"Chances are you won't see a return for a good 12 to 18 months," says My CIO's Chaabouni. "You need willpower and reserves to sustain the lack of income for 12 to 18 months. You need to stick it out at least 18 months and maybe even longer given this economy."
As for setting fees, Rodgers' strategy is to charge what the market will bear, which means different rates depending on the location of an assignment. Even within Arizona, for example, she charges less in Tucson than in Phoenix.
Another pricing strategy is to make sure your fees are less than those of Accenture and the other big, national consulting firms, Rodgers says. "If I can price myself equal to or less than them, it's still excellent money" and makes her services attractive to clients, she says. To find out what the big firms are charging, Rodgers says she asks consultants with whom she networks. She also often partners on projects with other consultants or firms and can see what others are charging that way.
Money coming in needs to be managed. Chaabouni's advice: "Get yourself a good accountant, and pay your taxes before you pay yourself." Because consultants get paid in large chunks on an irregular basis, "it's so easy to get intoxicated by a big check that you may go on a spending spree," he says. "If I get a check and I don't make an immediate payment to the IRS, I may be hurting downstream. A good accountant will educate you and help you and keep you true."
In addition to your own books, mind your potential clients' finances as well. "If the client is a start-up and hasn't been in business all that long or if their business model is shaky or there is some other red flag, demand prepayment or demand a retainer," Chaabouni advises. "Make sure they have some skin in the game."
Finally, as an independent consultant, health care insurance is bound to be one of your bigger expenses. There are several options. If you're married, check to see if you can participate in your spouse's health care plan. Otherwise, various professional associations, such as the Independent Computer Consultants Association, a US nonprofit, offer group health insurance plans for independents. A third option is teaching part-time at a local university as a way to become eligible for employer-based health care benefits at a reduced cost.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.