What Do You Do After Solo Consulting?

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Hi there!

One of my favorite parts of consulting is seeing.

You can see inside your clients. You can see what works for them. You can see their software, their process, their people. Everything.

Most importantly, you can see their business model.

I’ve now seen countless business models in action.

And, I firmly believe that consulting has the best business model possible for a small boutique business.

Consulting allows you to:

• Scale to max capacity in <1 year

• Maintain >90% margins

• Never need working capital. You aren’t buying inventory in this business model!

But, here’s the supper interesting part. Despite the business model being great, the vast majority of solo consultants leave the industry in <5 years.

There are a couple of reasons why, which we’ll cover in future newsletters.

For today, let’s talk about the three different exit paths most take when their solo consulting careers are over.

Path #1: “Mid-Sized” Entrepeneurship

Percent of ex-solo consultants who end up here: ~50%

At this point, the solo consultant has run their own consulting business for ~5 years. They know how to sell work to clients, pay quarterly taxes, and manage working capital.

Even better, the ex-solo consultant has made ~$500K/year for 5 years now. They likely have a significant amount of money they could invest in a new business.

They could invest that money into a “mid-sized” business and completely skip raising venture capital. That way, they retain 100% ownership of the business.

Example businesses here could be:

• Buying a chain of franchises (e.g: 5 Wingstop locations in Nashville)

• Starting a window repair, garage door replacement, or similar niche company

• Starting a real estate development company

Downside Case Outcome: Business fails in <18 months, go back to consulting

Base Case Outcome: Match consulting income but work <30 hours a week, and your equity value is worth $2M+ in the business

Upside Case Outcome: Business generates $1M+ EBITDA and you work <30 hours a week. Even better, your equity in the business is worth $5M+

Path #2: “Swing for the fences” Entrepreneurship

Percent of ex-solo consultants who end up here: ~10%

In this path, the solo consultant takes their business experience to Sand Hill Road and tries to raise a ton of money to build a big company.

Very few ex-solo consultants do this.

The reason why is risk.

The odds of failure are >99% and it will take a 5-10 years of hard work to get there.

Said plainly: Path #1 can get you a $20M+ net worth.

The only reason to try path #2 is if you really want to buy a Gulfstream.

Downside Case Outcome: Business fails after 10 years; go back to consulting

Baseline outcome: Business fails after 5 years; go back to consulting

Upside outcome: Forbes list & a Gulfstream G-650

#3: Full-Time Job

Percent of ex-solo consultants who end up here: ~40%

Roughly 50% of solo consultants became mid-sized entrepreneurs. Roughly the same percentage take a full-time job.

Here’s how it typically works:

• The consultant works for a client for many years

• During that time, they build a strong relationship with the CEO, or other senior leaders

• When a job opening emerges, the CEO likes and trusts the consultant due to their years of working together

• The consultant gets a big money offer to join as a Senior Vice President, C-suite, or similar

Here’s the key: this move is almost never planned. A consultant is continuing their work, and a job offer emerges out of the blue. The offer is great, so they consider it.

Next thing they know, they’re filling out paperwork with HR to start the job.

This is often a really good outcome, especially if your career goal is to be a big company CEO one day.

Baseline outcome: Great job at a company you already know extremely well from your time as their consultant

Upside outcome: If you perform well, you’ll start hearing from H&S and Korn Ferry about C-Suite jobs at even bigger companies.

How can I help?

If you reply to this email, it will come directly to me & I’ll respond early next week.

To head off a very common question: I’m sorry but I don’t have any quickstart guides, courses, communities, or other paid resources!

What would be most helpful to read about next week?

Please feel free to reply back and let me know what would be most helpful for you :)

What am I up to these days?

This newsletter isn’t about me; it’s about you. However, I keep getting asked, so I’ve added this little section.

Traditional consulting

Somewhat of an interesting situation here. My one remaining client hasn’t paid me yet. This is the first time in my career a client is late on an invoice.

I’ve reached out to the team and have assurances it’s coming end of July. We’ll see if that’s true.

In the interim, I am not going to do more work with them until the invoice is paid.

Skin-in-the-game consulting

This is a new consulting model where I work with a client as their advisor, but I also own a significant piece of equity in the business. I have “skin in the game” to ensure my clients succeed.

A new client and I have verbally agreed to work together. We’re actually speaking later today!

Real Estate

Scholastic Capital is up and moving! We are currently in our final stages of prep and document creation ahead of a big fundraising push in Q4 of this year.

We’re shooting to raise $10M to buy single-family homes in great school districts next summer. It looks like we’re on track to do so!

If you are interested in following along, click here!