Seth Grodin

If you're reading this then I'm guessing you're familiar with Seth Grodin's blog.

A recent post he wrote about the 'brilliant specialist' resonated loudly with me as a self-employed consultant.

Trial pricing

A gambit that occasionally appears when I'm negotiating with a new client is the proposal for a 'trial' price.  The idea being that I discount my fee for an initial (trial) project in return for the prospect of more work in the future.  Of course there is no implication that any future project will revert to my normal fee structure.

So what's actually being said to me is this...

1. We don't have enough faith in what you do to pay you properly now, so if you fail we need to limit our financial exposure
2. But if you do happen to succeed then we propose rewarding our own bad faith with a continued discount
   

And the client usually believes that he's doing me a favour!

The assumption underpinning the proposal is that I'm not in enough demand to dictate terms and that it would be better for me to sell my time to them at a discount than sit at home earning nothing.  In short, the client is behaving like a company but treating me like an individual.

If I'm going through a less-than-busy period it's tempting to agree to the deal but the pitfalls are obvious; the best case scenario is that I have to turn down higher-paying work with other clients because I'm committed here.  The worst case scenario is that word gets out and I'm forced down to this new price across the board.

I can't say 'never accept a trial pricing offer' because there are times when they make sense; for example when the client's offer of (a lot) more work equates to a genuine 'discount for bulk' or when your cash-flow is so dire that anything's better than nothing.

But I can say this: it is no one's interest but your own to keep your prices high.  If you don't protect your fee structure no one else will.

Charge at the point of pain

My services are expensive.  For many clients my day-rate is at the absolute upper limit of what they would ever pay any supplier under any circumstances.  When I mention my fee there's often a sharp intake of breath around the table, nervous glances even.  I'm fine with that.  I'm fine with being a line item on a departmental budget requiring an asterisk against it and an explanatory note at the bottom of the page.

But the reason I'm fine has nothing to do with the actual money.  To do my job properly I usually need a pretty big headcount of client personnel in the room; sales representatives if I'm running training and marketing executives if it's a strategic planning workshop.  In either case, my fee is dwarfed by the cost-to-company of putting that many people in the room with me.  

It wasn't always this way: when I started out my day-rate was dwarfed by the room hire.

If I'm perceived as inexpensive then my ability to deliver my product (training, consultancy) diminishes; participants turn up late, step out to take calls and conduct other business during 'my time'.  Entire sessions can be compromised in this way, projects founder and I'm left with a justifiably poorer reputation.  Conversely, when I charge more I get the engagement I need to get the job done.  Once word gets out as to what I'm costing the company everyone magically does what they're asked to.  In the room on time, phones off and focused.  

Pricing can be an effective tool, sometimes the only tool, for creating internal commitment to my project.  My fee should force my contact to go to his boss' boss to get budget sign-off.  Suddenly my guy has to vouch for my quality and I stop being the only person to with a genuine stake in the success or failure of the project.  So now I really have to be worth what I'm charging.  I'm forced to bring my 'A Game' every time because other people are affected by the result.

Pricing

Over the next few installments I want to examine the issue of pricing, especially the question of why it is so hard for many people to ask for money on their own behalf.

When negotiating fees I take a counterintuitive approach: mentally downplay the link between the price I'm charging and what will eventually end up in my bank account.

Because my clients are huge companies, not individual customers, I am never negotiating with anyone with a direct (personal) financial stake in the decision.  My 'opposite number' will get the same paycheck regardless of the outcome of our negotiations.

Of course my client will always be operating within a finite budget but that's a different thing.  Most managers deal with budgets vastly larger than their own salary and so, barring (isolated) instances of outright graft, they treat those budgets as abstractions.  Because big organisations aren't good at rewarding individuals or departments for underspending, budgets are just big numbers there to be spent, or even overspent, by the end of the accounting period. 

What I need to avoid at all costs is the client making the link between his big number and my personal bank account.  The moment he thinks "His fee is about 15% of my annual salary!" then I'm in trouble.

A key tenet of successful fee negotiation is to treat the money as an abstraction, because that's how the client views it.

Marko's mantra

Marko is an Australian writer-actor-director and an old, old friend of mine.  One of his many talents if that he has as much control over an audience as any performer I've ever seen.  Every now and then we work together on 'presentation skills' workshops.

At the core of Marko's performing philosophy is a very simple mantra to be repeated in deep, slow sentences just before you go on stage;

I am Here

I deserve to be Here

I want to be Here

It's all about 'being in the moment', something vital for any performer looking to connect with an audience.

I've found it to be just as useful in other potentially stressful situations like just before walking into the client's office to make that big pitch or getting off a plane in a strange city a long way from home.

In fact Marko's mantra is a pretty good way for any self-employed person to start the day.  Simply replace 'Here' with 'Self-Employed' and repeat slowly until you start smiling.

Surrogate markers

I've been thinking about what makes me happy at the end of a 'typical' working week.

Because I am only paid when I'm in front of a client (ie actually delivering a programme), a 'typical' week is spent at my desk at home not getting paid.  So what does a 'good working week look like then?   Especially from a marketing / client liaison perspective?

In the absence of actual feedback from clients, I use surrogate markers to give me a sense of how my business is going.  This is the same logic as assessing a PR campaign, which is all about changing public perception (hard to measure) in 'column inches' (easy to measure).  

My preferred surrogate marker is comparing my email inbox and outbox at the end of the week (I file emails weekly).  A good week has as many client emails received as sent.  And if I'm filing incoming emails from 4-5 clients at different stages of the adoption cycle then I've had a very good week.

Because I always travel to the client to deliver a programme, a meaningful longer term marker is 'number of flights caught'.  More flights = more work.  More international flights = greater global reach.

Surrogate markers must be easy-to-measure, personally meaningful and offer a logical insight into the health of your actual business.  They are never as meaningful as actual feedback from a client or sales figures but at the end of a solipsistic week at home they're much better than nothing at all.

Support networks

To stay sane as a self-employed consultant I need two quite different support networks.

Firstly, there are the people who understand the work I do.  They work in and around the pharmaceutical industry, either client-side or or as consultancy, advertising or training vendors.  We keep in semi-regular informal contact to swap tips, contacts and industry gossip.

Secondly, I keep up a network of friendships with other self-employed people: actors, freelance writers, graphic and web designers, PR professionals, events organisers and the like.  Most have very little idea as to what my business actually does, and to be honest, they don't really care.  What we do have is the shared need to believe that we can make a decent living being self-employed in our chosen fields.

We talk about 'only being as good as your last job'.  We talk about the freelancer's need to never turn down work; which follows the same logic as the old actors' axiom of never letting your understudy on stage.  We bemoan the irony of never being able to take that holiday when you need it most.  In other words, we talk about always being present in the eyes of your client.

Best of all, we get to celebrate each other's successes and cushion each other's disappointments without the envy or schadenfreude that professional rivals experience in the same circumstances.

Work out when you work best

Working alone gives you the luxury of working when you work best, especially if you work from home like me.

Personally I do my best thinking alone and between the hours of 530am and 10am.  I get up at 5am, make coffee and then spend about 30 minutes checking emails from other parts of the world, reviewing my To Do List and so on.  So around 530am I can get a clear run at my most important tasks; ie. the ones requiring the clearest thinking.  By my calculations, by lunchtime I've achieved more than most of my office-bound competitors will in the entire day.

Whenever I can I also schedule any meetings (phone or face-to-face) after lunch.  Personally, I've never had a problem with getting focused for client interactions so I'd rather not 'expend' my best thinking time in that way which is why I have them later in the day.  Not that I could convince many clients to meet me at 530am anyway...

I'm not suggesting that early rising is the only successful work pattern, its just the one that works for me.  However, understanding when your brain works best and making every effort to protect that time for your most important tasks is vital.

In the consultancy game what you're actually being paid for is the thinking you do before you get in front of the client.

Write a book

I'm not joking.

If you're a serious, self-employed consultant, which means you're 100% passionate about whatever it is you consult in then get yourself in print.

It is one of the more painful, most protracted experiences you'll ever have but well worth it.  The cache that goes with being an author is unlike any other.  If you've sat down and thought through 30,000 words of an idea then you are, by definition, an expert.

My caveat is this: do it properly.  Invest the time to write at least three drafts and then invest the money to employ a professional editor to ask all sorts of hard questions, large and small, before your final draft.  Then self-publish.  The hidden wisdom behind self-publication is that you retain total control over your product, you get to say whatever it is you want to say in your own words and you'll still be out there on amazon.com  with everyone else.

My approach is to treat the book as a a high-value calling card rather than an income stream per se.  I've sold thousands of copies, mostly in multi-book orders from clients, so the editor's fees and typesetting costs were recovered long ago.  But I've done even better out of the business generated by the hundreds more I've given away.

Best of all: it's mine.  I wrote it and no one can ever take that away from me.

If you're interested...

Lead Times

My business operates on extremely long lead times.  I have worked out that the average time between first contact with a client and project delivery is just over sixteen months.  In Good to Great Jim Collins talks about reducing an organisation's focus to a small number of readily meaningful metrics to drive performance.  'Time-to-job' is certainly meaningful to my business.

In the past I've tried any number of initiatives to reduce this sixteen-month lag but of late I've come to accept that it's an immutable part of the industry I work in.  Understanding (and accepting) 'time-to-job' has empowered me in a lot of different ways.

• It has a relaxing effect when I mention it to clients - I'm not going to pester individuals to force the pace on decision cycles
  
• It gives me a very clear link between client list and cash flow
• It forces me to face up to the fact that the only way for me to force the pace of growth is to have as many clients as possible - all at different stages of that sixteen-month cycle

Another positive effect is that it stops me from fretting (too much) over unreturned emails.  It helps if you can accept that that unreturned emails from a potential client and unsolicited approaches from unknown ones are two sides of the same karmic coin.

Feedback loops

One of the unsung advantages of employment is that the workplace has a socialising effect.  Sooner or later we are all made to face the consequences of our words and actions (and inactions).  It can be as subtle as feeling vaguely excluded around the coffee machine or as blatant as someone sitting you down and telling you a 'few home truths'.  When newly self-employed people talk about things like 'missing the team environment' this is mostly what they mean - an absence of those million little signs to be read and adjusted to on a minute-by-minute basis.

The lack of socialisation - of feedback loops - is one of the hidden drawbacks of working for yourself.  You finish the document and email it off or you shake hands then leave the meeting room or you hand over the final blueprint.  The job is done and you're out of the loop.

Apart from the truly radical (and awful) feedback of having someone dispute a fee after project completion - something that has happened to me only once in almost twenty years of consultancy - I find it really hard to get an honest assessment of how a job went.  Maybe it's just me but post-project follow-up mostly feels like a transparent exercise in fishing for compliments.

The only feedback that I really value is further work from the same client.  Apart from having an actual monetary value it's the only thing that's 100% honest.  In any business you really are only as good as your last job.  A cliche, I know, but never truer than when you're working alone.

So what happens when I don't get follow-up work?  I worry. I worry and fret and analyse my performance.  Then I redouble my efforts and stoke that small-bore paranoia that's better known as perfectionism.

Sidebar: when my suppliers (who are mostly self-employed themselves) do a great job then I make a point of sending a token of appreciation like flowers or a book.  We're all in this together.

Hold your nerve

Things have been a little slow for me of late.  Dispiritingly so.  Looking down my list of 'active' clients a month ago I luxuriated in the notion that I'd be battling to stay afloat amongst a tidal wave of work, that I'd spend springtime wishing there were more hours in the day.

Four weeks later the picture is dull, approaching gloomy.

There's enough work on for me to know that the bills will be paid and that life will go on as planned (no small feat in a city as expensive as London) but that tidal wave of work that the freelancer in me prays for stays away.

From experience I know that there isn't much little rhyme or reason that can be attributed to a drop-off in enthusiasm across a range of clients, especially when they operate in different time zones.  And whilst its often tempting to look at my ever-shortening 'WIP' file, read about the impending global economic meltdown and use that to explain the dearth of work, I know this is lazy thinking.

Each client, so enthusiastic in February, will have a different reason for pulling back in April.  The key supporter with a change in roles.  The product launch postponed.  The announcement, unanticipated, of a global restructuring.  The boss who simply had to be at the next meeting taking maternity leave.  Good reasons all, and none to do with me, my product, or anything I can even remotely influence.

Because I work in a world where I charge a considerable amount for a relatively small number of projects, the temptation to read to much in the entrails of another 'thanks-but-not-until-Q3-at-soonest' email is always there.  The trick is to hold my nerve.  That and keep broadening my client base.

An email hits my in-box: one of the aforementioned clients wants to meet on Friday.  I feel validated again.

Gym time

Yesterday I mentioned that I use a personal trainer as a mechanism to stop frittering away time.  If I have to be at the gym at a certain time then I have have the work done beforehand.  Easy logic.

Of course the real reason that getting to the gym is important is my baseline health; diet and exercise are the keys to feeling better and living longer.  There's no one in the Western world who doesn't know this; everyone I know wants to get to the gym more often but they're too busy at work to do so.  The fact that I've built a working life that allows me to break that cycle and exercise almost every day of the working week (during the day when there are no crowds) creates a virtuous circle.  

Things like 'gym time' figure highly in most people's fantasies about self-employment and when people tell me that I'm looking well it acts as positive reinforcement of my decision to work for myself.

Parkinson's Law

From time to time I find myself in a rut.  I sit at my desk taking hours to complete tasks that I can normally knock over in minutes.  This brings to mind Parkinson's Law; that work expands so as to fill the time available for its completion.

My temporary inability to complete simple tasks means that I'm denying myself one of the supposed benefits of self-employment: that any time not spent working is your own.

My solution is to use my diary to impose time constraints on my world; with other tasks to attend to I'm forced to complete my work in a shorter period.  The inverted corollary to Parkinson's Law is if you want something done, give it to a busy person to do.

When I started my first company in the early 90's I immediately went back to university for a degree in English and Australian Literature.  Not only did I get the degree but, far from compromising my new business, the fact that I was busy had a positive effect on my clients.  There's a danger in letting a client know that you have a 100% open diary.  It flags that you're either brand new (therefore untried) or, worse still, failing.  I never had to tell my clients that the reason I couldn't do that face-to-face meeting on Tuesday afternoon was because it clashed with a lecture on Shakespearian Tragedy.  All I had to say was that I had a clash.  If it was too important to miss then, of course, study came second.

Nowadays I volunteer at a local charity and use a personal trainer to achieve the same thing.

Gaining momentum

I am waiting for an email from a client.

Last Monday he said he'd get something to me by the end of the week.  I've been waiting eleven days.  It's an important email to confirm dates for an upcoming project.  Until I receive it I can't book flights or hotels or tie down other appointments.  I can't even let my wife know if I'll be in the country for our anniversary.  I tried emailing him about a marginally related topic hoping that would act as a reminder but he seems to ignore that email as well.  I'm left with no choice but to wait.

Finally the email arrives with most of the details that I require but also asking a couple of simple but necessary questions to finalise part of the project.  It will take me no more than five minutes to answer the questions and, pending an equally rapid response from him, we can everything locked up in an hour.

But part of me wants to wait; ignore the email until Monday morning and deal with it then.  Part of me wants to make him wait.  For making me wait.

This is insane.  I know this is insane.  I'm thinking like an artless divorcee trying to reconnect with the rules of modern dating.  Do I call?  Do I wait for him to call?  If I call twice before he calls me once is that friendly or desperate?  What if he's waiting for me to call?  What if something's happened and he can't call?

Really this is just my ego talking; I'm not a person who likes to be kept waiting and sometimes I find it hard to conceal my displeasure.  What my ego wants to do is send a message.

And suddenly I'm considering not responding immediately on a matter where timing really counts.  Suddenly I'm willing to give up precious momentum in order to feel better about a perceived slight.  Except I'm not seriously considering doing anything of the sort.  I'm certainly not willing to do anything that will stall the momentum behind the project.  I'll reply immediately and have the whole thing wrapped up by close of business today.

Momentum is precious.  I do everything possible to increase a project's momentum and shortening response times is a big part of that  If I respond quickly he's more likely to do the same.

It's not desperation, it's professionalism.

You're in a market

The best self-employed people that I know have an acute awareness that they operate in a more or less open market.

Contrast this with being an employee where you're essentially operating in a monopoly situation.   If you're the company bookkeeper or the sales representative for the South-West then no one in the world is allowed to do the company books or call on clients in that region except you.

This is such an obvious situation that it goes totally unnoticed until you're self-employed.  The client might promise you all the bookkeeping work or the entire South-Western territory, but only a fool would see this as a permanent arrangement.  Even contracts come up for review from time to time.  Face the fact that you're in a market and accept that markets are devoid of fairness; if the client's daughter-in-law suddenly fancies herself as a bookkeeper then you've most likely lost a client.

In an open market you're really only as good as your brand and when you're self-employed then you are that brand.  This is a shift in thinking if you're used to working for others.

For example, you need to accept that there's no such thing as seniority, only longevity.  Longevity just means that you've been around a while and if you and I are competing for a client then I'll turn your 'longevity' into a negative: you're not hungry for the work, you're complacent and take the client for granted, you're not up to speed on the latest industry trends.

In other words, 'longevity' is just another brand attribute like cheaper, newer, closer, more convenient, smaller, better attention to detail and so on.  

Nb. If when reading this you read the word 'brand' and thought 'logo' then I'd strongly suggest visiting amazon.com and tracking down a few 'Marketing for Beginnners' books.

To succeed in your market you need to understand what your personal brand is all about and you need to nurture it.

In Princeton

Flew to the US on Thursday for a day of meetings with clients on Friday. I have more meetings with other clients early next week before flying back to London on Tuesday night. Because the meetings on this trip are really ‘prospecting’ rather than delivery, and because they’re all with different clients, there’s no one for me to on-charge my accommodation expenses. This puts me on the horns of a freelancer’s dilemma: where do I stay for the weekend?

I’m trying to build a client base in the North America without having to relocate here, so I’m always minimising the perception that I’m not US-based. There are so many suppliers to my industry that are located here that, to many Americans, using a foreign supplier is just a whole lot of extra hassle.

Never mind that my consulting offering is unique or that these meetings have all been driven by pre-sales of my book; I never forget that the easiest way for a company to rationalise not using me is that I live a transatlantic flight away. I’m also mindful of the fact that I am a solo operator servicing huge companies and that most of their other suppliers are commensurately huge.

So whenever I’m working in the US, I actively try to minimise the perception that I’m a one-man-band working out of England. I’ll never lie about either fact but there’s no point in rubbing anyone’s nose in this, is there?

Hotel choice presents a specific challenge. I can’t put myself in a situation where that most innocuous of corporate conversation-starters, “Where are you staying?” is a something I’m dreading. Being UK-based I can’t go home for the weekend but if the client finds out that I’m booked into the local Howard Johnson’s then maybe its yet another reminder that I’m not McKinsey & Co.

In the past I’ve gone ahead and staying at the cheapest place available yet it always turns out to be false economy. Cheap means noisy. It means less security so I’m always worried about my laptop (or carrying with me everywhere). It means no Internet or gym. Cheap means that I get no work done over a weekend in a strange city where I don’t really want to be. Cheap means that I get to the end of my stay feeling like Willy Loman from Arthur Miller’s Death of a Salesman.

In other words, staying in a cheap hotel means that I’ll get to Monday wishing that I wasn’t self-employed.

My rule of thumb is that I should have essentially the same level of physical comfort and convenience as I have at home – no more, no less.

I opted for the Marriott that I know the client uses for off-site meetings.

Broaden your client base

Perhaps the biggest mistake that any newly self-employed person can make is to get tied to one or two clients only.

The danger is most acute if you've been moved sideways off the payroll and then rehired to do a version of your old job as a 'consultant'.  Leaving aside the tax issues (ie are you really self-employed?), the danger to the long-term viability of your new business venture is insidious.

At the beginning it all feels great: you're doing a job you know how to do, maybe even working with the same co-workers and customers as before.  You're probably feeling  better off financially as you're billing more in fees than you were taking home in salary.  But because you're an ex-employee working (hard) in such a familiar environment, it can be easy to forget that the single most important aspect of successful self-employment is broadening your client base.

You can't ever afford to forget that fundamental, usually unspoken, change in your status: to sever all ties with you, all the client (aka 'your ex-employer') needs to do is to stop returning your calls.

Much is written about marketing and self-promotion and so on but let's cut to the chase: your goal must be to cultivate as many viable clients as you can.  It's only with a range of income streams that you can start to feel any sense of that stability that is a necessary precursor to business success.

About me

I am a 40 year-old Australian, married and living in London since 2005.  I am one of the two founders (and 50% owner) of Dramatic Change (www.dramaticchange.com), a sales/marketing training consultancy that works solely with the prescription pharmaceutical industry.  Its a pretty  specialised field and so we work with clients right around the world.

My business partner, who lives in Wellington, New Zealand, and I founded the company in 1998.  Before that we had run another company that specialised in interpersonal skills for the Australian corporate conference and events market.

Before that (and we're talking 1991 now) I worked in the marketing departments of the Australian subsidiaries of Unilever and Coke; two monolithic mulitnational FMCG (fast-moving consumer goods) companies.  Before that I did a Bachelor of Business, majoring in marketing and advertising, at the University of Technology, Sydney (aka UTS).

So I've been self-employed, successfully, for about 17 years.  I've paid the bills, traveled the globe, consulted on projects worth hundreds of millions and had a hell of a lot of fun.  I still do.  And over that time I've also had employees and really cool office spaces and overheads and all the other features of a 20th Century Business. 

Then I reverted to the ultimate low-overhead business model: me, a spare room, a laptop and a BlackBerry.

It is an active choice and I wouldn't have it any other way.

Raison d'etre

I've been self-employed as a marketing / management consultant for over fifteen years now and, for whatever reason, recently a number of very different people have asked me for advice on the subject of self-employment, working from home, etc.

Because I am a consultant and therefore cannot resist the chance to tell others when to do, I jump at chance and dole this advice out freely.

The vision behind this blog is to set out some of the things I've learned over the last fifteen years about self-employment, about working from home, about small-shop consultancy and, I suppose, about myself.

Comments and questions will be incredibly welcome.