What is likely to happen if an engineer starts a consulting business? What if the person were in business development instead? I’ve seen this story play out more than a handful of times and the pattern has become predictable. To illustrate the outcomes, I’ve written a fable:
Once upon a time, there once was a talented engineer who was outstanding at his craft. He had a degree from a top school, was passionate about technology, and proud of being a top-notch engineer. He would spend his free time learning the latest techniques and enjoyed being the subject matter expert at work. One day the engineer was in a meeting with a vendor in which he realized that he could be making a lot more money as a consultant than remaining an employee. So he struck out on his own and began a small consulting firm, marketing his services to local companies who could benefit from his expertise.
Around the same time and on the other side of town, a business development professional was sitting in a similar meeting and came to the same conclusion that he should start a consultancy of his own. He also went to a good school and was good at what he does, but he did not possess the engineer’s passion for technology, nor did he spend any time learning the latest techniques or technology trends. Instead, he was much more interested in staying connected with people he had met, hearing what they were up to, and learning about how to raise money – something he found much more exciting. To start his new business though, he needed help from an engineer. Because he is good with people and skilled with sales, he was able to coax one of the junior developers from his firm to come him on this new journey.
This is the classic story of the Artisan and the Opportunist. The Artisan is a skilled crafts-person who knows the work better than anyone else, whereas the Opportunist may not know or care about the work itself, as they’re focused on building the business and sales. Both have strengths and weaknesses they must contend with. Which entrepreneur is more likely to succeed?
In the beginning, the Artisan will likely struggle with a lack of network connections to call upon as customers. His top-notch trade skills may eventually lead to a great reputation that minimizes the need for him to do sales, but that assumes he ever gets off the ground to begin with. The Opportunist will likely have an easier time generating early deal flow since he already has a deep network and know how to work those connections. The Opportunist also benefits from distribution of labor since they can focus exclusively on developing customers while someone else does the work.
Fast-forward two years. Assuming the Artisan was able to hang in there, he’s presumably established a great reputation now and enjoys more work than he can handle. He has even brought on a couple other high-end engineers to help him yet he struggles to fully delegate to his team. And because his business is built on a few personal connections with vendors, his clients all expect him to personally oversee their project. Even if he wanted to fully delegate to his team he couldn’t because his clients want him personally overseeing everything.
The Opportunist meanwhile has their own successes and challenges after the first two years. Because they have so many more connections, they’ve built a broader and more diversified customer base rather quickly. The Opportunist does not want to turn down any client that he’s worked to build and so they hire engineering talent quickly to cover the demand. And because the Opportunist is mindful of profits, he continues to hire junior level talent to maximize profit margins.
As a result though, the Opportunist’s company is developing a reputation for low quality work, which is starting to hurt them, and internally they’re beginning to buckle from growing so quickly and not taking the time to sort out proper systems to manage the throughput or methods to manage quality of output. Their talent gets frustrated by the internal chaos and lack of opportunity to do good work or grow professionally. The company develops a problem with high turnover, which creates an ironic feedback loop, eroding those higher profit margins and further contributing to their quality issues.
The inevitable outcome for either of these businesses is less than ideal. The Artisan’s biggest challenge was finding those first clients but if he overcomes that challenge, then he’s likely to go on to build a nice lifestyle business for himself. But because he’s so busy doing the work, he’ll struggle to ever build a business of significance and thus is unlikely to ever grow beyond a couple assistants. The Opportunist meanwhile is more likely to build a business with real profits and something they could sell for a nice profit a decade or two later, but with a higher risk profile. They’re dealing with the mid and lower range of the market where they’ll see higher margin compression as those lower-end engineering skills inevitably commoditize. And because profitability is predicated on constant deal flow, any disruption to that flow such as a recession could be fatal.
Neither the Artisan nor the Opportunist will reach their fullest potential if they only play to their own strengths and ignore their weaknesses. The Artisan must embrace the Opportunist mindset and spend more time building a business rather than just doing the work. The Opportunist needs to temper the impulse to grow quickly with some attention to detail or the very growth he’s succeeded to create may become precise his onw undoing.
Imagine though what would be possible if the two worked together to create a meaningful sales pipeline around a position of quality. They could build a dominant brand in their industry – one where reputation reinforces sales efforts, engineering talent is easier to recruit and retain, and higher-end projects in a premium segment of the market, where margin compression and market volatility are less of an issue. Like so many things in life, balance is key to building a thriving and sustainable business.