Being an independent analyst can be a rewarding career choice but aside from the intellectual rigor and research engagements, there is also the issue of getting paid. Even established practitioners can find the business side of the role to be a distraction or worse. On a day-to-day basis, do you spend time producing or selling? Do you default to spending your time on spreadsheets, research and writing or do you put the time into networking and developing business? Are you more of an introvert and a thinker or are you an engagement monster who possesses a tremendous aura that wows people into throwing projects your way? Most people fall somewhere between the two extremes but no matter where a person resides on that spectrum, the battle between creation and generation remains.
So where does the money come from?
Subcontracting consulting projects from larger firms is one approach and with the right relationships and network it can support your practice. Subcontracting takes away the business development issues leaving you to be the analyst. Perhaps you can command a high enough rate to meet your revenue targets and, if the clients’ pipelines are full then there should be work.
Is it enough though? Consulting engagements are hit or miss, take time to develop, are subject to client delays and there is the frequent conflict between what they say they want and actually expect. Also, you being a subcontractor means the end client relationship is controlled, usually via contract. Poaching clients is a bad practice that leads to significant professional and economic repercussions.
Writing industry reports is another strategy that people will pursue and if you do not have other pressing engagements it can help fill time, provide reference work and even some revenue. Larger firms or companies like BCC Research will act as a publisher which allows the person to focus on content and leave the business to someone else. There are trade-offs which are highlighted below.
The Business of Report Publishing
|Minimal business development requirements leaving creator more time to produce work
||Lower revenue potential, publishers can take up to 75% of report revenue
|More time to develop personal brand and build out infrastructure
||Publisher owns the work that is created
|Support via editing, possible research synergies, forecasting, accountabilities
||Minimal brand building of the writer, firm comes first
|Alignment with a larger and more established firm
||No control over sales and marketing process
|Possible advance on royalties, guaranteed revenue
||Product will likely be one of many being pushed
||Channel sales further depress revenue
In report publishing there are multiple payment models.
- Fixed fee where you produce work for contracted payment. Highest guaranteed payment, no upside.
- Fixed plus % of sales is where you are paid a fixed amount plus share in the upside. Lower up-front money but stronger incentive
- Advance against future royalties is where publisher pays you a certain amount and then resumes payments once sales cross a thresh hold
- Straight royalty means when the reports sell then you get paid
On a risk continuum, guarantees benefit the provider, the royalty model is more advantageous to the publisher. That does not mean the publisher has no exposure on a royalty basis though. Bringing reports to market is a complex process and mastering all the aspects to it takes time and a lot of lessons learned. There are expenses, opportunity costs and other burdens that a publisher will carry.
Yet, there is no escaping the fact that the publisher is the one who sees the greatest reward on these deals, sometimes paying as little as 25% of total sales (NET) despite the fact the analyst is the one doing the heavy lifting from the intellectual (value) side. Reports can take up to 6 weeks of dedicated labor to produce and it may take up to a year or longer for the full sales cycle to complete.
Getting into the report writing business via subcontract means you are going to spend at least 6 months living on savings and somewhat meager advances and royalties. Assuming you can generate 8 reports a year then you may see $60,000 your first year and maybe $100K after that. On the other hand, Indian market researchers are charging firms $3,000-$4,000 a report which makes it hard for independents to compete in that arena.
Some other questions for you to consider if you are going to subcontract a report;
- What is the scale of the publisher? Are they large in your area or looking to use you to enter a market?
- What sort of reputation do they have? Are they seen as a quality provider?
- What type of resources do they have to apply to promoting your report?
- Can they present you a marketing and sales plan that looks credible?
- What types of comps can they show you?
- Are they willing to prove their performance by allowing you to contact other writers they represent?
- What evidence is there of consulting work that may come about from your producing a report under their flag?
There are other questions to ask and learn the answers to but as publishers generally look to minimize the risks and “share” it with the writers it would behoove you to be sure that your upside is protected.
There are other means to publish reports if you are interested in doing so. Self-publishing can work if you have financial resources or enough consulting work to pay the bills. Perhaps it might be an element of your revenue plan but not all of what you will do. You may elect to produce a report or three to engage a market, show reference works or leverage them for consulting. It may be that you have sufficient expertise to churn out some works in short amounts of time so that the production burden and overall risks are reduced.
There are though certain economic considerations to account for and again there is that time spent on producing vs selling your output. Hiring dedicated staff is expensive and unrealistic. I have seen people start up a practice, take on overhead and then wonder why they are in the hole for several tens of thousands of dollars. A measured approach is the more prudent one to pursue.
Challenges in Increasing Revenues for Analyst and Professional Services Firms
Self-Publishing vs Working with a Firm
The Plight of the Independent Practitioner