when are you giving it again so I can watch you do it?” – David KleeA video link of you doing a technical presentation is a great thing to have ready to share with someone!How long have you been working in this?Why are you in this industry? Is it something you enjoy?“It’s that want to know, the want to fix, the drive to do better and learn and grow and contribute. That’s what I look for.” – David Klee, on what to look for in consultants he would hire or work withHas David spoken to anyone who struggled to articulate why they enjoy working in this industry or why they work as a consultant?David says yes.“If they can’t tell me why they want to be or stay as a consultant, it tells me they may not be really invested into it. So, they are just there on a 9 to 5 basis. For some jobs, that’s perfectly fine. It really is. If I need an operations person to keep the lights on, keep stuff running, that’s fine. But if I need somebody to say, ‘we’ve always done it this way, but here’s a new way. And it’s a better way. And I figured out how to do this.’ That’s what I want…. Do you enjoy finding a better way? I think that’s the one succinct statement I can say right there that makes a great consultant instead of a good consultant.” – David Klee35:47 – Keeping Consulting Enjoyable
After all of his experience in consulting and now after owning a business for many years, how does David keep the enjoyment despite the stress and all the obligations?David likes doing new things and gets bored easily.“As a consultant, you can choose to spend non-billable time that’s business oriented.” – David KleeWhen there is an emerging trend or technology, David can spend time learning to deepen his expertise.David gives the example of clearing his calendar for 2 weeks to go deeper in some specific technologies. A full-time employee is unlikely to get this type of opportunity. The consultant can use the learning to widen his reach and to provide more value to customers.“To be able to say here’s a new technology; I think it could compliment what I do and adapt and grow and broaden what I do and sharpen what I do…. The more you know, the more you know the failings and the positive things about the stuff that you already do. Database technologies, infrastructure, cloud…they are more tools for the toolbox. It makes you a better consultant….” – David KleeDavid can also say no as the owner of his consulting firm. He can avoid accepting projects which are not a good fit or are destined to fail.“The consultant…you can say no. The contractor…you may have to work out the remainder of the contract, but you know it will end at some point. Being an FTE or a consultant for somebody else…you may be kind of stuck…which, that’s difficult.” – David Klee“If you’re willing to put in the effort and work it and it works, you’re doing this for you. You’re not doing it for somebody else…. It’s a massive shift, and it’s not why you want do it. But at the same time, if it works, that is a good motivator…. You’re the one building the reputation for you. You’re the one building the professional contacts that stick with you through thick and thin. It’s for you. And you and enjoy it. And you can’t trade that for anything.” – David KleeWorking for yourself means you don’t bring on the wrong person, don’t bring on the wrong project, and you don’t keep customers who are not a good fit for you.“The biggest power you have is you can say no. It’s empowering. It builds confidence. It strengthens your convictions on why you continue to do this. Because after being in business for 11 years and being in consulting for 14, will I ever go back to working for anybody else? No way. I’m having too much fun.” – David KleeDavid recounts the story of recently saying no to a customer. It can be unexpected and hard to hear.If David could go back and do it all over again, would he still go into business for himself?David says yes – without hesitation.He also might have done it a couple of years earlier.“I’m having too much fun. I know it sounds cliché, but most of my day is solving problems for folks…. Call me weird. I know we’re unsung heroes in IT, all of us. I get a personal thrill out of being able to make that kind of a difference. Even if it’s saving somebody ten grand on database licensing or making this report that they have to run every single day over lunch…to be able to make that run quick…they curse the machine less and they can do more of the job that they enjoy. And that’s fun. I thoroughly enjoy that.” – David KleeDavid shares some examples of the ways he has made a difference in the lives of his customers -fixing a recent SQL Server performance problem, helping a customer save millions on licensing, making improvements that added to the valuation of a company, etc.If you want to follow up with David on this conversation, you canVisit Heraflux.com.Visit DavidKlee.net.Connect with / contact David on LinkedIn – davidaklee.Mentioned in the Outro
The way David assesses consulting talent, especially those he might work with as contractors, was extremely interesting.Asking about why someone does what they do and how much they enjoy the work gives you insight into whether this person is likely to remain valuable in our industry over time. The consulting firm owner wants to work with people who will continue to be valuable over time.Try asking some of these questions of a co-worker. What are they learning, and why are they in this industry?David talked a little bit about upselling. This is not something exclusive to selling a product or service. Full-time employees of any company do this all the time.Think about the last time you added to the scope of a project because it was interesting or you spotted something that needed to be fixed.We might do this to provide more value to the company, to show we’re taking initiative, or something to help you gain expertise in a new area. We might need to sell the idea of spending more time or resources on something to our management, especially if we’re not usually in control of our workload.Remember to provide details on what will be done and the value something will provide (i.e. decrease risk, increase revenue, etc.).If you’re looking for more stories of those who have pursued consulting, check out our website’s consultant tag, or listen to some of these recommended episodes:Tad Reeves had a lot of experience doing contract work and spoke to us about the things he liked as well as how there came a time in which it no longer fit with his life circumstances. Check out [Episode 297 – Consulting and Content Management: Blinking Lights and Big Impacts with Tad Reeves (2/3)(https://nerd-journey.com/consulting-and-content-management-blinking-lights-and-big-impacts-with-tad-reeves-2-3/).Marni Coffey shared her experience as a consultant, spoke to the glamour of consulting, and shared why she didn’t like it. But we also found that this made her a better leader later in her career. Check out Episode 278 – Uncovering Empathy: The Greatest Skill of an Inclusive Leader with Marni Coffey (1/3).Both Dale McKay and Erik Gross shared their respective thoughts on the role of a consultant and how to be successful. Check out these episodes:Episode 289 – Enhance Your Personal Brand: Feedback as a Catalyst for Change with Dale McKay (2/2)Episode 295 – AI and Automation: Repeatable Patterns for Learning, Consulting, and Growth with Erik Gross (2/2)Justin Kelly has experience doing contract work, moonlighting, and is a business owner like David.Episode 271 -Moonlight Business Ownership: Inside and Outside the Hurt Locker with Justin Kelly (2/2)Abby Clobridge was another recent guest who owns a consulting firm. She has some great thoughts on what it means to take a consultative approach in these episodes.Episode 292 – Library Science: Information Architecture and the Synthesis of Details with Abby Clobridge (1/2)Episode 293 – Enterprise Knowledge Management: A Consultative Approach to Solving the Right Problems with Abby Clobridge (2/2)Contact the Hosts
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