In the past couple of months, I've talked to a number of procurement practitioners and consultants considering going out and, in their words, "doing their own thing". This list includes some senior executives and CPOs in the sector. It also counts a number of former consultants and even software developers who are in the process of bootstrapping their own firms and companies. Because I've been out on my own for five years and have mostly enjoyed every minute of it (with a few exceptions, mind you), I thought that I'd offer up a bit of personal history with a few observations and suggestions for those considering doing their own thing in this environment. In next Friday's rant, I'll talk about why I believe the timing is ironically ripe for others to set up shop today and how best to get started. But first, a little history.
When I left FreeMarkets at the start of 2004, it felt like the right time to go out on my own and start a boutique advisory and consulting firm. I was fortunate enough in the first year to make an amount approaching my previous compensation from a base salary perspective. These early earnings kept me going when the job offers from clients came in (which always happens, I've been told, when you set up a small expert storefront). But those times were never totally peachy. Once during a slow period that first summer, I took on a project, an evaluation of all of the key providers and trends in a number of procurement, supply chain and product lifecycle management / collaboration areas, for $10K. I knew the engagement was worth well into the six figures if a larger firm slapped its name on the cover. But I desperately needed the cash at the time to hit the first year revenue targets I set out for the firm and my client was an old friend who had no budget for the project, yet wanted to get it done (I also think he thought he was doing me a favor, which he was).
After writing some 110 slides and presenting the findings to a happy client over the course of an entire day, I quickly came to realize the research was an excellent investment of time in more ways than I thought upon taking the project on. I was able to leverage quite a bit of that research when I decided to start the blog later in the fall. I was also able to turn some of it into a firm point-of-view document that I used with potential clients to build our credibility as an expert in the market. Flash forward five years and the firm I started is going strong with $10K representing a minor project.
The firm remains focused and expert in our approach, the work we do is rewarding, and I can see the difference we make in projects both small and large. Early on, I decided to keep the firm lean. Azul Partners today is primarily myself with two other contractors (both of whom were partners at larger firms and have at least a decade more experience than I do). I made a choice in the early going to not build a leveraged model, but to rely on a small expert circle of former consultants I had either worked for or hired to do work for me in the past. I needed to pay them at or close to 100% of what I could charge them out at, but the quality of work that I knew they would deliver allowed me to rest easy at night and build the types of client relationships and reputation that I knew would be important going forward.
Our fixed overhead is very low and as anyone who has visited our office can attest to, it's nothing special (in fact, to be even more thrifty, I share it with my wife and her employees and contractors). Now I won't get up on my soapbox and say that this is the right way to build a boutique firm. I had a number of other colleagues who started their own consulting ventures at the same time and ended up building far larger firms with significant numbers of employees and/or contractors. But this has worked for me. It's also a good living that within a few years was better than I had previously. When I talk to others who've done similar things, I often hear similar observations, though in retrospect, I do feel that I was able to build a decent book of business in the early going. Which leads me to the number one piece of advice I can give anyone contemplating the leap: line-up that first client (or ideally, a number of initial potential clients) before you take the plunge.
As a last observation for today's rant, be brutally honest with yourself. There are many talented people who are not entrepreneurial by nature -- they need a sizable organization behind them to do what they do best. Be prepared to wear multiple hats simultaneously -- marketing, sales, basic accounting and, of course, professional practitioner/consultant. Know your minimum personal financial requirements and have enough reserve cash to get through the inevitable dry spells. And on a personal level, if you're in a bonded relationship, don't make that person your first sale. If he or she isn't behind you on this venture from the git go, your stress levels could become insurmountable.