Considering consulting? Ask these questions first
Updated: Jan 24, 2019
Don’t leap into consulting without doing your homework.
By Beth A. Berk, CPA, CGMA, and Dawn Wotapka
If you've been considering consulting as the next stage in your career, you're not alone. Many CPAs become part-time or full-time consultants prior to retirement. Others choose consulting because they want greater flexibility and control over their schedules. Some consult between full-time jobs, or on the side while working full time.
Opportunities for accounting consultants are high right now. "It's a consultant's market," said Don Plato, vice president at Robert Half Management Resources. According to the U.S. Department of Labor's Bureau of Labor Statistics, the unemployment rate for accountants and auditors was 1.7% in the third quarter of 2018, well below the national unemployment rate of 3.7%.
Since so few accountants are unemployed, open positions are going vacant for longer, and organizations are likely to consider hiring consultants on a short-term basis, said Maureen Hoersten, COO at Chicago-based staffing firm LaSalle Network. It can take three to four months to fill a high-level vacancy, such as a CFO or controller position, and organizations may hire a consultant in the meantime. They may also seek consultants because they are expanding or relocating and need someone to assist during a transition or to help implement software.
If you're thinking of becoming a consultant, however, there are some things you need to know about the consulting landscape first, and some vital questions to ask yourself.
REGISTER WITH A STAFFING FIRM OR GO INDEPENDENT?
Probably the most important decision you will need to make is whether to be an independent consultant or work as a contractor for a staffing or consulting services firm, two of the main avenues for consulting, though not the only options. Each approach has its pros and cons.
When working with a staffing or consulting services firm, you register and are interviewed and onboarded, and the firm will match you with potential employment opportunities. The firm will also take a percentage of your pay in exchange for this and other services. The advantage to working for a firm, though, is that you won't need to find clients or market yourself.
Registering with a staffing or consulting services firm is usually fairly straightforward: You call or register on the company's website, submit a résumé, and conduct an interview with a recruiter, which may take place over video call. Many firms review and offer advice on candidates' résumés as part of the onboarding process (see "Is Your Résumé Specific Enough?" below). Firms often have a high volume of open positions and are able to place accountants fairly quickly, in some cases within 24 hours, Hoersten said.
Another advantage to working for a staffing or consulting services firm is that they offer benefits, such as health insurance, vacation time, bonus pay, and, in some cases, even free CPE. Independent consultants would need to secure health insurance and similar benefits on their own.
When working as an independent consultant, however, you may enjoy more freedom to choose your clients and the hours you work (see "From Controller to Consultant". You can work out any problems or issues with your client directly without involving a third party. You would also receive your entire fee from your clients and don't need to give a cut to a staffing firm. To gauge whether you would be successful as an independent consultant, ask yourself whether you would be self-motivated enough to find work, enjoy the networking necessary to find clients, and be comfortable not knowing exactly where your next paycheck is coming from.
KEY QUESTIONS TO ASK BEFORE YOU BEGIN CONSULTING
Do you have the right attitude?
Consultants should be proficient in the skills their prospective employer needs and be able to quickly adapt to the processes and procedures of their new workplace. "We don't want to place a consultant who needs to spend time getting ramped up, learning the tools and skills they need to execute the assignment. Instead, we need to identify consultants who can hit the ground running and be a value add to current leaders," Hoersten said.
Do you have specialized skills?
Though organizations are seeking consultants with more general skill bases, the most in-demand accounting consultants are those with specialized skills (see "The Most Sought-After Skills for Consultants," below). "That's not to say that if you're just a good controller, you can't find a job," Plato said. "But if you've been doing SEC reporting for the last 15 years, for example, you're going to be our go-to more than a controller that's just dabbled in it."
Before launching your consulting career, determine what type of work you think you may want to do. Then perform a self-assessment to identify any gaps in your skills. Evaluate both your technical skills (such as regulatory knowledge, industry knowledge, proficiency with different types of software, and writing capabilities) and soft skills (training and/or managing staff, networking, presenting).
Note that, depending on your previous role, you may not have all the knowledge you need to serve a new population. For instance, if you've been in a senior management role, you may not have been involved with hands-on accounting functions for a long time. Or, if you work for a large organization, you most likely use different software than smaller companies do. The niche you want to enter may require you to learn a particular type of software (QuickBooks, Xero, Intacct) or brush up on other skills such as workflow management.
To build new skills or hone ones you haven't used lately, you may need to do research or take classes. You can also gain skills by volunteering or working at a reduced rate until you get up to speed.
How long do you want to do consulting?
Are you seeking to consult for just a few years before retiring altogether, or for possibly the next decade or more? Establishing an anticipated time horizon can help you determine what type of work you decide to do and how much you should invest in preparing yourself.
Most placements by staffing or consulting services firms are for three to six months, though occasionally they can last a year or more.
When do you want to start?
Regardless of the type of work you want to do, getting started as a consultant most likely will require advance planning. If time allows, you should start thinking about it at least six months from the time you plan to retire or transition. That will give you time to obtain any additional training or education you will need.
CONSIDERATIONS FOR INDEPENDENT CONSULTANTS
By becoming an independent consultant, you are, in effect, starting your own small business, with everything that entails. Here are some aspects to consider:
Earning enough to cover expenses
If you currently work for an employer that provides benefits, keep in mind that, as a self-employed person, you will need to factor the cost of health insurance into your budget. You will also need to consider how much money you will need to get started as a consultant, including for travel expenses, taxes, technology and software (if your clients are not providing this), and the cost to acquire new skills and set up an office.
There are many factors to consider in terms of what you may seek as an hourly rate or fixed fee engagement, such as the type of work you will be doing, the market where you live or work, the duration of the project, whether you need to bring your own laptop, and your experience level. Other things to consider are how far away your clients are from your home, and out-of-pocket costs such as parking, tolls, and specialty supplies. (You can consider charging clients for out-of-pocket costs as part of your engagement.) If you're not sure what to charge, talk to similar consultants and ask how much they charge and what items they include in the fee versus what they charge separately.
You will need to assess whether you would be able to work from home or would need to rent office space. You'll also need to think about how far you're willing to travel for an assignment.
If you set up a home-based office and plan to have business-related professionals come to your home, you will need to determine what type of business-related liability and/or property insurance to obtain. If you have homeowner's or renter's insurance, you should inquire with your insurance company to determine what is covered. If colleagues or clients will ride in your car, you will also want to speak with your insurance company about using your car for business.
Your comfort level with networking and asking for business will impact your ability to find clients. Reach out to existing contacts. Make sure you have business cards and set up your own database of contacts or use LinkedIn. Think about who's in your local network to reach out to (for example, professional membership or religious organizations, chambers of commerce, Business Network International, etc.).
You will also need to think about how to market yourself. Ideas include using LinkedIn, creating a website and domain name, using a branded email address, starting a blog, creating a marketing CV (as opposed to a traditional résumé), running ads, writing articles, presenting, and joining networking and industry-specific groups.
Drafting legal contracts (or engagement letters) with your clients
This is a must. Having a contract or engagement letter will protect you in the event of a lawsuit. Your contract or engagement letter should include items such as fees, out-of-pocket expenses, and the timeline and scope of the work to be performed. You may want to consult an attorney for help drafting these documents. Also, keep in mind that some prospective clients may request a proposal prior to entering into any type of legal agreement.
Consider various scenarios to see what makes sense for you. For example, will you operate as a sole proprietor, an LLC, or a corporation? Each type of entity has a different tax treatment, and they may differ in terms of benefits. Ask yourself whether you may be hiring staff later on, which may affect how you set yourself up as well.
If you don't have a strong tax background, seek out a CPA with tax experience who can assist you in the planning process. Find an attorney, too, if necessary.
A REWARDING CAREER MOVE
Many CPAs who have made the leap to consulting, whether on their own or working with a staffing company, have found it to be a rewarding career move. Consulting can be a way to finish up your career until you're ready to retire from work altogether, or serve as a steppingstone at times when you are between permanent employers or need greater flexibility. It can also be a way to obtain additional skills and experience.