Monthly Archives: July 2010

15 tips in starting a new consulting career

A subscriber of my newsletter asked me about my insight in getting into the consulting arena full time. He has twenty years of IT experience and is apparently very interested in pursuing the opportunity of working for himself.

I have been on my own for ten years now, and I can say that although I thought I was fully prepared to run my own company, there were some things that I had to learn the hard way.

I’m very fortunate in that my book sales and training programs do very well. I love what I do and enjoy the work. Even so, there are things missing in my business that I really enjoyed in a corporate environment.

Here is how I responded to the question. It might be worthwhile if you are thinking about a future consulting career.

These are thoughts I have based upon being on my own for ten years now after more than 20 years as an IT Manager and CIO in the corporate world.

1. Try to insure you have 1 to 3 solid clients to start with that will provide a minimal level of revenue for you. The amount you need is dependent upon your own personal situation. You need to establish positive references quickly and having more than one client will help you get started quickly.

2.  Marketing and sales is the most important part of growing your business unless you are very lucky and word of mouth grows it for you. The technology services market is very competitive so don’t assume you will have clients by simply displaying your company sign.  Talk to most consultants and you will hear them say that there is a constant need to develop new clients through marketing and selling. Do not underestimate the importance of this aspect.

3.  It always takes longer to develop new business initiatives than you think. It took me three to four months to research, select, and implement a shopping cart and credit card process for my web site in 2001. I’m glad I took the time because I have been very pleased with the services I chose. Similarly, many of the basic products and services I now take for granted were developed after many hours of effort only because I had never done it before. When you can, connect with someone who has already gone through what you are trying to do and take advantage of their prior learning effort and experience; you will get there quicker with a mentor helping out.

4.  Plan to work harder and longer, especially in the formative years of your business. There are weeks when I log conservatively 80-100 hours a week and I have no commute to the office. Part of this is just me enjoying what I do, but the other part is that it takes more effort on your part when you are a small company. A small business owner has to wear many hats: consultant, salesman, marketing, accountant, , , and “chief bottle washer”. In your early years, you will probably find yourself working a lot more, not less.

5.  Don’t hire people until you have sufficient business to cover it. What I mean by this is that your business should be generating sufficient revenue before adding new employees unless you have a funding source to cover it. Unless you have plenty of funds set aside or some very lucrative revenue producing clients, you need to keep your overhead expenses low. There is a reason why most businesses do not make it beyond 3 years, , , they are under capitalized.

6. As much as possible you want to avoid building up Accounts Receivables. My business is great in that I’m almost always paid before delivering the service or product, but that’s unusual. In my consulting work, I’m obviously paid after the fact in many situations. I have intentionally converted my business model from 99% consulting to 60% training/education, 30% Internet sales, and only 10% consulting. It took three years to get there but it’s a model that allows me to avoid the “work an hour to be paid an hour” scenario that is prevalent in a pure consulting model. In a startup, you can’t afford to have many “slow paying clients”, , , same is true for most small businesses.

7. If you can, look for ways to generate recurring revenue. It’s the key to establishing financial stability and leveraging your capabilities. Creating a business that generates a predictable recurring revenue every month can position you to be more flexible and allow you to take risks that otherwise you may not want to when you are chasing the revenue every month.

8.  Think about developing white papers or short, practical “how to” documents in your area of expertise or interest. It gives you the ability to take what you are doing for a single client and make the knowledge available for people all over the world. It creates  leverage. You will need a web site, shopping cart with credit card processing capability, a product, and the ability to generate lots of awareness. I can tell you from personal experience that if you have information that helps others and can make them aware of it, you can generate additional revenue for your business that essentially runs on autopilot. This creates additional flexibility and helps your company grow.

9.  Clearly define your products and services so it is easy to tell someone about your business and easy for them to understand what you offer. Your potential clients must be able to describe your service or products before they will buy. Develop a mission statement and state what you do in the simplest terms possible.

10.  Networking is key. Again, you will be more successful if you have minimal capability but great marketing and sales ability than if you have great consulting capability but are weak in marketing and sales. I’m convinced that I could have tripled my income in our first three years with only 10-20% of the assets I had to offer if I had superior marketing ability. Networking with those who need your services will be key so take the time to develop a marketing strategy that gets your message to your target market.

11. There are lots of incidental costs but the tax deductions are better in having your own business. Don’t forget to take into consideration the income taxes you owe. Just because it goes into the bank doesn’t mean it’s all yours. Most governments want their fair share, , , if there is such a thing.

12.  Build a business plan. I believe most companies fail because they don’t clearly define their objectives and how they are going to achieve them. Take the time to create a business plan that spells out what your project initiatives are going to be, how you will gain new clients, and above all the budget you plan to operate by. After finishing the plan, increase the budget by 25% to 40% because the reality will probably be that it costs you considerably more to operate than you think it will.

13. Create an office space that is conducive to getting work done. All too many people miss this one. We all work differently to a certain extent. In my case, I can get quite a lot done with family nearby because I can shut them out (to my wife’s dismay at times). If you need total quiet to be productive, then by all means create a cave where you have the solitude you need to get your important work accomplished. Your productivity and livelihood counts on it.

14. Be sure you are prepared for the potential isolation effect in working on your own. Many have a hard time making the transition from a more structured corporate environment to an entrepreneurial one. This has probably been the toughest part for me. I miss the involvement with professional staff on a daily basis and being part of a larger organization at times, , , but the 1-minute commute and flexibility to work in my pajamas more than makes up for it.

15. Many companies go out of business because of being under capitalized. To give your new business the startup time it really needs, you should have the funds identified to carry you for three years or more. Having sufficient capital will allow you to weather unexpected surprises and the time it takes to build a sustaining business.

Consulting or working on your own is not for everyone. It takes a strong sense of commitment and perseverance to do what it takes to run a small business. It also takes a lot of discipline, , , let’s repeat this, , , lots of discipline is required to succeed on your own.

The great thing with today’s technology is that you can create an image that rivals the big companies; but when it comes to getting everything done, it still requires lots of work. If you aren’t funded well, you will find yourself doing much of the work.

Unless you are fortunate to fall into a sector of consulting where the demand is extremely high and the resources far and few between, pay close attention to the importance marketing and selling plays into a company.

Sales and marketing is the key in growing a company!

I certainly do not say this because I have great sales and marketing expertise. In fact, I think my skills in those areas are average at best. Sure, I’ve learned a few things over the years but a great marketer will tend to be more successful than the great operator.

Item #2 above, Marketing and sales are the most important part, is really key from my experience. I’m much better at it than I was in the early years, but I still have a long way to go after ten years in business. My preference (and those from the technology side like me) tend to prefer to implement, improve, and operate rather than do marketing projects or try to sell.

I learned early on in my career that I wasn’t cut out to be a great salesman. Two years of selling at IBM helped me learn this about myself, and it’s still true. It’s simply not what I like to do.

Now, I’m a bit more mature (or older depending on how you look at it), and I understand and appreciate the value of marketing and selling more than ever.

The point here is that if you are looking to “cut loose” and start your own company, be sure you know how you are going to find new prospects, attract them, and turn them into new clients. Without new business, you will be like 70% of the start-ups that fail to make it past their first two or three years.

Most of us who provide consulting services would prefer to just do the work. We like it or we wouldn’t be doing it. Be certain that you include 30% or more of your time to do the marketing and selling activities as you plan your business. It’s an unfortunate requirement of growing a young company.

I hope this helps any of you who might be contemplating “taking the leap” and starting your own consulting business.

Stay positive

I’m a firm believer that positive energy creates positive results. And believe me when I say, “your energy is felt by others”, , , so keep it positive.

I know to stay positive is hard at times.

We all go through struggles and challenges, many of which are beyond our control and can be extremely frustrating. Still, you need to remain positive to be successful.

Rather than thinking about what’s wrong or what you don’t have, , , think about what you do have and what’s right in your life. You won’t have to think long to come up with a lot of good things, , , and I know from experience that you don’t have to look far to find someone who has much more difficult circumstances than you do.

So be thankful for what you have!

Positive energy makes some big things happen and your enthusiasm for life and your work will spill over to others around you. Try it and you will see.

Here are a few key thoughts for you to consider:

  • A problem client is an opportunity in disguise
  • Addressing a problem employee is the right thing to do for the employee
  • Your worst day is often followed by a super day or a great week
  • Think of the glass half full, not half empty
  • Take time off to re-energize and reinforce your positive attitude
  • Look for a win-win with clients and vendors
  • Senior managers look for positive leaders
  • You set the tone, so make it positive
  • Arguing your point doesn’t always achieve a positive result
  • Positive attitude doesn’t happen automatically, , , you make it happen

A person who can smile in the midst of tremendous challenge is like a magnet; others will look to that person for leadership and example. You may be boiling or a shamble on the inside but when your demeanor exhibits a positive attitude it calms those around you and creates an environment where things can get accomplished.

Stay positive !!

Handling a problem employee – case study

Over the course of a management career, you will deal with many employee challenges. One especially difficult challenge I encountered makes an interesting “case study”.

The employee in question was abusing others, both teammates and clients, and was not producing at a level expected for the position. This employee also fit a minority category.

My approach has always been to deal with issues as they come up and deal with them as fairly and consistently as possible, , ,  regardless of sex, race, or other minority category.

The bottom line is that each individual on your team is expected to produce positive results and do so in a healthy way. Building a team that is highly responsive to client needs and successful in delivering value to your company requires everyone to make a positive contribution.

Here is a brief description of how I handled the situation:

  1. I coached the employee about the problems on two separate occasions and made it clear that I expected improvement. I was very specific and gave him examples of the unacceptable behavior. On the 2nd coaching session, I told him that if it happened again he would be put on a formal improvement plan and that if the issue occurred during the improvement plan time frame, he would be terminated.
  2. The issue occurred again so I sat down with the employee and delivered a formal “work improvement” discussion. In this discussion, I gave the employee specific critique with examples that reinforced my concerns and handed him a written document stating the problem and specific resolution steps he must take to continue employment. Finally, the employee was notified directly that continued unacceptable performance that led to this discussion would result in dismissal.
  3. In two weeks, I fired the employee because the performance improvements were not being met and another serious event demanded my action.

The formal improvement session included the attendance of our senior Human Resources Manager because I wanted to be sure in this case that we covered all the bases since it was my belief the employee would simply “not get it” and he fell into a minority category.

This was exactly the observation the HR Manager gave me after the session when he said, “You addressed all the issues well: what’s wrong, what you need to do to fix the problem, and clear understanding that continued poor performance would not be allowed. Even so, the employee doesn’t understand the problem; but you could not have explained the situation more clearly.”

In most situations, you won’t have to actually get to the point of firing an employee. What I’ve encountered over 90% of the time is that when you address poor performance directly or conduct a “needs improvement” session with a poor performer, the employee does one of two things: he either improves the situation quickly or leaves on his own accord.

One of the most important responsibilities a manager has is to do the right thing by your employees. That means stepping up to bad situations and taking appropriate action to improve performance of your IT organization.

It is the right thing to do for your company, your clients, and your IT staff.

More importantly, it’s the right thing to do for the poor performing employee. If you have an employee not performing, there are reasons as to why. Your job is to address the issue and to help each of your employees succeed, but there may be exceptions who just won’t make it. If so, your job is to help the employee move on to something that he can be successful in. To avoid this responsibility is unfair to the problem employee more than anyone.

If you approach it in a light of “doing the right thing for the problem employee and your company”, it makes the tough work a little easier.

Climbing the ladder of success

We are all climbing our “ladder of success” to some extent. The 2-part question we need to ask ourselves is, , , “What is success and how do I get there?”

Success is different for all of us. To some, it might mean having a steady job with good benefits.

For someone sitting next to you, it might be earning a certain level of education or gaining a specific technical certification.

To someone else, it might mean earning a certain level of income.

It could even be having a title like Director of IT or Senior Specialist.

The point is, , , success is in the mind of the beholder and it’s a bit different for each of us. What motivates me might not motivate you at all, , , and that’s perfectly all right.

What this means though is that we all need to sit down and define what success means for ourselves, because if you don’t know it is going to be very difficult to achieve it – right?

Once we know what success means to us, we can create a strategy and develop the plan to get us there.

Something else to consider is that your idea of “success” will change over time. That’s right, once you achieve your Director of IT position (or whatever it is) you were targeting as your success milestone, you will identify another goal, , , one that’s higher and more ambitious.

I’ve been managing IT resources for many years and have had some lofty titles and prestigious positions in some great companies. Today, I run my small training company and set new goals every year as to what success will mean for us here at MDE Enterprises, Inc.

If your goal is to be more effective in an IT manager role for your company, I can help you. We have the best tools and resources for IT managers in the industry, , , practical and proven tools that really work.

Whatever your goal, you need to develop a plan to get you to your targeted success level. In most situations, achieving success requires you to deliver results, , , and results are delivered by those who know what and how to get the job done.

It’s pretty simple when you stop to think about it.

If you want to climb the ladder of success, decide what it is that you want and devise a plan that will get you there. A key part of the plan has to be the education and training you need that will position you to deliver the results required to achieve the level of success you target.

For a technical resource, it will be specific technical training, possibly a certification or two, and exposure to certain types of projects where you can gain sufficient experience in your field.

For IT managers, it’s learning what your senior management team needs from your IT organization and knowing how to deliver these results through your team.

You probably also need some tools to help you get things done, ,, whether it’s a technical objective or a management objective. Not only do you need the tools to help you succeed, you need to know how to use them to deliver the results it takes for you to succeed.

It all comes down to:

  • knowing what to do to be successful
  • understanding how to go about it
  • having the tools and examples to help you succeed

Regardless of what your success goals are, knowledge is the key. Invest in yourself to gain the knowledge and your potential for success increases dramatically.

Don’t know where to start? Find a mentor or someone with experience you trust to help you think about your situation, , , to openly and honestly discuss your potential, , , and to help you develop a realistic plan to achieve more success.

Once you do, you will be amazed at how empowered you become, , , because you now have a plan that’s within your control.

Here’s to your success !!

A final note
Success is not all about money. Certainly, it’s important for some, but making a lot of money is not necessarily a true measurement of one’s success. Happiness in what you do, the quality of life you have with your family, your hobbies and activities outside of work, , , many things make up a person’s “success factor”.

For example, my Dad was not a rich man in terms of money, , , but he was one of the richest men I’ve known. He never made a lot of money, but he had tremendous amount of respect and more friends than one can count. At his funeral I learned so many things about his giving to others and how much it meant to them to be his friend, , , and how much fun he was to be around. He didn’t have a lot of money but he was very successful, , , it’s all what you want to make of your life in the end that counts.

Open door environment

Creating an environment where people know you are receptive to their ideas, needs, and inquiries is key toward building trust.

An “open door” environment (notice I didn’t say “policy”) can help you create the trust you need to be effective.

Your clients and users will be more open to discussing problems and working with you to develop solutions to those problems when you don’t “shoot the messenger”.

Employees will trust the fact that they can be open and honest about issues with their manager when they aren’t penalized for discussing tough subjects.

To have an open door process, you have to do more than just state that you have one. How you go about handling those who seek your counsel and advice will set the tone for whether your IT organization actually provides an open door “environment” or simply refers to a “policy”.

Creating the right environment to work in is by far more important than creating a policy.

Don’t get this tip confused with a legitimate “open door policy” where an employee has the ability to talk to your boss about an issue. This is important but not what I’m focusing on in this article.

You want to create an environment where people feel comfortable, even encouraged, in coming to talk with you about their issues. If you don’t create such an environment, the big loser will be you, , , so ask yourself the question, “Are people comfortable in discussing their problems with you?” If not, you need to make some changes that helps them get there.

Motivating IT staff

Motivating employees is something I really like to do. It’s a conscious thought and a deliberate, proactive effort that you must go through when managing an IT Organization.

Employees want and need leadership. They want to be “pumped up” and feel energized in doing their work. One of the most gratifying things is being part of an organization that is all focused on the same objective and is “charging up the hill” to reach it’s destination.

Motivating employees begins with honesty, respect, and an understanding of what motivates an individual.

People are not motivated by deception, being taken advantage of, or being kept in the dark. Showing respect means sharing your company’s objectives and how your IT Organizations fits into the grand scheme of things.

When I was a young employee at IBM, I enjoyed the comradeship and the monthly branch meetings with recognition and agendas that focused our efforts. Much of these principles are what I take to a new IT organization as their IT manager.

My book, IT Staff Motivation and Development, provides insight into the process I use and many of the techniques I use to “pump up” the staff. The most important aspect is that you must genuinely care about your staff and do all that you can do to help them be successful. You must recognize that their individual successes lead to the organization’s success which leads to your success.

You will not be a successful IT manager unless your people are successful. What this means is that your job is to do everything you can to support your staff and help each person be successful. If they are, then you will become successful as a result.

Here are a few techniques I have used. Just remember, if you aren’t sincere it will have an opposite effect.

  • Schedule monthly staff meetings to recognize achievement
  • Hand out ice cream sandwiches in the afternoon
  • Award an evening on the town for results
  • Develop a training program for your staff (learning new things is always one of the top motivations for IT employees)
  • Pizza lunches
  • Motivational films
  • Give your staff credit for accomplishments and take the “hit” as their manager for your organization’s failures
  • Be a positive force and set the tone with positive energy in the company
  • Reward desired behavior as well as successes
  • Do some things to interject some fun in your staff’s day

Motivating employees happens because you decide to make it happen and you implement a strategy to do so; it doesn’t happen by accident. Take a look at yourself and think about what motivated you as an employee. You will find that many of these things still work with today’s employees.

Ultimately, it’s more about caring for others and respect for the individual than anything else. When you do, it shows them that you truly appreciate their efforts, , , and this goes a long, long way.

IT expense as a percent of revenue

Measuring IT expense as a percentage of revenue is a key measurement many senior executives use to evaluate what it is costing the company for technology support.

The calculation is simple:   Take your IT organization’s total expense and divide it by the revenue of your company.

If you only support a division of your company, use the revenue for just that division to keep from skewing your number and to make it an appropriate measurement.

I have looked for industry standards but haven’t found any that I thought were reliable, , , and there is often a real problem with so called standards anyway.

Here’s why. You can take two almost identical companies in the same industry with roughly the same revenue base, similar number of clients, etc., and the cost to support their technology may be vastly different for valid reasons.

If one company is highly automated with a single primary business application while the second company has very little automation and multiple technologies due to recent acquisitions, the needs are totally different, , , even though they may be roughly the same size. The point is: their issues are totally different so they have different support requirements.

On the surface they can look similar in many respects such as revenue, # of clients, same industry and mission, etc.

Closer inspection shows that the two companies are so different that from a technology needs standpoint, they barely resemble one another.

The automated company may be spending half as much in an IT expense as a percent of revenue measurement as the other company and they could both be spending at an appropriate level. In fact, the company with little automation and many systems from their acquisition activities might need to even be spending more to support their technology situation.

What this means is that you have to be careful with “industry standards”. If you don’t look at the underlying issues, industry averages or “standards” can get you in trouble.

The real issue boils down to spending at a level that is appropriate for the business at any given time based upon the circumstances you have and what you are trying to do.

That’s why I place so much emphasis on conducting a thorough IT assessment. It is the key piece that tells you what you need to know in order to make a positive impact for your company in your IT Manager role by addressing the needs and issues of the business.

If you are interested in learning how to conduct an effective IT assessment, take a look at IT Due Diligence. It contains a complete process and tools that walk you through it.

Focus on your core competency

I joined a small company one time that had two operating divisions that operated as completely separate entities other than a few corporate support functions. What was interesting about this was the fact that the main focus of the company (our core competency) was in the larger division making up over 90% of the company’s revenue.

The smaller division had significant challenges including a lack of management focus and needed lots of attention to turn it around. It was also located some 500 miles away from our corporate office.

The other challenge this division had was that it was a very capital intense organization due to costly equipment requirements to provide specific services that made it somewhat unique. It was truly a unique business and a desirable option for our company, , , but there were other challenges in the company that needed a very limited resource called cash.

As an executive team, we liked the fact that the smaller division provided unique services and we all thought that at some point this smaller division would become valuable complimentary services to our core business in the much larger division.

The challenge: Lots of potential opportunity but where and how do you focus your limited resources?

In my IT assessment, it was also clear that the technology needed to be updated, especially the business applications which had become obsolete as the small division grew.

We had limited resources, especially cash and capital to fuel the turnaround of our great little company with lots of potential, , , but also with a lot of existing challenges and need of attention from the management team.

We had limited management resources and both divisions of the company were under stress from poor management of the past.

I knew we could turn the small division around if we were able to focus dollars and experienced management attention to it. The problem was that both divisions needed immediate support in both capital and management attention, , , and we didn’t have enough of either to go around.

My recommendation was that we sell the small division and focus our full energy in establishing a firm foundation for what we believed to be our core business and what made up the bulk of our revenue, , , and what we believed was to be our long term business focus.

After much discussion and deliberation, that’s exactly what we did.

We could have made the decision to repair both divisions but it would have taken much longer and placed tremendous strain on our weak capital position and upon the management team.

It’s important to take a realistic view of what your organization, or company can do. I know for certain that several of our managers could have turned the small division around. The question is at what price do we have to pay to do it. It’s a matter of evaluating your risk.

It was a clear decision for me in looking at the IT support issues and why I made such a strong recommendation to focus our limited resources on what was going to be most important for the future of the company.

Early on it was not a popular recommendation and was a difficult decision, but over time it became clear it was best for our company’s future.

IT Management Model – Hit 2 birds with 1 stone

There are many situations where “hitting 2 birds with 1 stone” can make a big difference in IT.

Here are just a few for you to think about:

  1. When hiring, it’s nice to be able to hire someone who meets multiple needs in your organization. Finding someone who addresses several skill needs of the organization is a plus and well worth the extra effort to find.
  2. When programming requests are prioritized, it improves productivity when you can knock off several request changes in the same project when the requests affect the same program.
  3. Technology initiatives that can address multiple needs of the company are great ways to enhance IT reputation. Doing things that provides value and improves client service are big winners for the client and for IT.

Key points to consider:

  • Always look for leverage opportunities
  • Small incremental expense or effort can have big return
  • Involve your staff in identifying “two bird” possibilities
  • Measure the improved gains
  • Create awareness of successes

Final thought:

Anything you do that leverages your IT Organization’s productivity is a benefit for all concerned. Take a proactive approach in seeking out situations that allow you to address multiple issues with one focused effort.

Client service is a process, not an event

Better said, excellent client service is a culture, not a project. You may initiate specific projects or install a process to improve the levels of client service you provide, but organizations that live and breathe doing the things that improves client relations truly stand out from the crowd.

I’ve said many times that it all starts with the IT Manager. When you “walk the walk” and “talk the talk” and demonstrate you understand what’s important in helping your technology clients, it carries throughout your IT Organization.

Not only that, it spreads to other organizations in the company and even to external clients if you have them.

What’s nice is that great client service does spread out to those you touch. The flip side is that poor client service does the same thing and with significantly more adverse impact.

What’s the old saying? “Make a client angry and he or she tells at least 20 other people!”

Well, it certainly holds true in the IT world.

You never achieve great relations with your client unless you are making proactive efforts to help them achieve their objectives. That’s actually what client service is all about: helping others do their job as productively and painlessly as possible.

OK, so how do we begin?

First, determine what it takes to be considered a “world class” client service organization in your company.

To do this, you have to go ask those who you support.  Organizations that rely on technology support are interested in the following key areas:

  • Focus on their priorities
  • Anticipate their needs
  • Be responsive to their requests
  • Communicate and keep them “out of the dark”
  • Provide high systems “uptime” and availability
  • Be cost effective
  • Fix their problem and fix it right the first time

I’m sure none of this is a surprise. Take these “wants” and formulate your own questions to determine if you are providing support services that address these needs.

The answers will lead you to issues that define where you need to focus energy to improve client service. For example, if your clients are telling you that you aren’t working on their priorities, find out what the priorities are and refocus your organization’s efforts.

Likewise, implement processes that help you become a more responsive support organization if you hear things like, “We never know the status of our projects.” or one of my favorites, “It’s like sending a request to a ‘black hole’.”

It’s really not hard, but it takes a conscientious effort to understand what your customer needs and how well you are doing in meeting those needs. Once you know, it’s a matter of doing things that address specific needs.

Create a targeted “client service project initiative” and watch the relationships improve. Don’t try to do this alone. It helps when you have other department managers involved in your crusade and they like the fact you are doing this to help them.

The result can be a big “win-win” for everyone involved.