Introduction:
My name is Chris Bonatti, and I am the President and Treasurer for International Electronic Communication Analysts, Inc. I have a degree in Electrical Engineering from Rensselaer Polytechnic Institute, but for the past 25 years or so I have been a consultant in computer and communications security. I have considerable experience in the areas of open systems and Internet based protocols; Command, Control and Communications (C3) applications; tactical communications; and information assurance (IA). He is an accomplished programmer and software architect. He has been an active participant in numerous standardization technical committees. Mr. Bonatti also has significant project management and team leadership experience. He is a Certified Information Systems Security Professional (CISSP). He has previously held a restricted radiotelephone operators license, and is a long-standing member of both the IEEE, and AFCEA.
Q1) How did you start your consulting business?
I launched my consulting business in late 1996 with two colleagues from my previous employer. We had all worked together in a business unit there. Our previous employer was a large consulting company, and it had just undergone an extensive reorganization. As a result of the reorganization, our business unit was left without a clear place in the corporate structure, and without an advocate in upper management. We asked to be transferred to a different part of the organization, but our request went unanswered for a long period of time. We were collectively debating how to respond to this inaction, when one of our soon to be partners suggested we strike out on our own. The three of us took an extended lunch to discuss the matter, and decided over the next couple of days.
The decision to leave our jobs and start a business on our own was difficult. The key worry we had was loss of income while the new business got established. The oldest of our trio had the easiest decision, being without children and with a full retirement pension from the Navy. The youngest of us also had no family to worry about, but he had then been working professionally less than 10 years and had not accumulated a large cash reserve. I two preschool aged children to care for, and a wife who was not then working. We decided that we make it work if we pulled together. My wife returned to work to help supplement our family’s income, and my older partner’s wife agreed to look after our children during the day when our work schedules conflicted.
Once we had decided to start our own business we had several meetings after work to decide on a plan of action. We spend one afternoon at the Fairfax County Business Library researching tax implications and what it took to incorporate. We drafted our own articles of incorporation and bylaws. Then my other two colleagues took the paperwork to the statehouse in Richmond. That same week we gave notice at our old company. After we gave notice there was a lot of pressure brought to bear to get us to change our minds or perhaps break ranks. We were prepared for this and refused to budge. Then in two weeks we were free!
We decided to structure the company as a regular Virginia corporation rather than an S Corporation or LLC. Virginia was our choice of states because the Virginia tax burden was less than those of Maryland and DC, and two of the three of us then lived in Virginia. Each of the three of us kicked in a stake of $1500 for equal shares of company stock. I initially took on the role of President of the company. The corporation was mainly based at one of our homes, though we operated the company from all of our homes. So our overhead was thus quite low. It was only necessary for the company to buy some software, a laptop computer, and establish some new phone lines. This low overhead allowed us to fully self-finance the start up of the business, and avoid incurring unnecessary debt.
We waited until after we had completed our severance with our former employer to begin trying to establish business with any former clients. This did not take long to begin. Our former employer was our first customer, engaging us as a subcontractor to complete work we left unfinished when we resigned. Within a couple of months we had established interim contracts with two of our major clients (federal government organizations) from our old employer. Of course, it was several more months before we were paid for any of this work. So cash flow was difficult for a while.
Q2) When problems arise, how does your management team (or how do you) resolve them?
Our company has established a tradition of maintaining close communication among the corporate officers. Communication is maintained mostly via email and telephone. This is especially effective because all of the officers know each other well, and have worked together for many years. This kind of coordination probably would not be effective in a larger company. We have also established a tradition of regular lunch meetings among the entire company staff on approximately a monthly basis. This facilitates synchronization on what’s going on throughout the company.
When we have had operational issues or problems arise we have discussed them among the corporate officers and quickly reached a conclusion. Usually consensus was achieved, but in some cases we would go with the majority decision. Underlying this issue resolution method was the understanding that all of the officers were ultimately shareholders in the company.
Q3) Could you provide some examples of challenges you faced?
The largest challenges our business has faced have been the change in management resulting from the retirement of one of our officers, difficulties hiring new staff, and difficulties in bringing in new clients and achieving growth.
Our company underwent a major upheaval when one of our founding officers decided to permanently retire. This retirement was voluntary, but was precipitated by the business situation. The company had suffered a downturn in revenue due to the retirement of a key client figure. The lower revenue levels were no longer adequate to support the cost structure we had established, and it was necessary to reduce administrative overhead to keep the company viable. At about the same time it was discovered that many administrative functions, including billing, accounting, and security, were all significantly in delinquent under the responsibility of this officer. Equally, the officer in question did not feel that he was prepared to return to billable work in favor of administration. These administrative functions were transferred to the remaining corporate officers. Each of the remaining officer underwent some quick tutorial in these roles followed by a long period of sink or swim on the job training. This was made worse by the fact that a number of actions were left long undone, and needed to be “caught up” as quickly as possible. This all resulted in a very difficult post-transition period for perhaps 12 months.
The consulting profession is one that is filled with dilemmas. The work we do is a rarified skill that combines specialized technical knowledge, problem solving, writing skills and interpersonal communication skills. Candidates also need to be motivated self-starters, but will function in a business where they must take direction from clients who necessarily know less about the subject matter then they do. It is extremely difficult to recruit individuals who both have the required skill set, and want to pursue a consulting career. So recruiting new consultants is very challenging. We tried to overcome this by hiring somebody relatively young and training them. However, this didn’t work particularly well in our distributed, at-home work environment. A later downturn in our business caused us to lay off this individual, but we considered the incident a failure of our management. We have not satisfactorily resolved this issue.
Developing new business in a small company is a constant challenge. Work that we do for clients is very much a function of interpersonal skills. It is difficult to shift work onto another employee once a job is in progress. This keeps existing staff committed to existing clients and limits their ability to pursue new clients. Additionally, existing clients know that you are a small business, and consciously limit the amount of work that they give you to avoid overloading you. Furthermore, it is inadvisable to hire additional staff into a small business without a solid source of work in which to profitably engage their time. This creates a sort of chicken and egg dilemma for business growth. These factors take a great deal of finesse and luck to overcome.
Q4) How has your company evolved, and what experiences were the changes based on?
In many respects, the nature of our company has changed little since the beginning. In others it has changed substantially. We are still a very small, distributed, home-based consulting company that principally serves the federal government. However, there have been some important changes.
Approximately three years ago, the company underwent major change of simultaneous downsizing and change of officer responsibilities. This change was very disruptive for perhaps a 12-month period while the company effectively reestablished control of our administrative functions including billing, accounting, and security. However, the process has been worthwhile in that it has resulted in the establishment of better management processes, making the company more flexible, robust, and better positioned to grow.
While most of our business continues to be with the federal government, we have also performed on a small but long-term contract for a commercial interest. We view this very positively because it raises the profile of the company in front of a much larger and more well-rounded set of potential clients. We do not ever expect commercial business to eclipse our federal government business, but it adds an interesting dynamic to the company.
While most of our business continues to fall within the realm of traditional consulting, we have also attempted to expand the services we offer into some different but synergistic enterprises. We have established a bona fide software development capability in C, C++, Java and several less common languages, and have undertaken some software development projects as internal development projects. We have pursued several assignments entailing software prototyping and code reviews in areas where we already have dominant technical expertise on other fronts. This affords us an opportunity to grow the breadth of the business rather than merely the size.
Q5) When someone joins your company, how do you orient them as a member of your team?
This is not something that we have excelled at in the company. We have hired two employees since the company’s inception. One was a recent college graduate who manifestly did not work out. The other was a very experienced established consultant who we had all worked with at our prior company. The experienced employee has now been with the company for over seven years, and is now on the verge of retiring for personal reasons. So our rate of success in team building us only about 50%.
Our failure to integrate our young employee was the result of several factors. Most prominent was the fact that our work at home environment didn’t provide enough day-to-day contact between the experienced consultants and the new hire. Also, the work we were engaged in did not yield many obvious well-defined subtasks that the new hire could safely prosecute. There was also considerable performance pressure from the client in question. So the new hire simply wasn’t able to contribute enough to be effective in satisfying the client. We did spend a great deal of time with the new hire (two or three of us meeting for an afternoon a week for a couple of months) to provide informal training and discussion about relevant technologies and the nature of the tasking. The new hire was also included in the company’s monthly lunch meetings. All of this helped, but ultimately the gulf seemed to be too large to bridge. We felt that our management skills were primarily at fault for the new hire not working out, but the problem was very difficult due to the overall difficulty of hiring consultants.
Our experience with our more experienced employee has been quite the opposite. This employee has worked out well in his position, and has become a valued member of our team. Initially we needed to convince this person that our distributed work environment wouldn’t be too isolated. After a few years though we have created a true believer, with much the same measures that failed with the younger person. This seemed to validate the judgment that the distributed work environment was particularly problematic for bringing new staff up the experience curve.
Q6) How do you motivate and reward people?
Our company has recognized from the beginning that it might be difficult to attract and retain high-caliber staff as a very small business lacking some of the usual big business perks (such as a well-known name or fancy offices). We consequently decided to compensate for this my providing a strong employment package emphasizing our unique strengths. Our low overhead allows us to offer above average salaries to our staff. We also provide a Simplified Employee Pension (SEP) program that provides an additional 25% kicker to the employee’s gross income directly into their own IRA. This give the employee complete control of their retirement plan, which is far better than any 401(k) program. Similarly we stress the great flexibility of our work environment. Our management does not believe in the nine-to-five grind. Should work when you need to work to accomplish the client’s goals. Our evaluation of employee success is based on their work results and client satisfaction; not being chained to their desk during conventional work hours. This flexibility acts as a force multiplier for all our employment benefits.
I personally believe that the only way to truly motivate people is to impart to them a true belief in your goal. Success always requires sacrifice, and people do not make sacrifices for things in which they are not personally invested in some way. To gain this level of commitment you much engage their emotions: their pride and sense of accomplishment at a job well done, their desire for the greater salary and rewards that accompany success, their fear of the consequences of failure, and even their disappointment in letting others down. All these emotions (and more) are part of the make up of every person. My approach as a manager and leader is to always try to engage people’s enthusiasm for the task at hand by subtly tickling all of these notes, while emphasizing the positive aspects of success. This approach works well with good people, and not so well with bad actors. So it is essential to identify and weed out any such bad actors. Obviously in such a small company there is little opportunity to exercise this philosophy.
Q7) What advice would you give to someone starting out in your field?
There are several suggestions I would have for any budding consultant. Be a generalist, but find something to be expert in. Establish an open, candid, working relationship, with clients, and try to establish a relationship of trust. Also, prospective new consultants should spend some time working for an established consulting firm before trying to start their own business.
Consulting is full of contradictions and paradoxes. To be a good consultant is to be a good generalist. You need to be able to listen, think on your feet, solve the client’s problems, and follow through regardless of the technologies or specialties required. Being affiliated with a large firm helps with this because you have a broader range of technical expertise available from your firm. Nevertheless, there is no substitute for a sharp, well-rounded problem solver on the front lines. On the other hand, starting a small consulting business demands that your firm be an expert at something… preferably something unique and in demand. You need a deep reservoir of expertise on some subject matter.
I would recommend new consultants always strive to achieve a relationship of trust with their clients. It is obvious that any government contractor is dependent on their client, but a less obvious truth is that the client is similarly dependent on the consultant. If the client didn’t need your help they would not hire you, and they need you to do the best job possible. In this kind of relationship, it is best to achieve an open, candid, working relationship, gradually leading to a measure of trust.
Lastly I believe that it is essential to have some experience in this field before attempting to start your own business. Consulting may sound easy (the actual client work often is), but the ongoing battle for business is very challenging. Another factor is that the consulting industry as a whole has a very high staff turnover rate. A fair amount of this is due to the fact that not everybody is cut out to be a consultant. Anybody looking to enter the consulting field should spend a minimum of 5-10 years working for a large consulting firm before considering starting their own business. For most people more time would probably be advisable.
