Author Topic: Working for yourself advice.  (Read 3967 times)

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Offline WilkseyTopic starter

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Working for yourself advice.
« on: September 27, 2022, 11:33:09 am »
Hi, I have a friend, yeah yeah I know the cliche, but I really do on this occasion!

My friend has worked in the electronics industry for the best part of 20 years here in the UK, he is a product designer and has only ever worked in a small lab environment so not exposed to customers or anything that might be considered social.
The company he works for has undergone a buy out and they are removing the need of product design and going fully off the shelf (because that always works so well!) so his job is goneski and is being made redundant.

He is in his late 40's and wants to explore doing his own thing, he has enough savings and is getting a pretty sweet payout that he can live over a year without any kind of financial input (lucky sod!), he has asked me if I have any suggestions on certain things and I did ask him to think about viability of starting a company whilst the chip shortage is in place but he ensures me he has thought about it and is happy to proceed.

Anyway, some of the questions he has asked I have no clue as I am not in that position or have ever done it before, so i'll post them here and see if anyone has any advice if you don't mind.
1. How do you find out what products are in demand if you don't have a contact within a particular company?
2. How do you get clients or find clients if you have no contact with the company, is it too niche to just advertise?
3. How to know what to charge? (for this I said cost *2.5 but is that still a good guide?)
4. Dealing B2B is it best to form a LTD company to protect the director. (I thought yes but good to clarify).
5. What insurances do I need (I said liability but are there any others?)
6. Any other advice? (I'll throw this one to the room too!).

Thanks in advance for all of your replies, I think it is quite overwhelming going from paid 9-5 to working for yourself, but I guess everyone has to start somewhere and he seems quite determined to try it which I admire.
 
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Offline pardo-bsso

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Re: Working for yourself advice.
« Reply #1 on: September 27, 2022, 12:20:40 pm »
Be prepared to a lot of anxiety, responsibility, lack of proper rest and sleep and work 24/7.
And don't take employees unless you really need them and have about ~4 months of salary buffer in case things go sour.
 
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Offline nctnico

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Re: Working for yourself advice.
« Reply #2 on: September 27, 2022, 12:42:23 pm »
If you want to have any succes then you'll need to be able to do firmware development as well. Also don't compete on price and try not to get projects on a blanque check. I always give customers a ballpark estimation of hours which I try to adhere to. Customers work with budgets so you can't confront them with financial surprises they didn't budget for.

Product liability is something you have to limit in the terms & conditions / contract. You can't get any insurance for this. Some insurance policies claim they do but if you read the small print, they actually don't and you are sinking money into a black hole. What does make sense is to have an accident liability insurance. So if you knock a Ming vase over, it is covered by insurance.
« Last Edit: September 27, 2022, 12:44:50 pm by nctnico »
There are small lies, big lies and then there is what is on the screen of your oscilloscope.
 

Offline AndyC_772

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Re: Working for yourself advice.
« Reply #3 on: September 27, 2022, 04:10:34 pm »
I've been working for myself for about the last 10 years, under very similar circumstances. A few tips...

- Know, confidently, what you're going to work on and who your first customers will be BEFORE becoming reliant on contract work.

- See above, it bears repeating.

- ...multiple times.

- Find a good accountant, ask them about the tax and liabiity positions of going self-employed vs Ltd company. Grill them on IR35, make sure you know what the tests are for "disguised employment" and ensure your contracts are drafted accordingly.

- Also find a good solicitor specialising in company law and intellectual property. Ask them to explain the law surrounding IP ownership as it applies to your kind of business, and get them to draft (or at least, check and revise) your contract T&C's. It's expensive, but worth it 100 times over if it means the difference between collecting royalties on your IP vs losing it entirely.

- Don't ever believe someone who tells you what's in a contract; always read it in full for yourself. I've lost count of the number of times I've been told a contract says one thing, only to discover it's nothing of the sort.

- As the 'little guy' you can expect that some companies will try to assert themselves and screw you over. Respond robustly. "No" can be a valid, correct, and occasionally therapeutic response.

- You should have a web site, for the benefit of people who hear about you by other means who want to check you out. Don't expect that it'll attract new customers independently, though.

- A good customer is worth bending over backwards to support. So is a bad one, unless they don't pay their bills, in which case they're not a customer at all.

- There will be gaps between contracts. Accept these unplanned holidays. Embrace them. Don't spend the time staring at an empty schematic and feeling uneasy about being unemployed. (This is *hard*!)
 
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Offline voltsandjolts

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Re: Working for yourself advice.
« Reply #4 on: September 27, 2022, 05:36:12 pm »
If you want to have any succes then you'll need to be able to do firmware development as well.
Yup. Everything has firmware these days. Be prepared for some customers to dictate Microchip or ST or Freescale etc.

Customers work with budgets so you can't confront them with financial surprises they didn't budget for.
Yup, which makes it important to highlight any technical risks you foresee at an early stage. Presenting these risks in the correct way doesn't put a customer off but actually makes you look more competent  ;)
 

Offline Ed.Kloonk

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Re: Working for yourself advice.
« Reply #5 on: September 27, 2022, 07:05:31 pm »
It's hard to offer advice on this predicament since much of what I found prolly won't apply to anyone else and my journey began when the world was very different. Though my door is always open if anyone wants tough love, in private.

That said, a couple of things stand out WRT the particular questions.

1. How do you find out what products are in demand...?
   You should always know this regardless of your jump status.
      Jot down on paper where you think the thing of interest to you will go. Date your journals. Review them often.
     
2. How do you get clients or find clients if you have no contact with the company, is it too niche to just advertise?
  Whilst advertising has it's place, the reality for small fish is you'll only hear from time wasters and sales folk if you put yourself out there. The key is word of mouth. Kicking that off really depends on the character of the individual and they're approach.

3. How to know what to charge? (for this I said cost *2.5 but is that still a good guide?)
   Again, depends on the proprietor. Are you building a company or a client base? A general rule, I think, still applies is with products it's hard to be competitive. What local customers are craving is local, good service.

4. Dealing B2B is it best to form a LTD company to protect the director. (I thought yes but good to clarify).
   Depends on the situation. Who knows?

5. What insurances do I need (I said liability but are there any others?)
  Best advice I can give you is look not at the insurance so much as look at what you could claim if you need to. Insurance companies don't like paying out. The claim has to be worth the effort and not just being valid.

6. Any other advice? (I'll throw this one to the room too!).
   Be prepared to adjust your approach per customer. Learn the rule about 20% of your customer base supplies 80% of your income.

Quote
He is in his late 40's and wants to explore doing his own thing, he has enough savings and is getting a pretty sweet payout that he can live over a year without any kind of financial input (lucky sod!)

Don't let these guys fool ya. They too often piss opportunity up the wall. Just watch. Soon as the payout comes. New car. Renovated bathroom/kitchen. But 9/10 times they will squander and exhaust nearly all the money then complain that the system is against them. (it is, don't get me wrong).

Quote
Thanks in advance for all of your replies, I think it is quite overwhelming going from paid 9-5 to working for yourself, but I guess everyone has to start somewhere and he seems quite determined to try it which I admire.

You cannot understand the distractions that will hit you when you make the change. I hope for his sake that he has a wife who will hone his energy not help him spend his windfall. By all means, encourage him where possible. Just don't fall into the trap of offering him strategy advice because he could very likely blame you.

HTH
iratus parum formica
 
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Offline Bud

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Re: Working for yourself advice.
« Reply #6 on: September 27, 2022, 09:23:39 pm »
Do not forget banks will treat you differently if you are self-employed. Specifically, difficult to get a mortgage.
Facebook-free life and Rigol-free shack.
 
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Offline coppice

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Re: Working for yourself advice.
« Reply #7 on: September 27, 2022, 09:40:21 pm »
Two of the hardest things in engineering are finding good suppliers and finding good customers. Its hard enough when you are in a substantial sized company. On your own its really tough. Most people who do well starting a business for themselves have spent years cultivating a pool of good contacts before they begin.
 

Offline nctnico

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Re: Working for yourself advice.
« Reply #8 on: September 28, 2022, 12:05:40 am »
Two of the hardest things in engineering are finding good suppliers and finding good customers. Its hard enough when you are in a substantial sized company. On your own its really tough. Most people who do well starting a business for themselves have spent years cultivating a pool of good contacts before they begin.
It is good to start off with having customers but with the help of internet new customers can be found or just contact you to do work for them.
There are small lies, big lies and then there is what is on the screen of your oscilloscope.
 

Offline WilkseyTopic starter

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Re: Working for yourself advice.
« Reply #9 on: September 28, 2022, 01:39:27 am »
Thanks for all of your replies so far, very helpful, he is divorced no kids and has his own house which is paid off already and drives a 1999 Toyota Corolla, his savings without redundancy pay which he recently told me whilst chatting over his current predicament and ideas, would hire a decent software developer for at least 3 years let's put it that way, his current job role consists of designing automation products, he can write C for 8051 chips and the latest thing he has been working on involves a Raspberry Pi and Python.

I introduced him to the world of GSM years ago and ESP devices a few years ago when they became popular so I think he wants to pursue some product ideas he had around that.

That is a bit of background on him, not sure if that helps or not.
One question I have, bearing in mind I work in a completely different industry (highways), if he had a product or a kind of product idea - i.e. keeping up his automation products (PLC alternatives, "smart" relay controls etc whatever that entails) how would he find companies to work with based on his interests?  I would guess it's not as easy as going to your local HVAC supplier and asking if they want to buy your "smart" relay?  He doesn't have a "pool of contacts" as he has been squirreled away in a lab environment.

I told him it will be a hard slog, he doesn't mind it taking a while as he doesn't live lavishly and his redundancy alone will pay his bills he reckons for at least 2 years without dipping into his savings.  I think he will do it anyway I would like to help him with all of your kind advice, I have told him I take no responsibility to the success of his new venture should he decide to proceed, but I also told him that I would be willing to do a bit of side work for him if needed such as firmware and working with other micros as I primarily work with ST, PIC and AVR where as he worked solely with 8051 until the company switched to x86 SBCs now Raspberry Pi's.
 

Offline nctnico

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Re: Working for yourself advice.
« Reply #10 on: September 28, 2022, 02:11:21 am »
IMHO selling your own products is very hard. You need to be a salesperson as well. Many people won't see the benefit of a product at first and need convincing through advertising, doing demos, being present on exhibitions, etc.
There are small lies, big lies and then there is what is on the screen of your oscilloscope.
 

Offline jonpaul

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Re: Working for yourself advice.
« Reply #11 on: September 28, 2022, 07:58:59 am »
Bonjour à tous

My last "real" job in 1976, as an EE.
Then I was consulting for many decades.
I started a component firm in 1986 ( in USA but this  may apply to UK and EU).

1/ very rare that one person has the technical, management and financial experience and skill to run even a one man firm successfuly, number of employees increased the overhead and problems exponentially.

2/ 95% of all small business start-up fail within 5 yrs

3/ the 20 years of zero/ negative interest rates has ended, the central banks and governments in USA UK and EU all rapidly raising interest will as throughout the ages, cause recession environment, and make cost of business and loans untenable for starting up.

4/ budget zero income 2..5 yrs due to unforeseen expenses, like government regulations, tax compliance, parts availability

5/ never assume that you know a good market. 

6/ a website is just a business card, inquires will be  99.99% junk, spam, hacks.
Never place à phone or email address as text.  Use a secured contact form

7/ all salés paid in advance,  offer no terms,  you can't collect!

8/ paiement via bank transfer or bank check, credit cards have hi fees, and charge backs.

My reccomended action is to search for a new job in your field, and keep the starting up as a side activity.

Just the ramblings of an old retired EE

BON COURAGE ET BON CHANCE!

J
Jean-Paul  the Internet Dinosaur
 
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Offline m98

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Re: Working for yourself advice.
« Reply #12 on: September 28, 2022, 01:21:42 pm »
Never place à phone or email address as text.  Use a secured contact form

If you've never set up a commercial website in your country, please first read all applying laws and regulations. Don't know about France, but that suggestion would prove to be expensive in Germany...
 
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Offline jonpaul

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Re: Working for yourself advice.
« Reply #13 on: September 28, 2022, 01:41:41 pm »
you can " mung" the contact information, use an image not bare text for contact information.
Most  sites  omit a physical address nor phone number.
Only a general email address or contact form.

consult with your legal council re your locations Website legal   requirement.

Jon
« Last Edit: September 29, 2022, 06:29:44 am by jonpaul »
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Offline m98

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Re: Working for yourself advice.
« Reply #14 on: September 28, 2022, 02:01:15 pm »
GDPR doesn't apply to information a business legally needs to disclose. And hiding contact information in an image isn't really effective.
 

Offline PaulAm

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Re: Working for yourself advice.
« Reply #15 on: September 28, 2022, 04:36:00 pm »
Contacts are the biggest problem.

I ran a one person company for close to 30 years.  The first jobs came out of contacts I made while working for a smallish university.  Other clients came from those and networking from friends.  For many years I had a contract with a large university, but those again came out of personal contacts.  When my contacts dispersed, as happens, so did the contracts.

You need something to get the attention of your customers to differentiate you from the crowd and get you in the door.  Being buried in a back room lab is not great preparation for that.

Selling services is easier than selling products (unless maybe you're selling into the hobby market).  For services, you just need adequate professional liability insurance and a good contract lawyer.  For products, you need an entire legal staff  :-DD

Oh, and recessions can be brutal.  In the '08 meltdown I lost half my client base to death, retirements and business closures.  Things got a bit sticky back then.
« Last Edit: September 28, 2022, 04:38:19 pm by PaulAm »
 
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Offline jonpaul

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Re: Working for yourself advice.
« Reply #16 on: September 29, 2022, 06:26:04 am »
Bonjour à tous

Agréé with notes of Paul Am, it's not what you know, its who you know.

Our network started with  university alumni, coworkers, friends.

1970s..1980s joined a local consulting referral,  PATCA, in Silicon Valley.
By 1985,  2 pages ad in EEM component annual directory, for our  parts.
IN 1994, wrote and set-up first website (HTML, 24 hours HTML café).

Since 1990s, original research, published papers and gave présentations at industry conferences, eg AES, SMPTE, NAB.  Our work specific  for data transmission, HV or magnetics, so these mémoire may not apply to the OP situation. Hope this note can spark some feedback and ideas!

Bon courage et bon chance from France.

Jon

 
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Offline WilkseyTopic starter

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Re: Working for yourself advice.
« Reply #17 on: September 30, 2022, 12:38:07 pm »
Thanks for all replies, good advice about doing it as a side hustle, i've been doing that for a number of years now for a bit of pocket money on the side.

I mentioned looking at automation companies and those that install the automation equipment as they may well be an opportunity for a design partner, cold call / email them, we don't really have networking events local to us, there is the chamber of commerce but I've been to a few of those and it seems quite close knit to those already members and you try speaking to a few but then they go back to their gathering and you feel like a spare part.
 

Online SiliconWizard

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Re: Working for yourself advice.
« Reply #18 on: October 02, 2022, 12:41:27 am »
Do not forget banks will treat you differently if you are self-employed. Specifically, difficult to get a mortgage.

Yeah, that's one of the downsides. The trick would be to get it while you're employed and switching to self-employed after that.
 

Offline tycz

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Re: Working for yourself advice.
« Reply #19 on: October 02, 2022, 06:18:16 am »
Do not forget banks will treat you differently if you are self-employed. Specifically, difficult to get a mortgage.

Yeah, that's one of the downsides. The trick would be to get it while you're employed and switching to self-employed after that.

I'm self employed and had no trouble getting a mortgage. I asked the bank about it and they said it would only be a problem if I couldn't provide the previous two years' tax records.
 

Offline SmallCog

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Re: Working for yourself advice.
« Reply #20 on: October 02, 2022, 11:24:19 am »
Perhaps consider offering technical services rather than products, at least to start with.

Let people come to him with a problem that needs solving or with an idea for a product.

This may also include working with his products that are being discontinued by his former employer, businesses tend to resist change even if the OEM’s try to force it on them. Depending upon what he’s been making there may be a market for non-genuine support.

As he makes contacts doing this sort of work, he’ll have contacts to take his ideas for new products to.
 
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Online Nominal Animal

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Re: Working for yourself advice.
« Reply #21 on: October 02, 2022, 02:07:12 pm »
For the software/firmware side, hire a specialized lawyer for a few hours (in separate one-hour sessions) to explain how the various licenses work, answering your questions about them.  (Of course, read about them beforehand on the web, and write down the questions that leave you uncertain.)  This is what I did in late 1990s –– except the lawyer was a friend specialising in copyright training other lawyers and didn't actually charge me anything!
(I should have paid him anyway, because it would have been best money I'd ever spent for the business, it was that useful.)

The main licenses I've used are CC0-1.0/Public Domain, Apache/MIT/BSD, LGPL, GPL, and completely proprietary ones, including work under NDAs.
The hardest to initially truly understand was GPL, hands down.

Depending on the product, the client may wish to own the copyright on the work.  They may or may not wish to license some of the work back to you.  This is often not beneficial to either party, however: many implementations make no sense to do from scratch, and things like Ethernet/Wifi/BT connectivity is usually better implemented using externally licensed code (existing libraries).  Typically such things are licensed under permissive licenses (lwIP, for example, under BSD license).

My own approach in negotiations started from the point of what the client actually needs, instead of what they want.  For example, when not transferring copyrights, and only licensing the firmware/software sources to the client using a suitable permissive license, they could still have any other contractor work on and develop it further; the main limitation would be that they would be constrained to that license, so if someone else wanted to buy it off them, the license would govern that sale and could not be changed.

Because I understand the basic legal requirements and benefits of the various licenses –– not like a lawyer would, but enough to talk to a customer and explain how it works in practice, and also describe it to lawyers on both sides who can verify it is legally correct ––, I have also done mixed-license work.  The tricky part is what the pertinent copyright laws consider a derivative work.  On computer software, run-time linkage and published APIs are the currently accepted demarcation line, but for embedded firmwares it can be much trickier.  Nevertheless, most permissive licenses like BSD do allow incorporating completely proprietary parts to otherwise e.g. BSD-licensed code, so for embedded stuff incorporating proprietary closed-source stuff, this typically only excludes GPL- and LGPL-licensed external libraries.

Having the copyright ownership and licensing be discussed first and agreed upon, before even signing a contract, is crucial for sane custom software development work.  Without it, especially with "tricky clauses" in the contract, things easily become bitter and you end up paying lawyers more than the work is worth.  I find it better to be crystal clear, and manage expectations from well before signing the contract.  I like to be utterly predictable for the client, with zero surprises; it seems to work best.

Not everyone will agree with me here.  There are many programmers who don't care about licensing at all, that they are something for someone else to worry about.  I disagree.  The things I write and build, I'm ready to support in the future as well, and even have an independent reviewer check for both bugs and copyright issues.  I claim it makes life and work easier.  So, whether your friend (almost wrote "friend" there, sorry) needs to understand the few most common software licenses or not, does actually depend on which kind of niche they intend to fit in.  I would not bother trying to compete with the Chinese on price, and suggest targeting quality and reliability and verifiability and such instead.
 
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Offline nctnico

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Re: Working for yourself advice.
« Reply #22 on: October 02, 2022, 02:30:26 pm »
Do not forget banks will treat you differently if you are self-employed. Specifically, difficult to get a mortgage.

Yeah, that's one of the downsides. The trick would be to get it while you're employed and switching to self-employed after that.

I'm self employed and had no trouble getting a mortgage. I asked the bank about it and they said it would only be a problem if I couldn't provide the previous two years' tax records.
It depends but as a rule of thumb you'd need to be able to produce 2 or 3 years of tax records. Which means that basically you'll have trouble getting a mortgage the first 4 years. And not all banks are setup to deal with self employed people so your choice of banks is less. I changed my mortgage a few years ago and it turned out one of the banks I like the least, was the easiest to deal with for self employed people.
There are small lies, big lies and then there is what is on the screen of your oscilloscope.
 

Offline nigelwright7557

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Re: Working for yourself advice.
« Reply #23 on: October 02, 2022, 03:31:38 pm »
As well as other jobs I have worked for myself for about 15 years.
Do I make a fortune ? No pretty much most years a small loss.
So not much point doing it other than to fill my time and keep my hand in with software and electronics.

The main problem is competition driving down prices.
 

Offline coppice

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Re: Working for yourself advice.
« Reply #24 on: October 02, 2022, 05:30:45 pm »
Do not forget banks will treat you differently if you are self-employed. Specifically, difficult to get a mortgage.

Yeah, that's one of the downsides. The trick would be to get it while you're employed and switching to self-employed after that.

I'm self employed and had no trouble getting a mortgage. I asked the bank about it and they said it would only be a problem if I couldn't provide the previous two years' tax records.

Where do you live? These things vary a lot between countries.
 


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