How To Quit—Without Quitting

What you need to set up a consulting business after you leave the office

Time to retire, but not quite ready to hang up your spurs? Going into business for yourself as a consultant, using the contacts and skills you gained on the job, lets you slow down your work life to a pace you can control. You can set your own hours, choose your own clients, and pay your own salary.

If you're one of the lucky ones, you can snag a consulting contract with your soon-to-be-former employer. That will at least get you started. In any case, here are some tips for setting up a consulting practice:

START SMALL. It's easy to set up a fully outfitted home office for less than $1,000, and that's what you should do.

Keep your fixed expenses as low as possible, especially if you're counting on the proceeds of your business to fund your retirement, or even part of it. A rule of thumb: It will take a year or two before you turn a profit and three before you'll be making a living.

If you're more comfortable with a formal workplace and having access to a conference room and overhead projectors as well as someone to answer the phones, rent space in a commercial office suite.

KNOW YOUR COMPETITIVE EDGE. After years of corporate downsizing, self-proclaimed consultants are ubiquitous. If your skills are unique or scarce in your market, go after that niche and build from it as you gain expertise.

When John Coppola retired from the Smithsonian Institution in 1995, he planned on being a freelance curator, putting together exhibitions for museums. Comfortable working in Spanish as well as English, the Miami consultant today gets most of his business from museums in Latin America and the Caribbean. And he's not just mounting shows: "I found that what museums really need is strategic planning advice and professional development."

WRITE A BUSINESS PLAN. It can be brief, maybe just two pages. But it will help you define your business, tell you whether there's a potential for profit, and forecast your cash flow -- important for projecting the investment you'll need to get up and running. If you've never written a business plan before, this would be a good time to hire a coach to guide you through it.

Expect to pay around $500 for a couple of formal sessions, but often you can find someone to help you for free, a friend or professional associate who already has an established consulting practice.

CHARGE ENOUGH. You're going to incur out-of-pocket expenses working for a client that you don't have as an employee. For one thing, your Social Security and Medicare taxes will double. You also have to buy your own health and disability insurance, and there's no such thing as a paid holiday or vacation. A common guideline is to bill your clients 2 1/2 to 3 times what they'd have to pay an employee to do the same job.

JOIN A PROFESSIONAL ASSOCIATION.In fact, join several. Besides keeping up your ties with trade groups affiliated with your specialty, which you need to stay current, you should become active in local consultant associations. Every major city has several. "Networking and referrals are absolutely essential in this business," says Mike Grimshaw, a 61-year-old management consultant in Rancho Palos Verdes, Calif., who spent 30 years as a sales executive for high-tech companies such as IBM (IBM ), Cisco, (CSCO ) and Nortel (NT ) before retiring six years ago. "It's the best way of seeing how other people are doing the same thing, right or wrong."

One association, the Institute of Management Consultants (, is the only group that certifies such consultants; that certification can differentiate you from your rivals. The associations can also put you in touch with service providers, such as accountants and attorneys, that you need to help run your business.

MARKET YOURSELF. While you're at it, join an organization that will teach you how to speak on your feet more effectively, such as Toastmasters International. It's an essential skill. Referrals from clients and associates, and companies that ask you to bid for their business, provide a more reliable income stream than cold-calling prospects does, and seminars, speaking engagements, and mentions in newspapers and magazines are what bring in that kind of business.

"Selling yourself is not like selling some widget," says Tom Northup, 65, who had retired after 30 years in manufacturing. It took just a year for him to figure out that retirement wasn't for him, and he became a consultant in Newport Beach, Calif. "Most people are going to have to learn new skills and techniques, or they aren't going to be successful."

Besides joining Toastmasters, Northup hired a consultant to build his Web site. He engaged a coach to help him develop a stump speech that he can deliver on a moment's notice. He writes articles for a newsletter that goes to clients and prospects, but they're edited by a consultant "to make them really sing," he says.

When you're ready to start your consulting business, plenty of resources can help. For a general look at what it takes, pick up Getting Started in Consulting by Alan Weiss. For the nuts and bolts, you can't beat Working for Yourself: Law & Taxes for Contractors, Freelancers & Consultants, by Stephen Fishman.

Whatever you do, don't look like you're retired. "If you sit down with clients looking tanned and relaxed, it can work against you," says Bob Clyatt, author of Work Less, Live More: The New Way to Retire Early. "You don't want to make this look like a hobby, or like you're just puttering around." Even if that's what you're really doing.

By Larry Armstrong

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