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Suggestions for starting your own consulting firm

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On 6/9/2016 at 7:51 PM, jijir83 said:

Previous response said it best.

Legal, accounting, insurance should be priorities. I've been there with the incorporation, website, logo etc... not worth the money now. Get some nice and clean business cards, build up your LinkedIn profile with work samples and past projects, and do a lot of networking to get jobs. Cities, municipalities, freelance websites, non-profits etc...

The only reason you need a website is to send someone to look at your work. Some people don't have LinkedIn so if you have the time and skills, build one. Paying someone will cost you and it's not something that will come up in common search. Marketers and Google will say they can make it happen. Don't take the bait.

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what do you mean by legal? accounting won't be needed since I won't have much work at first...from my understanding i think all I need is business cards..is that correct?

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You don't need business cards either.  I wouldn't worry about legal or accounting until you make a sale.

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Legal: Get council. It might sound like an expense you don't need now but when you get sued, and you will get sued, (I'm not being pessimistic), then you'll be happy you did. A lawyer who deals with and understands contract laws and your type of work is an asset. Most of them are sole proprietors as well so they know what you need to setup to be in compliance with your state, fed, clients etc...

Accounting: Get a proper accountant. Filing turbo tax on your own will save you money until you get audited. A good accountant will help you with paying as little as legally possible but be in compliance with the state and fed.

Insurance: The lawyer can help you with this as well. They have liability insurance for themselves. And yes, we all think we won't get sued until we do.

Basically you want to cover your ASS-ets and your personnel assets. And those 3 people help you with that even before you start dealing with clients. They might have a way for you to ramp up to these coverages as your business grows so you don't spend all that overhead without yet having any work. For example, it might be ok to be a contractor, you might be able to give people a waiver with specific language that covers you and they can't come after you once that risk is shifted to them. I'm speaking from personal experience. I did a project once and wrote the contract myself in English and French because those are the languages my clients spoke even though they are in the U.S. I had it looked over by a lawyer and when people wanted to contract with us, I explained the terms to them and the contingencies then had them sign the contract with the lawyer in person after it was explained again. Sure enough 2 a-holes threatened to sue when things didn't turn out the way they wanted and claimed they didn't understand the terms. I said go ahead. That was 4 years ago. Had I listened to my partners on this project and went at it like a 'trial' or hobby, life would be quite different right now.

Maybe you don't want to pay the 100+ hourly rate that a lawyer will charge to tell you this, but there are resources. A lot of cities have business councils, chamber of commerce.... I don't remember the names exactly. In MA we had 'SCORE Mentoring'. I met with one retired businessman on there and he's the one who warned me about this stuff. You can find people who have done what you want to do and willing to advise/mentor you on how to go about it.

The point is, you need some business cards, somewhere cheap people can go to ponder on your experience and services, and those 3 things listed above. Because, as soon as someone calls with a job offer, you better be prepared to say yes and not stall.

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27 minutes ago, jijir83 said:

Legal: Get council. It might sound like an expense you don't need now but when you get sued, and you will get sued, (I'm not being pessimistic), then you'll be happy you did. A lawyer who deals with and understands contract laws and your type of work is an asset. Most of them are sole proprietors as well so they know what you need to setup to be in compliance with your state, fed, clients etc...

I'm curious about @willsee's take on this.  Isn't the primary goal to establish a well-known client base where clients are somewhat familiar with your quality of work?

I will say business cards are super cheap these days. I see offers for free bulk quantities.  It can't hurt to have something with your name, number, and email/website on it. If even very basic.

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My take is I wouldn't spend money on it until you get a client.  You can spend 3-6 months pounding the pavement looking for a client to say yes before you need ANY of that.  What if you spend $5,000 setting all of this up, then hit the streets and realize no one likes you or wants to do business with you, or you realize that going door to door and dealing face to face with clients isn't your cup of tea.  I would spend that money on coffee, bagels, donuts, lunch, dinner, beers, whatever

Half the engineers in my city don't have a website or business cards, I doubt anyone has even looked at my website (it was under construction most of the time)

 

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Notice the civil engineers going "legal" in their responses. And the other disciplines "I wouldn't bother". The nature of our work is liability heavy. We've learned from others and our own experience. Most of us also had to take a least 2 law courses in college. So yeah... as an EE and the type of work he's plan on doing, then maybe he's fine.

Also, where you are makes a difference. I don't do anything on the East Coast or West Coast without understanding the legal implications. I also wouldn't work for a client in those places without doing the same. The things people pull is ridiculous. Ignorance of the law is not an excuse. So maybe anywhere in between you're a bit more comfortable giving it a try. People might be more understand and look at it more like a rapport and long term collaboration.

1) I would not build a website if I didn't have the skills to do it myself or have a friend do it. I have done it for myself and others. Simple place to park your info because not everyone you deal with has LinkedIn. Mailings and face-to-face networking works too. There are a bunch of "resume" style cheap websites out there as well. Ok... so that's maybe 100 bucks for some cards, some paper with your info and resume style site.

2) I wouldn't start an LLC. Even when you create it through Harvard Business in Delaware, you still have to pay taxes to your state as an out-of-state corporation or whatever. I don't remember the details exactly but I remember still owing yearly taxes to the state and registration fees blah blah blah. But I'd talk to an accountant and a lawyer about what I plan on doing and how to approach my taxes the next year. They're happy to talk when they think you'll bring them the taxes to file. Which I would. If you're working under the table and the client is happy to not report it, that's one thing. But remember, the client probably has a business. The services that he hires you to do helps him with his deductions/losses. He will list them as his "loss" when he files his taxes for his business or company. A lot of states now are requiring that the solicitor of services gives a form to the contractor/engineer in this case to basically say "yes, I did this work for X amount". Some clients don't know that. This used to go unnoticed by the IRS and local revenue but now they're trying to cash in. So, your client says he paid you to get a deduction but you forgot to file it on your taxes, tried to go cheap or not report, then there you are. Getting some advice from an accountant and paying them around tax season to do your taxes saves headaches. Oh... and those business cards count as deductions. Sure, you can do your taxes yourself as you build up work and claim things yourself. But that's also one of the flags in IRS system to put you on their audit list.

3) I wouldn't hire a lawyer. But I'd consult with one. Even if it costs me $200 for an hour of their time, once I do some research to come up with some good questions, I'd do it so I know what I'm getting myself into. Like I said, there are other ways for free legal advice related to a business startup.

4) I wouldn't buy insurance but I'd ask the lawyer about it and the implications etc... The type of work you will dictate if you even need insurance or you can decide that the risk is low.

What I'm saying is that he has to understand his obligations, liabilities, and protection options for the kind of business he's going into. A lot of people get jobs from clients all over these days from freelance, non-profit sites, etc... You need to have a sense of what that implies within your state limits and when you cross borders.

In any event, what I'm suggesting will cost him nothing other than a few hundred dollars and a week of his time. But sure... we all have different approaches to dealing with things. Some of us are luckier than others. Risk is all relative. It's what you can handle until you realize that you can't. ;) I'm sure @MM2 will figure out what works best for him. It's been done before.

 

 

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We've probably had several hundred of these themed threads the last 10 years but no one ever comes back and gives us the 411!

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8 minutes ago, Road Guy said:

We've probably had several hundred of these themed threads the last 10 years but no one ever comes back and gives us the 411!

There are two guys in our town that started their own firm (civil & structural) about a year back. Their prices started out real low and no one could touch them, they got just about every job they bid. The last two months we won three jobs in a competitive bid against them so they must be raising their prices. Might be strategic or reality kicked in with some high overhead costs they had to cover. They do decent work but since they don't have me they are obviously inferior to our firm for structural services.

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21 minutes ago, Road Guy said:

We've probably had several hundred of these themed threads the last 10 years but no one ever comes back and gives us the 411!

Everything I'm saying is based off of what I've done the last 18 months with my own company.

I've talked to numerous people in my town about starting their own thing but they get so hung up in the details (lawyers, accountants, website, business cards, blah blah) that they never go do the #1 thing...GET CLIENTS.  It's easier to mental masterbate about starting a business instead of going and doing it.  That's why I said skip all of that other stuff and see if the posters have what it takes to actually go door to door and sell themselves and get a buying client.  If no one wants want they have to sell, it's all a wasted exercise.

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On 6/16/2016 at 11:53 AM, MM2 said:

what do you mean by legal? accounting won't be needed since I won't have much work at first...from my understanding i think all I need is business cards..is that correct?

So have you started yet

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I just got off the phone with my insurance agent regarding liability insurance. He said most architects/contractors will not use you unless you have million dollar policy. The price goes way up if you do work for condo associations due to their high percentage of lawsuits. He has a client that is still in litigation from the 2004 hurricanes. The attorney fees have topped $200,000 so it was a good thing he had insurance. Insurance is based off volume but here in FL it starts at $2,500 per year for civil engineers and starts at $5,000 a year for structural engineers. I'd need to do a decent amount of work to cover that. It makes moonlighting on the side pretty tough to swallow.

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On 9/8/2016 at 10:09 PM, SE_FL said:

I just got off the phone with my insurance agent regarding liability insurance. He said most architects/contractors will not use you unless you have million dollar policy. The price goes way up if you do work for condo associations due to their high percentage of lawsuits. He has a client that is still in litigation from the 2004 hurricanes. The attorney fees have topped $200,000 so it was a good thing he had insurance. Insurance is based off volume but here in FL it starts at $2,500 per year for civil engineers and starts at $5,000 a year for structural engineers. I'd need to do a decent amount of work to cover that. It makes moonlighting on the side pretty tough to swallow.

Is what he said true?  He is an insurance salesman....

I have a $1MM / $2MM policy, I am electrical so my policy is about $2,000 a year and based off of fees (including my subs).  I've had a couple of clients ask me for my insurance policy but not all of them.  But if you could do $50,000 a year on the side at $150/hr is around 300-350 hours a year. 

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