There are pros and cons of joining a consulting firm versus staying on your own.
1. Margins are higher if you are on your own. You will normally make more money if you find your own clients and close your own deals because you do not have to share the proceeds with anyone.
2. Collections risk is real. Just because you closed a deal and did the work doesn’t mean you are going to get paid. You are now a vendor, and companies don’t pay vendors all the time. Shielding yourself from collections risk is a main reason to join a consulting firm.
3. Insurance is often overlooked. Depending on the type of consulting you do, it’s a good idea to get insured. When you issue an opinion, especially as an expert, you potentially open yourself up to liability. Shielding oneself from liability is another reason people join consulting firms.
4. Firms make it easier to scale. When you have a team behind you, larger projects are easier to close. You also can have someone else handle administrative tasks while you focus on revenue. However, scale comes at the price of either taking a lower rate because you joined a firm or the headaches that come with having employees.
5. You’ll need to handle business development if you’re on your own. Part of running your own business is selling. You may find that you have a knack for selling that was never uncovered when you worked at a full-time job. Or, the prospect of selling could frighten you. The more you are comfortable selling and the better you are at it, the more likely you can command a higher margin.
6. Some consulting firms require exclusivity. If a firm requires you to be exclusive with them, in my mind that’s the equivalent of a full-time job, and you’d better be compensated accordingly.
The nice thing about consulting is you don’t have to choose between joining a firm or being on your own. Many times, you can do both or join multiple firms. Remember, you are leasing your time, ideally to the highest bidder. You can do a mix of finding your own gigs and working through other firms. This lets you balance the risks that come with finding and collecting on the business you book yourself versus the lower margins of the business you get through a firm. While consulting is different from a full-time job, once you understand the various elements involved, you can find the path that best suits you.