

What do I need to know before I start consulting? - twunde

I&#x27;m currently strongly considering moving to consulting. I&#x27;ve got some work lined up (20 hrs&#x2F;wk) but not enough to be stable
1) What do you do about health insurance? 
2) How do you figure out your rate as a consultant?
3) How much work do you aim for? And then how do you get it?
4) How do you get the social interaction that you would get at a fulltime job?
5) What else should I be thinking about?
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eswat
2) I assume you’re charging by time. In that case do some research on what
your _local_ competitors charge and find a balance between that average amount
and what you’re comfortable with based on your experience. Don’t be afraid of
increasing prices. Once you get some experience under your belt, look at
value-based income[1].

3) I do a guesstimate on how much I can actually work in a week - a bit more
than the 20 hours you have, but not 40 - and allocate clients to that time.
Most of my current clients are people I have worked with in some capacity, but
going to meetups and talking to people about your business helps get new
clients as well. Always be selling, even to friends.

4) Ironically I get more social interaction now than when I had a full-time
job, mostly due to compressing my work schedule which offers more flexibility
for meeting with people (having lunch with others in my industry, going to
meetups earlier and staying later to network, etc.).

I suggest just working your damn hardest during the day so you save enough
time to get some proper social interaction after work. Co-working spaces are
another avenue, but if anything I found people less talkative in these setups
than an actual office (in Ottawa at least).

5) Think about getting an accountant, even if you think you don’t need one.
Sooner or later you’ll need their help for some trivial thing you didn’t
account for, such as signing a new apartment lease and being able to prove
your income.

And be open to collaborations if possible. Working with other consultants on a
project that they can’t quite get off the ground will help both of you than
working individually.

[1]
[http://breakingthetimebarrier.freshbooks.com/](http://breakingthetimebarrier.freshbooks.com/)

~~~
twunde
Is there a reason why you don't do 40 hours a week? Also I really like your
idea about working with other consultants. That may be what I try to do first
(especially since I'm not a front-end dev)

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philbarr
I've been thinking about consulting myself, and have slowly been working out
solutions to those problems. Remember this is from someone who _doesn 't
actually consult yet though_. But since I seem to be the first one to comment
here goes nothing:

1 - I'm in the UK so not a problem. But if I was in the US and didn't have a
regular income, no immediate life-threatening diseases and was just starting
out I'd be tempted to let that slide for a few months. Put it on the priority
list for when you get stable.

2 - Think of yourself as your customer that's looking for a consultant. Find
consultants in your local area-ish and ask them what their rate is. Make it a
bit cheaper than that to start with and be honest with your customers that you
are just starting out, "so you're getting an experienced dev for cheap but I
would like to use you as a reference."

3 - As much work as you can get to start with! Never stop looking for
business. Even if you're jammed with work right now (and you're not) you
should expect to spend some of your time each week "feeding the pipeline".
Also remember to sell support contracts to your customers as much as you can,
this is where you're going to get your regular income. You charge more for
"instant response" and on-the-day fixes. Free tech support is "I'll answer an
email when I get a chance". It also makes sure that your customers know that
just because you did some work for them that doesn't mean they now get 24/7
support for free for life.

4 - I've worked from home for 3 years and I like it. Some don't. Either way
make sure to get some social interaction. I have a dog I walk to the pub :).
Another good way to meet people is to join a gym but then do the sports clubs
there - I've joined the squash club and we meet every Thursday and Sunday.
It's good because you meet different people and it kind of forces you to get
out. Also remember to put in a bit of effort to see friends and family. It
takes a little more effort because it means you have to get off your arse and
out of the house - but it's not _that_ much more.

5 - Sales, sales, sales. Who are your contacts? What business meetups are
there in your local area? Is your website setup with your own domain and clean
and professional? Do you have business cards? You're not just a dev now,
you're a businessman/dev.

Hope this helps...

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poulsbohemian
Realize that you are going into business for yourself. Bread will only arrive
on your table and the mortgage will only get paid through your blood, sweat,
and tears (not speaking figuratively at all here). You have to hunt down that
prospect, turn them into a customer. You do the work, you do the billing, you
nag them until they pay the invoice, and gee wiz, you may have accounts
payable before you have accounts receivable.

1) Health insurance: assuming you are in the US, you buy it - try
ehealthinsurance.com, your state's health exchange, etc. 2) You figure out
what your customers can afford relative to what your competitors are charging
3) As much as you can get, from any source you can find. Build a sales
pipeline, you are in business for yourself now. 4) There's no time for social
interaction, you are self-employed. Any time you aren't doing the work, you
need to be doing sales, bookkeeping, marketing, updating your website, writing
new work proposals, and half-a-dozen other things. Your only social
interaction will be with customer and prospective customers. I'm only
partially kidding.

I'm assuming the 20 hours/week that you are doing now is in addition to a full
time gig. If that's the case, keep your day job. Keep doing these moonlighting
gigs (and saving the money from them!) and use them as a test to help you
figure out things like a) what to charge b) what it takes to win new business
c) how much work you can handle. When you have enough work built up that it is
overtaking your day job, then you'll know it is time to quit and go full time
on consulting.

Good luck!

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canterburry
Charge enough so that you can afford downtime and choosing your gigs rather
than having to take whatever comes your way. Being short on money forces you
to take whatever low paying work you happen upon. Low paying gigs make you
short on money. It's a vicious cycle.

My consulting gigs where usually long term 9 months+ full time with 3 - 4
months of downtime during the year. You need to charge enough to easily last 6
months without a gig and still afford to be choosy, pay yourself retirement,
healthcare, vacation, savings etc.

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brudgers
Number one, above everything else:

Work is never lined up for a consultant. Either you have a signed contract and
a cashed retainer, or you have a job you are chasing. There's no in between
because lined up work doesn't pay the bills. People cancel projects.
Consultants get underbid. Start dates get moved back. There's no paycheck on
Friday.

As a corollary, clients are people with whom you have a contract. Paying
clients have already written you checks. Great clients have written you lots
of checks and done so quickly and without hassle. Everyone else is a potential
client or a deadbeat. Don't work with deadbeats. Don't pursue potential
clients that give you clues they will be deadbeats.

Insist on a retainer applied against final invoice. The arguments a potential
client gives against a retainer will be based on their concept of business. If
that model is that everyone tries to scam everyone else, take it as a tell
about their future behavior.

Lastly, discount all future payments to zero. Don't plan around getting paid
on a particular day. Don't plan on getting paid at all by any particular
client until you really know their business model inside out and have done
enough repeat work with the client that you can describe where your money
comes from in their process. Even then you should discount to zero because
outliers happen, but nobody can.

Good luck.

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wikwocket
Regarding insurance, shop around. Look to the government healthcare exchange,
but also check with your credit union, home insurance provider, local agents,
etc. Ask agents about the pros and cons of low/high deductible, coinsurance,
maximums, etc.

Regarding pricing, price based on value, not cost. Don't come up with a rate
by saying, well I used to make the equivalent of $30 an hour at my day job, so
I'll change $40! Instead work on finding projects where you can build
something that makes or saves a customer many thousands of dollars, and charge
based on that value. As you gain business/industry knowledge, develop a pitch
that communicates this. As you become more experienced with scoping and
delivering projects, switch to weekly pricing or project pricing, in the
$X0,000 range.

The other reason not to come up with a rate based on your day job is that you
now need to cover insurance, time off, dry spells, non-paying customers, etc
out of your own pocket. Make sure whatever rate you do settle on accounts for
all of this.

Finally, talk to an accountant and a lawyer. You're going to want to know
what's coming before tax season, and you're going to want to have signed
agreements (preferably with cash down) with customers.

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JSeymourATL
In terms of time management- a solid idea to consider from David Maister,
split the day into 3 categories:

1)Income Time (serving clients)

2)Investment Time (creating ones future)

3)Individual Time (everything else)

The essence of this approach is to start treating your investment time as
serious as income time. This will significantly affect your future success--
and lifestyle.

Look up Alan Weiss on consulting > [http://www.amazon.com/Million-Dollar-
Launch-Kick-start-Succe...](http://www.amazon.com/Million-Dollar-Launch-Kick-
start-
Successful/dp/0071826343/ref=sr_1_1?ie=UTF8&qid=1403276335&sr=8-1&keywords=alan+weiss%2C+start+consulting)

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Im_Talking
You know you have hit the perfect pricing point when the client says to you:
"You do great work but fuck are you expensive". This means they can't do
without you but cringe paying the bill.

My other advise is don't be a consultant. No leverage, no building value, no
holidays (trust me on this), no security (you're always first to go). My
advise: find a pain point and build a product.

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robbiea
A lot of great advice in this thread. My input is to get involved in
organizations that are the most likely to help you find clients.

If you're a digital marketer, get involved in digital marketing meetups. If
your clients are most likely lawyers, go to lawyer meetups. When I say get
involved, I mean really get involved. Get a position on the board. Immerse
yourself in the community where your clients are.

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cafard
Might I recommend Gerald Weinberg's _The Secrets of Consulting_
([http://www.dorsethouse.com/books/soc.html](http://www.dorsethouse.com/books/soc.html))?
Much of it is written in a light and amusing manner, but he hits a lot of the
points people have mentioned here.

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nuff
I started consulting about 2 years back. The most important thing I have
learned is Cash Flow management. Always keep in mind the 'earned money' is
going to be in your bank account for a while. Sometimes for over a month. Make
sure you stay afloat.

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twunde
I just want to thank everyone who replied. There is a lot of great information
in this thread. Who knows, maybe in a while I'll have a blog post about going
solo

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chris_wot
Watch the company you keep.

