Ready, set, go solo

Do some prep work before declaring yourself a free agent.

By John Rossheim
Network World, 02/26/01

Maybe you've had it with the corporate IT world. Or maybe you yearn to become a sought-after independent network consultant. Either way, if you want to be your own boss, you've got a lot of things to think about before you up and quit your day job. Here's help.

1. Research your market niche

Do your skills as an employee translate into marketable consulting services? Do your homework by calling recruiters specializing in contract gigs, sounding out potential clients and drilling down into the listings on generalist and IT-specific online job boards.

There's a range of contracting opportunities available to network pros, according to Rick Freedman, author of The IT Consultant: A Commonsense Framework for Managing the Client Relationship.

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"If somebody has a deep enough grounding on the technical side he can sell those skills as a tech-for-hire," says Freedman, who runs his own consulting business out of Lenexa, Kan.

2. Ride the trends

Network security skills are much sought after in 2001, Freedman says. On the business side, IT departments are looking for consultants who can optimize the mix of insourcing and outsourcing for complex network projects.

Recruiters and network consultants agree that some of the best opportunities are in wide-area networking. "Our clients are looking for high-end engineers who can do a blueprint for a 2,000-location WAN, for example," says Margaret Langsett, executive vice president at Virtual Corp. in Flanders, N.J. Voice and video over IP are also hot, she says.

3. Contemplate your work/lifestyle balance

Once you unleash yourself into the world of consulting, you'll be consumed with pleasing clients, keeping the books, marketing yourself and attending to a million other details. So now is the time to think about the big picture. Is your chief goal to triple your pay, or are you ditching the corporate grind to get more face time with the family?

Get specific about how many hours you want to put into the business each week, how many of those hours you'll actually be able to bill for, and how many weeks you want to work each year. The results of your analysis will be a key input to your next task: pricing.

4. Set your fees

To optimize profits, you've got to see what rates the market will bear. But first you'll have to figure out what you need to gross to make ends meet.

Langsett, who counsels IT folks embarking on contracting careers, offers this rule of thumb: "Take annual salary plus bonus, add something for health insurance, then add another 30% to tide yourself over between gigs.Then divide by 2,000 to get the hourly rate."

Independent consultant John Talkington charges $125 per hour, the same rate his employer was charging when he left to found Apex Network Solutions in 1998. Talkington usually bills 24 to 28 hours per week serving the LAN and WAN needs of small and midsize businesses within striking distance of his office in Carrollton, Texas.

After you've logged a few projects, consider charging a flat fee instead of an hourly rate. That way, the more efficient you get, the more money you make.

5. Don't forget benefits

Buying your own benefits comes with the free-agent territory. Yup, that's a big ouch. At a minimum, you should plan for health and disability insurance, and regular contributions to retirement savings.

Consider joining a professional association that gives you access to group rates on insurance. The savings on premiums might pay for your association membership, and then some.

Secure coverage before you quit your day job. You may be able to buy insurance at group rates through your company for up to 18 months after you leave, thanks to COBRA. Also consider buying a noncancelable disability policy while you've got a corporate connection; otherwise, you might have to wait for years to get covered as an independent.

6. Assemble your infrastructure

One challenge of transitioning from traditional employment to consulting is that you need to put forth a professional image as soon as you start networking for contract opportunities. This means you can't annoy prospects by e-mailing them your resume as a vintage 1994 WordPerfect attachment or by letting your 2-year-old answer your business phone.

Talkington set up his home office for less than $10,000, with purchases including a reasonably powerful laptop, Microsoft Office and other business software, plus basic office furniture. You'll also need a voice phone line and high-speed Internet access.

What's more, you should seek the counsel of an accountant and a lawyer about tax strategies, contracts and so on. As your clients will hopefully learn, good professional advice can pay for itself many times over.