Reply to: How to structure and run a new consultancy?

[tomtomagain]

Situation: myself and 2 other contractors have recently had our contracts not renewed by the end client because the central IT dept we work for has had its budget cut. The 3 of us were in effect the only IT team.

Interesting thread with some good robust advice.

There's one other factor that I didn't see anyone mention but I think is worth throwing in.

THE CLIENT DOES NOT HAVE ANY MONEY.

They've just slashed their IT team. There may possibly be departments that "Need" IT work .... but how do you know they have any money?

I "need" a new car ... but I ain't getting one for a six months 'cos I'm skint.

Company director says to IT director : "Save money. Get rid of your contractors. "

Marketing director isn't just going to then re-hire the same 3 guys on the same rate.

[northernladuk]

I had to read that post twice then...

[kaiser78]

It it was my spouse, going down well wouldn't be a problem at all.

I had to read that post twice then...

[Lance]

Just use A B And C shares and declare dividends according to how much each of you bills the client, less some agreed amount to pay the accountant etc.

Isn't that going to fall into settlements legislation?
Or be classed as an MSC?

[Lance]

I'd say that it's the other way around, the dev guys have to accept that without the sales guy they have no money coming in.

I think we're saying the same thing.

Let's be clear though. This was an example I've seen work and not what the OP was looking at.

[SueEllen]

I'd say that it's the other way around, the dev guys have to accept that without the sales guy they have no money coming in.

I've been to some entrepreneur networking groups. There are some brilliant IT ideas out there but you will never have heard of them as for some reason some people in IT don't understand the importance of marketing and sales.

[MrMarkyMark]

I'd say that it's the other way around, the dev guys have to accept that without the sales guy they have no money coming in.

Yep, the technical solution / people can be smarter than feck, but without any marketing, strategy and sales man you are going nowhere fast.

Lets just say I have an insight to what someone else is involved in and sometimes has my input too

I should add this is in the context of actually growing a business, not just getting a few BOS in a couple of places (got the T shirt for that one somewhere).

[Antman]

the only time I've seen anything like this work is when each person has very different skills.
EG. A techie, a salesman and a PM. The salesman will never do billable work and the other 2 have to accept that their work is paying for him.
As other have said, the reason it doesn't work and usually fails is over sharing of workload and cash.

You'd also need some very good legal documentation and seriously consider what each of you want to achieve long term. I imagine you've not thought much further ahead than the next 6 months when 6 years is the minimum sort of timeline for an agreed plan.

I'd say that it's the other way around, the dev guys have to accept that without the sales guy they have no money coming in.

[northernladuk]

Just use A B And C shares and declare dividends according to how much each of you bills the client, less some agreed amount to pay the accountant etc.

As long as you can charge at consultancy rates you'll have twice as much money anyway, so no point in bickering about the pennies

Riiiight.. So his current client that pay for them already are going to engage them on twice as much to carry on working for them with no business offering except to fill some more seats up with bums.... Right on.

[hugebrain]

Just use A B And C shares and declare dividends according to how much each of you bills the client, less some agreed amount to pay the accountant etc.

As long as you can charge at consultancy rates you'll have twice as much money anyway, so no point in bickering about the pennies

[ladymuck]

Deja-vu all over again

I feel I've seen this question before

Always good to get a second opinion

[SueEllen]

It sounds like they're using it as a vehicle to enable the business that they've near enough secured (hence no salesman needed). Legal documentation is a must, but if the company is simply an entity through which they have to operate, then they don't need a salesperson - it's still a case of discussing the proposal with an accountant to establish what the simplest and/or best options are.

Businesses who rely on one client end up going bust.

I learnt that temping in an import/export department just out of university.

[LondonManc]

the only time I've seen anything like this work is when each person has very different skills.
EG. A techie, a salesman and a PM. The salesman will never do billable work and the other 2 have to accept that their work is paying for him.
As other have said, the reason it doesn't work and usually fails is over sharing of workload and cash.

You'd also need some very good legal documentation and seriously consider what each of you want to achieve long term. I imagine you've not thought much further ahead than the next 6 months when 6 years is the minimum sort of timeline for an agreed plan.

It sounds like they're using it as a vehicle to enable the business that they've near enough secured (hence no salesman needed). Legal documentation is a must, but if the company is simply an entity through which they have to operate, then they don't need a salesperson - it's still a case of discussing the proposal with an accountant to establish what the simplest and/or best options are.

[Lance]

the only time I've seen anything like this work is when each person has very different skills.
EG. A techie, a salesman and a PM. The salesman will never do billable work and the other 2 have to accept that their work is paying for him.
As other have said, the reason it doesn't work and usually fails is over sharing of workload and cash.

You'd also need some very good legal documentation and seriously consider what each of you want to achieve long term. I imagine you've not thought much further ahead than the next 6 months when 6 years is the minimum sort of timeline for an agreed plan.

[northernladuk]

That will go down well, with one of the contractors at least.

It it was my spouse, going down well wouldn't be a problem at all.