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Ask HN: What mistakes did you make when starting as a consultant/freelancer?

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Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#231

Post by taylortrusty »

m0zg wrote: post #213
jimnotgym wrote: post #135

Earlier quoted context omitted.

Penalty clauses are not always enforceable. Early payment discounts are... I mentioned it in my post, but the number one reason a reasonably sized company doesn't pay is that your invoice is not on their ledger. Call their accounts payable dept up after a few days, check they have the invoice, ask them when it will be paid. Don't be shy, this is what they expect!

Doesn't matter - they work anyway. Nobody in accounts payable is going to get into the details of whether things are enforceable or not. They'll just pay your invoice instead.

This is not a universal truth. Discount incentives work much better.

The clients who pay late will pay their invoices without the late fees anyway, in my experience. Now you’re tracking down payment for your work and the fees.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#232

Post by o-__-o »

mehrdadn wrote: post #53

Related question (especially to those saying you should've charged more): how do you start consulting in software engineering? Like where do you advertise and expose your talent to potential clients who would pay at a rate that you think is worth it?

Network at Conferences and meetups. Stay in touch with old colleagues. Listen to everyone’s problem and suggest a solution if you see they are really stuck on something. Reach back to those people and ask about their problems. If it’s ongoing, build a concise document that describes the problem and a potential roadmap to solving. Give it to client (see what I did there?) and tell them to shop around and use that roadmap as a guide. Build sales documents and go back to client asking to implement your roadmap by working on said solution, involve other key personal in that meeting. ... Profit!

Lather, rinse, repeat. Sometimes the above takes 6-9 months. Sometimes you get a handshake on the spot. Sometimes they never call back. Just like dating, keep your options open to stay fluid and keep talking to potential clients on the regular.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#233

Post by chirau »

robinduckett wrote: post #158
WildGreenLeave wrote: post #124

Earlier quoted context omitted.

If you don't mind me asking, how did you find those clients? I assume it was all mouth to mouth advertisement? How did you switch between those types of work? Reason I'm asking is because I recently started freelancing in software/web development (about 6 months ago) and I think I'm doing okay. I love to design and think out all of the odd, interesting or difficult back-end problems and so far all of my clients love…

This is just under what I charge per day for fully remote full-stack JS development and whilst I do need to charge more in future I am happy with my current client and the work is challenging and engaging. As the OP says, if you don't find the work engaging then move on.

you charge just above $80 per day?

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#234

Post by heavyset_go »

csomar wrote: post #148
londons_explore wrote: post #80

Earlier quoted context omitted.

Do you actually forward receipts to the client and have them pay to the cent? I always find it easier to just have a fixed line item for "travel to client events", and usually I end up coming out ahead by a substantial margin by not booking fancy hotels.

Isn't that fraud? You are supposed to charge exactly how much the travel expenses did cost. If you think you should charge for the travel time proportionally to your work rate, then you should do that but have these separate. It's possible a client will ask you for the travel expenses receipts and it would not be nice to show him that there is difference between what you charged and what it did actually cost.

> Isn't that fraud?

No, it's a travel fee. When I hire service workers to make house calls, I'm under no impression that the line items for traveling simply covers their expenses. I expect them to make a profit for the privilege of having a professional show up in person.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#235

Post by im_down_w_otp »

WildGreenLeave wrote: post #124
im_down_w_otp wrote: post #45

Earlier quoted context omitted.

$35/hr was writing post-processors for CNC machines. Went up to $75/hr for interactive media work (Flash/Flex). Went up to $150/hr for business systems integration (Netsuite, Salesforce, etc.) Eventually got that up to $300/hr. The astute observer will notice that the rate was inversely proportional to the actual difficulty of the work. This was mostly 10-15 years ago. $350/hr+ was distributed database related consul…

If you don't mind me asking, how did you find those clients? I assume it was all mouth to mouth advertisement? How did you switch between those types of work? Reason I'm asking is because I recently started freelancing in software/web development (about 6 months ago) and I think I'm doing okay. I love to design and think out all of the odd, interesting or difficult back-end problems and so far all of my clients love…

A combination of word if mouth and eventually targeted business development activities (not sales, but business development).

To make it easier to charge more you have to go after customers who are less price sensitive, whose problems are costing them a lot of money, and who are accustom to acquiring outside help for things outside what they consider to be their core business & expertise.

In my case this was big enterprises. Nationwide law firms, banking & fin. tech. institutions, international distribution & logistics companies, etc.

It took a long time to build up to that point and to get access to those parts of the market. The way it worked for me was, early-on, I'd be doing smaller jobs for big companies. Sometimes with another vendor as an intermediary. So, I might work with Boeing or Lockheed indirectly, but I was fastidious about establishing direct personal relationships. Once I hit the media & marketing world, it was the same pattern. Work through an existing vendor of say Pepsi or Nike, and then make direct personal relationships that could grow later for their adjacent or orthogonal needs.

Eventually you have enough contacts and enough of a reputation that you don't need to leverage the credibility of intermediaries anymore.

I don't know that such a path would work for everyone for all kinds of work (everything I ever did was kind of esoteric for its time), but that's what worked for me.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#236

Post by rahimnathwani »

ghaff wrote: post #199
pbhjpbhj wrote: post #193

Earlier quoted context omitted.

Could you explain why you think it's fraud (and where you're from might help too). In the UK there's, for example, a standard "mileage charge" which people tend to claim for driving to a place for work. It's not "the cost of travel" it's an approximate. When a company charges for sending an operative to a site, they pay the operative £10 ph, and charge the company receiving them £100 -- presumably you think that's fr…

I'm not sure it's fraud but it's probably not a good practice. Standard "mileage charges" in the US are actually set by the IRS. I assume it's similar in other places so that's a well-established practice for car-related expenses. I'm not sure how else you would do it as there's no way to directly capture expenses other than fuel. I assume that in most cases billing some standard travel day rate/per diem (perhaps bas…

The mileage charges set by the IRS are for 'computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes', i.e. they're used to work out your tax bill.

There are similar mileage rates in the UK, published by HMRC. They have the same purpose.

The mileage rate you agree with your client needn't be related to those rates at all.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#238

Post by HenryBemis »

HeyLaughingBoy wrote: post #214
csomar wrote: post #148

Earlier quoted context omitted.

Isn't that fraud? You are supposed to charge exactly how much the travel expenses did cost. If you think you should charge for the travel time proportionally to your work rate, then you should do that but have these separate. It's possible a client will ask you for the travel expenses receipts and it would not be nice to show him that there is difference between what you charged and what it did actually cost.

You should expense (to the IRS) what the actual expenses are, but you can charge your client whatever you agree on. e.g., a month ago someone wanted me to travel to their site. Although I didn't end up going, my fee to do that would have been much more than just the travel (6 hour drive to another state) and hotel costs: I also have to factor in that while I'm travelling, those are hours I can't bill to any other pro…

Exactly. Every time I travel for a client they pay for everything, plus the "sandwich & juice" in the airport, taxis/trains to/from home/airport/hotel/meetings AND the hours/days from the moment I exit my home to the moment I reach the hotel. For the return, any minute after 5pm, until I get back home.

I am not willing (in order to be 9am on the client site (in another country) to spend half a Sunday away from home and loved ones for free. I usually charge 1h commute +2h in the airport pre flight + duration of flight + commute to hotel post flight.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#239

Post by Seufman »

Few things:

- Get your accounting in order. Pay a professional to do it; don't try to do it yourself.

- Take care of yourself. You'll probably be flying a lot; don't take the cheapest routes, tell the client it's business at >4 hours in the air, etc.

- I unfortunately get brought into a lot of situations where a CEO / VP is looking for justification in firing someone or making a big structural change. In these cases, it's important to keep in mind that you're working for the person who is paying your fee and to not get hung up on trying to fix the situation. It sucks.

- Charge a lot. Think up the largest number you believe would be reasonable for your services and multiply that by 1.5x. Consultants are supposed to be expensive.

- You'll be amazed by how many people reach out and want to take phone calls to go on fishing expeditions / mine you for free value. The way I deal with this is: A) I ask very pointed questions about what, exactly, they're looking for in an engagement via email before I take a call. If they don't have a compelling need, I decline ("I don't think this is a good fit for me." -> be blunt) and B) I have developed a 6th sense for whether a company can afford me / the project sounds viable. If you have enough inbound, don't be afraid of false positives in turning down phone calls.

- Don't bill hourly. I charge per project on the basis of value; if a potential client fights you on this, reject them.

- Try to get work on a retainer basis. You're being paid to not only do work but to be available -- you're a service provider. This is nice because the revenue "stacks" up and you also get more integrated into the team this way as it frames you as a source of insight / wisdom. If you're using consulting as an entry point into a new role, this is very effective.

- Build something proprietary: an Excel model, some tech, an audit framework, a taxonomy, whatever. Brand it. That's now "your thing" and you can set a market price for it that is divorced from incremental work.

- Build out a proprietary funnel for business: a blog, Twitter presence, whatever. If you have to go find business on your own / do sales, you can't charge as much as when people come to you.

- In general, I think it's good to be skeptical and to err on the side of telling people "no." There are a ton of lightweights / window shoppers / sleazy people out there; get good at detecting them and rejecting them quickly.

- NOTHING IS FREE. You don't pitch, you don't do exploratory onsites, you don't give samples, you don't take "no-agenda meetings," you don't let people "pick your brain." You are a consultant and if people want your insight, they need to pay you for it. Internalize this phrase: F* YOU, PAY ME.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#240

Post by HenryBemis »

juanuys wrote: post #116
gk1 wrote: post #32

Longer write-up here: https://www.gkogan.co/blog/how-i-learned-to-get-consulting-l... Some things I learned through mistakes: - Charge more. - Travel like a professional and bill the client. For my first business trip I used airline points, stayed at an Airbnb on my own dime, and even refused the client's offer to reimburse me. Stupid. (Full story here: https://www.gkogan.co/blog/stupid/ ) - If I'm not enjoying the w…

> fire bad accountants What is bad? What is good? I guess I expect my accountant to be a bit of a financial advisor sometimes, which they aren't.

My first accountant was dangerous. His suggestion regarding cash flow and financial management was "spend the money as you want and we'll figure things out in the end of the year". I prefer to have a "friend", someone who will care for my £€¥$ and will kick my heart butt if he sees I do stupid things. Another comment used the word "advisor". I know that legally there are limitations on what they can propose to you, but better have someone who cares. Otherwise just get something like QuickBooks for a fraction of the cost and use an accountant in the end of the year just for the filing.
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