4 ms·

I have built two successful consulting groups, while some people here are saying 25% cut is normal that is astronomical in my experience for what he is providin

I have built two successful consulting groups, while some people here are saying 25% cut is normal that is astronomical in my experience for what he is providing. I would never agree to that rate just for an introduction, 8-12% is more reasonable for an intro and payable only when the client pays their invoice. If your friend is doing some work and on-going management or something than that's a different story and this may all be very fair. But if he is literally just making an intro and then now saying you have to sub-contract from him that is odd to me and for me and has red flags all over the place. Essentially it seems like he wants to control the client relationship and just have you do the work, there are a lot of potential downfalls here. For example, if you aren't talking directly to the client and instead he is playing middle man you may get a bad wrap from the client because your friend doesn't understand something properly. That client then talks to other potential clients and next thing you know you are taking a hit for your friends behavior. If he is letting you have direct access to the client and he literally is just billing, his 25% is insane. Other downfall is if you don't control the client relationship how are change requests going to go? Is he going to properly represent them? How is billing going to be handled, they pay him net 30 and you wait again to get paid so you now risk 45-60 days of non-payment? Is his company big enough you can feel confident he'll pay you timely and properly? If things go south, is his company large enough to compensate or protect you during a legal suit? Is he carrying all the proper insurance? This just has so many red flags to me. Essentially IMO your friend is taking advantage of you by introducing you to a client he knows (maybe does business with regularly) and he knowing you charge too little is jacking your rate to something more reasonable and taking the difference. With friends like that you don't need any enemies for sure. I usually introduce friends to clients for free because it is good business to make sure clients stay happy and my friends find work. Plus if a friend fucks up I am not on the hook for their screw up, just for the intro which I can manage around. For people I don't know or that are just acquittances, I'll do intros but I do take a referral fee paid as they are paid from the client. Only time I take money for an intro when a friend is involved is if I need to get involved or the value of the contract would be such they can afford to pay a fair referral, but I'd never ask for 1/4 of the value even if I told them to charge 1.25x more. Don't compare to staffing agencies, that isn't an accurate representation unless that is the business your friend is in.

thrwwwy123 7y ago
Thank you very much for the detailed response, this is extremely helpful. > But if he is literally just making an intro and then now saying you have to sub-contract from him that is odd to me and for me and has red flags all over the place. This is indeed the case. But the work is interesting, and I believe my friend is just inexperienced. How do you suggest I proceed? > Is his company big enough you can feel confident he'll pay you timely and properly? As far as I know this is among his company's first engagements of this kind. I don't believe he is able to pay until the client pays him. > If things go south, is his company large enough to compensate or protect you during a legal suit? Is he carrying all the proper insurance? These are great questions, thanks. I will follow up with him regarding legal and insurance. > For people I don't know or that are just acquittances, I'll do intros but I do take a referral fee paid as they are paid from the client. I think this kind of arrangement would make more sense under the circumstances. What is the fee you normally take? Do you have any advice for how I can convince my friend that this is the better option for both of us? > Don't compare to staffing agencies, that isn't an accurate representation unless that is the business your friend is in. I believe that is the business he wants to be in. Can you please clarify why this isn't an accurate representation? Thanks again, you've been very helpful already!
- smacktoward 7y ago
  > I believe that is the business he wants to be in. Can you please clarify why this isn't an accurate representation? Not the parent, but: a staffing agency typically handles lots of administrative stuff for its workers. They handle billing the client, they make sure taxes are withheld and give you the documentation you need at tax time, they may provide group benefits like health insurance. They also provide the legal entity the client contracts with, so the workers don't all have to incorporate individually. This is the ongoing value they add, they shield their workers from all the messy and complicated hassles that come with entrepreneurship. If the idea is you're an independent contractor who's still expected to handle all that stuff yourself, your friend isn't acting as a staffing agency. They're just bringing you on as a subcontractor. As to whether the amount they're asking for is reasonable, anything's reasonable if all the parties involved agree that it is. It sounds like you don't, and are looking for some justification you can hang that objection off of. But you don't need a justification, you're two parties trying to strike a deal, it's perfectly within your rights to say "I think this deal sucks" and make a counter-offer you like better or even walk away. That may not be smart, depending on how badly you need this work -- remember though, he needs you to make this deal happen as much as you need him! -- but it's absolutely something you can do.

thrwwwy123 7y ago

Thank you very much for the detailed response, this is extremely helpful. > But if he is literally just making an intro and then now saying you have to sub-contract from him that is odd to me and for me and has red flags all over the place. This is indeed the case. But the work is interesting, and I believe my friend is just inexperienced. How do you suggest I proceed? > Is his company big enough you can feel confident he'll pay you timely and properly? As far as I know this is among his company's first engagements of this kind. I don't believe he is able to pay until the client pays him. > If things go south, is his company large enough to compensate or protect you during a legal suit? Is he carrying all the proper insurance? These are great questions, thanks. I will follow up with him regarding legal and insurance. > For people I don't know or that are just acquittances, I'll do intros but I do take a referral fee paid as they are paid from the client. I think this kind of arrangement would make more sense under the circumstances. What is the fee you normally take? Do you have any advice for how I can convince my friend that this is the better option for both of us? > Don't compare to staffing agencies, that isn't an accurate representation unless that is the business your friend is in. I believe that is the business he wants to be in. Can you please clarify why this isn't an accurate representation? Thanks again, you've been very helpful already!

smacktoward 7y ago
> I believe that is the business he wants to be in. Can you please clarify why this isn't an accurate representation? Not the parent, but: a staffing agency typically handles lots of administrative stuff for its workers. They handle billing the client, they make sure taxes are withheld and give you the documentation you need at tax time, they may provide group benefits like health insurance. They also provide the legal entity the client contracts with, so the workers don't all have to incorporate individually. This is the ongoing value they add, they shield their workers from all the messy and complicated hassles that come with entrepreneurship. If the idea is you're an independent contractor who's still expected to handle all that stuff yourself, your friend isn't acting as a staffing agency. They're just bringing you on as a subcontractor. As to whether the amount they're asking for is reasonable, anything's reasonable if all the parties involved agree that it is. It sounds like you don't, and are looking for some justification you can hang that objection off of. But you don't need a justification, you're two parties trying to strike a deal, it's perfectly within your rights to say "I think this deal sucks" and make a counter-offer you like better or even walk away. That may not be smart, depending on how badly you need this work -- remember though, he needs you to make this deal happen as much as you need him! -- but it's absolutely something you can do.