INC Entrepreneur Of The Year

Inc Magazine's Entrepreneur of the Year for 2006, Ken Hendricks, is my hero when it comes to his head down, industrious approach to success. The article in Inc is lengthy, but worth the read - Ken is a billionaire several times over, but pretty much does it by fixing up broken stuff: buildings, companies, etc. I especially like how he treats the guy from the magazine to dinner at his faorite local restaurant - on two-for-one night. My kind of guy.

Freelancer vs. Entrepreneur

My subscription to "Small Biz Resource" usually yields an interesting article or two, and this week is no exception. Blogger Ivan Idea quoted Seth Godin from his book, The Bootstrapper's Bible: How to Start and Build a Business With a Great Idea and (Almost) No Money, and focused on the difference between a Freelancer and an Entrepreneur, describing them as follows:

DO YOU WANT TO BE A FREELANCER OR AN ENTREPRENEUR?

As you consider different business models, you need to ask yourself the critical question above. This is a moment of truth, and being honest now will save you a lot of heartache later.

The difference? A freelancer sells her talents. While she may have a few employees, basically she's doing a job without a boss, not running a business. Layout artists, writers, consultants, film editors, landscapers, architects, translators, and musicians are all freelancers. There is no exit strategy. There is no huge pot of gold. Just the pleasure and satisfaction of making your own hours and being your own boss.

An entrepreneur is trying to build something bigger than herself. She takes calculated risks and focuses on growth. An entrepreneur is willing to receive little pay, work long hours, and take on great risk in exchange for the freedom to make something big, something that has real market value.

Most of the consultants I encounter function as freelancers, by these definitions, though they may have entrepreneurial spirit, and perhaps, someday, will aspire to build something bigger.

Help from the lawyers

When it comes to being an independent consultant, some basic legal advice is key to getting started, and dodging icebergs along the way.

Nolo.com has put together a collection of legal advice and articles regarding contracts, taxes, corporate structure, and a host of other relevant topics.

U is For User

Several years ago, I joined the Project Management Office of a firm that was assembling a team to guide an enterprise wide General Ledger implementation. Previous implementation experience led me to appreciate the importance of end user participation throughout the system development lifecycle, but this project was going to be especially instructive when it came time for User Acceptance Testing.

The end users for the first major rollout were financial accountants. Their monthly consolidation process was archaic, resulting in long, tedious work days and difficulty in scheduling vacation. As a result, volunteers for project related responsibilities were scarce.

Most of the requirements gathering, coding, unit testing and data scrubbing were performed by the Project Team. The User Acceptance Testing plan was prepared several months before UAT was scheduled, allowing time for test script development. Scripting and most testing were assigned to the financial accountants. Their knowledge would be key to determining the complex transactions needed to ensure the system met requirements. Several meetings were held with the Controller, detailing the extent of his financial accounting team’s commitment. He signed off on the UAT plan, assigning leadership to his trusted VP, and assuring his team was on board. UAT Advisor status was assigned to one PMO member: me.

Producing test scripts proved daunting. Disagreements surfaced regarding responsibility for documentation and test execution. The users resisted the increase in workload associated with the project, and attempted to sidestep responsibility for the test script. Closed door sessions with the Controller were called to inform him that UAT might be late due to test script delays. He saw this as no big problem, as the PMO had ultimate project responsibility. I reminded him that his team had responsibility for scripting, but was waved off.


The week before UAT, minutes before a scheduled UAT status meeting, a colleague gave me a “head’s up” that the Controller was panicked that scripts were unfinished, and planned to pin that failure on the PMO – namely me! I quickly made copies of the signed UAT Plan, highlighting the responsibilities of the Controller’s team and my advisory role. I walked into the meeting, saw the Controller, his VP, and 10 other stakeholders, and handed out the copies. Stepping to the whiteboard, I wrote three letters in a vertical stack:

U

A

T

“U is for User”, I started, writing USER in huge letters, then described why experienced end users are required for the UAT tasks in question. The meeting was contentious, with the Controller acting surprised that he had assumed ownership of such key tasks. The VP, complained that her other responsibilities made it difficult to lead testing, and was advised to prioritize more effectively. After the meeting, it was clear to all in attendance why UAT would be delayed.

It took two more months of hard work, grumbling, and additional resources to complete testing. Afterwards, the PMO head summoned me to his office to acknowledge a job well done, and to reassign me to a new project role putting some distance between me and that particular user group. I accepted, gladly.

The Fork In The Road.

Yogi Berra is often quoted: "If you see a fork in the road, take it."
Easy for him to say!

Picking a path when faced with a business decision is difficult; it seems easier to make no decision than the wrong one. The examples in this article, adjusting a community based web strategy for a consumer products firm, and deciding whether to buy or produce ingredients needed to produce a high quality end product are illustrative of the way these decisons can result in a positive outcome.

I've come across a terrific series of brief articles in the forums over at Entrepreneurdad.com. Forum community leader, Mitch, has produced The Empire Series to chronicle the forks along the road that he has encountered as he figures out how to satisfy his independent streak, and builds a successful enterprise. Mitch is a candid and compelling writer, and any independent should be able to relate to his story.

Why work with an independent contractor?

If you find yourself struggling to articulate, in brief, the reasons to hire an Independent Consultant, the author has done a pretty good job for you.

Reason 1: Expertise

Reason 2: Output

Reason 3: Taxes

Reason 4: Benefits, as in "none"

Reason 5: Maximum Flexibility


In my experience, Reasons 1 and 5 are most important to my clients. They need to fill a pressing need for a seasoned manager / analyst, and are not ready to commit long term. Follow the link for more details.

Tax planning for the self employed

Forbes presented this article a few weeks ago, and all of these points are worth reviewing with your accountant. I find the medical related expenses to be the area with the most potential for tax savings for anyone with significant medical / dental expenses - this includes pretty much anyone with kids!

Earning Trust

I came across this article in Computerworld, and it is definitely worth sharing. The 10 guidelines here are terrific for starting out on an engagement, and most of them should continue to apply for the duration. They all involve communication, and many of them are old fashioned, but never go out of style, such as issuing meeting minutes or being honest.

Management by Baseball

Neat article about Jeff Angus. I like his approach of using sports figures and situations to illustrate business problems and solutions. I've tried to do that, with mixed results, myself.

One sports analogy that I noted on my last engagement: The Senior Managers of the PMO that I was part of would preach that the Project Managers should operate as a team, and at times would even suggest that we did so. I, respectfully, observed that the PMs operated less as a team, and more as a league, with each team in competition. Note that a league needs multiple, competitive teams to succeed, but in the end, each team is looking out for their own best interests. Most of the PMs agreed with my assessment, most of the Senior folks did not see how it could be possible.

Some cool Jeff Angus stuff:

His Blog

His Book: Management by Baseball : The Official Rules for Winning Management in Any Field

His website

A Website For "Work at Home" Dads

Just in time for Father's Day, details in the Press Release.

Consulting vs. Employee article

This article in Information Week provides a pretty good starting point for the discussion comparing consulting to being an employee. I agree with most of the observations regarding working outside the political structure, being a "second-class citizen, needing a tough skin, etc. One point of disagreement, though; in my experience, pay for overtime can be negotiated upfront by agreeing to a straight hourly charge. This usually discourages the client from asking for too many late nights and weekends.

Performance reviews not measuring up.

As any line manager who has helped with "special projects" can attest, when review time comes, the project work is not recognized relative to the amount of time and effort spent. This study, by Business Improvement Architects finds that experience is widespread. In turn, BIA seeks to capitalize on the issue by selling clients a proprietary process and system, intended to foster an improved environment.

Conversely, if you seek to excel in project work, you could approach firms as an independent consultant, thus leaving all parties out of the "performance review" trap, and leaving more time to focus on achieving the agreed upon project goals for the agreed upon price.

Advice from your friends at the IRS

The IRS provides detailed guidance for Independent Consultants in order to ensure they keep their tax status as Independent Contractors. While some of the paperwork is more complex, there are tax advantages to Independence, including the ability to fully deduct more business expenses. Publication 1779 provides some simple guidelines to help sort Independent Contractors from employees.

And the survey says...

M Squared has released their annual survey of indepentent consultants, and it paints a positive picture. Demand for consultants is growing, along with consultant's revenue, and acceptance of consulting as part of the normal way of doing business. They noted demand especially in the financial services, professional services and healthcare sectors.

M Squared is located in California, which resulted in 55% of their respondents being from CA. Sitting here in the New York Metro area, the highlights ring true.

Could French youth handle being Independent?

If the emotional reaction of French youth to the proposed change in French labor law is any indication, I can't see Independent Consultancy taking off in France. Quotes like this are telling:

"I risk working for two years for nothing, just to be fired at any moment...That's depressing, that's why I'm crying."

Basically, the law change proposes that young workers can be fired by large employers, early in their careers. The current law, it seems, prohibits firing, and has led employers to just not hire young people, and the huge unemployment rate reflects that.

Independence

I started out as an Independent Consultant in late 1998. My career to that point was a slow progression up the Business Analyst - Project Manager food chain. The money was ok, but the politics were stifling. I needed to do something different.

Like so many things in life, my decision was largely driven by supply and demand. 1998 saw a confluence of the dot.com craze, the Y2K semi panic, and a general push by big companies to upgrade business systems. Companies also wanted to have more flexibility with respect to staffing (English Translation - they want to be able to fire you when they're done with you, and not get sued) . Consulting/Contracting was hot, Business Analyst / Project Manager types were in demand, and I was lucky enough to have a good friend looking out for me who referred me to my first gig. Thanks Ken!

Since then I've worked for plenty of clients, had some ups, some downs, and continue to learn a heck of a lot. One thing, I think, needs clarification. This whole notion of "Independence". No consultant is actually independent. We depend as much on our clients as we did on our bosses back in the day - maybe more. We depend on colleagues, headhunters, friends, family, and the kindness of strangers. We are self-dependent with respect to benefits and retirement planning, but Independence is a state of mind, not a contractual arrangement. In hindsight, I was working with Independence in mind for several years before I decided to fly solo. And I'm glad I did.