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So You Want To Be A Consultant
Posted by
michael
on Sun Jan 30, 2005 01:04 PM
from the billable-hours dept.
from the billable-hours dept.
Stephen Friedl writes "I've been a self-employed consultant for almost 20 years - I still have my first customer! - and I'm asked often about the business by those who are considering it. It's not for everybody, and there are often surprises, so I've written up a Tech Tip that recounts my experiences and provides advice for the n00b. Executive summary: It's much more about customer service than it is about technical skill."
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Not much money, but rewarding (Score:3, Interesting)
are you going to pay me? (Score:5, Informative)
I think that's the reason why I wouldn't do consulting/contracting. A friend of mine recently decided to be self employed as a consultant and the biggest problem is getting people to pay him in an orderly fashion. When you are your own business you end up putting up money for various things, and when your incomming payments start to lag, you can end up in serious trouble.
Re:are you going to pay me? (Score:5, Insightful)
Which is why being under-capitalized is the number one reason new businesses fail.
Parent
Re:are you going to pay me? (Score:3, Interesting)
Re:are you going to pay me? (Score:2)
hey, the same thing happens to your boss if you work for a start up or small company! so it really boils down to the two choices:
Re:are you going to pay me? (Score:2)
Finance charges are the answer. Set them akin to a not-so-great credit card, and put in the contract for services that they agree to pay them AND that they agree to pay the fee for any collection agency out of their own pockets after 90 days.
Another way to go, which a guy I know uses, is to get a merchant account and accept credit cards. His ratio
Re:are you going to pay me? (Score:5, Interesting)
Another tip: if you do anything for free, even something as simple as plugging in somebody's mouse or changing their desktop wallpaper, put it on the bill with a 100% discount so they can see all the benefits of keeping you happy. The more people at a given site that see an advantage in having you around, the more pressure there is to make sure you get taken care of promptly. All consultants (except, perhaps, lawyers) do things gratis now and then in an effort to accrue good will. But believe me, if you don't document the freebies you won't get credit for them.
Find out right away who approves your checks (if you are contracting for a large organization this may not be the person you think it is) and don't hesitate to give them a call if there a holdup in getting paid. And when you do speak to that person, be unfailingly polite and explain the importance of your work to their company. Often it just takes one phone call from that individual to whoever cuts your checks to get the job done.
Another point I'd like to bring up is that many large companies are depending more and more on outside help (seeing as how they've often fired most of their existing full-time staff in an effort to become "right sized".) Consequently, I've found that some corporations have special fast-pay plans for small contractors. They generally won't tell you about it (the person who hired you probably won't have a clue) but if you talk to the accounts payable department and explain that you're a consultant who really likes working with their organization, but can't afford the usual delays in cash-flow, they may be willing to make an accommodation. If necessary, offer an early-pay discount to sweeten the pot. Sometimes they will ask you for one
Parent
me too ! (Score:5, Insightful)
Keeping your first customer is NOT perse a good thing. Only if you still make money on work for that customer. The first 10 years of my own business, I found my self spending a lot of time giving phone-support for previously programmer stuff. Or for other stuff... or for no stuff at all (help, my mouse doesn't work properly anymore !)... The most difficult thing in being self employed is : learn to charge for everything. If you work on something, even if it is only 5 minutes : bill'em.
It's the only advice I can give. If you start a relationship with your customer based on free support (in the widest possible interpretation of support), yuo're fucked
Re:me too ! (Score:5, Interesting)
Customers will abuse your good nature to no end if you do freebies.
Example: I do work for this small construction firm. Their payroll is $30,000 a month, they don't want to do any kind of maintenance contract (200 - 500$ a month, nothing). Yet they call me for *every* little thing that goes wrong, mouse runs out of batteries, virus defs out of date, some problem with quickbooks, whatever. I've been meaning to get tough with them....
The corollary to that is actually, if you have the ability, *choose you clients well.* I am stuck with a lot of clients from when I first started out and didn't know any better.
Ive seen a friend of mine whose much more savy "fire" clients for refusing to upgrade off old, vulnerable software. It was great.
Parent
Re:me too ! (Score:4, Insightful)
I've not found this to be the case: the consultant gets to pick what he does and does not charge for, and if customers know that every time they call you, they get billed for 5 minutes, it doesn't create an entirely friendly environment. I think that a certain amount of "freebies" is part of maintaining a good customer relationship: I get paid for my time, but I don't nickel-and-dime my customer to death.
Steve
Parent
Re:me too ! (Score:2)
If only I could do that with my family...
Re:me too ! (Score:3, Insightful)
Also, you don't have to be an hourly-billing nazi. You can go the extra mile for a customer without charging them - as the whim guides you. You just have to know how to make it clear that it's exactly that - something extra you are doing beyond the call of duty and that you normally _WOULD_ and _WILL_ charge for it.
You don't have t
So true (Score:5, Insightful)
Communication, communication, communication. And it's not billable, most of the time - so take that into account when you set your rates for the time you can bill. You can spend 60 hours a week working in this mode, and only be able to charge for 15 of them sometimes.
One of the most debased professions... (Score:5, Insightful)
With the Y2K and dot-com booms, "consultant" became used to mean someone with more than three months of IT experience...
Thankfully (for us real consultants), most of the amateurs have returned to horse farming, or whatever they used to do.
It'll still be a while, however, before "IT Consultant" on a business card impresses anyone.
Re:One of the most debased professions... (Score:3, Funny)
The horses says hello btw.
Consultants with poor skills.... (Score:5, Interesting)
It's much more about customer service than it is about technical skill.
...Not to be rude, but I've noticed this is the "rule" with the consultants that have worked on various portions of projects that I've been involved with (e.g. the guys customizing an ERP that our system will be integrating with).
The funny thing is that the consultants with the poorest technical skills make the most money (charge the most hours) - at least in the short term.
Technical skill? (Score:2, Interesting)
I also have never liked the term consultant. Sometimes consultants are nothing more than paid mouths to spread an idea, and they don't actually "consult," or say their own
Re:Technical skill? (Score:5, Insightful)
I'm much more on the technical side of consulting, and the only "marketing" I do is publishing original, technical content [unixwiz.net]. Mainly I write C code all day, though I'm sure that this slashdot post is seen as "marketing"...
Steve
Parent
One consultant to another (Score:2, Interesting)
"I contracted a client today!" Jeez, can't we discuss this without mentioning viruses? Seriously though, I find your choice of words poor and I disagree with your classification, I've been a consultant for 9+ years now and I would say what you call "contracting" is typical freelance consulting and your definition of consulting is basically handholding. Top professional companies do not need handholding, so when you're dealing with them it's much m
Re:One consultant to another (Score:5, Interesting)
I think you'd be surprised at the number of 'top professional companies' who use consultants; it's often less about hand-holding than bringing in fresh perspective or someone with experience at other companies for a common industry issue. I would agree it's less about customer service in those instances (although, in my own view of the 'types' of consultant out there, the two categories are 'technical', where you make your reputation by being correct, and 'sales', where you make it by handing out warm fuzzies... but I digress) because you are dealing with people at that point who have enough knowledge to know what it is they don't know, but it's definitely not the same as being brought in to fill in as a sysadmin for three months.
Parent
Sub Contracting (Score:2, Interesting)
Pros and cons (Score:5, Interesting)
A lot more of your expenses can be quantified and written off as business expenses when you work for multiple people. Of course, there's a little more risk here for error, but the IRS doesn't seem to put you in jail if you make honest mistakes.
Oh, there's certainly a lot more freedom involved too. You make your own schedule, and you're in a much better position to tell someone to fuck off without impacting your lifestyle too badly. On the other hand, when you're not charting up billable hours, you're spending your time marketing. Always marketing.
I've been doing this for about 3 years now and I don't think I've billed more than 20 hours a week on average, but being able to select which 20 is really convenient for your sanity. There are some weeks where you won't work at all and others where you don't lift your head higher than your shoulders. If you can't stand regular routine, independent consulting is the lifestyle for you.
There's a certain anxiety that comes with alway having to market yourself to new clients and not being sure if you can make ends meet in six months, but this isn't so bad in the computer industry since if you run into trouble, you can usually fall back on a fulltime job before you starve to death. You definitely need to save up a cash cushion to help even out the unsteadiness of work, but simply knowing that you have it there puts you in a better position to weigh whether you wan't to prostitute yourself out for that ActiveX project.
Unless you have iron will self-control, working out of your house is usually a bad idea because you end up finding as many distractions as possible to keep you from working. You also never feel that you're "off", since your day always looks like a 16-hour work/play haze.
All in all, I certainly don't regret getting into this.
Resume Placement (Score:2, Funny)
So true ... customer service keeps me in business (Score:3, Insightful)
My advice for new consultants:
Incorporate. Protect your savings, house, car, etc., if there's a disaster.
Be available. This includes evenings, weekends, and vacations.
Be responsive. Check your customer email several times a day and respond.
Re:So true ... customer service keeps me in busine (Score:2, Informative)
Be available. This includes evenings, weekends, and vacations.
This is exactly why I STOPPED being a consultant.
Fixed bid projects. (Score:5, Insightful)
One thing I would like to add, though, is a fixed bid tip. The author admits he does not have much experience with this type of work and omits one important detail that can save a lot of headache for both parties and keep cashflow going during a large project.
Always try to do a fixed bid project with milestone based payments. This keeps the customer happy since they get to see the code at intervals, gauge the progress, and offer feedback. It lets you get paid as you go and helps you use customer feedback to make changes (and no matter how good the spec, there will be) as you develop.
Re:Fixed bid projects. (Score:2)
So you want to be a consultant? (Score:2)
I've been a self-employed consultant (Score:5, Funny)
Parents...
Johnny Bravo (Score:2)
Our hero goes out into the street, sees a man who is walking with a slouch, walks up to him and says:
Johnny: 'Don't slouch. That'll be 10 bucks.'
Sloucher:'Gee, thanks. Here's your money.' (Hands Johnny a bill). 'You know what you should do with that?'
J: 'What?'
S: 'Put
Some of this strikes a chord with me... (Score:4, Insightful)
Recently, I was in salary negotiations with a company without any competing job offers. I asked for a really high salary relative to others applying for the position. When asked why or do I have any other offers, I simply reiterated that I am very interested in this position, and the salary is what I have discovered through other companies is market.
The name of the game is: "Never show all your cards"
The secret formula is... (Score:5, Insightful)
50% Personality, 50% Technical Ability.
If you can't walk into an office and within 2 minutes be mostly comfortable and getting along with everyone, then you shouldn't be a consultant. You don't have a long time to get going, like you would if you were an employee. There's no training, no hand-holding. You are there doing your thing. It's actually quite fun and interesting most of the time!
I also still have my first client.... heh
-m
Simple Rule of Thumb. (Score:5, Insightful)
Re:Simple Rule of Thumb. (Score:3, Insightful)
Often the case on consulting projects when a client who lacks expertise wants to make design and development decisions that he's not qualified to do.
Generally good advice, except about the copyrights (Score:3, Interesting)
There are certain pieces of intellectual property that the customer owns simply because it originates with them--business processes, customer information, etc. Those things remain their property whether you are working with them in your project or not, and you can't re-use or re-publish them without express consent. However, in most cases, anything that you create remains yours under the same laws. It is possible for you to relenquish your right to the client, in effect giving the IP away, but if you do so, you do NOT have the right to re-use it again yourself in future projects. They own it, even the building blocks--you are infringing on their copyright at that point.
There are few situations in which this might actually come back to bite you (or them) but they are devastating if they do arise. For one, if you ever decide to sell another work based on that code to another client, under those same terms, you've created a potential liability for both of your clients, depending on how much you got in writing at any particular stage. Either the second is infringing because the first owns it, or the first is infringing after you sold the rights to the second.
It's possible, of course, to license your code any way you would like, but you have to retain ownership of the copyright in order to do so. You have to make it absolutely clear to the clients that you own what you code, but that what they are paying for is a perpetual license to use that code as they see fit. This has the same effect as what the author is going for, I believe, but without the potentially nasty side effects.
Challenges I've experienced (Score:5, Interesting)
The other challenge is that some people seem to think that "consultant" means you're unemployed. Some say, "Oh, so you're between jobs?" I then explain that I have a roster of clients and that I've been doing this for seven years. I have also learned to stop saying that I'm a consultant and to start saying that I have run a small marketing firm for seven years.
Occasionally, I also run into potential clients who think "consultant" just means that they can avoid payroll taxes. They don't understand that I have other clients and that, while a full-time ongoing engagement is something I'd consider, I'm not using consulting as a way to scam the government. I've run into some companies that have had "consultants" working for them full-time for the past five years. (Canada's tax laws do not allow this.) Fortunately, I don't run into people like this very often.
on evolving skills (Score:4, Interesting)
- The first one because I hadn't yet decided on a career focus and I wanted to leverage my native English language skills to quickly get a foot inside a foreign country's IT sector, as a freshly landed immigrant;
- The second came as one of those offers one cannot refuse, based on my excellent performance at the first job.
Once I got pigeonholed into Technical Writing, applying for any other job became a dauntingly difficult task. I just kept on getting comments like:- This opening is for a Project Manager. That doesn't match your profile: you're a Technical Writer.
- Hi! This is Ms.Clueless BitchAufHR from soonbankrupt.com, how ya doing? Thanks for your application for this Product Manager position. We were all sitting here reading your CV and we have a nice Technical Writer job for you.
- Oh, so you're fluent in 7 languages. That's good, cause we're badly in need of a Technical Writer who can do both English and German.
At some point, it almost felt like my college degree was being systematically ignored, which made me ponder whether I would be better off switching field rather than fighting the HR drones.I stopped sending out CVs and instead focused on contacting old friends, which paid off in spades: within a few weeks, I landed myself a CTO position at a really forward-looking startup where a mere acquaintance was working, based solely on his pitching my CV to his boss.
Since then, I haven't bothered with the CV mailing game; I utilize the power of social networking. It works.
Parent
Excellent read (Score:2)
Try lots of shit and see what works :)
This just in: (Score:2)
Thanks heavens that it turned out I am pretty good at it.
This is probably the best read on this subject I had in a long time. If you are planning to do this kind of job and follow his rules you really mig
Somewhat OT-Open source software for consultants? (Score:2)
I too am a small-time consultant. I have a client who likes my work. There has been a lot of feature creep, which is good as far as moeny, but problematic for keeping organized. I'm looking for a software package (hopefully LAMP) that is designed for the one-person developer -- feature estimation with nesting and dependencies, hour tracking, and invoicing. I've looked at dotproject and it seems to lack invoicing.
I would like to do this on my own of course, but I don't have the time with this
The consulting field seems to be changing (Score:2)
10 out of 10 (Score:4, Interesting)
try to find some consultant friends! especially in the "time and project management" departement it helps tremendously to have a colleague who can jump in when you are short in time or are on holiday - and who doesn't try to "steal" your customer..
everything else is almost identically to my businnes practice and i can say: "it works!"
regards,
PAT
The trouble with consulting (Score:3, Insightful)
Customers Paying Bills on Time (Score:3, Interesting)
They simply refuse to do so, some of them taking as long as 60 days to pay on a invoice.
Doesn't matter the time on the invoice due date.
Handling this sort of thing is still dicey and although I am sensitive to customers needs, I still have to pay the bills on time as well.
Some tips not mentioned in the article:
1) Although shortening your invoice schedule may have worked for this gent, I can say that is rarely has any impact on my customers.
2) If you are going to start a consulting business, insure you have about 90 days of operating income (complete business quarter) to start with.
3) Projects should be divided up into your invoice scheduling if that is what your invoice shcedule is.
If you really have certain customers that are really bad, work with them for a long time on timely bill payment (say 6 months). That means continually sending them letters, discuss it with a variety of people in the organization, not just your contact there.
If they continue to be greviously late, then drop them or stop work citing a long history late payment history.
I did this with one customer and all sorts of people started asking where Hackus was??? When they found out they were late on a payment AGAIN by 90 days, they paid and offerred me a job.
Your milage may vary.
-Hack
Been there, done that (Score:5, Funny)
If you want *my* insight into the industry and how to work it, I can arrange a coaching session or formal meeting together with comprehensive notes and a presentation - here are my rates...
Transparency really is key (Score:3, Insightful)
- We don't do anything billable without a contract in place. This means there are no unpleasant surprises later when the client says "oh, I didn't realise this would be so much" or "we don't have the budget allocated." On the other hand, if there is no arrangement ahead of time (perhaps what I'm doing is outside the scope, or they're a new client) then we don't invoice, and the time we spent was our problem.
- Don't charge for the small stuff. Quick phone calls don't add up to a ton of short charges as they do with a lawyer. But it also means that if the subject is clearly long then I have to pay attention and be sure to tell the client "You know, this is going to take more than a few minutes. Let's schedule a time to go over this in detail." It also means, as TFA says, that you have to fire people for whom this doesn't work -- in that case the calls are just a symptom of something worse wrong with the client relationship.
Basically our principle is: if you wouldn't like to receive a bill for it, you probably shouldn't be sending one for it.self-discipline (Score:5, Insightful)
I've been doing this kind of work for the last six or seven years. And it took me the first five to figure out how to work at home. During that first five years, working at home was not easy! I hadn't yet developed the discipline needed, nor the mental state necessary for home and work to co-exist.
I eventually figured it out, and am extremely happy with my lifestyle right now. The first step was learning how far I had to distance my work life from my personal life. For example, we bought a new house this year. When looking for a house, the number one necessity on my list was an office area on a seperate level than the living area. We found one with a basement den that became a really wonderful office. It's a half level from the living room, and a full level from the bedrooms. Wonderful.
Something else I learned was that, no matter how much I thought I could get done with a TV on, it was best to be distanced from all television. The same goes with music with lyrics. For maximum concentration, I need to listen to instrumental music (fortunately my two favorite musical genres are classical and movie soundtracks). Interestingly, as long as I play only instrumental music, I have better concentration than if I don't listen to any music, because it will drown out other distracting noises. (headphones are also a good signal to the wife: don't bother me!)
Speaking of the wife, another challenge after getting married was not only me learning to work at home, but my wife learning to let me work at home. Make sure that everybody in the household knows that work time is work time. If you worked at an office, nobody would expect you to swing by the house to straighten up the living room at 2:30 in the afternoon. Don't make it an excuse for not doing any extra work (believe me, wives hate that), but make sure that your wife knows that while she's welcome to ask you to help out, not to expect it to get done until after your work time.
Now, if anybody has figured out how to cure the
The real deal (Score:4, Interesting)
Re:for the n00b? (Score:2)
Old farts shouldn't worry though, a few years down the road n00b and newb will be like neat and groovy - words used only by the next generation of old farts.
Re:An agrarian view to IT consulting (Score:2)