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Ask HN: consultancy, how to?

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Ask HN: consultancy, how to?

#1

Post by ErrantX »

Hey guys looking for some insights.

Im working full time for a company who dont mind me consulting on the side so long as it is not in business time (win). An ex-university friend has approached me with a proposition to do some websites - he works for an IT consultancy that doesnt do web design but has said it is willing to hand off customers who want sites to him (in the region of 2 or 3 a month). It's a good gig and looking over the specs for the first job he has it looks like a reasonable amount of work.

He wants to split 50/50 - he brings the clients and does the design work pluss some admin etc. I do the site building and technical consults. Again it seems a fair deal because he can bring the serious clients.

Anyone spot a catch? More importantly any advice on how to get set up?

Obviously I will want an actual agreement - would a simple partnership (im in the UK_) suffice do you think?

Also as I am working remotely (though will be paid a day's travelling per job so I can meet clients face to face initially - I feel this is important :)) does anyone have recommendations for tools to collaborate on these specific projects (I will probably use bitbucket for SCM and ticketing etc. so more in terms of communication & work hour tracking).

And finally if your already doing similar work what kind of rate would you expect to be paid for this work (initially we are looking at £25/hr to get initial traction going up to £70/hr as things progress / we get a reputation)? + any other advice :)

Cheers peeps :)

Re: Ask HN: consultancy, how to?

#2

Post by salvadors »

The agreement you have should reflect how well you know the person, how well you trust them, and what the worst case scenario is. I'd suggest you almost certainly want lawyers involved in this part as they can give you a fairly boilerplate agreement that's tailored around the 4 or 5 key questions that you'll need to think really hard about.

Bear in mind that in a partnership, rather than a limited company, you have full personal responsibility for all debts (and not just in the normal course of business: you also need to consider someone suing you, such as disgruntled client). A simple partnership, without an explicit agreement to the contrary, will also include joint and several liability. In other words if one partner were to do something incredibly stupid, all the partners would be liable for up to the full amount owed.

There's no reason why that sort of set-up _can't_ work: there are numerous businesses that run like that quite happily, but you should be sure that you're comfortable with the risks.

Re: Ask HN: consultancy, how to?

#4

Post by demosthenes »

salvadors wrote: post #2

The agreement you have should reflect how well you know the person, how well you trust them, and what the worst case scenario is. I'd suggest you almost certainly want lawyers involved in this part as they can give you a fairly boilerplate agreement that's tailored around the 4 or 5 key questions that you'll need to think really hard about. Bear in mind that in a partnership, rather than a limited company, you have f…

Keep in mind that you can set up a Limited Liability Partnership, which would seem to make a lot of sense in this situation. Liability is limited in the same was as in a Ltd. company, but it differs in how profit sharing is handled. Check with an accountant for details.

http://en.wikipedia.org/wiki/Limited_liability_partnership#U...

Re: Ask HN: consultancy, how to?

#5

Post by mseebach »

The easiest way to handle this when you don't have any investments, no professional liability or other complications, is simply that you set each your own individual sole proprietorship. Your friend, as he handles the administration, bills the client, and you bill him. Your agreement should likely be that you get paid when he does.

This way, if things turns sour, you only stand to lose what your friend owe you - there's no legal entity that you share and might need legal help to dissolve. If you don't trust your friend to make such a setup (even if this particular setup isn't the right one), you shouldn't go into business with him.

Regarding the rate, don't undersell yourself. There's an expectation as to what a professional developer costs (probably way closer to £70/hr than £25/hr), and if you don't meet that expectation (in either direction) you'll experience some friction. You can give a one-off discount, e.g. as a voucher handed out as marketing. Underbidding is for punks with ASP.net for dummies and "Hello world" under their belt, bidding at the actual price is what professionals do. State your rate at what you think you're worth, and be prepared to give a discount if you feel it's the right thing to do. That way the client also feels like he got something.

Re: Ask HN: consultancy, how to?

#6

Post by mseebach »

salvadors wrote: post #2

The agreement you have should reflect how well you know the person, how well you trust them, and what the worst case scenario is. I'd suggest you almost certainly want lawyers involved in this part as they can give you a fairly boilerplate agreement that's tailored around the 4 or 5 key questions that you'll need to think really hard about. Bear in mind that in a partnership, rather than a limited company, you have f…

If you need lawyers at this state, you're doing it wrong (specifically starting up with the wrong person)

Re: Ask HN: consultancy, how to?

#7

Post by eru »

mseebach wrote: post #5

The easiest way to handle this when you don't have any investments, no professional liability or other complications, is simply that you set each your own individual sole proprietorship. Your friend, as he handles the administration, bills the client, and you bill him. Your agreement should likely be that you get paid when he does. This way, if things turns sour, you only stand to lose what your friend owe you - ther…

That seems clean. (I have no experience in legal matters, but the suggestion sounds elegant and simple. Though you might have to look out for taxes, when you do business as two separate entities.)

Re: Ask HN: consultancy, how to?

#8

Post by ErrantX »

demosthenes wrote: post #4
salvadors wrote: post #2

The agreement you have should reflect how well you know the person, how well you trust them, and what the worst case scenario is. I'd suggest you almost certainly want lawyers involved in this part as they can give you a fairly boilerplate agreement that's tailored around the 4 or 5 key questions that you'll need to think really hard about. Bear in mind that in a partnership, rather than a limited company, you have f…

Keep in mind that you can set up a Limited Liability Partnership, which would seem to make a lot of sense in this situation. Liability is limited in the same was as in a Ltd. company, but it differs in how profit sharing is handled. Check with an accountant for details. http://en.wikipedia.org/wiki/Limited_liability_partnership#U...

Yes this is vaguely what I was thinking too (I have taken this LLP before).

From the other comments (bar one) it seems to be an ok approach so that makes me more confident :)

Re: Ask HN: consultancy, how to?

#9

Post by ErrantX »

salvadors wrote: post #2

The agreement you have should reflect how well you know the person, how well you trust them, and what the worst case scenario is. I'd suggest you almost certainly want lawyers involved in this part as they can give you a fairly boilerplate agreement that's tailored around the 4 or 5 key questions that you'll need to think really hard about. Bear in mind that in a partnership, rather than a limited company, you have f…

Thanks. In terms of trust, well, I trust him enough to go ahead (certainly I know he wont deliberately screw me) but perhaps would like to have some form of legal entity or fallback in case things go sour.

I dont forsee it at all but it's not a partnership that I would happily walk into w/o any agreement - if that makes sense (there are some friends I would do so with).

Thanks for the advice.

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