Monthly Archives: February 2017
When dealing with individuals or small companies, an Engagement Letter may make more sense than submitting a formal proposal or quotation.
It also makes it easy for the client to buy – no purchase order is needed – just sign the letter. For this reason, Engagement Letters are widely used by attorneys and accountants.
Such was the approach I recently suggested to my Apple computer consultant. Yup, I finally decided to move on from the old XP machines that have served us so well.
After getting our new computers up and running, we talked a little shop. New to consulting, he had some questions – and frustrations. One was getting paid. Been there – done that 🙂
After the work was done, he would submit an invoice. Terms were net due, but many were taking 60 days or more to pay. One client was even arguing about work completed.
So I suggested an Engagement Letter, combined with an advance deposit. My accountant has used this method for years (although no deposit.) I recently needed some legal help, and my lawyer did the same.
Here is a sample. It is based on my standard quoation/proposal described in an earlier post.
123 Main Street
We appreciate the opportunity to work with you regarding your new Apple computer system.
In order to ensure an understanding of our mutual responsibilities, we ask our clients to confirm the following arrangement:
Tasks: Consultant will perform the following (on-site as needed):
— Discuss needs and recommend system configuration
— Arrange for purchase of hardware and software (to be paid directly by client – not consultant)
— Install Windows as a virtual machine, and port data to new computer
— Install virus and backup software
— Set up e-mail accounts
— Provide basic training and answer questions
Additional services can be provided for additional fees.
Schedule: By mutual agreement.
Budget: $XXXX, based on 16 hours. Please note this is not a fixed price proposal. Actual time and expenses will be billed. Budget will not be exceeded, however, without client approval.
Payment: $1000 deposit, with remainder due upon completion of above tasks and presentation of invoice.
If the foregoing agrees with your understanding, please sign the enclosed copy of this letter and return it to our office. Thank you.
Joe Consultant Date
PLEASE SIGN ON THE LINE BELOW THAT YOU HAVE READ THIS ENGAGEMENT LETTER AND AGREE TO ITS TERMS.
John Client Date
Policy Statement & Business Practices
Our clients often have questions about our business practices and policies. This document addresses common questions. Our intent is to help you understand our practices, so that we can better serve your needs.
Rates -Our rates are $XXX per hour ($XXXX per eight hour per day), plus expenses. On-site time is billed portal-to- portal while office time is billed at our regular hourly rate.
We do not charge a premium for overtime, night shift, weekends, or holidays. Our rates are subject to change, but engagement letters or purchase orders received within the quotation validity date will be honored as quoted.
Expenses – All expenses incurred for the client will be billed at actual cost, with no markup. Consultant will not purchase hardware or software. Client will pay vendors directly.
Travel – Travel time is charged at our regular rates, as follows:
-Local – No travel charge for full day consultations. For less than a full day, time will be billed portal-to-portal.
-Out of town (Air Travel) – One full day labor is added to consultation fee for travel within the contiguous 48 states.
Travel expenses will be invoiced at actual costs. We normally make our own travel arrangements, but if made by client, they are subject to our approval. We normally purchase “no-penalty” coach airline tickets.
Quotations – Quotations are valid for 60 days, unless otherwise stated. All quotations are budgetary – not fixed price – and actual time and expenses will be billed. The quotation will not be exceeded, however, without client authorization.
Terms – We can proceed upon receipt of a signed engagement letter or purchase order and a $1000 deposit for clients with established credit. Balance due upon completion and presentation of invoice. We accept checks, credit cards, or bank transfers.
Confidentiality and Non-Disclosure – All client information and communications are held in strict confidence. Client Non-Disclosure Agreements to this effect are normally acceptable, provided they do not contain clauses restricting our right to do business with others.
In addition, client names are not released without prior approval , nor do we use client names in our marketing materials.
Certifications and Insurance – If information disclosure, certifications, or insurance are required by the client, these must be forwarded to us for evaluation prior to issuing a quotation.
Conditions transmitted subsequent to the start of work will invalidate the quotation, and subject the client to any incurred expenses. Specifically, the following conditions apply –
(1) we do not disclose names or information (technical or financial) about any client without express consent of that client,
(2) we do not submit to financial audit to any agency, public or private.
Performance and Cost Guarantees – Due to the uncertain nature of most consultations, we are unable to precise estimates. When troubleshooting, we can not guarantee success. Often the extent of the problem is not known until an initial evaluation has been made.
As such, all cost estimates are based on a level of effort, but estimates will not be exceeded without your prior approval. You will always, however, receive our best professional efforts and advice in any consultation.
Thank you for the opportunity to work with you.
Like my quotations, the first page outlines the tasks, schedule, and budget. The second page is the “boilerplate” that remains the same. Keeps things simple – always a good idea.
P.S. If you are signed up for my newsletter, watch your mail box for Issue # 1.
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© 2017, jumptoconsulting.com. All rights reserved.
Time for a financial rant – based on a recent news article.
One of the first things to do upon making your JumpToConsulting is to set up a retirement account. Trust me — years later you will be glad you did. I am!
According to a recent on-line article by CNBC, about half of US families have ZERO retirement savings. Nearly 70% of adults have less than $1000 in retirement accounts. Not good…
So take this important step right away, even if you are moonlighting. You can do it as part of setting up your business bank account, with automatic transfers to savings.
Better yet, set up automatic transfers to an IRA with Fidelity or Schwab.
We did this soon after starting EMIGURU. We first set up Fidelity IRAs. Several years later, our accountant suggested a Keogh, which let us put aside up to 25% of our income.
The best part is that 25% is tax deferred. In the meantime, compounding does its magic.
We use a financial planner with who manages the Keogh (and other investments) through Schwab. Fees are based on a per-centage of the portfolio, which in my opinion is the only way to go. As such, he is a fellow consultant and fiduciary, which means (unlike a broker) he puts my financial interest first.
Why not do it yourself? You can, but I prefer having a professional manager, letting me concentrate on making more money at what I do best. The same reason I use an accountant, lawyer, and other professionals.
Here are some savings guidelines/suggestions from the article:
- By age 30, have your annual salary saved.
- By age 35, have twice your annual salary saved.
- By age 40, have three times your annual salary saved.
- By age 45, have four times your annual salary saved.
- By age 50, have five times your annual salary saved.
- By age 55, have six times your annual salary saved.
- By age 60, have seven times your salary saved.
- By age 65, have eight times your salary saved
Fidelity simply recommends salary saved by age 30, and ten times your salary by age 67.
When younger, I must confess I was lax about this myself. Fortunately, my business partner insisted we do this. We started at age 45 for me. Never missed the money, and after 25 years at 25%, we both ended up with nice nest eggs.
Now at age 70 and starting to draw on the Keogh, I’m so glad we did this!
It is never to early (or late) to start. Do it TODAY – whether you are consulting or not!
End of rant. Remember, Uncle Daryl wants YOU to find your freedom too!
P.S. Stay tuned. The long promised Newsletter is about to launch, along with a free white paper based on a recent magazine article. If you have not done so, sign up now.
© 2017, jumptoconsulting.com. All rights reserved.
As we begin a new year, it is time to reflect. Here are some thoughts on choices.
We all make choices in life. Among other things, I chose consulting — it did not happen by chance. I’ve long been inspired by this popular quote:
Two roads diverged in a wood and I – I took the one less traveled by, and that has made all the difference.” – Robert Frost
Choices once made rule out other choices. That is what paralyzes many – the fear of giving up options. But even if you do nothing, you have still made a choice.
Looking back on seven decades, here are some choices I’ve made:
- Chose to study engineering – As a teenager, I was interested in many things. But my fascination with ham radio let me to choose Electrical Engineering. That choice ruled out other choices that also held my interest.
- Chose to go into RF design – After graduating with my BSEE, I chose to go into RF (Radio Frequency) design. My first job was working on communications systems. At the time, computers (not RF) were all the rage. But I chose RF.
- Chose to move to Minnesota – After being laid off (and losing my engineering innocence), I chose to move to Minnesota where my wife was born and raised. This ruled out other choices in warmer places (but I eventually made it to Arizona anyway.) This choice led me into EMI (Electromagnetic Interference) which later became the focus of my engineering consulting firm.
- Chose to drop an MSEE – After seeing highly educated engineers laid off, I chose to drop an MSEE program. Instead, I chose to spend my time and efforts on more practical pursuits. This included a Master Electrician’s license and a PE (Professional Engineer) license, both beneficial for consulting. Later dropped an MBA program to focus on building my consulting firm.
- Chose to move into systems engineering – After several years as a back room engineer dealing with EMI issues, I chose to make a job change. I sensed it was time to become more involved with customer problems, not just technical problems. It was also time to break out of the comfort zone. As a bonus, met my business partner.
- Chose to teach & moonlight – After working in systems engineering, my business partner recruited me to teach an evening electronics class. I chose to accept the challenge, which led to other moonlighting projects, and eventually our own engineering consulting practice. That choice meant giving up other pursuits, such as vegetating with TV shows.
- Chose to go into sales – After the itch to consult festered, I chose to change career directions again, and became a sales engineer. It required a lot of effort, but I knew I needed the experience if I was to eventually start/run my own consulting firm.
- Chose to go with a startup – Along the way, a customer recruited me to join his startup. Seeing this as an opportunity to work in a small business, I jumped in. While the experience was good, this choice was not so good. Withing two years, I was replaced by a friend of the customer who lacked the cojones to jump in at the start. As is often said, it was a learning experience…
- Chose to hang out my shingle – After losing my job, chose to hang out my consulting shingle. Timing was bad, funds were short, and I soon realized there was more to learn. So back into the corporate womb I went.
- Chose to try marketing – After faltering with the initial consulting attempt, I chose to pursue a technical marketing position. It was interesting, and I learned a lot from my boss and colleagues. But I missed being in the field, so I chose to accept another sales engineering job. It turned out to be a good choice.
- Chose to hang out my shingle again – this time older/wiser – After several successful years as a sales engineer, chose to try consulting again. The itch was still there, and the timing was right. Or so it seemed, except that the first day in business (1987) the stock market crashed! But this time I was prepared, and I succeeded.
- Chose to stay with it for the next 29 years -After the scary start (the first day in business was the worst day in business), things continually got better. Sure, there were some ups and downs, but overall it has been a very rewarding way to spend a career. If you are so inclined, I highly recommend it.
- Chose to start this blog – After being asked many times about getting started in consulting, I started this blog five years ago. The goals were to share experiences and advice, and to inspire those who are truly interested in consulting. I’m happy to report that I’ve now helped several make their own JumpToConsulting.
Hope this post has given you some food for thought. The choices you make today will affect you tomorrow. But NOTHING will happen unless YOU choose to MAKE it happen!
Best wishes on YOUR choices in the coming year — Uncle Daryl
© 2017, jumptoconsulting.com. All rights reserved.