What to Do before You Leap!
What to Do before You Leap!

Starting your own consulting business is a huge leap of faith – in yourself! Assuming that this is how you plan to make your living (not just a retirement pursuit) here are 3 practical tips to create a safety net for yourself. So before you quit your “day job” make sure you do the following:

Make sure you have 18 months of living expenses planned out.

  • New consultants usually give themselves a year to make it before they decide to bail out, and that is way too soon! You need to give it at least 18 months in order for marketing to kick in and generate the kinds of referrals that become the staple of any consulting business.
  • My own business turned the corner in my 15th month. I was thrilled when it happened and relieved that I was able to support yourself during that start-up phase.

Arrange for a signature line of credit.

  • I’d suggest at least $50,000 US, more if you can get it.   That’s because there may be unanticipated expenses for you or your business, and you want to be able to absorb them.
  • However, you need to get this line of credit BEFORE you start your business, while you are still employed and getting a salary! That’s because once you quit, you may not be credit worthy for a while — finance companies will want to see two years of business tax returns.
  • In my own business I realized this too late. When I needed to invest in a new computer system and marketing collateral, I had difficulty getting a loan and often had to rely on credit cards with a much higher interest rate.

Get disability insurance before you quit.

  • The fact is, you are more likely to become disabled than die, so life insurance although nice will not help you if you get into a situation in which you cannot work for an extended period of time.
  • I learned the hard way that applying for this AFTER you start your business means lower benefits for a higher rate. Why? Insurance companies need to prove you are working before agreeing to sign you.   They like to look at a pay stub or tax returns and be able to see you come and go.
  • If you are in the start-up phase, you may not be able to provide the financial evidence needed for the amount you want to insure, and if you work out of a home office, you won’t be “coming and going” on a regular 9-5 basis. As one insurance agent said to me, “How do I know you are not just watching daytime TV?”

So while you are planning your own consulting business, put in the effort to soften any hard falls. It will still be a scary leap, but you will sleep better knowing that you have a safety net!

Cathy Perme is the co-owner of Perme & Peterson Associates, LLC.

Fizz by Cathy Perme

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Fizz! How to Succeed as an Independent Consultant author Cathy Perme also wrote Confucius in My Cubicle: Practical Wisdom for the Leader in All of Us, released by Wisdom Editions in 2017.

rich set of suggestions
Cathy's marketing and selling background makes for a rich set of suggestions for getting business and building one’s brand. I think it is rare ...
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Barbara A Tuckner
Cathy's marketing and selling background makes for a rich set of suggestions for getting business and building one’s brand. I think it is rare for an independent consultant to "give away" so much of their business engine and expertise. That adds up to a heap of generosity; something that is remarkable in the "friendly" competitive consulting world.
rich set of suggestions
Barbara A Tuckner
down to earth and practical
Down-to-earth, practical, and provides plenty of tools to use to develop your independent consulting business. Cathy takes a constructive look at how to succeed by ...
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Meghan Jost
Down-to-earth, practical, and provides plenty of tools to use to develop your independent consulting business. Cathy takes a constructive look at how to succeed by intelligently marketing yourself, engaging others, and keeping it all in balance with your personal life.
down to earth and practical
Meghan Jost
dozens of ideas
Cathy gives dozens of ideas about networking effectively, making sales calls and using social media and she doesn’t minimize the effort that has to ...
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NES
Cathy gives dozens of ideas about networking effectively, making sales calls and using social media and she doesn’t minimize the effort that has to go into it. It’s a reality check for anyone who thinks they can just hang up their shingle and become a consultant, but a great guide for anyone who’s willing to put in the hard work to be a success.
dozens of ideas
NES
from a to z
Cathy will take you from point A to Z on how to successfully become an independent consultant.
Charles Bever
Cathy will take you from point A to Z on how to successfully become an independent consultant.
from a to z
Charles Bever
methodical steps
For those that take the leap, Cathy's methodical steps will surely be helpful in achieving success.
Kevin Walsh
For those that take the leap, Cathy's methodical steps will surely be helpful in achieving success.
methodical steps
Kevin Walsh
recommend to anyone
I recommend to anyone starting a business.
Patricia Jayne Keefer
I recommend to anyone starting a business.
recommend to anyone
Patricia Jayne Keefer
years of lessons
Cathy shares years of lessons and a broad breadth of practical consulting and business experience in a very clear and engaging guide for starting and ...
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Ted Clark
Cathy shares years of lessons and a broad breadth of practical consulting and business experience in a very clear and engaging guide for starting and developing a successful consulting company. Highly recommended.
years of lessons
Ted Clark
I appreciate Cathy sharing
I appreciate Cathy sharing what she’s learned over the past 30 years about how to succeed as an independent consultant. Her advice is straight forward, ...
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Amy Brown
I appreciate Cathy sharing what she’s learned over the past 30 years about how to succeed as an independent consultant. Her advice is straight forward, thoughtful, organized, and easy to follow.
I appreciate Cathy sharing
Amy Brown
Learning Experience Face
This has been a truly learning experience and has helped me grow both personally and professionally.
Anonymous
This has been a truly learning experience and has helped me grow both personally and professionally.
Learning Experience Face
Anonymous
drove to closure horse
Took a very complicated and dynamic set of realities and personalities, surfaced underlying issues, facilitated a robust and healthy interaction, and drove the process to ...
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Anonymous
Took a very complicated and dynamic set of realities and personalities, surfaced underlying issues, facilitated a robust and healthy interaction, and drove the process to closure and action.
drove to closure horse
Anonymous

Cathy Perme