My Opinion:
1. How many people can u manage (Maybe , at the same time ?)
& How do u keep all of these ppl working in the correct direction ?
(maybe, Project management ????)
2. How many hours a day you have active presence of mind..
(Just working 12 hours a day is not a bid deal ..
I have seen ppl who worked like that ..but didn?t have their minds working more then 2-3 hours !)
Just make self check at end of each day : How much productive day was today ?
(Did u spend whole day debugging/resolving things !!!)
3. How much stress can u handle?
Starting your own business can lead to lots of stress (sometimes unnecessary ?!)
4. Are u a Geek type?
You may have to loose lot of that and start thinking everything from business point of view ?
See any new technology as a good business opportunity instead of a new tool to satisfy your Geekish nature ..
5. Don?t loose your observation skills ?
Everyday doing something , u will observe things , and you will have some idea about something ?
don?t loose that idea ..it might be a great business trick !
One of the problem with human mind is , ideas never comes when u need it and when u thinking about it ..?I was stuck with that problem, I left it on side and start doing other stuff ...and mean while I was doing something else ? I had a Brilliant idea about solving the first problem ? and I could solve that problem in minutes ! ?
This happened tome so many times ?
6. You do need all of the things mentioned in this article ?
Including logistics & support personnel for customer relationship management
7. Have a Bussiness Plan !
Just having lots of work doesn?t mean , you will survive for ever !
You need a strategy..And adopt it gradually (slowly but surely !)
etc?etc
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If your professional output is anywhere near as sloppy and error-ridden as your comments, you will fail as a consultant...but might prosper as a technician.
Russ
Russ
Pull in the green cards, we have people here that can't find a job. If your going to sell me a burger, fix my computer, or maintain my life insurance, try to do it in english please. 'nuff said.....
Pull in the green cards, we have people here that can't find a job. If your going to sell me a burger, fix my computer, or maintain my life insurance, try to do it in english please. 'nuff said.....
Two other things that a new entrepreneur should investigate - a good business lawyer and a tax advisor, preferably an EA (Enrolled Agent).
A business lawyer can step you through the process of setting up your business. If their price tag is too high, consider other low cost solutions. In Connecticut, visit the CT Economic Resource Center (http://www.cerc.com). They provide a free service that explains how to get registered with the state, obtain proper licenses & permits, etc. Other groups like the SBA & SCORE provide similar, low cost services. I'm sure other states have the same sort of things.
Consulting services may be taxable in your state. A good EA can help you set up your books, do your fed/state taxes, etc. A CPA can probably do the same thing, but at a higher price.
A business lawyer can step you through the process of setting up your business. If their price tag is too high, consider other low cost solutions. In Connecticut, visit the CT Economic Resource Center (http://www.cerc.com). They provide a free service that explains how to get registered with the state, obtain proper licenses & permits, etc. Other groups like the SBA & SCORE provide similar, low cost services. I'm sure other states have the same sort of things.
Consulting services may be taxable in your state. A good EA can help you set up your books, do your fed/state taxes, etc. A CPA can probably do the same thing, but at a higher price.
Hi guys,
Two Questions for you
1. Where can i find a directory of all the IT consultant in Toronto, Ontario.
2. Is theis a certification /permit required to starup a consulting business.
Two Questions for you
1. Where can i find a directory of all the IT consultant in Toronto, Ontario.
2. Is theis a certification /permit required to starup a consulting business.
Consulting is a business like any other. Too many people look at independent consultants and think "I could do that!" -- Can you handle living without a paycheck for 6 months? How are you going to get your clients? What about health insurance?For too many people, hanging out a consulting shingle is something they do in-between jobs, or because they think they can do the same job and get a lot more money.
Consulting means you get to do your job, along with everyone else's -- you get to be reception, marketing, sales, accounting, management, HR, mail delivery and administration.
I've been a consultant for over 20 years, growing from an independent to a small firm. We've always managed to pay the bills, but it wasn't always easy. I've seen a lot of independents take the first "real" job that came their way because they couldn't handle the workload or not knowing where or when their next paycheck was coming from. Me, I couldn't live any other way.
Consulting means you get to do your job, along with everyone else's -- you get to be reception, marketing, sales, accounting, management, HR, mail delivery and administration.
I've been a consultant for over 20 years, growing from an independent to a small firm. We've always managed to pay the bills, but it wasn't always easy. I've seen a lot of independents take the first "real" job that came their way because they couldn't handle the workload or not knowing where or when their next paycheck was coming from. Me, I couldn't live any other way.
'...Can you handle living without a paycheck for 6 months?...' is the most relevant comment in all of the threads! Health insurance is another good point, especially if you have a family, and rates are not cheap when you are not part of a 'group' plan.
I would also like to offer this advice: does your business rely on Microsoft products? If the answer is yes, be prepared to spend many, many hours (for which you can't charge) cleaning up someone else's problem! Any business plan involving MSproducts must control as much of the total environment as possible - otherwise you will be held responsible. I envy those who have survived this!
I would also like to offer this advice: does your business rely on Microsoft products? If the answer is yes, be prepared to spend many, many hours (for which you can't charge) cleaning up someone else's problem! Any business plan involving MSproducts must control as much of the total environment as possible - otherwise you will be held responsible. I envy those who have survived this!
I will be opening doors for my consultant business within a week and half. I'm located in the Oklahoma City area, and plan to initially focus on the Metro area. My specialty is network architecture and security, and plan to target small to medium business. I have already handled the legal aspects of the business, made some contacts, and have prepared my marketing materials. After doing some calling around, it appears that other businesses in the area charge between $95-$150 for networking work, and I cannot find any local ones that specialize in security. I was planning on billing $100 / hour.
Does anyone have any advice? Am I charging too high? What other marketing techniques could I try? What about joining the local chamber of commerce?
Thanks!
Does anyone have any advice? Am I charging too high? What other marketing techniques could I try? What about joining the local chamber of commerce?
Thanks!
Join the Chamber, network at any and every event possible. As for your rate, I've got two rates I use, $135 for "an hour here or there" rate, and $85 is what I call my "preferred customer rate" for those who do business with me on a regular basis. Watch your expenses, and assign everything you can to your company's expense accounting. (see your accountant for advice) Good Luck: David@competitivenetworksolutions.com
Charge as much as possible. The more you charge, the easier life will be. I too have 2 rates. A standard rate & a discounted rate. It is much easier to make money on the standard rate clients ($125 vs $100. It always a bit saddening when I am billing the discounted clients since I get 20% less for each hour they are billed.
Also, with the standard rate, I have much more leeway in case something comes up. Try billing a customer 4 hours for something that should realistically take 2. Now you see where the higher rate works.
If you are really good at security (or anything else), charge the highest rate in your area. You will lose some prospects. But those are likely the ones you don't want anyway.
Good luck! Be tenacious! It can be a long, lonely ride.
Kookman
Also, with the standard rate, I have much more leeway in case something comes up. Try billing a customer 4 hours for something that should realistically take 2. Now you see where the higher rate works.
If you are really good at security (or anything else), charge the highest rate in your area. You will lose some prospects. But those are likely the ones you don't want anyway.
Good luck! Be tenacious! It can be a long, lonely ride.
Kookman
You can't charge for something you haven't spelled out in the first place. You can reduce the invoice, but you will almost never increase it.
People will set the hours for their convenience, so, you need to spell out your hours of operation and create an additional fee for 'outside business hours' work - ( when requested by the customer. If it's your choice, fine, but if they think it's better for you to be there at 5 am, you need to show the value for it.)
Our company also has two rates, onefor 'high stress' and one for 'low stress'. Some people call it 'server room' and 'desktop' or 'network' and 'desktop'.
Also, an emergency response surcharge might be in order as well.
Good luck!
-Les
People will set the hours for their convenience, so, you need to spell out your hours of operation and create an additional fee for 'outside business hours' work - ( when requested by the customer. If it's your choice, fine, but if they think it's better for you to be there at 5 am, you need to show the value for it.)
Our company also has two rates, onefor 'high stress' and one for 'low stress'. Some people call it 'server room' and 'desktop' or 'network' and 'desktop'.
Also, an emergency response surcharge might be in order as well.
Good luck!
-Les
I too am struggling with between a "real job" and consulting. I just read a great little book by a lady with 20+ years as a career coach. She talks about getting a new job, retaining an old job AND the really interesting part of starting a business. She hs great ideas on effectively marketing your business. She has an unreal amount of experience as a small business owner and has national exposure (what about Oprah). The book is about $20 as I recall and is entitled:
"What to Do with the Rest of Your Life"
Robin Ryan
Good luck all.
Best Regards
Jerry D
Naperville Illinois
"What to Do with the Rest of Your Life"
Robin Ryan
Good luck all.
Best Regards
Jerry D
Naperville Illinois
Does anyone out there have any advice for someone who's planning to go into part-time consulting? Many people I know want to try out having a business of their own (because, if you succeed, it's really the best way to go) but are scared of the "no paycheck for 6 months" part of the commitment. Can the advice commonly given to musicians -- "don't quit your day job" -- be applied in these cases?
Among those I know who've tried it, one keeps drifting in and out of "regular" jobs, alternating with his business as it goes through fat and lean cycles. Another was finally able to quit his day job, and has so far done well with his business (although, as with Terryn's experience, there are still times when it isn't easy to pay the bills). In another case, a middle-level manager in my company still hasn't quit his job despite being quite successful in a business he put up with some partners (some of the partners are full-time, some, like him, have regular jobs).
I know that much of the article, as well as the advice from the discussion contributors, also applies to part-time consultants, but I'd like to know if there's any advice that any of you have specifically for those who want to test the consulting waters with one foot. Or do you think that not having a total commitment mentality will severly lessen your chances of business success?
Among those I know who've tried it, one keeps drifting in and out of "regular" jobs, alternating with his business as it goes through fat and lean cycles. Another was finally able to quit his day job, and has so far done well with his business (although, as with Terryn's experience, there are still times when it isn't easy to pay the bills). In another case, a middle-level manager in my company still hasn't quit his job despite being quite successful in a business he put up with some partners (some of the partners are full-time, some, like him, have regular jobs).
I know that much of the article, as well as the advice from the discussion contributors, also applies to part-time consultants, but I'd like to know if there's any advice that any of you have specifically for those who want to test the consulting waters with one foot. Or do you think that not having a total commitment mentality will severly lessen your chances of business success?
In my current possition, I have found that my promary job demands preclude being able to gaurantee the "When you need me I will be There" kind of service customers expect. My approach to side work and consulting has been to work as a "sub-contractor" for area consultatnts. I market my skills to other consultants in the area who may not share in an area of expertise, let them get the jobs or refer jobs to them and be thier sub. this way my "Customer" is more understanding of my time limits" and I am dealing with people I have a rapport with and whoem I can talk through problems more easilly than A user. I charge less than I would for "dealing direct" but don't have nearly the headaches to deal with
What are good sources for getting on "bidding" lists for outsourced projects? Instead of "subcontracting" through existing IT placement firms.
My experience of 15 years consulting (30 years total experience) - you must develop your own leads.
Bidding on outsourced projects are GENERALLY already wired to go to another company - the client is just using you to prove that they asked for some competitive bidding. I have been on both sides on this - wasting my time on bids where the client already knew who they wanted and breaking the champagne know that I have the job before the bids had come in.
Join local networking groups - chamber of commerce, charity groups (lions, rotary, etc), special interest group chapters.
"People do not care that you know until they know that you care."
Bidding on outsourced projects are GENERALLY already wired to go to another company - the client is just using you to prove that they asked for some competitive bidding. I have been on both sides on this - wasting my time on bids where the client already knew who they wanted and breaking the champagne know that I have the job before the bids had come in.
Join local networking groups - chamber of commerce, charity groups (lions, rotary, etc), special interest group chapters.
"People do not care that you know until they know that you care."
I was a fairly successful consultant for about 10 years until I got tired of being "President and Janitor"! The biggest hurdle always was the benefits: Insurance and Retirement plans, etc. I decided to take a "real job" about 5.5 years ago and it has been okay but I do miss the freedom to decide which projects to do and which to pass on!
I had as much or more business than I could handle at times. There were 3 main sources:
1. I did two Business Trade Shows per year (hiring a couple of extras to assist) and demonstrated the products I supported and gave out business literature. I usually picked up some very good projects from the shows.
2. I got on the list to bid for small projects for county and city government and was able topick up some projects which also led networking with some well placed people who recommended me to others.
3. I joined several professional associations and was able to get projects or sub-contracts through the membership.
I also took the opportunity to advertise in church bulletins, school brag books, etc. I wrote it off at first as just a charity donation but surprisingly, it turned into work leads.
Hope this helps.
Sandi
I had as much or more business than I could handle at times. There were 3 main sources:
1. I did two Business Trade Shows per year (hiring a couple of extras to assist) and demonstrated the products I supported and gave out business literature. I usually picked up some very good projects from the shows.
2. I got on the list to bid for small projects for county and city government and was able topick up some projects which also led networking with some well placed people who recommended me to others.
3. I joined several professional associations and was able to get projects or sub-contracts through the membership.
I also took the opportunity to advertise in church bulletins, school brag books, etc. I wrote it off at first as just a charity donation but surprisingly, it turned into work leads.
Hope this helps.
Sandi
I agree with everything that is stated, one thing that is important though is "How to hire the help". Man, that requires some talent. I've hire over the past 7 years about 6 employess and in every case they seems to be eager to start then they getextremely lazy to the point where they do not want to go on-site and will try to sit in the shop doing nothing but checking out what's on the Internet. Since I'm always on sites, it difficult to see what the employees was doing. So I installed a proxy server that only gave access to certain sites and recorded where they had been. Now mind you I'm paying there salaries.
If someone has a magic formula on how to hire a good employee please post this. It is the one part of running your own business that adds extra stress.
Another point to consider, take time to your self. I put in about 60 - 70 hrs per week (mind you I enjoy what I do), but there is a time where one myust break away to smell the roses.
Watch your health
Watch yourdiet (no fast foods) sit down and enjoy a meal at least twice a week (brown bag it initially).
Make sure your wife/girlfriend understand that things are going to be tough initially.
Took me 3 months to get things going after that I haven't had the time to look back.
It accounting isn't your thing (god knows it's not mine) get a well-informed accountant and keep excellent records.
If someone has a magic formula on how to hire a good employee please post this. It is the one part of running your own business that adds extra stress.
Another point to consider, take time to your self. I put in about 60 - 70 hrs per week (mind you I enjoy what I do), but there is a time where one myust break away to smell the roses.
Watch your health
Watch yourdiet (no fast foods) sit down and enjoy a meal at least twice a week (brown bag it initially).
Make sure your wife/girlfriend understand that things are going to be tough initially.
Took me 3 months to get things going after that I haven't had the time to look back.
It accounting isn't your thing (god knows it's not mine) get a well-informed accountant and keep excellent records.
When hiring employees, I belive in shying away from "kids" in my experience anyone under the age of 30 just hanen't been on the big blue marble long enough to have developed the work ethic or sense of reponsibility of more experienced people. Although youth can have it's advantages, inconsulting especially nothing replaces the "soft skills" developed from life experience
One proven way of keeping contractors/employees productive is compensating them on a pay for performance basis.
We have developed a process which works very well in the technology and field services area and has proven to be worth its weight in gold .. so to speak..
The net result is our burden cost has been lowered by 31.34% .
We have also consulted with numerous companies and implemented this process successfully.
If anyone will like more details about the process pleaese contact me..
dave.gajadhar@netresultant.com
We have developed a process which works very well in the technology and field services area and has proven to be worth its weight in gold .. so to speak..
The net result is our burden cost has been lowered by 31.34% .
We have also consulted with numerous companies and implemented this process successfully.
If anyone will like more details about the process pleaese contact me..
dave.gajadhar@netresultant.com
One proven way of keeping contractors/employees productive is compensating them on a pay for performance basis.
We have developed a process which works very well in the technology and field services area and has proven to be worth its weight in gold .. so to speak..
The net result is our burden cost has been lowered by 31.34% .
We have also consulted with numerous companies and implemented this process successfully.
If anyone will like more details about the process pleaese contact me..
dave.gajadhar@netresultant.com
We have developed a process which works very well in the technology and field services area and has proven to be worth its weight in gold .. so to speak..
The net result is our burden cost has been lowered by 31.34% .
We have also consulted with numerous companies and implemented this process successfully.
If anyone will like more details about the process pleaese contact me..
dave.gajadhar@netresultant.com
When I graduated from ITT I was very hungry and still am. It was just like the commercial, I have 3 kids, a wife, and was working dead end jobs or no job at all. I took my education serious and my first IT job very serious. I loved being @ work eventhough the gig didn't pay that much. I was motivated to go for my bachelors degree and get some certifications. (I'm in the process of doing that right now). I also know and have done contract work for men who use these same techniques when looking for employees. I took my work seriously because it was and still is "do or die". I love being able to pay most of the bills and take care of my family. My wife does not have to deal with alot of pressure like before.
You should look for people like myself who will work hard for the dollar and love what they do.
Daniel Toomer
Network Consultant
You should look for people like myself who will work hard for the dollar and love what they do.
Daniel Toomer
Network Consultant
I did consultanting work, and may want to do it again. I have had offers from larger consulting firms. Since I have done it myself, I have the skills and the work ethic.
I am currently full time employed as a senior network admin. If something changes, I may want to be contacted at oraclewizard77@yahoo.com to do consulting again depending on the pay.
I am currently full time employed as a senior network admin. If something changes, I may want to be contacted at oraclewizard77@yahoo.com to do consulting again depending on the pay.
The article is thorough despite of being short; in my experience there are two hurdles that I have trouble with: 1) Competitive pricing and 2) Marketing myself and solicitation to sell my services.
It would be of great help if those who finally have reached success, give some tips /advise to those who we are planning to be in consulting or still strugling to reach a minimum of success.
It would be of great help if those who finally have reached success, give some tips /advise to those who we are planning to be in consulting or still strugling to reach a minimum of success.
From my experience, and from those of friends and colleagues who have gone into consulting, one of the most difficult aspects of jumping from being a paid foot soldier to going into business for yourself are the non-technical stuff. In fact, the better you are technically ("nerdy" if you will) the more difficult it is sometimes to do "human relations" stuff, especially when it comes to sales and marketing.
Many of us who have been working for years in large corporations are used to such things being taken care of by The Marketing Dept., The HR Dept., etc. But unless you can learn to do these things for yourself, unless you can learn to be as comfortable with humans as you are with computers, your business is dead in the water.
Many of us who have been working for years in large corporations are used to such things being taken care of by The Marketing Dept., The HR Dept., etc. But unless you can learn to do these things for yourself, unless you can learn to be as comfortable with humans as you are with computers, your business is dead in the water.
In response to ltolevaz@yahoo.com & Joey Indolos, it's all about the human touch. That is, at least as it relates to small business consulting.
For me, servicing customers that have from 1-30 employees, it is not how much you know as much as it is how you treat the customer.
An interesting article I read the other day from Inc. Magazine talked about this concept in the context of building construction but applies very well to consulting for small business. Shawmut Design could build thebest building in the world. However, if they didn't get the "punchlist" nailed, then the project was a failure. The same thing goes for IT consulting. You can hammer away at a server for hours. But the thing that has gained me the most praise on a call like this can be something as simple showing someone a new keyboard shortcut.
To show them that shortcut though, you have to listen to the customer. And this, my friends, is the key that unlocks the door...
Kookman
For me, servicing customers that have from 1-30 employees, it is not how much you know as much as it is how you treat the customer.
An interesting article I read the other day from Inc. Magazine talked about this concept in the context of building construction but applies very well to consulting for small business. Shawmut Design could build thebest building in the world. However, if they didn't get the "punchlist" nailed, then the project was a failure. The same thing goes for IT consulting. You can hammer away at a server for hours. But the thing that has gained me the most praise on a call like this can be something as simple showing someone a new keyboard shortcut.
To show them that shortcut though, you have to listen to the customer. And this, my friends, is the key that unlocks the door...
Kookman
There is some good advice in the article and some VERY bad advice.
Generally, the need to plan a business not just fall into it is worth the price of the article.
HOWEVER, you need an accountant BAD!
For the newbies, 2000 hours does not represent 50x40. It represents approximately 52x40 - stats. So if you DON'T take a vacation (and don't get sick) you can figure on 2000 hours.
Ergo, $30/hr doesn't correspond to $60K per year. It corresponds to $30K salary. Or about $45K in total billings.
If you want to do a rough set of your prices divide your desired salary by 1000. After health, taxes, expenses, sick time, vacation time, down time ... you should have an in-pocket equivalent.
Which explains why so many PMs are leaving the business now.
(Please note when using the above ... adjust for the amount of downtime you expect).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
Generally, the need to plan a business not just fall into it is worth the price of the article.
HOWEVER, you need an accountant BAD!
For the newbies, 2000 hours does not represent 50x40. It represents approximately 52x40 - stats. So if you DON'T take a vacation (and don't get sick) you can figure on 2000 hours.
Ergo, $30/hr doesn't correspond to $60K per year. It corresponds to $30K salary. Or about $45K in total billings.
If you want to do a rough set of your prices divide your desired salary by 1000. After health, taxes, expenses, sick time, vacation time, down time ... you should have an in-pocket equivalent.
Which explains why so many PMs are leaving the business now.
(Please note when using the above ... adjust for the amount of downtime you expect).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
I left the corp world about 2 years ago to start my own deal. I don't regret it, I am finally at break even but year 1 is a killer. To expect to stay billable for 2000 hours in a year sounds like a fairy tale. Look into retainers, and prepaid service contracts, they saved my life.
Glad to see the post, I would love to see more on the sales side. Mainley because you could be the best tech this world has ever had, but you will starve if you can't sell in your own busineess.
Thats the key where I see people fail, its not about knowing the latest greatest its selling what a business needs with some room for profit.
How to attain clients, good cold calling scripts, productising tech services, managing all the clients. Would love to see more on those topics Tech Republic.
Glad to see the post, I would love to see more on the sales side. Mainley because you could be the best tech this world has ever had, but you will starve if you can't sell in your own busineess.
Thats the key where I see people fail, its not about knowing the latest greatest its selling what a business needs with some room for profit.
How to attain clients, good cold calling scripts, productising tech services, managing all the clients. Would love to see more on those topics Tech Republic.
Preston:
Throw away all the sales tactics books...Forget about all the fancy methods....And oh my! No more cold calling scripts!...
As I stated in an earlier post, the only way to give a customer what they want is to first find out what it is that they want. And how do you do that? Some fancy research? Read lots of journals? NO!
LISTEN!!!
Keep your yap shut & listen to what the customer is saying. They will sell themselves.
Kookman
Throw away all the sales tactics books...Forget about all the fancy methods....And oh my! No more cold calling scripts!...
As I stated in an earlier post, the only way to give a customer what they want is to first find out what it is that they want. And how do you do that? Some fancy research? Read lots of journals? NO!
LISTEN!!!
Keep your yap shut & listen to what the customer is saying. They will sell themselves.
Kookman
I struggle to believe most people work 2000 actual billable hours/year. Unless I'm missing some great unethical trick like billing for my time spent doing my own accouting/invoicing/marketing/etc., I find I have to work at least 1-2 hours (often more) *unbillable* hours doing marketing/bookkeeping, etc., for every 8-10 billable hours. I.e, I would be putting in 50-60 (+) hour work weeks iff claiming 40 billable hours a week. I could have great bennies on some W-2 salaried post if I wanted to/could work that much. I went into consulting mainly because I cannot work full-time W-2 for health reasons, and so also do not work full time consulting for health reasons, but the better pay ($30-75/hour) and flexibility makes up for it for me. Happily, I don't need/want to make as much as some other folks perhaps. What about others?
No you can't work 2000 hours unless a) you are putting in a lot of overtime and b) you don't take vacation.
The writer definitely needs to hire an accountant!
The only way you should use 2000 hours is if you have a guaranteed job for 2+ years (the average life of a job) and expect to put in 8-12 hours overtime per week. (Not counting non-billables).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
The writer definitely needs to hire an accountant!
The only way you should use 2000 hours is if you have a guaranteed job for 2+ years (the average life of a job) and expect to put in 8-12 hours overtime per week. (Not counting non-billables).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
Lots of wisdom exists on the amount you can work in a year as a technical person. Subtract 5% - 10 % for training for example. Subtract another 10% if you work with Microsoft to fix problems the customer blames on you that are caused by MS.
I have never seen a technical person working in real computer systems that can work more than 60 to 70% of the potential billing hours, and IBM and Garner Group have similar percentages. Plus, the brain is like a muscle in that it gets chemically 'tired'. Unless you're at a breeze job, forget 2000 hours. You'd better plan to be very happy with 1000 and up per tech.
-Les
I have never seen a technical person working in real computer systems that can work more than 60 to 70% of the potential billing hours, and IBM and Garner Group have similar percentages. Plus, the brain is like a muscle in that it gets chemically 'tired'. Unless you're at a breeze job, forget 2000 hours. You'd better plan to be very happy with 1000 and up per tech.
-Les
The usual shortform calculation is to divide the annual desired salary by 1000. So to earn 60K you need $60/hr.
I must take exception to the comment "I have never seen a technical person working in real computer systems that can work more than 60 to 70% of the potential billing hours".
It's only in real computer systems (e.g. iSeries,mainframe etc.) that clients give contracts long enough to get close to 2000 hours.
Between unbillable (i.e. fixing Microsoft's software) and chasing the next short term contract and chasing the last payment ... the toy computers have it worse!
(Mind you that is for the development side -- the fix'em side reverses the equation -- the big boxes don't break nearly as often).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
I must take exception to the comment "I have never seen a technical person working in real computer systems that can work more than 60 to 70% of the potential billing hours".
It's only in real computer systems (e.g. iSeries,mainframe etc.) that clients give contracts long enough to get close to 2000 hours.
Between unbillable (i.e. fixing Microsoft's software) and chasing the next short term contract and chasing the last payment ... the toy computers have it worse!
(Mind you that is for the development side -- the fix'em side reverses the equation -- the big boxes don't break nearly as often).
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
I should have defined the systems. But the operative word is 'close' to 2000. How close?
And when do you train your people in a 2000 hour contract?
Unless the contract is just cart blanc, there will be additional overhead with materials, meetings,warranty and mistakes that aren't covered by insurance etc.
Subtract billing time, sales time also. If you have a big contract like that, when do you market for the next big contract? The discussion is about 'starting' a consulting business.
For us, it never ends; we make less net profit than we would like because of the subtractions
- les
And when do you train your people in a 2000 hour contract?
Unless the contract is just cart blanc, there will be additional overhead with materials, meetings,warranty and mistakes that aren't covered by insurance etc.
Subtract billing time, sales time also. If you have a big contract like that, when do you market for the next big contract? The discussion is about 'starting' a consulting business.
For us, it never ends; we make less net profit than we would like because of the subtractions
- les
The actual cost per hours calculation is ...
(S x (1+Br))/(H x (W*5 - D - I - E + O) x k) = $/hr
where:
S = Desired salary
Br = Benefits/Employment Costs Rate
(typically 25-30%)
H = Hours/day
W = Number of weeks available (i.e. 52-vacation)
D = Stat days (10 normally)
I = Sick days
E = Non-billable education days
O = Overtime hours
k = Average Employment rate (1-average downtime)
Take an example of someone earning $60K year.
There are costs of employment - taxes, health insurance etc.. Typically these costs add up to 25% as a minimum. So someone earning $60K has to produce $75K in order to be able to earn $60K.
If you want/expect to work 40 hours/week with 2 weeks vacation, no sick time (lucky you!) and noeducation (bad move!), you can produce at best 8x(50x5-10) = 1920 hours.
That means your costs - if you are always billable - is $39/hour.
However, most of us aren't that lucky. Let's presume you're in a high demand situation -- 3 month contracts with one week downtime between each ... that means 4 weeks "Vacation" or 8% downtime. That means you need (75K/(1920x.92) =) $43/hr.
Now what's the chance of having full employment for 40 years with no training in between?
Reality check isthat downtime will exceed 20-30% over an extended period (That's only 7 months off over 3 years). Personally, I know people who have been looking for over a year and a half at this point. I know several who have been looking for the past year.
Plug your own figures in ... the results could scare you.
By the way remember that this is COST OF LABOUR --- don't forget to add your cost of operating and your premium for risk (aka profit) to the equation.
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
(S x (1+Br))/(H x (W*5 - D - I - E + O) x k) = $/hr
where:
S = Desired salary
Br = Benefits/Employment Costs Rate
(typically 25-30%)
H = Hours/day
W = Number of weeks available (i.e. 52-vacation)
D = Stat days (10 normally)
I = Sick days
E = Non-billable education days
O = Overtime hours
k = Average Employment rate (1-average downtime)
Take an example of someone earning $60K year.
There are costs of employment - taxes, health insurance etc.. Typically these costs add up to 25% as a minimum. So someone earning $60K has to produce $75K in order to be able to earn $60K.
If you want/expect to work 40 hours/week with 2 weeks vacation, no sick time (lucky you!) and noeducation (bad move!), you can produce at best 8x(50x5-10) = 1920 hours.
That means your costs - if you are always billable - is $39/hour.
However, most of us aren't that lucky. Let's presume you're in a high demand situation -- 3 month contracts with one week downtime between each ... that means 4 weeks "Vacation" or 8% downtime. That means you need (75K/(1920x.92) =) $43/hr.
Now what's the chance of having full employment for 40 years with no training in between?
Reality check isthat downtime will exceed 20-30% over an extended period (That's only 7 months off over 3 years). Personally, I know people who have been looking for over a year and a half at this point. I know several who have been looking for the past year.
Plug your own figures in ... the results could scare you.
By the way remember that this is COST OF LABOUR --- don't forget to add your cost of operating and your premium for risk (aka profit) to the equation.
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
My experience shows that the potential billable hours can be calculated as follows:
52 weeks at 40 hours 2080
less
2 weeks vacation 80 (in my part of the world this would be 3 ? 4 weeks)
2 weeks sick 80
Billing 96 (1 day per month)
Training / networking 80 (10 days per year)
Public holidays 80 (varies country to country & state to state)
416
Potential 1644 (ie 41.6 weeks)
All of this is of course based on a 40 hour week. If you worked 50 hour weeks then the 2080 hours are achievable.
The above also does not take account of any other unbillable time eg marketing, loss leaders, etc.
The point is do not overestimate the billable hours you will have.
52 weeks at 40 hours 2080
less
2 weeks vacation 80 (in my part of the world this would be 3 ? 4 weeks)
2 weeks sick 80
Billing 96 (1 day per month)
Training / networking 80 (10 days per year)
Public holidays 80 (varies country to country & state to state)
416
Potential 1644 (ie 41.6 weeks)
All of this is of course based on a 40 hour week. If you worked 50 hour weeks then the 2080 hours are achievable.
The above also does not take account of any other unbillable time eg marketing, loss leaders, etc.
The point is do not overestimate the billable hours you will have.
I am not a fan of the "hourly" mentality. It can induce some novices (and greedy veterans) to pad project duration without adding value. That black cloud persistently hovers over the profession...
More importantly, focusing on hours is self-limiting, as it represents a finite revenue pool which evaporates as life happens. Want to attend a cert class? There's 24-40 hours gone. Spring Break with the kids? There's another 40. It doesn't take many events like that to seriously erode earning potential. If you intend to stick with the T&M model, please take this into account in establishing your rate.
I always "attempt" to bid projects rather than T&M for three reasons. 1) I don't like being limited by hours. 2) I don't like having to justify time to the client. 3) Project-based bidding focuses my attention on the client's needs and in terms of business value. It tends to position me as an advisor, vs. contract labor.
That said, hourly billing is sometimes necessary or even preferable. Necessary under certain contractual relationships, such as government contracting under GSA schedules. Preferable when a novice is starting out, or a veteran taking on new types of work, where the unknowns can kill cash flow if one under bids the "project". In cases like this, T&M billing is smart business as long as the focus remains on satisfying the client and not inflating the invoice.
I recommend that anyone starting out in this business check out "Million Dollar Consulting", by Alan Weiss. It's a good read with practical advice.
Finally, as others have noted, consulting is a business. It requires discipline. There is no one to blame for failures beyond the mirror. It's not easy work, but the rewards of delivering a successful engagement and making a positive impact on the client are worth it.
Best of luck!
More importantly, focusing on hours is self-limiting, as it represents a finite revenue pool which evaporates as life happens. Want to attend a cert class? There's 24-40 hours gone. Spring Break with the kids? There's another 40. It doesn't take many events like that to seriously erode earning potential. If you intend to stick with the T&M model, please take this into account in establishing your rate.
I always "attempt" to bid projects rather than T&M for three reasons. 1) I don't like being limited by hours. 2) I don't like having to justify time to the client. 3) Project-based bidding focuses my attention on the client's needs and in terms of business value. It tends to position me as an advisor, vs. contract labor.
That said, hourly billing is sometimes necessary or even preferable. Necessary under certain contractual relationships, such as government contracting under GSA schedules. Preferable when a novice is starting out, or a veteran taking on new types of work, where the unknowns can kill cash flow if one under bids the "project". In cases like this, T&M billing is smart business as long as the focus remains on satisfying the client and not inflating the invoice.
I recommend that anyone starting out in this business check out "Million Dollar Consulting", by Alan Weiss. It's a good read with practical advice.
Finally, as others have noted, consulting is a business. It requires discipline. There is no one to blame for failures beyond the mirror. It's not easy work, but the rewards of delivering a successful engagement and making a positive impact on the client are worth it.
Best of luck!
The problem with bidding by project is that of risk management. There is always a risk (probability x impact) associated with projects. Unless your organization is prepared to eat the risk, a project going wrong could spell the end to your business.
And, unfortunately, the reason most clients want fixed price is that they don't want to cover the risk. So why should you?
Add to that the inevitable argument that "This was included." "No it wasn't". And the inevitable "your price is too high". And you end up with a disaster waiting to happen.
On the other hand, yes, it can overcome the pricing limits. But you definitely need to know your costs and how to contain them. And most of all you need to know (and use) good project managementand estimation theory. And be very good at negotiation!
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
And, unfortunately, the reason most clients want fixed price is that they don't want to cover the risk. So why should you?
Add to that the inevitable argument that "This was included." "No it wasn't". And the inevitable "your price is too high". And you end up with a disaster waiting to happen.
On the other hand, yes, it can overcome the pricing limits. But you definitely need to know your costs and how to contain them. And most of all you need to know (and use) good project managementand estimation theory. And be very good at negotiation!
Glen Ford
Can Da Software
IS Project Management
Business Systems Improvement
Great approach IF the work is well-defined - otherwise estimating can be a nightmare. It is sometimes difficult to convince clients that there is a degree of risk in every project that has to be factored into the price.
Having said that, however, the project-based approach can be quite profitable, especially if you are very good at the type of work you do. For example if you provide an estimate for a new server installation and migration based on 12 hours and complete it in 4, the rest is pure profit (BUT only if you have the next project lined up to use the saved time....)
Having said that, however, the project-based approach can be quite profitable, especially if you are very good at the type of work you do. For example if you provide an estimate for a new server installation and migration based on 12 hours and complete it in 4, the rest is pure profit (BUT only if you have the next project lined up to use the saved time....)
As an engineer, I had no idea about business and I was a geek like was mentioned earlier. You may not need an MBA like I have, but take a few basic business and accounting courses to help you learn about the bottom line.
The fundamental problem that I see with people trying to go it alone, and establish a practice is business skills and slef motivation. Do you have them both??
The fundamental problem that I see with people trying to go it alone, and establish a practice is business skills and slef motivation. Do you have them both??
One alternative to going it alone is to form a company with some people you have enjoyed working with in the past. However, it is important to get people with a variety of skills. A group of geeks can invent incredible things, but usually cannot sell, market or plan to save their lives.
One aspect we need to look at too is putting value into your
business if you happen to want sell it or (God forbid) to
pass it on as inheritence. This is to establish methodologies
for the way you carry out your consulting practices and
document it. This puts your experience on paper and apart
from putting discipline into your consulting, provides a
value to someone who may be keen to buy (or invest) in
your business
business if you happen to want sell it or (God forbid) to
pass it on as inheritence. This is to establish methodologies
for the way you carry out your consulting practices and
document it. This puts your experience on paper and apart
from putting discipline into your consulting, provides a
value to someone who may be keen to buy (or invest) in
your business
Once you have decided to start your own business, and you have determined that you have the 'personality', the following should also be done:
a) determine what goods/services you are going to sell
b) research your competion
- this may help define what you will charge ($)
c) sell your 'strengths' and buy your 'weaknesses'
- if you don't know accounting, law, marketing, etc. - hire an expert consultant
d) BELIEVE in what you are doing MORE than anyone else - don't let someone else destroy your dream.
a) determine what goods/services you are going to sell
b) research your competion
- this may help define what you will charge ($)
c) sell your 'strengths' and buy your 'weaknesses'
- if you don't know accounting, law, marketing, etc. - hire an expert consultant
d) BELIEVE in what you are doing MORE than anyone else - don't let someone else destroy your dream.
Often, "who you know" is as important as "what you know" so try to develop a list of people who can compliment your own skills. When you are working on projects you will often be approached about other business - having complimentary associates whoyou can trust will mean that you don't necessarily have to turn down work you are not completely equipped to handle.
I have found that it is also important to associate with people who are your "peers". Working as a solo consultant can leave youin something of a vacuum; getting together with similar people can provide healthy insights into issues and helps to keep you current with other aspects of the industry.
Finally, balance your time. One of the prime reasons for becoming a consultant is to provide a life-style which includes more flexible leasure time. Often, leasure time is sacrificed on the altar of financial success. Long term you are not doing yourself any favours so make sure that you retain some time for yourself - to work on that painting or book, or to go for that surf or walk. Try to maintain some balance so that you are not just working - you will enjoy your work more and last longer at it.
A happy worker is a productive worker is a successful worker.
Ithas taken me nearly eight years to recover from burnout (after ten "successful" years of solo consulting) and I am finally gathering myself to do it again.
For anyone considering consulting, the original article, and a lot of the comments it has generated, contain valuable advice and insight.
God Bless and Happy Consulting.
I have found that it is also important to associate with people who are your "peers". Working as a solo consultant can leave youin something of a vacuum; getting together with similar people can provide healthy insights into issues and helps to keep you current with other aspects of the industry.
Finally, balance your time. One of the prime reasons for becoming a consultant is to provide a life-style which includes more flexible leasure time. Often, leasure time is sacrificed on the altar of financial success. Long term you are not doing yourself any favours so make sure that you retain some time for yourself - to work on that painting or book, or to go for that surf or walk. Try to maintain some balance so that you are not just working - you will enjoy your work more and last longer at it.
A happy worker is a productive worker is a successful worker.
Ithas taken me nearly eight years to recover from burnout (after ten "successful" years of solo consulting) and I am finally gathering myself to do it again.
For anyone considering consulting, the original article, and a lot of the comments it has generated, contain valuable advice and insight.
God Bless and Happy Consulting.
Every advice sounds good. What I can't understand is, how can you do consulting work if you have a full time job? Surely most clients would also want to meet with you during the same hours you are at work.
Every advice sounds good. What I can't understand is, how can you do consulting work if you have a full time job? Surely most clients would also want to meet with you during the same hours you are at work.
Actually, much of the work people need must be done evenings or on weekends, it is too disruptive during the workday. Once you go into this you are working two or more jobs and neglecting one over the other will have bad results. If your main job will allow some flexibility that helps a lot. If not, you will run into points of crisis. Expect that you will have to resolve them creatively. Go into your other jobs with the understanding that you can only work on their needs during off hours.Most customers will respect that.
I work fulltime and asked my manager if it was ok to start my own business whilst working fulltime. He mentioned that there were company policies which I needed to follow before I could start one, just in case there are conflicting interests.
Theknowledge of every application or product I help create through development and research are said to be owned by the company. And if I tried to use the same ideas and apply it to other companies within our industry. It would obvisouly put the company at a disadvantage and loose their competitive edge.
What do you do then? If the company is not going to listen and help me spread the knowledge within our business to make better use of it, why can't I go around to other companies and tell them about the idea? Why can't I approach someone who is willing to listen?
Theknowledge of every application or product I help create through development and research are said to be owned by the company. And if I tried to use the same ideas and apply it to other companies within our industry. It would obvisouly put the company at a disadvantage and loose their competitive edge.
What do you do then? If the company is not going to listen and help me spread the knowledge within our business to make better use of it, why can't I go around to other companies and tell them about the idea? Why can't I approach someone who is willing to listen?
I realize that a consulting company with several employees & office expenses needs to at least bill 40 hours a week, but when you are on your own it doesn't usually happen that way because you are your own marketer. You need to plan on working 20 to 30 billable hours & the rest dedicate to marketing & research, education, etc. Therefore if you take the amount given in the article of $60,000 a year, you should devide that by 1,000 billable hours for the year which would make your hourly rate $60 an hour.
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