Looking to moonlight as a consultant... (incorporate, fees, sales, organization)

[Lux Hauler]

Hello, young person here looking for advice! I am an engineer and recently was approached with a consultant opportunity dealing with high vacuum systems. I was referred to by the owner of a company who does sets up control systems for our equipment, the company looking for help is another client of his. I think this is a really cool opportunity for me but I have never done something like this before.

Any advice other than the obvious? How do I determine what I should charge for my time? I've known about their issues for several months (via my reference) and they can't seem to find anyone to come in and take a look at things as the work is relatively specialized. Any advice is appreciated!

Thanks!

[cpg35223]

1. Incorporate. Trust me on this. SubS or LLC. Just have a corporate structure. Not only does it insulate you personally, but it also gives you more opportunities to actually save money when you run part of your household expense, car, whatever through the company. For example, no matter what, you need internet to run your biz, right? That's a biz expense, then.
2. Invest in a good accountant to set you up and give you advice. It will pay enormous returns.
3. Never bill by the hour. Always bill by the project. That way, your client has the security of a budget as opposed to feeling as if the meter is always running. And you reward yourself for efficiency.
4. Everything. In. Writing. Even if it's a standard letter of agreement defining the scope of work. After returning from every meeting, send back a contact report detailing what was agreed to in the meeting, and make sure your client acknowledges it. NEVER fail to do this.
5. Market yourself beyond this first client. Otherwise, you could find yourself wrapping up the project in question and not have anything else in the pipeline. Considering the long sales cycle that likely exists in your biz, that's not a good place to be.
6. Dress and behave like a professional, not just like an engineer with a gig on the side. Cultivate the million little business courtesies, because they matter more than you ever know.
7. Keep your overhead low on things like office space. But make sure you have decent biz cards, web site and stationery (Yes, stationery still matters). Invest in a decent design and printing rather than simply heading down to Kinko's. And hire a good web guy to do your site on deal, complete with some decent SEO strategy. For the more polished you are in your marketing, the more you can ask up front. It simply builds value in the eye of the buyer.
8. Always pay yourself a conservative fixed amount and bank what's left over. Trust me, you might need it if times get lean.
9. Never stop networking, promoting, and selling. I don't care how busy you are. All those opportunities you have out there have a perverse way of drying up at the same time. So you always need to be out there. Join professional organizations. Go to luncheons. Attend conferences. Have a Facebook page for your biz. Whatever it takes.
10. The first couple of years, you'll bust your ass. After that, you'll still bust your ass, but it's important to have a life outside of your work. Otherwise, you'll burn out.
11. Treat your consulting gig like a job. That means showing up to the office ready to work at 7:30 or 8:00 every day. Take a lunch hour. Then back to it. Too many people in the consulting realm get seduced by the lack of oversight and lose discipline.
12. Enjoy it. This is supposed to be fun.
13. The first morning, you'll be standing in the shower, water pounding on your head. You'll ask yourself, "What the hell am I doing?" The answer is this: "I'm rolling the dice because I have guts." Then do everything after that moment with guts. The world respects fearlessness, if not foolhardiness.

[NinaN]

Read the book Flawless Consulting by Peter Block. The above advice is excellent and the book covers all those topics in detail.

Before you start, make sure your employer knows what you are doing. Don't risk getting fired for a small consulting job.

[Billy_J]

I would tell the company looking for help that this is your first consulting job.

Then ask them what they feel is a reasonable fee for your services. Say you would like to keep the price reasonable so you will get more work (if that is what you want) and they feel they are not being taken to the cleaners!

They will think you are WONDERFUL, will call you back for more work, and tell everybody what a great guy you are.

As you get more work, increase your fees.

If you get too much work, increase the fees more.

Work slacks off, lower your fees.

Sometimes businesses can't afford high fees. Or they may have to compete with another company and can't have their costs go over a certain amount. If you can work within their budgets, you will get more work.

Better to work for half your fee rather than have no work at all. Of course if you are very busy with work, then say full fee only.

[sondra_finchley]

All good points above, but it sounds like consulting is going to be a side project, not a total business, correct? Don't sell yourself short.

Remember that you will be paying additional taxes on any consulting income. So when you price the job, what you may want to do is:

1) Figure out what you make hourly now

2) Determine how long you think the project will take and do the math.

3) Add on a premium to account for: the speciality of the knowledge for the project (maybe another 50% per hour) and for the additional taxes you will have to pay on the income. I wouldn't gouge the client, but you have to make it worthwhile for yourself to come home from work and work on the project and make extra money on the work (since you have the specialized knowledge) - otherwise what is the point? Don't sell yourself short.

4) When you write a contract out for your services and include the scope of what is included, I would add on information around additional costs for work the extends outside the scope. That protects you from wasting time at the end if they want endless revisions and encourages the client to be efficient as well. If it is another project that follows on then write a new contract for it, but any sort of revisions that go beyond small expected changes should be priced additional.

5) There are online options like LegalZoom to cheaply file as an LLC, but the other poster was correct about ensuring your current employer is ok with this and that it will not take away from your current duties they are paying you for. If you felt you wanted to get some business cards set up then there is Vistaprint to get some cards done cheaply online. I don't think you need high-end stationary, but I would put together any invoices in a professional manner in Word and send them out on nicer paper.

Good luck!