| Topic Name: |
Doing the Independent thing... |
| Message Name: |
be prepared |
| Date Posted: |
07/08/2003 |
| In Reply To: |
I'm a Sr. Manager at a top consulting firm and am considering some solid independent consulting opportunities at the moment. Already have a potential client lined up and am looking to structure a nice contract that will most likely cover 1 yr. Does anyone have any advice on what things to take into account when structuring an independent consulting contract with fees, hourly bill rates, costs incurred of going inpdependent, incorporating, benefits, pto, overhead, etc.? I'm obviously looking to set up something sweeter than what I currently have at the firm I'm with. So, I figure I need to take into account that my contract should cover total comp and costs as well as a nice profit. I've heard not to underestimate costs such as benefits and other overhead. Any other tricks to the trade that I should be aware of?
Any advice is greatly appreciated.
Thanks. |
| Message: |
I've been independent (in IT) for 5 years and my advice is to try to get as much as possible in terms of rate. Figure out what they're paying their existing consultants, how much you were being billed at, and go from there. Nothing hurts more than throwing a figure out and the client accepts it immediately. Often you're limited to what the client wants, but it also depends how you work. If you know the role is going to be regular 9-5 hours, try to get a large daily rate, if it's going to be hectic, go with hourly or a daily (8hr) + overtime rate.. In my current situation, I wanted to go hourly but the client insisted on a daily rate. Because of the size of the contract and my long relationship with the client, I had to accept their terms. Of course, travel and other things should be above and beyond this and specified in the contract.
In terms of incorporation, benefits, etc. Those are just normal costs of doing business, it'll vary on where you live. I have an accountant who specializes in independents and I suggest you find one in your area to lay out all the fees you will end up paying that year.. incorporation, book keeping, tax filing, etc. Call your insurance agent and get a health plan priced out. This might be alot more than you expect (if you have children, etc)..
One thing you should be prepared for is cccounts recievable. net/30 can sometimes turn into net/60 or even net/90. I find big companies to be especially bad with this.. Try to keep as big a buffer as possible, you never know how long it'll take to get that first invoice paid.
Also set up seperate accounts to hold money you expect to pay in taxes. I make it a personal policy to over estimate by 10% and throw the money into an interest earning account or some sort of short term gauranteed security.
Seeing as you have a steady job at a firm, I wouldn't consider jumping ship unless you can get _minimum_ double your salary in contract rates. You're losing all your seniority and job security (is there any in consulting firms?). That sales force that kept you billable at the firm is also gone too. Finding your own leads and closing your own deals is incredibly rewarding, but you're only one person and you probably have to concentrate (somewhat) on your current client.
good luck..
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