The other day while researching things for me to do to find clients and projects, I came across this article by Alyson Krueger in which she quotes Stephen Robert Morse of SkillBridge, who says, "If you are a consultant you spend 50 to 70 percent of your time hustling for work, and 25 percent of your time actually doing the work.” Now as a business consultant who worked for consulting firms in the past, billability was a hugely important metric. We filled our time sheets each week and the billability was a point of discussion during performance evaluation meetings. It was problematic, though, because many of us who actually did the projects were helpless if the partners were not bringing work (or brought projects that required you to work full time but you could not bill the hours since the project was sold at a lower price -- if you said no to such projects you billability was zero and you were considered not a team player but when the time came to evaluate your performance and you were not around to explain the situation, some number cruncher concluded that you were not billable, and therefore, deserved to be punished).
Now I really started my re-entry to business consulting as a freelancer in April of 2014 and was lucky enough to get uninterrupted work till November, 2014. At that time when I wrapped up a few projects, it was nice to get a little break and enjoy the holiday season. It was only in January of 2015 that I started to worry that I have been on the bench for too long. Thankfully, a project materialized in February and a second one in March, both of which kept me busy till August. However, right now, I have been idle for more than two months and have nothing lined up yet. I am also afraid that if nothing materializes by middle of November, the holiday season will slow things down and I may not get anything till next year.
So reading the comment from Morse was comforting but also scary. Assuming that he is right and let me use the lowest billability ratio of 25% since I am new to freelancing and do not have a huge client base yet, it means that I would be working only 13 weeks a year. If I want to make about $150,000 a year (a fair compensation for someone with my qualifications and experience and considering the amount I need to allocate for paying my own health insurance and self-employment taxes), I must charge $288 a hour. I know this is nearly impossible for most freelance consultants unless they are very successful. I have averaged $75-125 an hour, which means that I might be able to make only $52,000 a year. Ouch! In 2015, if I do not get any additional work, I would have made $60,000. So either I must increase my billing rate or the number of hours worked. It is depressing, really!
I called up a business associate who has been a freelancer for over 20 years and he confirmed Morse's observations. He informed me that there are good and bad years so it is better to look at it over several years. He also advised that in a good year, I must not conclude that this is the way things are going to be forever and spend all the money. Instead, I should save it during a good year because I will need it during bad years. His experience is that you have to be constantly selling even when doing a project but there are just too many consultants out there and not enough work even if you have highly specialized skills like I do.
Now I really started my re-entry to business consulting as a freelancer in April of 2014 and was lucky enough to get uninterrupted work till November, 2014. At that time when I wrapped up a few projects, it was nice to get a little break and enjoy the holiday season. It was only in January of 2015 that I started to worry that I have been on the bench for too long. Thankfully, a project materialized in February and a second one in March, both of which kept me busy till August. However, right now, I have been idle for more than two months and have nothing lined up yet. I am also afraid that if nothing materializes by middle of November, the holiday season will slow things down and I may not get anything till next year.
So reading the comment from Morse was comforting but also scary. Assuming that he is right and let me use the lowest billability ratio of 25% since I am new to freelancing and do not have a huge client base yet, it means that I would be working only 13 weeks a year. If I want to make about $150,000 a year (a fair compensation for someone with my qualifications and experience and considering the amount I need to allocate for paying my own health insurance and self-employment taxes), I must charge $288 a hour. I know this is nearly impossible for most freelance consultants unless they are very successful. I have averaged $75-125 an hour, which means that I might be able to make only $52,000 a year. Ouch! In 2015, if I do not get any additional work, I would have made $60,000. So either I must increase my billing rate or the number of hours worked. It is depressing, really!
I called up a business associate who has been a freelancer for over 20 years and he confirmed Morse's observations. He informed me that there are good and bad years so it is better to look at it over several years. He also advised that in a good year, I must not conclude that this is the way things are going to be forever and spend all the money. Instead, I should save it during a good year because I will need it during bad years. His experience is that you have to be constantly selling even when doing a project but there are just too many consultants out there and not enough work even if you have highly specialized skills like I do.