Consultancy Fees for a Someone Who's Not a Consultant?
Discussion
A small manufacturing business has contacted me based on my previous employment in a fairly niche industry and asked for my help in building their procurement and supply chain. They want to move from sub 1000 pieces to 2-3000 pieces per year in a strategic growth model but would like my contacts and experience to enable them to do this.
The first problem is I have another full time job; however, I'd love to be able to help them as it's a great product and a space in which I enjoy working in so I'll try to squeeze it in on evenings and weekends.
The second problem is that I've never done consultancy, have no idea what I should charge and not much of an idea how long it will take until I really delve in and see the business plan and future development strategy. I expect it would be at least 6 months work. Within the space I work in (procurement and supply chain) many day rates for experienced hires and managers are £400-£600 a day.
Any advice would be welcomed.
The first problem is I have another full time job; however, I'd love to be able to help them as it's a great product and a space in which I enjoy working in so I'll try to squeeze it in on evenings and weekends.
The second problem is that I've never done consultancy, have no idea what I should charge and not much of an idea how long it will take until I really delve in and see the business plan and future development strategy. I expect it would be at least 6 months work. Within the space I work in (procurement and supply chain) many day rates for experienced hires and managers are £400-£600 a day.
Any advice would be welcomed.
If it's a significant piece of work then I don't see any way that you can do a good job by squeezing it into evenings and weekends. And as above, that would almost certainly impact the quality of your day job.
Only you know your circumstances, but it seems that you've got a great opportunity to build your skills and CV by taking on something potentially exciting and new in a relatively low-risk way. If there genuinely is six months' work there then I'd open up a negotiation with the business to see how genuine they are about using and paying for your experience (and make sure that it is your experience they want, not your contacts) and then if it all stacks up, jump in with both feet.
Only you know your circumstances, but it seems that you've got a great opportunity to build your skills and CV by taking on something potentially exciting and new in a relatively low-risk way. If there genuinely is six months' work there then I'd open up a negotiation with the business to see how genuine they are about using and paying for your experience (and make sure that it is your experience they want, not your contacts) and then if it all stacks up, jump in with both feet.
There's two ways you can approach it.
The first is to agree a day rate and the number of days needed to do the work. The day rate is really up to a combination of what you feel you're worth, what they're willing to pay and the market rate. For this they would likely require you to time sheet the work so you will need to determine minimum charge time per day (quarter day, half day, etc.).
However, if you can, I would try to work on a lump-sum basis. You work out the days you need and the price per day. The sum of this is the total fee and is up to you to provide the work within that limit regardless of the actual time you spend. So if you need 50 days but do it in 30, you're quids in... but if you end up spending 70 days, your day rate will suffer. But is a lot less bother and no need to time sheet.
Check payment milestones and key dates before you commit.
The first is to agree a day rate and the number of days needed to do the work. The day rate is really up to a combination of what you feel you're worth, what they're willing to pay and the market rate. For this they would likely require you to time sheet the work so you will need to determine minimum charge time per day (quarter day, half day, etc.).
However, if you can, I would try to work on a lump-sum basis. You work out the days you need and the price per day. The sum of this is the total fee and is up to you to provide the work within that limit regardless of the actual time you spend. So if you need 50 days but do it in 30, you're quids in... but if you end up spending 70 days, your day rate will suffer. But is a lot less bother and no need to time sheet.
Check payment milestones and key dates before you commit.
Agreed, take your time - have a look at the work load then get a good idea by asking them first what their budget is for this.
Last thing you want to do is charge £200 per day and they tell you that’s great as they were expecting it to be double that!
Sounds like a great gig especially if you enjoy that sector.
Last thing you want to do is charge £200 per day and they tell you that’s great as they were expecting it to be double that!
Sounds like a great gig especially if you enjoy that sector.
I work with SMEs for, say, one day a week, or four days per month over a long term. For those, I'm around £450 - £500 per day.
I also do short-term projects, again for SMEs, which may require three or four days per week, but only for a month, or two or three. For those, I tend to be around £500 to £750 per day.
I'm not a 'consultant', though. Rather than telling them how to do the job, I actually do the job. I'm a temp, I suppose.
I also do short-term projects, again for SMEs, which may require three or four days per week, but only for a month, or two or three. For those, I tend to be around £500 to £750 per day.
I'm not a 'consultant', though. Rather than telling them how to do the job, I actually do the job. I'm a temp, I suppose.
Al Gorithum said:
I'd be inclined to ask them what they're offering to see if it's worth your while. My consultancy fee is £1500+vat per day.
Reading the OPs post, it looks like his skills are in Manufacturing Engineering. Maybe call it Manufacturing strategy? I'm.a Chartered Manufacturing Engineer, and Six Sigma Black belt, and work freelance as a consultant.
Typical rates tend to be £35 to £45 an hour. Outside IR35.
Panthro said:
Thank you all for the advice. I assume I'll need to set myself up as a limited company too?
No, you can operate as Sole Trader (or even a Pertnership, but that's probably not relevant) which means you register for Self Assessment. You might want to engage an accountant for pointers about how to keep records & have a think about registering for VAT, although that does depend on how big a deal this consultancy is going to be. Insurance might be wise (Public Liability & maybe Professional Indemnity) & don't forget to make sure your car insurance is Business Class 2. Think about a separate email account - gmail looks a bit more professional than Hotmail. Your own domain name might be going a bit far at this early stage.https://www.contractoruk.com/
https://www.caunceohara.co.uk/
Panthro said:
Thank you all for the advice. I assume I'll need to set myself up as a limited company too?
Depending how much you expect to turn over. There are 2 advantages to limited.
If you are salaried elsewhere, you can take the net profit (after 19.5% corporation tax) as Dividend.
And limited liability. So you may not need professional indemnity insurance. But you might need public liability insurance. But Often contracts say you have to have it.
As I eluded to in a private message, if the income is not needed right now, you could keep it in the LTD company, and pay it out at a later date, or pay it into a pension (depends on your age, but I'm 54 and I can see that would be a good idea)
There are downsides to limited too, because self assessment is easier to do in my opinion, so you end up paying an accountant.
Doofus said:
I'm not a 'consultant', though. Rather than telling them how to do the job, I actually do the job. I'm a temp, I suppose.
A consultant can be many things on the consulting spectrum from a pair of hands at one end as you describe to a strategic advisor at the other end and many steps in between.craigjm said:
Doofus said:
I'm not a 'consultant', though. Rather than telling them how to do the job, I actually do the job. I'm a temp, I suppose.
A consultant can be many things on the consulting spectrum from a pair of hands at one end as you describe to a strategic advisor at the other end and many steps in between.I'm well aware of that, thank you. That's why I put it in inverted commas. I'm not what most people think of as a consultant.
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