Consulting for IT people

Reliable Response

Overview

Why Consulting?

You are currently out of work and looking to make

some money You want to get out of the cubicle world You're an entrepreneurial sort You don't mind hard work, and you want a higher

upside than corporate work Equity. You want to build something

Bad Reasons to Go Into Consulting

You want more flexibility You don't want to take orders You want to work for yourself You want less work Prestige

Where to Start

#1 File for an LLC http://http://www.sos.state.co.us/biz/FileDoc.do Cheap, easy, DO IT! Otherwise, if you get into trouble, they'll take your

whole life. It's your only protection! Checkout the available gigs on

http://denver.craigslist.com Apply for some and see if you get the work Talk with friends or families who have small

businesses, particularly non-IT

How Long Does it Take to Start

Expect 60 days before you get your 1st payment.

Your terms will be Net-30, which means they have

30 days to pay Expect a year before you're making as much as

you were at your current job

Legal and Accounting

As mentioned above, your LLC filing is the most

important. It costs $25 Call whomever you get car insurance from and ask

them about small business insurance. Ask about

theft. Insurance runs about $300-$500/year for computer

service companies Find a good accountant. They run about $100-

$150/month

Legal and Accounting

Look on the internet for any legal forms you need.

Complete the basic work before bringing it to a

lawyer Lawyers are not doctors. If you don't take their

advice, you won't die. Or even be sued. If your

lawyer is too pushy, get a new one. Ditto accountants. I've been at this for 3 years and

I still don't have a good accountant

What services or products to sell?

Consulting is easiest with small companies. There are tons of opportunities on Craig's List Generally, expect to support well-known, non-

niche applications. If you're good w/ LAMP,

you're golden. Don't be a prima-donna. You'll end up supporting

all sorts of crap. Deal with it.

What not to sell or expect

You won't get a gold mine. Expect to work for

every penny You won't get long-term gigs this way. If you

want long-term gigs, they'll end up being a lot like

working for a company Don't expect to work on the latest-and-greatest

tech. Usually, customers who want this go out of

business quickly

What might happen

You may be able to get non-local business. I have

customers in San Francisco, New Jersey, Atlanta.

But, those are rare You might get retainers. These are great because

they're guaranteed income. You might get fulltime offers. Consider them

carefully.

Where to Get Advice

Don't pay for advice. Some incubators are useful,

some networking groups too. But, for the most

part, people who sell you advice are looking to get

paid, not give good advice Ask friends and family who own small businesses Most of all, ask your customers. Customers

LOVE talking about themselves.

Office Space – Where to Work

You have 3 options Home office Office space Executive Suites

Home offices are cheap, but can be distracting. I

tried it for about 2 hours, where I spent 50 minutes

trying to convince my daughter to leave me alone

Where to Work

Executive Suites are great, but expensive. They provide

secretaries, coffee machines, copiers, meeting rooms,

phones, internet, etc. But, they have downsides. You drink their coffee. Their

internet hookups universally suck. I didn't use the

meeting rooms. The secretaries are cool, though. Office space comes in 2 varieties; A-class and C-class.

Anyone who says they're a B-class is a C-class with extra

bullshit. And, believe it or not, bullshit is expensive.

Office Space

Look for something close to you. Save time, gas money,

and frustration. If it's on a bike or bus path, even better. To replace an executive suite, purchase a coffee maker,

one of those combo printer-faxes-copier, microwave,

refridgerator. Maybe a total of $500 Get an account with www.gotvmail.com (disclaimer,

they're a customer of mine). It's great for auto-hunting.

And it sounds professional. Buy your own Internet connection Rent meeting rooms if you need them.

Enjoy, but don't go crazy

It's very easy to get fat and lazy when there's no

boss. Don't keep snacks in the office The privacy is great, but it gets lonely. Look for

office space where there are other companies. Remember to save money the 1st year. Do you

really need the fridge? The higher speed line?

The fancy chairs?

What to Charge

I don't know you or your business, so you'll have

to decide Expect to bill on average 20 hrs/week, 50

weeks/year. If you want to make $50k/year, you'll

need to bill $50/hour. You'll get more work and more respect if you

charge more. People don't trust the cheap guy.

Charge 50% more than you're worth. There's tons of work, so don't worry about losing

some over cost.

What to Charge

Expect to have a tiered pricing schedule. I'm

$100/hour for normal, hourly work, $75/hour for

larger projects (because I can bill more than 20

hours for them), and $125/hour for rush work You don't have to accept credit cards

Presentation

Get nice business cards Buy a suit! But don't wear it often. People are hiring you to be the IT guy. It's fine to

look the part, as long as you also look respectful.

Beard, bad haircut, etc is fine. Ripped clothes,

metal t-shirts, sullen attitudes, not so much. Be nice to the receptionists. They're the

gatekeeper

Advertising

Post your resume to Craig's List Local papers are a good value. Magazines and nation-wide papers are expensive.

CIO magazine is $30,000/issue! Write a blog, get it linked

Collecting Payment

Be polite, but firm Expect to get stiffed sometimes Try to get partial payment up-front Keep track of your hours, even if you're billing on

a project-basis Don't offer freebies. Customers come to expect

them Customers that pay reliably are worth keeping.

Keep in touch with them.

Equity and Exit Plan

If you build a good business, you can sell it for

lots of money. Product companies get a 7x multiplier. Service

companies get a 1x multiplier. This means that, if

you're making $100k/year doing hourly service

work, you can only expect to get $100k for it. If

you sell $100k of products, you can expect to get

$700k for it. If you find yourself doing something over and

over, look to productize it

Miscellaneous

Trumpet your successes. Make sure your

customers know what an awesome job you did. Always over estimate schedules and cost. Feel

free to under-bill. The truth is that most projects

take longer than you expect. Watch out for scope creep. If the customer didn't

specify it up front, make sure you bill separately

for it. Take time off!