Switching from Accounting to Solo Consulting (#253)

In this podcast episode, we discuss the issues associated with switching from an accounting career to solo consulting. Key points made are noted below.

The Switch to Consulting

This is a common wish for senior managers who’ve been in the same type of position for years, and the job just doesn’t seem that exciting anymore. Even with a different company, you can count on engaging in pretty much the same activities, over and over again. And, in a corporation, the pressures on a manager can be intense, especially when the company is publicly-held. So consulting can seem like nirvana.

Problems with Consulting

It’s not quite that easy. The first obstacle is marketing. How are you going to get the word out that you’re available for consulting projects? Just setting up a website is not good enough. Instead, you need to be targeting your specific area of expertise, which means figuring out where your ideal group of customers is, and then going out and meeting them. That could mean networking at industry events, or giving speeches at those same events. It means handing out business cards all the time. It will probably not be enough to just call a few friends and expect to have high-end consulting work drop into your lap. It doesn’t work that way. Instead, you’re going to be looking at a lot of your time in marketing drudgery. Many accountants are introverts, so this is monumentally hard for them.

Service Aspects of Consulting

If you feel confident that you can handle the marketing end of things, then it’s time to consider the flexibility aspect of consulting. In short, when a client calls, you answer. The consulting business is all about service. So if a project needs to be done right away, expect to cancel that vacation you’d already planned. If the client needs a report by tomorrow morning, expect to work some long hours to finish it. In other words, expect some periods when you’re under a lot of pressure.

The Highest-Value Services

Now, what about targeting an area that can make you a pile of money? The highest paying consulting work is value priced, which means that you’re not charging by the hour, but rather by the outcome. A good example of this is in the legal profession, where lawyers know that a client will pay them whatever it takes to keep them out of jail. So, if you apply the same thinking in the accounting field, that means targeting outcomes that are really important to the client. For example, provide consulting services for taking a company public, or assist with a bond offering, or provide advice about buying a public shell company for a reverse acquisition. In all three cases, the client is trying to raise money – probably a lot of it – so helping them raise the money can translate into a major consulting fee.

The same goes for mergers and acquisitions. These are major events that can make or break a company, so management needs the best possible advice in lots of areas. For example, you could provide due diligence services for acquisitions, or maybe in specific areas of the due diligence, like whether the target company has an adequate system of controls. Or, the area of emphasis could be in negotiating acquisition deals, or maybe in the fund raising needed to pay for an acquisition. Another option is to assist with searches for possible acquisition targets.

Another possibility is working on acquisition integration after the deal is done, like merging the accounting systems of the buyer and the target company. But, keep in mind that all of these high-value services usually have a short timeline on them, so expect to work some serious hours within a short period of time.

Less-Valuable Services

Now, let’s move down a notch to somewhat less valuable services, where you’ll probably have to bill by the hour. These services are more competitive, because there are more people out there with similar skills. For example, there’s reviewing the system of controls for any weaknesses, or writing accounting procedures, or helping to install accounting software, or helping to set up an inventory tracking system. It’s especially hard to break into the software installation business, because all of the large consulting firms consider this to be one of their core areas of expertise. At best, you might end up working as a contractor for one of the other consulting firms. The billable rates for these “lesser” activities can actually be quite good, but they also call for very specific skill sets, which a senior-level manager may not have.

Another concern is that the target market for consulting services is not smaller firms. They just don’t have the money to pay for a lot of consulting, so you might find yourself spending all kinds of time marketing to them, and then find that the resulting project is only worth a few thousand dollars. Instead, the sweet spot in the consulting market is larger firms. Unfortunately, all of the other consultants know that, too – so they’re all trying to sell to a fairly small number of potential clients.

This can be a real problem in a smaller city where there aren’t many large companies. In that case, you may find that your target clients are located a long ways away – so be prepared to spend a good chunk of your consulting career living in a hotel room, and only getting home on weekends.

Summary

I’ve made the situation look pretty grim. That doesn’t mean it’s impossible, just that there’s a lot more work involved than you might think, because of the marketing and the rush nature of the work. It’s quite uncommon for someone new to the business to immediately land a consulting contract, sit around all day ladling out advice, and get back home for an early dinner with the family. Instead, it may be months before you get any work at all, and it’ll be more likely that you end up subcontracting through a larger consulting firm, probably with no benefits.

My advice is not necessarily to avoid consulting, but to think through exactly how you’re going to do it, how you’re going to market yourself, what services to offer, how much to charge, and how much you’re willing to be away from home. An old friend of mine is a classic example of a consultant, who believed that if you weren’t interest in traveling, you shouldn’t be a consultant. It turned out that his next project was in Egypt – and he stayed there for years – a long ways from home.