[thelist] Fulltime to freelance

Phil Turmel pturmel-webdev at turmel.org
Tue Nov 25 08:59:32 CST 2008

Fred Jones wrote:
> Kevin Mulvihill wrote:
>> Maybe I'm lucky, but ALL my clients understand that there comes a time when
>> things have changed enough to warrant a discussion about more cash. And if
>> it's just a little scope creep, well, I've already figured that into the
>> price I gave in the first place.
> I would think that is lucky. My jobs don't just creep a bit in
> scope--they often double, if not more, by the end of the job. To go
> back to the client every day or two and say, "Well, you know, we never
> mentioned that feature..." etc. makes both them and me crazy. That's
> my experience anyhow.

I'm with Kevin on this.  I'm not exactly a freelancer, as I have
business partners in an LLC, but the work environment is essentially the
same.  And it's engineering, not IT per se, but works out to about 90%
software.  In any case, I'm an owner, and my own money is on the line.
For my company, risk management is #1.

We control risk in a number of ways:

1) We have standard hourly rates for our services, but the rates are
essentially punitive.  We want our customers to understand that they are
for emergencies, not for general projects.

2) We put in the time in the sales process to prepare detailed,
fixed-price proposals.  It forces us to ask the right questions of our
customers, and enables them to visualize what they'll get without
spending a dime.  It may take us 40 hours to bid on 400 hours of work,
but we'd rather do that than spend 800 hours executing that project.
The detailed proposal also highlights our professionalism, and our hit
rate reflects that.

3) We break projects up into phases with billable deliverables.  If a
customer loses their funding midstream, we've likely been paid most of
what we're due.  If the customer is a deadbeat and doesn't pay the early
milestone(s), we can stop before we're really hurting.  And in the off
chance they want to fire us, they'll have partial results to give
whoever cleans up after us (hasn't happened yet).

4) Whenever we do work by the hour, we invoice every two weeks at the
latest.  See 'deadbeat' above.  The hourly work must include testing and
validation, or we won't offer a warranty.

5) If small scope changes come up, we usually absorb it, but with
written documentation that our customer is getting a freebie.  Handling
the little stuff this way gives us the credibility to say no to the big

6) We attach a modest set of standard terms and conditions to our
proposals.  We attach similar terms and conditions to our standard rate
sheet.  We paid a lawyer to prepare them.  We've never had to test them,
and as long as we do 1-5, we don't expect to.

We must be doing something right.  We have multiple Fortune 500
companies as regular customers, even though we are only three people.  I
think its our proposals.  I would not be embarrassed if one of my
proposals was reviewed by the board of any such customer.

Note that we manage our customer's risk as well as our own.  We work out
ahead of time what the commissioning plan will be.  When reworking
existing systems, we figure out what downtime they'll experience, and
how to mitigate it.  We give advice on their infrastructure.  We try
hard to understand their business, so our advice fits their finances.

Randal Rust wrote:
> Around here, the mantra is: work hard, charge a fair price, don't be
> afraid to admit you don't know everything and produce quality
> end-products. I firmly believe that if we stick to that, the business
> will be just fine. It's worked for 10 years and we do most of our
> business through word of mouth and partnerships we've built with other
> service agencies.

Concur.  My partners and I *only* work by referrals.  We have not needed
any advertising.  In six years, we've only had *one* customer find us on
their own.  There were lean times, but for a while now we've been booked 

Randal Rust wrote:
> Paul Bennett wrote:
>> Any advice from thelist from anyone who has done this successfully?
> Save up and build your client list until you have no choice but to
> leave your full time job.

I'm not so sure about this part.  If your part-time clients are hiring
you to do the same kind of work your full-time employer offers, you are
competing against your employer.  That's a big no-no in my eyes, and to 
most large firms.  When my partners and I formed our company, we did 
nothing on the side, period.  Only our wives and our lawyer knew about 
it prior to our announcement, which was simultaneous with our resignations.

We established our engineering reputations by giving our all to our
prior employer.  We established our business reputation by breaking away
cleanly.  If we hadn't been 100% ethical, I doubt our Fortune 500
customers would have ever spoken to us.

Phil Turmel

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