Is it better to start consulting inside somebody else's firm or on your own

The part of your firm option I'd weigh hardest is the sitting in front of a client who doesn't like the answer. That's the skill I can't imagine teaching myself, because when it's my own client and my own invoice I'm going to soften the answer. Every time. A firm has a partner in the room who doesn't care whether you're liked.

Five years into my own thing and I did it the second way, and the tuition was real. I underpriced my first eleven engagements. Not by a little, by roughly half. Took me eighteen months to work out that I was quoting my time at what I used to earn per hour as an employee, which has nothing to do with what a client will pay for an answer that saves them a five figure mistake.

A firm would have handed me that in a week. What a firm would not have handed me is the client list, and my top three clients today came from relationships I had before I started. Those would have been the firm's clients under any decent agreement.

If your existing relationships are real and warm, go alone. If they're a mailing list of people you met once, take the salary.

Running a small team on the service side, so I'm the firm in your option one, and I'll tell you what the offer actually contains.

Low fifties plus a cut on originated work means for two years you are subsidizing my client acquisition with your research hours. That's a fair trade if the training is real. Ask them these things before you sign: how many hours a week will a senior person spend reviewing my drafts, will I be in client meetings in year one or year two, and what does the non-solicit look like when I leave. That last one is where the value of the whole option gets decided, and how enforceable those clauses are varies by state, so have an attorney in your state read it before you sign.

If the answer to the review question is vague, the training isn't real and you're just cheap labor.

I came out of the trades and the apprenticeship model is the only reason I know anything, so I'm biased toward option one. But the thing that made apprenticeship work was that a journeyman had to sign off on my work and could see it from across the room. Bad drywall is visible. A bad market study looks exactly like a good one until the building doesn't lease. So ask cobalt's review question and mean it.

Nobody has said the obvious thing, which is that consulting fees on $500 to $2,000 scopes will not pay you a living for a long time. I've hired advice on deals in progress and the small scopes I buy are exactly that size, and there aren't many of them per year per client. Do the arithmetic on how many $1,200 engagements you need at your current life cost. That number usually decides this question before anything about training does.

quarry's right about the math and I'll add the ugly version. On thin margin work you take engagements you shouldn't because rent is due, and that's how a consultant ends up telling a client the deal works. The salary in option one is insulation against that. It buys you the ability to say no for two years while your judgment sets. I'd have paid for that at the start instead of learning what my opinion is worth after I'd already sold it cheap.

The reason I'd hire the firm person over the solo year-one person has nothing to do with skill. It's that a firm has done a hundred of these and their template already contains the questions I'd forget to ask. Solo people in year one give me their best thinking on the questions I raised. Firms give me the questions I didn't raise. That's the actual product.

Two documents decide this and neither is the offer letter.

The first is the firm's non-solicit and assignment language. If work you originate belongs to them and clients you touch are off limits for two years after, option one costs you a five year head start on your own book, not two.

The second is your own engagement letter in option two. Scope, what happens when the client asks for more, what you are and aren't opining on, and how you get paid if they stop responding in month two. Writing that document well is most of the job. I'd rather spend a year drafting versions of it under someone who has been sued once than invent it myself, but that's a preference about how I learn, not a rule.

Either way, have a lawyer in your state look at both.