Want to Do Consulting With a PhD? Here Are 8 Things You Should Know.

Six months into my post-PhD career, I left a job at a think tank to do consulting with a PhD.

There were several reasons for this, but the most important was that I was watching the money the think tank was taking in to do these research projects. It was a lot of money. And they’d pay me by the hour. And when I sold a $50k project that took me 4 months to do, I confess I started to wonder why I needed the middleman.

Why couldn’t I just sell that project and do it myself?

It turns out it was harder than I thought. People paid the think tank because of their name and reputation, and I didn’t have that yet.

So I struggled to sell, and eventually failed miserably and ran back into a job.

Why do I tell you this at the beginning of a post on consulting?

Because it’s possible to make a lot of money consulting. I’ve met people who do it. And I’m in the process of doing it again. This time I have clients. This time I have a plan. But it still won’t be easy. It will take an insane amount of work. (NB this post is about building your own business as a consultant rather than getting hired as a consultant with a big firm. You can read about that here.)

Here are 8 things you should do to build a career in consulting with a PhD.

1. Build your network

Networking is everything. Your network will create wealth and opportunities for you. The bigger and better it gets, the more you’ll have.

So take building your network seriously. Make it a regular practice.

If you aren’t willing to build a network constantly, don’t go into consulting. Consulting with a PhD can require near-constant selling, especially if your contracts are small.

And the first point of sales is relationships. People are most likely to choose you from several people they could pick because they know you. If you’re on their radar, they won’t google someone; they’ll call you.

The great thing about building your network is that it doesn’t have to happen at some magical point when your PhD is done. You can start now:

See the related posts (Links open in a new tab):

Many Students Have No Idea How to Network. Here Are 5 Tips.

6 Mistakes PhDs Make When Networking

Here’s Why Networking Will Dramatically Change Your Career

2. Define what you offer

You should know what it is you have that companies occasionally, and preferably routinely, pay for.  Consulting represents a sweet spot where employers really need to or want to get something done, but don’t have enough employees to do it and can’t justify hiring one. Enter you.

Let’s say that hiring a new research assistant would cost them $40K for a year. If you’re there and will save them the hassle of doing this, plus they get a PhD on it, they might throw $20k or $30k at you to do the project.

But define, define, define. Be specific. Don’t just say that you’re a researcher. Be clear on what your offer is. I can do Program Evaluation, Stakeholder Mapping, Convening, and write policy papers in the areas of immigration, education and skills, and innovation and economic development.

As you meet people and build your network, ask what their specific needs are. Ask them how often they hire consultants, what they usually hire consultants for, and if there’s a list you should be on. Do they need an engineer to run two months of tests to validate a concept? Do they need a policy researcher with expertise in gender studies to write a report?

At the same time, it might be worth keeping an open mind if you get offered other things.

It’s a learning adventure—so roll with it!

3. Consider working a job first

If you can make the jump from PhD to consulting, more power to you. Even more power to you if you can do it on the side while you study. But if you don’t know the field you want or the value you offer, it might be worth getting “paid training” through working in a job.

When I worked at the think tank I ran projects, won grant money, and worked with stakeholders—not to mention built a strong network in Ottawa. My next job in government taught me how much I didn’t know about how government works, how things get done, and how to use a bunch of acronyms. When I recently told a director (a mid-level manager in the Canadian government) that I was going into consulting, he was excited—every time they hire consultants they have to teach them about how they do things. He realized that if he hired me he wouldn’t have to do that.

If I had jumped straight into consulting from the PhD, I would have had a difficult time. I’m not sure what I would have sold (writing or editing probably) and, if I were successful, my life would look very different. I learned so much from working every job I’ve done that makes succeeding in consulting more possible—but still far from a sure thing.

Don’t rule out working a job if your goal is to eventually do consulting.

4. Learn business basics

Ok, so you’re launching a consultancy. Will it be a corporation, an LLC, a partnership, or will you operate as a sole proprietor? Do your clients hire sole proprietors, or do they require incorporation? How will you do your bookkeeping? Are you keeping track of your tax write-offs? Do you need insurance?

You don’t need to know EVERYTHING about business, but the things I mentioned above are considered basics.

Try reading some business books. Drop by a local small business support center, or browse government websites dedicated to helping. Learn as much as you can.

For bookkeeping, you can set up a free account and try Freshbooks, which I absolutely love. It’s the perfect program for starting out. You can try it for free here.

If you don’t know what cash flow means, or what the difference between revenue and profit is, it might be time to learn.

I don’t want to discourage you. With all the weird stuff you’ve learned, you can learn the basics of business!

But go do it! Treat is as seriously as your most important academic investigation. Because the skills you grow will change your life.

5. Figure out how much to charge

If you’re going to charge $15 an hour as a consultant, you might be better off working at MacDonald’s. You will have a tendency to want to bid cheap to win contracts, and sometimes you might have to do that. But your foray into consulting can’t be a race to the bottom or it will hurt you and your work.

Price your service high enough that some people might say no (again make sure you know what your value proposition is).  Recognize that people equate price with value, and expect to pay a little more for someone who will do a great job.

To give you a frame of reference, in Ottawa I would charge $70 an hour for most clients. For the occasional passion projects or non-profits I’ll go lower—my lowest right now would be $55 an hour. Now of course, I don’t actually charge by the hour—I charge by the project. But if a client wants to know what my hourly rate is, that’s it. And when I estimate a project, that’s the framework I use.

Now let me guess. You’re sitting there as a graduate student thinking that this is an obscene amount of money. And from a $15k stipend, it seems like it.

It’s actually win-win. I didn’t make $70 an hour in either career-job I worked. As a consultant, I’m assuming all the risk. I’m personally not willing to assume a high level of risk to make the same as I made in a job.

And it’s a win for the employer too, believe it or not. It costs an employer anywhere from $70,000-$130,000+ a year to hire someone full-time to do what I can do–and it’s a headache. So if someone hires me for $40,000 to get done what it would normally cost them $80,000 they’ve saved a lot. If I can get between 4-10 contracts a year that are between $20,000-$45,000 I’ve made some fantastic money.

Now—before you see the dollar signs rolling in front of your eyes, let’s add a caution here. If I sold 4-10 projects a year worth $1,000 each I’d be living in poverty. Some consultants do–especially the first year. Just because you CAN make a ton of money consulting doesn’t mean you WILL. Again, I don’t want to discourage anyone, but it’s important to have a realistic view of what might happen and prepare for anything.

You’ll also need to find a balance between cost and workload that allows you to function well and deliver—if your projects are poorly done people will notice sooner or later.

6. Build your personal brand

If people are going to pay you $70 an hour to be a consultant for them, they want you to be professional. That means putting the grubby PhD student identity away (if they’re still around). Polish, polish, polish your brand.. Work on your LinkedIn and share material on it, get professional head shots. Perhaps get a website. You’re in the business of marketing YOU inc. right now, so make sure you would want to hire you.

Work on how you carry yourself. Practice your handshake so it’s firm. Study speaking and projecting confidence.

I know these things sound so ridiculous, but they seriously make a huge difference and will make you more likely to succeed. Confidence especially is critical and is easier said than done.

7. Get professional help

If you’re serious about consulting, it’s worth getting some professional advice. Absolutely read everything you can, but there are two people every entrepreneur should have in their ear: a lawyer and an accountant. The lawyer will help you be legal and legitimate (if you decide to incorporate) but can also offer advice on contractor agreements, non-disclosure agreements, and a whole bunch of other legal processes that are vital for entrepreneurs.

The accountant is also someone you want to have in your corner. They’ll tell you how to structure a company, teach you how to pay only the taxes you need to (I’m not talking about setting up a shell company in Panama here—but you really don’t want to pay more taxes than necessary), and what you need to keep for bookkeeping, tax write-offs, etc.

You need both of these people. You don’t need either of them full-time. Chances are, once you’re running, you’ll only see your accountant once a year and your lawyer perhaps less than that. But do find someone with the heart of a teacher that you can call with little questions as you have them. If your lawyer or accountant makes you feel like an idiot or won’t explain things to you, get out of there.

I want to add one more caveat here. So you want to be a consultant? I WOULD NOT suggest spending tons of money up front. There are lots of things for both lawyers and accountants you can spend money on—monthly check-ins, extra paperwork. I chose to do the bare minimum UNTIL I have cashflow. You should absolutely make sure you’re going to have some money coming in, perhaps even have your first few clients tentatively signed, before you drop a ton of money on lawyers and accountants. It’s too easy to get in way over your head up front.

8. Get ready to battle yourself

Just like in academia, imposter syndrome among entrepreneurs is rampant. So you may never feel good enough. And in the end, it’s one more place you’ll have to #fakeittillyoumakeit.

If you’re making the leap, make sure to prepare for this. Find a good mentor–a BUSINESS mentor (not your PI). Look for mastermind groups or meetups of business people, and surround yourself with people who think like entrepreneurs.

Conclusion.

This is a very minimal guide to consulting. I’m still learning lots about it, so I’ll post more as I learn. What do you think? Are you planning to make the jump? Have you thought it through? Have I missed anything?

Let me know! And good luck!

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