[LINK] private question for off list - consulting

[Jim Birch]

I ran a small home office business - basically me and a casual employee
occasionally when required) for a number of years before accepting a
position at one of my clients as they grew.

Some points:

You do a lot of stuff that doesn't uses time and doesn't make money, like
accounting, tax, drumming up business, organising stuff, research, etc.
This is the potential killer.  You have to do it all. Getting this stuff
organised and working smoothly without using a lot of time is critical to
financial success and remaining low stress.  Use an online accounting
package and talk to an accountant before you start.  Keep up to date.  Bill
immediately.  You should be able to bill from a cafe or better still, at
the client's site before you leave.

Deciding what to charge is not as critical as it sounds.  You can change
this.  Consider having hourly, daily and weekly rates, either formally or
by arrangement.  Discount steady clients, especially if they commit to x
hours per month.  You can, and probably should, charge a lot more for some
work types than others, eg, specialist skills, legal work, toxic workplaces
or getting shot at :)  One off jobs, taking an hour or two with lost time
and travel between jobs and lots of small bills is completely different
economically to large chunks of work.

I had one tiny bad debt in 10 years due to working basically with only a
few clients of the government and corporate type who always pay bills, more
or less on time, but I know from others that bad debts are a big emotional
as well as dollar cost.  I'd strongly second setting your base rate high
with some graded concoction of discounts for upfront (50%?) and rapid
payments and make sure the clients understand this is for real.  Ditch
anyone who doesn't pay reliably. It's not just the money.

Steady clients who pay on time, and give larger lumps of work, and -
somewhat paradoxically - who you don't mind putting in extra effort for,
are good for your mental condition.

If you have a support role with clients, you should charge for phone calls,
either per incident or as part of an agreement. Also if you do a support,
you need to work out what happens when you aren't available, you might even
want to take a holiday.  This was a big attraction back to a full time job
for me.

A single employee will consume like 20% of your time.  Think hard before
you get one.  A few employees makes you a manager/overseer pretty much full
time.  Which might or might not be ok.  It is probably not the special
skill of your business.  Being between jobs is a mixed blessing if you are
self-employed but a disaster if you have employees to pay.

This might all sound bad but there are great positives of working in
multiple environments, flexible hours, and hopefully doing stuff you like.
Plus money.

Oh, and don't undersell yourself.  Consultants are able to bring specialist
skills into a business and only work when there is work to be done.  That's
why they are good for the business even while they charge big hourly
rates.  Just get the job done on time, cheerfully without hassle, and off
the manager's worry list and they will pay almost anything.

Cheers
Jim