Early-retirement wannabe

ex-pat_scot

uk1 wrote: »

Could you indicate as loosely or specifically what sort of consultancy?

There is a lot of opportunity if you have a talent or knowledge base, and preferably a current reputation that could really increase earnings depending on the type of consultancy work you have in mind.


Jeff

i work for one of the major accounting / advisory firms, and there's a lot of call for specialist consultants to help out in regulatory or technical (audit, compliance, regulatory, advisory) areas.
Granted though - you need an impressive portfolio career to pick up the experience though.

uk1

ex-pat_scot wrote: »

i work for one of the major accounting / advisory firms, and there's a lot of call for specialist consultants to help out in regulatory or technical (audit, compliance, regulatory, advisory) areas.
Granted though - you need an impressive portfolio career to pick up the experience though.

It sounds like you have a potential area of expertise that could certainly lend itself to consultancy. I went down this path at the age of 43 leaving a very well paid (but insufficiently paid) job in a corporation and made enough to retire in 7 years. If I had stayed, it would have killed me through boredom and I'd never have saved enough to retire comfortably.

There were a few things that I learned and did which made the world of difference. I hope these thoughts are useful to you.

1. I felt that clients dislike seeing high daily rates, particularly when they were considerably more than they earned. What I contrived was a way of "packaging" what I did into a package that was "all inclusive". The package started at £5,999, went upto £9,999 then as the business grew, it went up to £19,999, then £29,999 and then upwards from there. This heaviily disguised a high daily rate.

2. Some cosultancy can be on an ongoing basis but if you charge an hourly rate then some won't call and you won't earn. I also offered a monthly retainer rate where clients could call as often as they wanted and I would chat for as often and as long as they needed. This in my case was "mentoring" but isn't too dissimilar to the sort of service you might be offering. A few clients paying a good monthly retainer becomes a good base of income.

3. I also offered a "percentage" deal. In your business if it involves tax saving for example and you can see the opportunity, it might be on the basis of say 5% of cash saved. On one deal I did 3% on a contract I saved and this was a considerable chunk which the client saw as "risk free".

4. As the business grows never turn down a job you don't fancy. If you do you will irritate a potential client. Instead say "you would be delighted to help" but fix the price so high that only an idiot would go ahead. This approach has two advantages. If you don't get the work, you haven't irritated the client and also you cast yourself as being a very highly sought after and highly paid consultant. If you do get the work however you warn the client ie offer "caveats" and you will earn a considerable sum. Ensure the agreement includes that you will get paid for all of the fee even if they stop early. I don't want to talk specifics, but there was some pieces of work I did on this basis that were life changing.

5. Eventually as the business grew, I contained and rationed the amount I wanted to do by increasing "rates" until I had just the right amount of effort I wanted to make the most amount of cash for that effort.

6. Keep overheads to a minimum. Unless you feel that you are genuinely building a business you can sell, then don't lease offices and take on staff or anything fancy. Every penny saved is a penny saved.

7. Nurture long-term relationships and make them into "friendships". Sow seeds.

I don't know how far off you are but I hope these are a few of the things I learned and I hope that they are useful and thought provoking to you, as I wish I knew at the start what I knew at the end of my career in consultancy and mentoring.



Jeff

gadgetmind

justme111 wrote: »

You obviously enjoy it more than alternative ways of spending your time so why not

It is a totally new area for me and it's very much a start up, which appeals after the "big business" of the last couple of decades. The other guys are very bright, very energetic, and very young. My role is to explain all of the mistakes that I've made over the last 30 years so that we can hopefully avoid a few of them.

atush

You made and sold one company, I can see why you'd want to do it again lol. You were made for it.


as for

For the removal of any doubt, I always tip but dislike emotionally the automatic addition as a service charge.

I totally agree- a tip should be decided on the level of service. Esp in britain where pay structure means all are at least paid MW. It makes me pretty mad when restaurants do this. Esp as in the UK they sometimes pocket the tips themselves.

ex-pat_scot

uk1 wrote: »

It sounds like you have a potential area of expertise that could certainly lend itself to consultancy. I went down this path at the age of 43 leaving a very well paid (but insufficiently paid) job in a corporation and made enough to retire in 7 years. If I had stayed, it would have killed me through boredom and I'd never have saved enough to retire comfortably.

There were a few things that I learned and did which made the world of difference. I hope these thoughts are useful to you.

<snip>
I don't know how far off you are but I hope these are a few of the things I learned and I hope that they are useful and thought provoking to you, as I wish I knew at the start what I knew at the end of my career in consultancy and mentoring.



Jeff

Thanks Jeff - very useful insights.


I moved 4 years ago from a regional FS internal function, into a London-based practice but operating as a contractor.
I did a mixture of one-off advisory / consultancy reviews for the accounting practice, alongside longer term secondments into several of their clients.
I now work as an employee of the firm, rather than contractor, but there are many around me who remain as contractors and who pick and choose the work they wish to do / secondments they wish to take.
As you note, it is lucrative, and can be very expensive to the end client where they need such specialist experience.
Whilst much of what I / we could do for clients could be sold direct to them, rather than via the accounting practice as intermediary, I find that clients are usually willing to pay the higher practice price for us, as it brings access to the wider firm knowledge base and brand.


Overall, it made a huge difference to the quality of life, and earnings, when I went from an internal resource to contracting.
Whilst I was relatively well paid before, I managed to make the contracting a full time deal (to the extent that I had few holidays), tripling my income.


I do have personal contacts with whom I do occasional work- as I move along the timeline towards 55 then my plan is to make sure I keep them close.


My strategy is not without risk though (whose is?).
I am heavily reliant on the current pensions framework, for the following reasons:
- the £40k annual limit
- access at 55
- lifetime limit of £1m
- flexible access to funds
Lesser things, like salary sacrifice, are also very helpful

uk1

ex-pat_scot wrote: »

Thanks Jeff - very useful insights.

My strategy is not without risk though (whose is?).
I am heavily reliant on the current pensions framework, for the following reasons:
- the £40k annual limit
- access at 55
- lifetime limit of £1m
- flexible access to funds
Lesser things, like salary sacrifice, are also very helpful

Do not overlook simple old fashioned un-wrappered cash. You are now well aware of how much incremental earning are worth in terms of being able to change lifestyle and savings. I had a very good accountant who saved me a fair amount of cash that was "in the business" when I stopped. Also I use my cash as a sinking fund ie I presume it won't grow but I'll depete it to zero when I'm say 90. It isn't just about pensions it's also about old fashioned cash, as a part of your overall financial assets.

Good luck,

Jeff

aldershot

Thought I'd chime in on this thread as Mrs Aldershot retires this Friday. She'll be 54 in October and I'll be 53. I should change my u/n as we're now Dorset rather than Aldershot.

I'm planning on leaving sometime in Q1 or Q2 next year. We plan to live off savings and then a mixture of savings and pension funds. We have about £2m in cash/equity investments /pensions between us (excluding the house) and I'm figuring that will probably be enough. State pension forecast is £178 + £162 when we each hit 67 which also helps. It's a scary thought to leave a highly paid city IT job (for her as well as me) and step off the treadmill because the pull of "just one more year" is very strong but I'm going to be brave :eek:

We've saved so hard over the past 10 years that I calculate that the drop in lifestyle will be small as our present non work outgoings are actually not that high. I'm assuming we can generate £3500 net a month index linked and still have some capital available for a rainy day (or roof).

I think the bigger risk is the 2 of us not actually enjoying not working (seriously).

gadgetmind

I'm not sure how your savings split between taxable pension income and (more of less) tax free income from elsewhere, but your net figure looks very low to me compared to your pot.

aldershot

gadgetmind wrote: »

I'm not sure how your savings split between taxable pension income and (more of less) tax free income from elsewhere, but your net figure looks very low to me compared to your pot.

I was figuring around 2.75% yield gross roughly split between us with a zero real growth rate. It's very conservative I know and I should probably take more risk with a 30-40 year time horizon but I see a very uncertain world out there and agree with Bill Gross that the next 40 years won't look like the last.

uk1

aldershot wrote: »

I was figuring around 2.75% yield gross roughly split between us with a zero real growth rate. It's very conservative I know and I should probably take more risk with a 30-40 year time horizon but I see a very uncertain world out there and agree with Bill Gross that the next 40 years won't look like the last.

From this post and your previous post, it seems to me that a consideration you seem to have is "leaving money" and preserving capital. I may have misunderstood the numbers.

With the value of all of your assets unless your main home is the bulk of your total value and you wish never to move, then without detail it seems to me that you are not thinking of all of your assets as a sinking fund to be spent over both your lifetimes but are instead sacrificing "drawdown" to preserve capital. I may have misunderstood the figures but if this is the case, then don't lose sight that after you expire joint inheritance tax then leaving too much cash to your kids and sacrificing drawdown today has significant potential iht repercussion. Essentially you seem to be forgoing a better lifestyle today to have your kids pay iht tomorrow.

Have I misunderstood your challenge?

Jeff