Starting an Executive Consulting Business During Your Transition
This post was originally published in IvyExec on December 21, 2023.
In today’s dynamic job market, many seasoned executives find themselves in between positions. This could happen to you due to a corporate restructuring or due to a new leader coming in who cleans the house (you included) to bring aboard his or her own team. It could also happen by your own choice because you feel you don’t fit personally or, business-wise, you no longer agree with the company’s direction or believe in its prospects or, alternatively, you just feel the need for a break due to personal or family needs.
Regardless of the reason why you find yourself between full-time C-level or senior executive positions, this article seeks to help. The help offered is guidance on the creation and use of a consultancy as a way to use the time between positions to advance your career.
This article ends with tips on starting an executive consulting business during your transition but first offers four special consultancy uses and benefits in the next paragraphs.
Exploring New Horizons and Staying Current
Executive consulting allows you to stay current, test the waters in uncharted territories with reduced risks, grow your skill set, and augment your resume. To the extent you can target your consulting to areas in your field where you would like to develop and enhance your experience, each such consultancy could be added to experiences and achievements on your LinkedIn profile. The more you add, the better positioned you will be to recruiters and for potential business opportunities.
Expanding Deal Flow and Enhancing Employability
While you continue to pursue full-time positions through traditional channels, offering your expertise as a consultant adds flexibility to your profile. Companies can now tap into your skills for short-term assignments, providing a mutually beneficial arrangement. This not only keeps you employed between executive roles but also positions you as a resource for companies seeking interim C-level executive assistance.
Executive consulting might turn into your next full-time position. As a consultant, you have a paid opportunity to showcase your capabilities to a potential employer. Working closely with a company allows you to assess its operations, culture, and management style, which helps you make an informed decision about whether you would want to accept a permanent position if that is offered to you. It’s a chance for both parties to engage in a professional courtship, fostering a deeper understanding before committing to a long-term relationship.
At the same time, the company is assessing your capabilities. On many occasions, companies will make a full-time executive job offer to the interim consultant who meets their expectations and is familiar with and liked within the company. Your time as a consultant gives you an advantage over others whom they don’t know as well.
Earning while you wait to expand your runway
Executive consulting allows you to choose the amount of work you take on and dictate your earning potential while awaiting your next challenge. Financially, it provides a crucial buffer for executives with substantial family and financial commitments. The income that is coming into you allows you to extend your runway to finding and accepting the next full-time position.
You don’t have to jump at the first job but can wait until the right opportunity arises.
Enhancing your leverage in the next negotiations
Your consultancy can also serve as a tool in executive employment terms negotiations. If an attractive position is offered but falls short in compensation or other terms, your active consulting practice puts you in a position to gracefully decline the offer and indicate that you prefer to continue consulting.
This is especially true if one of your current consultancy clients wants to hire you full-time, but the terms do not meet your needs. You indicate you prefer consulting, and they continue to receive that good consulting from you until they finally offer you enough to go full-time. Either way, you keep the door open for future negotiations and the possibility of a sweeter deal down the road.
Tips For Starting & Building a Consultancy Between Positions
Cost-effective Launch; Business Entity
The overhead cost of starting a consulting business can be quite low if you simply use your home office, supplemented by a virtual office with a prestigious address and conference facilities usable as needed. Additionally, it is wise to create a business entity from which to conduct your consultancy. That is usually a single-member LLC, which is the least effort, paperwork, and cost to administer.
There are two important benefits that come from the business entity – the first is limited liability, which could be important if a contract does not end up right and there is a threat of a lawsuit. The second important benefit – is to demonstrate your commitment to consulting, even though you know you would take the right permanent full-time job if offered to you.
Branding, Niche, and Online Presence
The first step in setting up a consulting business is to identify your niche. Start by assessing your skills, strengths, and areas of expertise. Consider the industries you’ve worked in, the problems you’ve solved, and the unique knowledge you possess. Your niche should align with your passions and professional experience and also where you would like to see your next full-time position.
Develop a professional brand identity for your consulting business. Your brand name should be suggestive of the kind of services you offer or the niche you address and not already in use. You would want to use the name for your LLC, obtain a web domain now, and then later file for a Federal trademark. Your online presence is crucial in today’s digital age. This can simply come from your LinkedIn profile, but it might also come from a website you develop that lays out your services and value proposition and gives examples of past achievements, testimonials, and contact information for inquiries.
It is wise to work with a digital marketer with proven success in SEO – search engine optimization. The digital marketer can make all the difference in making sure your website is seen by your target audience.
Billing and Contracts
In setting your fees, commission, and cash/stock compensation, you should not skimp. You should be paid for the value you bring to your clients so that this is both lucrative to you and also a great return for your clients. As a consultant, you should make sure your rates are high enough to take account of all the sunken, non-billable time you will experience, which includes time in marketing, billing, and admin, plus all the downtime between engagements.
Additionally, you will need to pay for your office overhead and health, insurance, pension, and other benefits you used to get from your employer. From the company side, they expect to pay a substantial rate, which can actually be of great value to the company. You are “just in time management” – you are “the hired gun” with expertise their team doesn’t have, and you incur less costs than a full-time employee. You should also have your own standard form contract that sets out billing, payment, and collection terms and also has disclaimers of warranties and limitations on liability, as well as terms for termination of the consultancy.
There should also be a place for attaching a description of the scope of work.
Your Job and Your Consulting Business Can Co-exist
You don’t have to shut down your consultancy upon securing a new full-time position. In today’s dynamic corporate landscape, executive roles can be short-lived due to acquisitions, business challenges, or leadership changes. Maintaining agility is crucial.
A thriving consulting business acts as a valuable refuge between positions and positions you well for future opportunities. Your consultancy may even evolve into a marketable asset, especially if you add colleagues over time.
So, what do you need to do to keep your consultancy? You should negotiate for a provision to devote not “all or your entire business time” to your full-time position but instead “substantially all your business time” to the new position. Your executive employment agreement will recognize your consultancy, but your employer may require that your consulting work must not interfere or conflict with your new job, and perhaps you may not seek new clients. Most companies, if they want your services, will accept that concession.
After all, they may even benefit from information that you get from your consulting side job, in the same way, that executives do when they serve on outside boards.
Executive consulting gives you a chance to capitalize on your years of experience, keep current, add new skills, expand deal flow, extend your runway, and even enhance your bargaining position in executive job negotiations. Executive consulting is not just a temporary fix but a strategic maneuver that can redefine and enhance your professional journey, offering a wealth of opportunities for growth, exploration, and negotiation.
So, if you are in transition, perhaps you might try executive consulting and see how it can benefit your career!
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