Beyond $200K per year
If you are contracting in a niche market as I’ve recommended, you might want to take things to the next level at some point. No I’m not talking about leasing office space and hiring employees. I’m talking about subcontracting other people to clients. While you can make a good income with a high rate, there are only so many hours in the year (about 2000 working hours) so you can calculate your maximum income fairly easily. For example at $100 per hour, you are limited to about $200K per year.
One of the challenges (and opportunities) for clients is that it is hard to find qualified people with our niche skills. So why not offer to provide those resources to clients that trust you? You’ve probably worked with other people with your skills and you’ve determined who else you would recommended to your existing clients. This could be the actual client using the product, local consulting firms, or even the product company itself. Some product companies won’t have a local presence in your area because they haven’t sold many products there. There is no benefit to them to having training consultants sitting in the office doing nothing (ie. ‘on the bench’).
The people you could ’sub’ will be those colleagues that you’ve worked with on other projects. You can ask around for sample contracts, modify ones you have signed yourself in the past (if you have the original word docs) or worse case hire a lawyer to create a new subcontractor agreement for you. It will have the typical statements such as non-compete and non-disclosure clauses. You can have your subs invoice you monthly and you pay within 30 days of receiving the invoice. So you have to manage your cash flow because you will likely be paying them before you get paid by the client. Some people put clauses in the agreement that they will pay you after they get paid (which is easier to manage).
This concept is known as leverage. In this context, you are using leverage to subcontract other colleagues, leveraging your clients, and their trust in you.
Your task for this week: Are you getting high hourly rates? If you’re not, ask the contractors around your office what kinds of rates they get. Have you been able to subcontract others to your existing clients? Please post your findings in the comments section of this blog entry.
