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Consultants Cash In

If someone tells you they're a consultant, you might wonder what they do. The term is vague. What do they consult about? With whom do they consult? And how do they earn a living?

A consultant is someone whom managers or business owners trust to give honest, objective opinions on managing their businesses or in dealing with difficult or sensitive issues.

Some consultants help large corporations change for the future. Others help reorganize businesses to get them through difficult times -- mergers, bad publicity or a financial crisis, for example.

Other consultants help smaller companies expand their client bases or services. Still others prefer to focus on specific industries, like working with physicians to better manage their practices.

Most consultants work independently or at a consulting firm. They're known as "external" or "outside consultants." But some companies have their own consultants on staff. These people are considered "internal consultants."

"A consultant is an expert who applies knowledge, skills and judgment to a client's situation," says consultant Tres Roeder. He is the president of his own consulting firm in Ohio. "I've worked both as an internal consultant and an outside consultant. I've helped clients on corporate strategy, project management, marketing, operations and other areas."

Most of Roeder's clients have been large Fortune 500 corporations, but he works for smaller companies and not-for-profit groups, too.

Drew Stevens has his own consulting agency in Missouri. "I work with physicians who operate their own medical practices, such as chiropractors who struggle to produce relationships with patients that [can] grow revenue. My work aids physicians with business modeling, learning and accountability so the practice is run as a profitable business."

Many consultants start out working for consulting firms. Some later decide to start their own businesses.

"The firm provides them with the stability of an established company, interesting and challenging work to do, and the structure for conducting that work. Many professionals prefer these levels of assurances," says Billie G. Blair. She's the president and CEO of Change Strategists, Inc., in California. "I fall into the entrepreneurial category, having started the company."

Blair says that this allows her to structure the company the way she likes and work with clients of her own choosing. But starting a company is a risk for even experienced consultants.

No matter what the industry, most consultants are hired for the same basic reason: to tell the client what they need to know, but usually don't want to hear.

"CEOs hire us, and hire us to do the job that cannot be done from the inside -- to look at the corporation in depth," Blair says. She says consultants examine what clients plan to do, what they have already done and what they want to do in the future. "They rely on us to have the expertise for knowing how to guide them through these processes of change."

Blair adds that good consultants offer the objectivity needed to address the issues at hand but also have a broad base of experiences to find options and solutions for their clients.

Glenn Yonemitsu is a management consultant. He works with large and small clients in all types of industries in both the public and private sectors. "They all have one thing in common -- they all want to grow rapidly, and they are willing to make the hard decisions to achieve this growth."

Successful consultants create business and attract clients in a couple of ways. They can market their services to prospective clients. Stevens says he spends 10 percent of his time on marketing to keep business coming in. Consultants can also find clients by networking with other professionals. Well-established consultants may only need word of mouth and referrals to attract new business.

The job itself can require long hours and traveling across the country (or even internationally) to clients' offices. Quite often Blair is already working by 5 a.m., making conference calls with her East Coast clients. Yonemitsu says late nights are common, too, especially when it's time to prepare final reports.

Each consulting project goes through a similar process. The first step is selling the client on hiring you over another consultant.

"Amazingly, consultants have to be master sales people, with powerful abilities in persuasion and influence so they can 'close' deals," Yonemitsu says. Today he appreciates his teenage experience selling stereos for a commission.

Consultants also need to be able to interview people and research facts and figures in order to fully assess a client's situation and find possible ways to fix it. "Being a quick study, being able to synthesize [combine] a number of elements and a complex situation into an understandable framework is a crucial skill," Yonemitsu says.

If you can't do that, you won't be able to assess the situation well enough to make recommendations or suggest possible options to your client. Presenting those findings is where everything comes together.

Yonemitsu says it's a bit like being on stage.

"You are being your most compelling and influencing self as you are communicating your results and conclusions," he says. "Following up and implementing is almost the easy part, if you have done everything else well."

Roeder says a general management consultant needs a balanced approach to the job.

"The balanced approach requires three core skills. One, you must have expert technical skills on the subject you're consulting on. Two, you must have business acumen [good insight] to understand how your consulting engagement will drive business results for your client. And three, you must have excellent 'sixth sense' people skills focused on leading people through change."

Yonemitsu says analytical skills and communication skills are vital.

"Anything one can do to develop those skills would be valued."

Joining Toastmasters or taking drama courses are just a couple of ways to do that. "Any opportunity where one has to develop the ability to communicate and persuade is valuable," says Yonemitsu.

If you think you might want to become a consultant, Blair suggests seeking out some professional consultants and talking to them about their jobs. Shadowing a consultant would give you an insider's look at the role. You may also want to consider applying for a summer job at a consulting firm.

College is important, too. "A coursework focus on either business or organizational psychology will be necessary," Blair says.

Yonemitsu suggests broad-based business degrees over specialized business degrees. "Being a generalist helps a consultant to better understand how their recommendations fit all areas of the organization."

Yonemitsu says the potential earnings of a consultant can range from an entry-level junior consultant earning $75,000 a year at a large firm (they could earn even more with an MBA) to an established, respected senior partner who can earn hundreds of thousands of dollars per year.

Blair notes that outside consultants can earn roughly three times what an in-house consultant makes. Roeder adds, "Outside consultants typically have a more challenging lifestyle, too -- more travel and longer hours."

For consultants transitioning from working at a consulting firm to setting up their own business, Stevens says, "[Their earning potential] depends on the ability to operate a successful and significant business." While some independent consultants struggle to generate business, especially in the early days, he says some are able to sustain high-earning practices.

Yonemitsu says earnings potential often comes down to where one went to school, since many firms hire by pedigree. "The most sought after people, who graduate from the best school, will have lots of opportunity," he says.

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Consultants Cash In

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