Skipping Freelancing: From Corporate To Micro Consultancy Founder

Yesterday I wrote about what the process of starting a micro consultancy looks like for freelance consultants (read it here). There are pros and cons to making this transition, but it is, without a doubt, the most common and natural path for those who have a vision of building a lifestyle boutique consultancy.

Here's an interesting question that came from a reader:

Really insightful Dan. One curiosity: What if I'm working as a consultant with a paycheck and want to start a micro consultancy directly (skipping the freelancing stage)? What are the risks or advantages of doing that?

To which I answer: You can do that, but I often recommend against it. Starting a micro consultancy without freelancing first adds too many risks to only a handful of advantages. But I said "often", so let's start with the exceptions first.

The biggest exception is for those who have experience starting and running a business before. There are several reasons for this that wouldn't fit in a daily post, but basically it's a whole different game. The entrepreneurial world requires both a mindset and a set of skills completely incompatible with those from the salaried world. If you have been through that before and know what it's coming, hiring support from other people from day 1 is indeed an option.

However, even in those cases, I often suggest consultants start a self-employed life without a team (with exception of any partners or co-founders). The reason is simple: When you start you only have a concept, but no evidence of what works.

You often have no clear target audience, or a too big of a target, or you don't know that target well enough. You have no proven offerings, services you know will solve urgent and expensive problems for your targets. You have no proven processes or methodologies to solve those problems - most of the time, they are guesses.

In this scenario, what tasks and activities can you delegate? Although it's reasonable to hire help to do some initial market research, that's not much you can outsource. From my experience, the founder must be the one talking to people, pitching, and experimenting - it's part of the process of building confidence and cultivating valuable expertise.

Remember: You don't need to quit your job to start taking small engagements on the side. And if you do quit, you will have a much bigger financial runway for your first years. When freelancing, cash is king and provides you with peace of mind and the opportunity to make good decisions, rather than forced ones.

The only consultancy founders who I've seen succeed without doing any freelancing are people who either (1) have had extensive other entrepreneurial experiences in the past or (2) have deep expertise in a specific industry or service and have dabbled with some independent projects on the side. Or both.