Ask HN: consultancy, how to? • Hacker News Board

Re: Ask HN: consultancy, how to?

#31

Post by chollida1 » Fri, Jun 19, 2009, 5:40 PM UTC

mseebach wrote: post #27

chollida1 wrote: post #20

Earlier quoted context omitted.

Couldn't disagree more. The reason we have lawyers look over documents is that they write these types of documents everyday and they can tell if you've missed anything. This comes in handy when a dispute arises or some other unforeseen event. Joel talks about this on the Stackoverflow podcast when they discuss using a lawyer to review the FogCreek office rental agreement. The gist of it is that when lawyers talk abou…

> Joel talks about this on the Stackoverflow podcast when they discuss using a lawyer to review the FogCreek office rental agreement. This is not a rental contract, that the ability of 100 (?) employees to their job rests on. If Joel gets to the Fog Creek office one morning and finds the locks changed, he looses thousands of dollars a day - and not just his own money, that's money that he already owes in wages and so…

> These two guys are doing some contracting on the side. There are no investments and no liabilities. Their worst case scenario is walking away, not talking to each other, maybe disputing a few $1000. Doing ten rounds with a lawyer (there's really no boiler contract that can cover every conflict two friends working together might encounter) easily costs that, AND then you'll still have to go to court to enforce the contract.

Well then we disagree. This contract would require about 2 hours from a good lawyer. At least when I entered in a similar partnership with a friend that's what we spent.

I'm more thorough/cautious than you. All that means is that you and I are unlikely to do business with each other:)

Re: Ask HN: consultancy, how to?

#32

Post by lionhearted » Fri, Jun 19, 2009, 11:24 PM UTC

Hey Errant - not sure if you're still following this thread, but you got a hell of a lot of some bad advice.

Most people are really "mine mine mine!" oriented, they're telling you be careful of the split, watch out for getting filched, etc. That's all well and good to some extent, it sucks to be burned. But you're doing services work - there's not too much you stand to lose later.

I'd recommend you don't mess things up going for a slightly uneven split, or overkilling the details. Like mseebach recommended, going sole proprietor is good for low liability. After that, don't kill the goose that doesn't exist yet. Getting experience in business and consulting while making cash is a good thing. If you make 10,000 GBP over the next year doing this on the side, and technically you maybe could've should've gotten 12,000 GBP - who cares? Trying to get a 35/65 split, or overhashing details means the project won't get off the ground. If it's a stellar deal for your partner - even better, he'll be motivated to get you a lot of work. If it turns out to be a bad deal for you, you can move on later.

My advice would be different if you'd be building significant assets or investing money. But you're doing services - just get going. I'm guessing a lot of the people who say, "Charge more! Get more of the split!" aren't really big winners in life. No disrespect to them, but we're talking about grabbing at pennies here. Just getting into business is the most important part - be as amicable and easygoing about it as possible. Yeah, there's a good chance it'll end poorly someday, as most partnerships do. But hopefully you'll get good experiences, make some cash, and most importantly, learn a heck of a lot in the process. Don't sweat the pennies, getting into action is where you get paid now, and learn what you need to get paid even more later.

Re: Ask HN: consultancy, how to?

#33

Post by ErrantX » Sat, Jun 20, 2009, 8:48 AM UTC

lionhearted wrote: post #32

Hey Errant - not sure if you're still following this thread, but you got a hell of a lot of some bad advice. Most people are really "mine mine mine!" oriented, they're telling you be careful of the split, watch out for getting filched, etc. That's all well and good to some extent, it sucks to be burned. But you're doing services work - there's not too much you stand to lose later. I'd recommend you don't mess things…

Thanks - as you say the split is something Im not worried about. The income generated will be about £1500 a month for me (based on the current work lined up - should be sustainable) which is about a third of my current salary. The idea is this will be my savings money so it's not "on the line" in terms of need. I have nothing invested (and am very easy going anyway) so I cant see the downsides.

I could probably get a 60/40 split but the other guy would be a bit miffed (it's his baby and he is all enthusiastic). The money I get seems pretty fair for my time (even if it seems extremely generous to him) so.... :D

I think the impression I got is he is looking for this to be the start of his "something big". Essentially I am helping him get that off the ground - the deal is if it is "big" and turns into an actual company employing more programmers I will be leaving with a pay off for my initial "investment of time" (that figure is still to be agreed on - but will be) as I have a career to pursue anyway.

I cant see the downside to a couple of years doing this for income on the side - it's all good experience :D

Thanks for your comments! You've made me confident I am doign the right thing :D

Re: Ask HN: consultancy, how to?

#34

Post by ErrantX » Sat, Jun 20, 2009, 8:49 AM UTC

access_denied wrote: post #30

lp456 wrote: post #21

Earlier quoted context omitted.

5% for an introduction? If I'm understanding this correctly he's selling and designing. The sale alone is worth 25%. Now I'm not saying 50% makes sense but 5% is incredibly low for a sale of anything (even if your cashmart). Agree on all other points.

Here in the german advertising scene the standard comission for an "successful recommendation" is about 15% no questions asked.

We have decided to pass on e-commerce work to another company (despite some of it being in the 10's of thousands) who have signed an agreement to pay 15% commission. So I think that is fairly standard all round.

Re: Ask HN: consultancy, how to?

#35

Post by ErrantX » Sat, Jun 20, 2009, 8:53 AM UTC

CyberFonic wrote: post #16

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…

Having read the all the suggestions, this is the one I'd recommend. Partnerships are more bother than they are worth. There are a lot of IF's: If he brings in the business. If he does a "good" design. If he manages the client and responds to his calls. If he pays you on time. If he brings in clients that pay at the top end of the scale. Then he might be worth 50%. My impression is that your friend is trying to profit…

the split of work isnt 50/50 but I dont think the money split is unfair.

or rather the amount I will be getting is fair for my time - he is getting a LOT for his time but it is him with the emotional investment - I can walk away he wants this to be his career.

At the end of the day the split isnt my biggest concern so long as I get paid a fair amount for my efforts (probably what I would be paid were he just contracting work to me anyway). The main benefit of doing it "together" (under some kind of agreement) is that in the future if it becomes a full company I will be leaving (as I have a career) we have agreed that part of our signed agreement will include a pay off for me (probably in the region of a percentage of the first 2 years income - he said 50%.[lets split 50/50 all the way]... which seems very high :P)

Anyway - thanks for the comments. Im sold on this approach over an LLP so I'll pitch it to him in our meeting next week :D