so you want to be a consultant? the pros and cons of being independently (un)employed robert krten...

So you want to be a consultant?The Pros and Cons of Being Independently

(un)employed

Robert KrtenIron Krten Consultingwww.ironkrten.com

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Kr10Iron Krten ConsultingSecure, embedded software architecture and design services.

www.ironkrten.com/TechTuesday

In case you want to follow along…

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Everything you ever wanted to know about consulting…

• Is consulting right for me?

• Why are you a consultant?

• What are the benefits?

• What are the pitfalls?

• Why hire a consultant?

• How do I get started?

• What do I need to know?

• How much can I make?

• How do I find work?

• How do I negotiate a contract?

• Do I need a lawyer?

• Do I need an accountant?

• What’s the most difficult contract you’ve ever had?

• Do I need to be an entrepreneur?

• Should I get a domain name?

• Should I get business cards?

We’ll touch on these points throughout the presentation

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My Background• 3 years in startup / small company

• 18 years of consulting• 5 years of employment (it didn’t take)

• Back to consulting (1½ years and counting!)

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The Pros and Cons

Consulting – is it for you?

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Green Grass• The grass is always greener on the

other side:– I don’t like my current job, so I’ll be a

consultant!

– This consulting thing is easy!

– You guys are overpaid!

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Changing Conditions• You may not necessarily want to be a

consultant, but:– You can find only contract work– You may want to work only part time

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Why consulting?• Freedom

– Not limited to just one company, one product, one industry

• Creativity– You are your own boss

• Money– If you’re good at it and keep your pipeline

full, there’s decent money to be made

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Why not consulting?• Lack of stability

– Where/when is the next paycheque?

• Cashflow– Do you have cash reserves?

• Stress– Does this keep you awake at night?

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Why not consulting?• Always looking for work

– I love interviewing; do you?– Engineers are introverts – exactly the

wrong personality type– Networking, networking, and more

networking!– Dealing with rejection on a monthly basis

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Why not consulting?• Business Management

• You are the:– Marketing department– Sales department– Accounting department– Bill collector– Legal department– Chief bottle washer

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Why not consulting?• Work / Life Balance

– It’s easy to become a workaholic, because you can monetize every waking hour.

– Should you? Probably not.

– Can you resist? Depends on your personality.

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Getting Hired

What do you bring to the table?

Are you a consultantor a contractor

(or both)?

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As a consultant…• Specialized, concentrated knowledge

• Strong expertise

• Short term requirement

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As a contractor…• Term employment

– Avoids commitment from company– Not “headcount” (more like staples and

paperclips)– Different budget

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Getting Started

Or…Show me the money!

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Business Plan• Like any business, you need a plan:

– Expected revenues– Expected expenses– Long term budget items– Capital costs– … it never ends– Maybe you’ll even have profits!

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Business Plan

Revenue

SalaryDividends

Benefits

MedicalDentalRRSP

Employee / Owner(s)

Operations

Computers

Software

Supplies

Electricity

Marketing

Ads

Acct/Legal

Business

Taxes

Payroll

HST

Corporate

Government

$12k/y$100k/y($75k net)

$9k/y$9k/y

$100/h

$25k/y

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Business Plan

Revenue: $100 / hour 1,725 hours / year = $172k / year @ 80% occupancy = $138k / year

Expenses: Salary = $100k / year Benefits etc = $12k / year Operations = $18k / year = $130k / year

Corp Profit$8k / year

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Business PlanRevenue:

$100 / hour 1,725 hours / year = $172k / year @ 95 % occupancy = $163k / year

Expenses: Salary = $100k / year Benefits etc = $9k / year Operations = $12k / year Taxes = $12k / year = $133k / year

Corp Profit$30k / year

More profit due to higher occupancy, lower benefits and lower operations costs. Note that we pay taxes now

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Rule of Thumb• Generally speaking:

$X,000 / year=

$X / hour

You can adjust this formula +/- 15% depending on your industry, qualifications, market conditions, etc. If you need to adjust it more, you should revisit your business model calculations.

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Fixed Price• Hourly

– You get paid by the hour when you work

• Fixed Price– You get paid when the job (or certain

milestones) are completed

• Tradeoffs

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Agency vs Direct• Agency generally takes a cut

– Usually 15% – 33% (or more of total)– Some large corporations deal with

agencies only

• I’ve worked with one agency in my life; the BNR contract of ’94

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Setting up your BusinessNext steps:

•Business registration (incorporation)•Legal representative•Accounting representative•HST number•Website•Business Cards•Banking (current account, credit cards)•Phone•Advertising

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Business Registration• Why?

– Protection (corporation, not you, signs contracts)

– Some companies deal with corporations only, not “sole proprietors”

– Tax advantages

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Professionals• Lawyer

– Read your contracts!– Keeps you out of trouble

• Accountant– Manages your affairs with the government– I don’t like accounting, so I farm it out

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Advertising

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Contract Negotiations• Read the contract

• Have your lawyer read it

• Have your lawyer explain it:

…shall indemnify and hold harmless against any and all…

…vendor warrants……does not infringe…

…vendor certifies that… …irreparable harm …

up to the value of the contractknowingly

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Contract Negotiations• Read the contract again!

• This time:– Is it balanced?

• “we can cancel the contract on 5 minutes notice, but you can’t quit”

• “you can’t work for anyone else while you’re working for us”

– Are you properly compensated?• “we own everything you ever produced, will

produce, or think about producing”

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Contract Negotiations• If stuck, negotiate:

– You are the business owner– You are the one who makes the decisions

about your end of the bargain

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Summary• Is consulting right for you?

• What do you need to do to become a consultant?

• As a business, why would you hire a consultant?

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Questions?• I Am A Consultant – Ask Me Anything

• (a la reddit’s AMA forums)

• This slide deck:www.ironkrten.com/TechTuesday

so you want to be a consultant? the pros and cons of being independently (un)employed robert krten...

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