

Ask HN: $2k to $3k a month part time, but is it sustainable/ethical/scalable? - mntwiddler

Skip to the tl;dr below if you want the short version.<p>For the past 10 months I have made between $2,000 and $3,000 a month (Gross Profit).  I do this part time (nights and weekends) as I have a full time job.  My business model is simple.  I complete digital projects for local small business’s using freelancers.  I make money by placing a margin on what the freelancers charge me.<p>For clarification I do NOT do software development.  It is pretty much restricted to web development (editing and creation), graphic design (marketing materials, labels, logos etc.), and white hat&#x2F;lite SEO (article creation, keyword optimization, etc).<p>I bill myself as an ALMOST all inclusive digital services provider.  All of my clients completely understand my use of freelancers and are fine with it.  I have only had 3 clients during the 10 months and am currently only working with 2 of them.  I have connected with all 3 of these clients through word of mouth.  No marketing has taken place.  Hell I didn’t even have a website until a month ago and even now it’s just a landing page with an email capture on it.<p>Here is my overall question.  Is this a sustainable&#x2F;ethical&#x2F;scalable business model?<p>Obviously if I can get the clients I could do this indefinitely but will other companies buy in to my use of freelancers?  How do I market to businesses aside from just knocking on doors?<p>Is using “outsourced” talent and then placing a margin on it unethical because I am so greatly undercutting local talent?<p>Can I scale this? I have run the numbers over and over and the more people I hire the smaller the profit margin gets. Finding other people with the knowledge, skills, and dedication that I have to “replace” myself will be a significant challenge.<p>Should I quit my job and try this full time?<p>TL;DR I started a business using freelancers to complete digital projects for local small business’s.  Should I quit my job and do this full time?
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cmckay
A better way (in my opinion) to ask the question of whether or not your
business model is sustainable/ethical/scalable is to ask the question: are you
adding value? I think in this case, the answer is clearly yes. Dealing with
freelancers (and especially international freelancers) can involve a lot of
time and effort; you're taking care of that end of things. It's clear that
your clients could go out and find and hire their own freelancers, but that
involves work they would rather pay you to do.

As far as scalability is concerned, consider raising your prices. Don't think
of it as rent seeking; think of it as providing a valuable service (managing a
team of outsourced talent), and price accordingly.

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byoung2
It is completely ethical, and is the foundation of many business models across
different industries (think general contractor for construction hiring
subcontractors for plumbing, electrical, or tile work).

It is scalable as long as you are not the bottleneck. For example, if you are
the only one meeting with clients and drawing up contracts, you will find
yourself stretched pretty thin doing that. Imagine 50 clients all asking for
status updates at the same time.

I would explore the possibility of standardizing your services and prices, and
making it a self-serve model so clients can sign up and manage their projects
through an app or website. Then you can free yourself up to just do marketing.

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mntwiddler
I really like the idea of standardizing my services and pricing and it is
something I have thought about. However, I charge my clients on a time and
materials basis. If they come back 10 times with revisions because they are
going back and fourth on a decision I don't want to eat that time.

The bottleneck is what concerns me the most. I would have to hire someone
else, pay them a good salary, and train them to do what I do if I don't want
to be the bottleneck. Finding a quality person and training them doesn't
concern me as much as paying them. My margin % is pretty good but I am not
billing out at $100 an hour. So that worries me.

~~~
richsin
Your business, as many people have assured you, is completely fine. It's
actually a great service for some businesses.

Find bigger clients, this will allow you to keep your billings high if your
worried about bottlenecks and hiring. Look into
[https://elasticsales.com/](https://elasticsales.com/) for cold calling as a
service.

Why not do both versions of the business? Create a separate brand and package
together services, flat pricing and slap on a healthy markup to offset your
advertising and marketing. PPC, Social Media, etc would be great for this.

Get that monthly revenue up and then build a team around your processes.
Hiring will always be hit or miss - just make sure your hiring them for what
they know and not what they can learn - if you want to save time.

Best of luck!

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celticninja
dont tell people you are using freelancers, as far as they are concerned it is
your "design team", make no claim to in-house people. they are coming to you
as a one-stop shop so they dont need to deal with a graphic designer, web
developer and SEO, they have a single poitn of contact and you are getting
paid to project manage the freelancers.

whether it will scale is another question, but if you dont try you wont know
and worst case scenario you drop back down to evening and weekends and little
extra $$ in your pocket

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startupstella
It sounds like you are just great at sales for creative work. If that's the
case, perhaps you can make more money doing BD for a dev shop or creative
agency? I think the question is what the end goal is: if it's to make a lot of
money, you'll have to model out the time, resources, and clients you'll need
to make X amount of money and weight that vs the opportunity cost of doing BD
for someone else. If it's the autonomy/owning your own business, that's a
different set of analyses.

~~~
mntwiddler
It is definitely a wanting to own my own business thing. I wouldn't say I am
great at sales. Actually part of my fear of doing this full time is that I
won't be able to generate enough revenue. I really just don't know the correct
process to hunting out and getting sales from business's.

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grumps
Essentially this is how some web/digital agencies work. They higher people and
contract out the work. I see nothing wrong with it ethical.

That just depends on your ability to market yourself. In reality I would
suspect you'll just evolve into hiring people to reduce risks associated with
freelancers.

I assume you have some legal contract that you put in place with your clients.
I would ensure that it says you can subcontract out work.

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sharemywin
Time is money your researched and found talent that business what to use. So
ethical yes. Sustainable probably. In business trust and dependablity are as
important as price. Your providing a layer of that. If the contractor doesn't
deliver you chase down the solution untilt he customer is happy, that adds
value. Ask for referals, do more networking at small business functions get
more clients before you quit. Get business cards hand them out to everyone you
meet. PWC, E&Y all offer consulting services and they are billion dollar
businesses. Will you get in an incubator probably not, but who cares. I would
take about 20% of you profits and invest them in new marketing methods until
your big enough to fund/work on a product or Saas(if you want a scalable
business). Also, look for ways to sell reoccuring services to your clients
with a markup(Hosting, backup services) Ask your clients where their pain
points are and find more thigns to sell them. Build a service business then
automated the most time consuming tasks.

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wikwocket
I would echo everyone who has said there is nothing shady or unsustainable
about this. You are managing people with skill-sets to complete work of
business value for customers. This is essentially how most of the world's
companies run.

As for whether it is sustainable for you, you might want to get another few
customers, to see if your pipeline is repeatable. You may also wish to
accumulate enough savings to live on for 6-12 months. That way you'll have
some runway to ramp up your rainmaking, and figure out if you want to do this
for a living, or go back to a day job.

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driverdan
This is exactly how many creative agencies work. They have some artistic
talent in house but often farm out dev work to freelancers. There's nothing
wrong with it and yes, you can make good money doing it.

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Piskvorrr
IMNSHO not sustainable: copycats are likely to spring up, narrowing your
profit margin.

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patmcc
Is there a market/business model where that isn't true? The key to
sustainability isn't to be the only person doing something, it's to keep
improving on how you're doing it.

