Hacker News new | comments | show | ask | jobs | submit login
Ask HN: How do I start my own consulting firm?
476 points by cosmorocket 254 days ago | hide | past | web | 112 comments | favorite
I work as a senior frontend developer in a company and have experience with backend stuff and devops, learning new things constantly. My colleague and friend is the team lead of our team at that company (10 members in the frontend department). Before working in the company I had a long successful path as a 100% remote freelancer (7 years of work).

The stuff we now work on in the company is quite complex - a realtime trading platform with tons of inner components, complex logic, large codebase. To me seems like we got quite experienced and gained precious expertise by the moment. We have the ability to extend our expertise to other fields as well.

Now I feel like my career path now is to establish something on my own and work on a product.

I talked to my colleague about his will to join me as a partner in growing our own business and it looks like we are on more or less the same page about what we want and should do.

Here is my plan:

1. Do preliminary research. Prepare the basement in form of a site with portfolio, our focus, expertise and articles.

2. Start looking for projects online to work on for companies as a contractor team. I will bring us some coins for the first time.

3. Setup the business processes and make the workflow stable and profitable.

4. Keep working as a team for clients and start working on our product ideas.

5. Switch from contract work to our products gradually.

Here are my questions:

- Willing to find projects for a small team (2-4 members) of developers/designers should I look for larger projects in a different way?

- How do I identify that a company might be in need of a team like ours? I don’t want to spam everybody trying to catch a project.

- Should I prioritize our online sales channels over local ones?

- Should I partner up with firms like ours? Contact them and show our offer so that they could be interested in subcontracting with us?

- Should we have mentors/coaches?

- Should I hire a salesperson to look for projects?




Here are some things to consider about consulting:

Sales/Selling is the last thing on your list and salesperson is only a maybe. Reverse all of your priorities because selling and relationships are the most difficult things to master for a consulting company and you will die without those skills.

In consulting, tech talent < sales/relationship talent. In fact, if you're great at the latter go ahead and get started now because there are lots of great tech people who don't want to do it and will come work for you on a nice contract rate.

To give you an example of this I once worked with a consultant who was a technical rock star, and another consultant who was supposed to be technical but was actually pretty below average. The below average guy was more successful because he was great when talking with the customers and they loved him. He knew enough to talk through problems at a high level, explained things well, and made them feel comfortable that things we're on the right track. If he didn't know something, no problem, he just went and found someone with the answer.

Besides those soft skills he knew how to set and manage expectations. You may be used to the best results winning, but if you don't manage and then exceed expectations it doesn't matter. People love you when they expect 80 out of 100 and you deliver 88. They will not be happy and often fire you if expecting 100 out of 100 and you deliver 92. You will wonder how you just lost to a competitor who is not "as good" as you.

Even if you have pretty good soft skills, do you want to spend time constantly using them? I thought you liked the tech side? If you like both then great because someone has to spends tons of time doing it to sell, maintain, and expand the work and your success depends on how good they are at it.

For many people this will all be hard to believe, or they think it's exaggerated, or that it's easy to just hire someone to do it. That's fine, I hope you have great success. Drop me a line in a couple years to say how things turned out.


Further, think about:

* The length of your expected average contract (days, weeks, months) * The revenue in that contract * How many of those contracts you'll need to sustain the team per year * What percentage of your prospects will sign a contract

So for example, if you need 10 contracts per year to survive, and only 20% of your prospects sign, that means you need at least 50 sales conversations per year.

Marketing is the single biggest problem I see at small consulting shops. They don't get enough leads. Sure, you might believe you can convert a lead into a sale - it's harder than you think - but how are you going to get those leads?

Without leads, you end up groveling for low rate work that you don't really want to do, just to make ends meet. Then, after a year, you've built up a low rate reputation and low rate skills. It's a downhill slide from there to giving up and taking a full time job again. Nothing wrong with full time jobs at all - they're much easier since you don't have to do marketing to find work.


It's compounded by needing so much outbound sales when you have no reputation and such small capacity. I work at a mid-size consulting shop where we are maybe 50/50 outbound and inbound. Inbound sales are like gift-wrapped christmas presents but they require so much effort to get to. Outbound sales is extremely costly.


That's why my suggestion to these guys is to save every penny at their current job so they can skip to a product business.

Forget the sales, soft skills, and making products for other people that will never truly appreciate the craftsmanship that went into it. Just stick to your guns and create the situation where you can just work on your own product.

If you guys are kicking ass at your current firm, you should be being paid for it, i.e. making enough to save some some money. There's your ticket. Be patient and wait it out while saving money. Plan out your upcoming product, and do all the preparation that doesn't require deep immersion, so from day one after quitting you can deeply immerse yourself.

ps. how's 7 years as a remote freelancer so different from a consulting firm? It's not. Just more developers, bigger projects. You already know what that life is all about. Do you really want to go back to that, now with the burden of supporting more engineers? Keep it simple. If you have the skills and confidence, your product idea will work out. Just create the space and time to do it.


This is bad advice, imo.

If they start a consulting business there's a much more stable path to revenue from day 0, if they follow your advice they'll spend all their savings and possibly be in the reeds for ages. All the while they'll still need the sales/bd talent.


Ultimately it depends on the individual's scenario. Both sides are extremely challenging. Without more info, it's up to them to decide which best suits their situation. They're already thinking of going the consulting route, so I'm providing an argument for a different way so they can fully weigh as many possibilities as possible

So, the downside of consulting for one is that he's just going back to freelancing, just now with his buddy. But more importantly, the downside is simply that projects are always under-estimated, you'll grow your business ponzi-scheme style (new projects paying for old), eventually have more engineers, and be responsible for them, etc. Typical scene. They will have severely complicated their lives, whereas what a startup/product needs is simplicity and space to focus (i.e. not a plethora of projects distracting you and occupying more time than hoped). So it may very well be a long while before they truly create the space to do their own product whole-heartedly. I'm not saying it can't be done. They need to weigh whether they want to go through all that.

VERSUS:

a year from now (presumably after demanding a raise) taking 6-12 months off to work on their own product, and if it fails, simply going and getting another job (they'll be better engineers, and it will therefore be easier to get jobs).

At the end of the day, the biggest--and perhaps hidden--factor is whether you have kids. If you don't have kids (or people other than yourself to take care of), and you can't create this environment for yourself, you have other problems. But more than likely while at this stage of your life, you have options. So the trick is not to get yourself into trouble with large under-estimated projects for other people, and to do whatever it takes to create time for yourself and your own projects. That's the name of the game. That's what it's all about. I.e. keeping it simple. Don't get yourself into trouble with too many projects, projects that are too big, working for too much potential that doesn't pan out. Get short low responsibility projects, and make your #1 focus creating time for your own projects.


It's hard to call advice blanket good / bad when the decision is heavily dependent on an individual's end goal combined with their tolerance for risk and uncertainty. Different people need different advice.


Great advice. I'd only add that the OP seems like he's from a foreign country and doesn't have English fluency.

When you can't speak English fluently your shop's greatest strength will be technical prowess. Soft skills take a backseat until OP learns English fluently.


Of course this assumes that the OP wants to build a consulting business in an English speaking country. Maybe he/she wants to consult e.g. in France for French companies, but still posted on HM because advice from HN would still be helpful and relevant.


There's really good advice on here. One of the ones that sticks out is soft skills & sales, which is just as important in consulting as the technical prowess. I would say it's somewhere between 50-80% technical chops, and 20-50% soft/selling skills depending on the client.

I think that's a big distinction that hasn't been made. If your client is another developer or CTO that deeply understands the subject matter, then the technical skills are definitely more important. If you're dealing with a CEO or CMO or business owner that's not technical, be prepared to really explain the whole story and present value from start to finish. There's benefits to both, as the CTO may be able to negotiate down your rate if they know where to cut out segments of the project or give that work to cheaper labor. The CEO/CMO side will take more work to help them understand the project, but will defer to you on scope. Again, this is generalizing, but less so than some other comments that treat ever client as the same persona.

One thing to definitely consider is to have one or more people on your team that is or has good experience being client facing. Whether as an account manager at an agency, a client-facing designer/developer, someone who has been there and helped guide and manage expectations for 5-10+ clients at once. That's a skill that's required, or else you're starting from square one and will have a lot of learning to do on the job.

My thoughts on your questions:

- Willing to find projects for a small team (2-4 members) of developers/designers should I look for larger projects in a different way?

A: I think the answer here is that some companies want to find a solo consultant, some want a small nimble team like yours, and some want a full-featured agency. I've realized this myself that there are different clients that want different things, so you should just understand what you are and what your value prop is and know that you'll be the perfect size/fit for some clients, but too small or too big for others.

- How do I identify that a company might be in need of a team like ours? I don’t want to spam everybody trying to catch a project.

A: You can go the data route and find companies that just raised a round of funding if you're going the startup route, or get a list of 50-100 dream companies you want to work with and monitor their job listings, not necessarily to apply yourself (you can sometimes) but to gauge how fast they're growing and what gaps in talent they're missing at their company.

- Should I prioritize our online sales channels over local ones?

A: Like others mentioned, referrals and networking is helpful but it's not all or nothing. If you're not that type, many others have received great leads by publishing really good content (blog posts, webinars, slide decks, guides, etc) and getting leads in the funnel that way. Paid ads (display, PPC, FB) can work for top of funnel leads but not often for bottom of funnel (closing the sale) so adjust appropriately.

- Should I partner up with firms like ours? Contact them and show our offer so that they could be interested in subcontracting with us?

A: That's definitely a good way to start. One universal note is that it's likely that a firm will pay you 50% of the rate they bill the end client for. So keep in mind that if you find the client yourself you get 100% of your rate, if you subcontract you most often get 50% of it. Not a hard and fast rule, but fairly common.

- Should we have mentors/coaches?

A: Can't comment on this as I haven't gone too deep into this, but many, many people highly recommend it.

- Should I hire a salesperson to look for projects?

A: Can't comment much on this but it depends on your own teams capabilities/stage/style, etc.


> [•••] selling and relationships are the most difficult things to master for a consulting company and you will die without those skills.

How about outsourcing the sales part?


The short answer is it turns out to be a hard thing to do.

Right off the bat your choices are limited because many sales roles benefit from being close to customers. You may be limited to local and have no option to leverage hundreds of millions of people outside the country like tech can.

Secondly, they're expensive. The stars can make double what a top architect makes. You might think, no problem it's just x% on what they sell and we all benefit. Then the problem becomes why should they join your company now if you don't already have a lucrative pipeline to maintain and expand? To get around this some companies will pay fixed cash rate until commissions ramp up, but often that's hard to do for a startup.

Also salespeople tend to care less about how cool the technology is. It does matter somewhat, it's better to be selling software than cigarettes. However it would be common for a tech star to turn down a cobol job even for a 30% raise, whereas I estimate that's less true on the sales side.


Consulting = Selling. If you outsource the selling and you work on the tech, then you're the one being outsourced. It sounds like OP just wants to work on interesting technology, but not for someone else. Turns out it's pretty hard to do that without being proficient in running a business.


The great irony in tech is that we all rail on tech outsourcing, but no qualms about it elsewhere (marketing, sales, finance, HR, etc). I get it if you aren't quite big enough for a full time person, but just remember incentives are usually against you.


Outsourcing is a useful and necessary skill for entrepreneurs. Outsourced dev has a bad reputation overall but there are also good devs in other countries. That said most business work is far less complicated than dev work, and the risks of doing it wrong are lower.

If a dev turned entrepreneur values their time @ $100/hr and a 10-hour business task can be outsourced with a 15-minute description to someone else for $15/hr, it's the "right" decision.


I'd rather go entirely opposite.

1. Get clients and start working for them. If you don't have more than one clear customer who already wants you, you're not ready for anything further in this list.

2. Incorporate and handle the core legal and financial stuff (only when #1 is solidly working!)

3. Setup the business processes and workflow;

4. Start aggressively looking for more projects - not online, though. The projects available there are not the projects you want.

5. "Prepare the basement in form of a site with portfolio, our focus, expertise and articles." - this is fluff that can wait, it's a bit useful for marketing but not strictly necessary. You won't get clients from cold sales or random advertising anyway, you'll get them by personal contacts and word of mouth where this won't matter much; and if you won't get clients from personal contacts and word of mouth, then you'll fail anyway and this won't help you. The connections and reputation to get offline clients is your primary competency as a consulting team, so work hard on that. The technical skills of your team are important but clearly in the second place, they're necessary but not sufficient for success; there's a good reason why successful consulting businesses usually are started only after a decade or two in the industry as that's one of the few ways how a new company can get the required reputation to get started on decent contracts.

6. Hire a salesperson to look for projects when your existing projects can cover multiple full-time developers, i.e. when your business is working and you've decided that you want to scale to a larger volume. Before that, you'll have to do the sales yourself, as your own personal reputation and expertise will be the main reason why others hire your company; you'll have to convince customers that you/your company has expert skills and that you can do things that they can't do in-house and a salesperson can't really do that until you have a solid reputation and lots of prior clients.


Here's a question—if you have

> more than one clear customer who already wants you

...but they only want you as a full-time contractor (i.e. an employee-in-all-but-name), is there a good way to convince them to pay for your expertise on a consulting-as-needed basis instead?

It's easy to "become a consultant" if what you really mean is signing on for fixed-length engagements to produce low-level piece-work (as e.g. an artist, or a programmer, or a content writer), but how do I break into consulting as, say, a distributed-systems scaling expert? I'm offered many opportunities by large firms to just work for them on a full-time basis as a systems architect—but I'd much rather be coming into businesses and increasing the competency of their own staff to do such jobs, so that they (eventually) don't need me.

In my experience, large businesses are interested in such engagements, but only want to hire other large businesses—consulting firms—to do it. And small businesses or startups are iffy on the concept of hiring consultants at all, preferring instead to bring all manner of expertise for one-off tasks in-house (though this myopia never seems to extend to thinking they need to employ their own accountant or lawyer, oddly enough.)


There's a big difference between a contractor and a consultant, and I'm not speaking about the difference between full time contracting and some variable hours contracting. In consulting you want to ensure an arms-length separation and work on a deliverables-only basis with the understanding that the deliverables can be worked on by your team, not exclusively you; i.e. that your hours, schedule, work environment, tools, software, work organization, who does what, how many and which people are involved, subcontracting, etc are all decided and managed by you with only reasonable limitations caused by requirements of confidentialty/NDA's and the billing setup. Of course, some tasks are a bad fit for that, and it's reasonable to want an employee or a full time contractor for that, but if you don't want that then you most likely shouldn't convince them, but you should accept that this task is not what you want - perhaps the same company will have other tasks later where they will want consulting services.

Yes, if you want to be in consulting business, that means that you have to work as if you were a consulting firm, even if you are a single person. It carries some overhead, so charge accordingly. Some form of incorporation tends to help and give an aura of being a larger team even if you're not, but for people who know you it only changes billing/legal/tax factors, not the job itself.

Yes, small businesses and startups are iffy about hiring consultants, and probably rightly so - the nature of such services simply isn't a good fit for them. Again, you shouldn't convince anyone, you should either accept that small businesses and startups won't be your target audience (and thus avoid networking with them but focus on larger companies who are actually likely to be customers) or discard the concept of consulting and accept to work as full time contractor or employee or co-founder or service provider or any other relationship style that works well for their situation.


Make friends with CTOs that have budgets, and convince them that anyone else would just mess it up.


Do you do consulting or work in a similar manner? Genuinely curious. I believe the steps you describe are relevant to other consulting domains, not just software.


I do some consulting; not a majority of my time but I work with some people who are fully in that business and I have a "company" i.e. separate legal entity made for these tasks, which is useful especially if I need to hire someone else for a bit of help on some task. Yes, the steps are absolutely generic but I believe that there shouldn't be anything specific to software consulting; the basis of how "renting expertise" business works is the same, no matter if that expertise is in software, hardware, consumer psychology or geology.


If you go this route, you might even find an opportunity you realize would be better suited to making and selling a product rather than consulting, allowing you to delay that decision to consult or make/sell a product to find the right fit for a problem!


>> 4. Start aggressively looking for more projects - not online, though. The projects available there are not the projects you want.

Any particular techniques how to start doing offline sales?

Being a foreigner struggle a bit to find local projects in Bay Area. Meetups and events doesn't help a lot, cold contacts on Linkedin or by email are mostly ignored.


I built and sold (acquihired) a small successful security consultancy from 2011-2014. My experience is seen through the lens of security consulting. I should really write all this down in a longer form but heres the important take aways in my experience and my answer to some of the questions listed.

1) Your tech skills matter less than you think they do. Customers want good work of course but they also need a reliable partner who will answer the phone and provide guidance beyond just handing over code or a report. Be professional above all else.

2) Don't fool yourself that you're only consulting while you build a product. Its two entirely separate types of businesses. If you try to do both you run the risk of doing them both poorly.

3) Figure out your growth plan before even thinking about a sales person. You probably wont need one for awhile.

4) Yes you want mentors, preferably people who have built something similar to what you're trying to build now. Even better if they failed at it.

5) Don't rush into subcontracting. You will lock yourself out of big contracts that way. Large companies want a varied list of vendors to choose from. Only do this when it makes strategic sense for your longer term plans.

A small consultancy is a great lifestyle business. Be realistic about your goals for it. Scaling up a consultancy is mostly limited by how many experts you can hire. And if you do your job right its only a matter of time before your best people start their own thing.


--> Don't fool yourself that you're only consulting while you build a product. Its two entirely separate types of businesses. If you try to do both you run the risk of doing them both poorly.

Can you please comprehend some more on #2 above - esp how/ why/ what you think are difficulties taking this route?


What about using the process, resources, and scheduling expertise that you aquire from building products for others on your own project? Having the know how to complete projects is why people hire you're firm, so hiring yourself could be a great way to build a product on the development / design side in a cost effective manner.


I would love the opportunity to chat with you. Could you spare me an email or two?


Sure. First name dot last name at gmail


Might I suggest Step 0?

0.1 Start marketing. Something as prosaic as a blog, if necessary. Demonstrate your capability. (Capability does not mean technical skill. It means your empathy with another human to understand his/her pain, and show him/her that you care. You demonstrate caring by talking simply and clearly. If someone understands you, they feel good about themselves. If you are talking simply and clearly, that means you have taken the time to really give a shit about the other person).

0.2 Get a customer. For really really cheap if necessary. Train people to give you a small amount of money in return for some help.

. . . onward and upward.

I personally would not take on a partner and employees for a while. I can tell you from personal experience that it is a profound psychic burden to be responsible for other people eating and paying the rent. In addition, the HR component of having employees is pure, unadulterated shit swimming in a pool of pee. It's as if our government wants to discourage employment. California (where I am) is the worst.


Don't work for cheap unless you have to. Word of mouth matters and cheaper customers are in a totally different market segment.

It is very tempting, and easy to do as a one man shop, but it dramatically undervalues what you produce and you can end up trapped in that lower tier of work and pricing model and have a hard time escaping. (opportunity cost, etc)

patio11 has written openly about his efforts here and I think it is well worth it to review as well.

Experience: partner at a small, but growing infosec consulting shop.


Mandatory reading: win without pitching manifesto

I was skeptical for too long about this kind of advice and I've paid my fair share in lost opportunities. It really, really works.

http://www.winwithoutpitching.com/the-manifesto/


Here's the link you get after they try to harvest your email: https://www.winwithoutpitching.com/manifesto/read-it-online/...


What's the gist of it?


Most beginners think the power is in the hands of the client because he has the money.

This is a framework with 12 simple principles to reclaim the high ground in the client relationship, beat back the pitch and win new business without first having to part with your thinking for free. It enables stronger practices amid the forces of commoditization.

Of course Blair Enns is a better writer than me (English is not even my native language), but there we go:

1) specialize (another common rookie mistake is to position yourself as a generalist)

2) replace presentations with conversations

3) diagnose before prescribing

4) rethink the meaning of "to sell"

5) do with words what you used to do with paper (never again spend a night writhing a detailed quote for free)

6) be selective (don't waste your time with the wrong client)

7) build expertise fast (specialization helps)

8) do not solve problems before being paid (never let the client "pick your brain")

9) address money issues early (if you are unable to talk about money you will make no money)

10) refuse to work at a loss (be ready to fire abusive clients)

11) charge more

12) hold your head high


- Short intro:

Spent 2 years as freelance and 4.5 years building a 20 people consulting company (1). During this time met dozens of CEOs of various size consulting companies to share knowledge and learn.

- The why:

Think hard and long before you get into this field.

1. Turning into a product company statistically never happens.

2. You will become profitable only after a year+ (most consulting companies get stuck at 3-6 people and are NOT profitable). Profitable = you earn more than working full time for someone else.

3. With each year you will spend more time managing and less developing.

4. Its not like a startup - but you will have highs, lows, worries and sleepless nights.

5. Its all about building a name - takes years.

6. If you want to build your own product, stop reading here and don't even start with consulting.

7. Location matters - you didn't mention yours.


People mention this a lot. 'You need to learn to communicate better, and it's more important than tech skills'. I see that 500tech offers high skill services (courses and solutions). Are these services outsourced then?


I would say that is exactly the opposite of running a good consultancy.

There are a few places that are basically business people subcontracting others. Their game is usually "We are cheap" with sub-par quality and endless chasing after (non returning) clients.

The most successful outfits usually are founded by strong tech people who also do the sales. (As in our case, everything is in house)


Did this before (Matasano). Doing it now (Latacora). Answers:

- The two most important words in your business plan are "segmentation" and "qualification". While being open to lots of different kinds of projects, try to pick 1 or 2 kinds of projects that you can standardize and package. It's easier to succeed selling a couple things well than it is to succeed selling everything just adequately.

- Pick a kind of customer you want to work with. Aim on the higher-end side. Build collateral that will appeal to those customers: case studies, how-tos, industry news bulletins, open source packages. Find places to meet those kinds of customers and introduce yourself to them. You'll get wildly different answers on how well cold-calling and cold emails work (nobody will disagree that LinkedIn private messages do not work). My take is: if you're good at cold calling, cold call; otherwise, don't bother.

- Which you prioritize depends on where you are, but I'd prioritize content and collateral that you can use either locally or online. Again: build packaging around just a few offerings, and try to make that packaging unique. It should feel producty, and the way in which you turn your team into a product should communicate something interesting about your worldview.

- I don't think you should sell yourselves an available subcontractor. For the subs, good sub relationships are bought, not sold: if you advertise yourself as being willing to sub, you're communicating something about your willingness to get rolled. Your best sub relationships will come from bumping into people at shared large clients.

- No, don't have mentors or coaches, at least in a formal way.

- No, do not hire a salesperson. The world of employed account managers is divided into good salespeople, who can work anywhere they want to and don't want to work for your small consulting firm, and bad salespeople whose real talent is selling people like you on getting paid a salary without helping the business. It's incredibly hard to hire and manage a sales team and most consulting shops --- let alone the young ones --- don't have sales teams. The ones that do tend to have been founded in part by a salesperson. Since that's not you, good news: you're many years away from having to worry about this. Act like salespeople don't exist.

Bonus advice:

- Bill weekly, or at worst daily. Never bill hourly.

- Raise your rates.


If you take nothing else from this, just take the bonus advice, which Thomas and Patrick have been flogging here for years. It really is just true.

If you bill hourly, people will attempt to attain an intimate knowledge of the comings and goings of what you do in order to get more out of you for less money, and this will be irritating, and they will also demand that you produce itemised invoices, which will, in itself, be time-consuming and even more irritating. Tell them that your minimum billable unit of time to complete a task (any task) is a day - tell them that it's a resourcing requirement, or just tell them nothing (if you're not brave, then half a day just about works too - but nothing more granular than that, ever).

If you're working with any decently sized kind of enterprise, almost any reasonable rate you can imagine will be absolutely fine - worrying about $800 vs $1000 vs $1200 per day is utterly pointless; pick the highest number you dare and if they want to work with you it will be fine, and if they didn't want to work with you, the rate wasn't the problem anyway. I once charged a client ~$15,000 for a week's work, because they needed it in a hurry; I thought I was being outrageous (because the work was very easy and very repetitive), but they went for it. Later they accidentally sent me the pitch deck they had sent to their client, which included their costs, and I found they were charging ~$25,000 for the technical side of a $90,000 project - they made $10,000 on the bit my consultancy did, and a hell of a lot more on the rest. So yeah, raise your rates.


Can you elaborate on these two bits?

> It should feel producty, and the way in which you turn your team into a product should communicate something interesting about your worldview.

> Bill weekly, or at worst daily. Never bill hourly.

Do you mean bill hourly but only working in full-day blocks? Or that your clients agree to pay you on a daily / weekly rate without a number of hours defined. This seems like a tough proposition for businesses to accept.

(The thoughts from your experience are super helpful.)


Hourly/weekly billing are entirely standard in industry, and most good clients will not balk at them. The business does not want your butt in a seat for 480 minutes a day; they want increased revenue or reduced costs. They will not micromanaged the distance between your butt and your seat at one minute increments unless you structure your affairs such that they're required to.

Note that all of your professional analogies doing the same work for the same clients in a W-2 fashion are salaried, not hourly. They don't fill out timecards or send a report to their boss every week saying "64 minutes for project planning meeting" either.

As to how much work actually gets done in a day, part of the deal is that the business is buying an adult professional who is committed to delivering efficiently on the stated objectives in the SoW. That bounces around a little bit; most days it resembles a standard work day at the client's site (at least in my business).


Thank you. So to clarify, are you backing up this approach with SoWs defined in terms of scope? My current work has less upfront definition more like "figure out how to build a system that does X or features 1, 2, 3" and is billed hourly. I'd like to experiment with other models that lead to simpler invoicing.


"the way in which you turn your team into a product should communicate something interesting about your worldview"

This is an interesting way to say it, but its good advice. Insisting on doing things your way because you think its right can pay off in the long run. Have character, be honest.


4 years of consulting experience here with a similar situation to yours.

Step 5 is elusive and almost impossible. Lost 2 products to the services mindset with further strain by partners to bring in capital by doing services. The chicken-egg issue becomes much harder when you are working hand to mouth.

The problem roots from 2 main things, services/consultation mindset and in-consistent projects.

The people who outsource or consult other teams to build their solutions start with a bidding process which inherently means that the cheaper and faster the better. This sole focus on cheap/fast is fun at the start as you become creative to work with tight deadlines and I atleast started doing more automation than ever before but can be useless considering how varying the projects are in nature and how the clients sole motivation is to be cheap & fast. This results in repetitive unchallenging work which is highly demotivating.

Inconsistent Projects. Our first year we landed a huge chain of projects from a massive global brand giving us enough capital to last a couple of years. But with clients there is no guarantee, we couldn't display most projects we did in the first 2 years cause their launches were delayed and NDAs were signed which means nothing to show as portfolio of big names. Finally when we could, most of our project contacts were going dry meaning more inconsistency.

For your question of sales, we had business developers who would get commission for each project who would spam companies to get us in the door. Mainly marketing agencies or contractors who would sub-contract us projects. The only reason we could get a lot of projects was because one of our business dev was an industry veteran wanting to do exactly what we were doing and we worked together though giving up high margins.

If your end goal is to build products, i would recommend go straight with a product. Find something you love to build, take out weekends for it with your team and try to get it into an accelerator for more advice/exposure.


Hi Umar, I believe I have sent you a LinkedIn message, please check, thank you!


Been freelancing for years, spent some time working with a guy that used to run a design consulting firm. I was thinking about starting a dev consulting firm, and his suggestions on how to find project were:

Identify complementing firms, see about partnering with them to do the stuff they don't do. Partner with a design firm to do the dev part of their gigs. Partner with a marketing firm to do dev work on App campaigns. Etc.

Identify much larger competing firms, see if they can toss you the projects that are too small for them. If you're a 20M/year big consulting firm, a $15K project might not be worth the hassle, so if you know the people that review the projects, they can refer people to you when they turn them down.


From my own experience: do not build a product until you find someone to pay for it. Unless you are really cashed up but even then you need a customer to drive it.

Take everything you can at the beginning and occasionally charge in beer for small things that took 20 minutes. Some of my biggest jobs came from some of those customers.

If you get along well with your colleague then partner up. You'll help each other out when going gets hard.

Don't be afraid to make drastic changes, like abandoning a product that doesn't sell.

Creative agencies without inhouse devs are your bread and butter until you get that recurring revenue from your products.

Expect to productize the most random stuff you would never think off.

Excel is your biggest competitor.

Go for it! Good luck!


Wait, you need to understand your risks. Consulting services has some extremely difficulty challenges unlike most businesses.

1. Cash flow / making payroll will be a constant issue.

Even when you win a gig, you won't be paid for 45-60 until after you start. And that will be trailing your work. Do you have enough cash reserves to float 2 months salary.

Now think about when you grow your team and now you have 10 employees, do you have enough cash reserves to pay 10 employees for 2 months until you receive your first installment check?

2. Sales cycles can be long and costly

Keep in mind you won't win all sales cycles. And sales cycles might take 6-12 months to win. During that time you'll probably have to fly to the customer, pay for travel,etc.

No of this pre-sales expenses are reimbursable. It's just a cost of business. Do you have enough cash reserves.

3. What to do when you don't have billable work?

For ever day you don't have billable work, you still have to pay your staff. Do you have enough cash reserves to pay your staff for months on end without billable work?

TLDR; consulting requires huge cash reverses. Also keep in mind it's hard to get credit lines in consulting businesses because you don't have inventory assets.


I just founded Elastic Byte (shameless plug https://elasticbyte.net) which is a DevOps-as-a-service and infrastructure consulting startup.

The biggest challenge in starting a consulting business is indeed building relationships and selling. It is very different than running my other company a traditional web SaaS. I'm spending lots of time in CRM (managing inbound leads), communication with leads, and setting up phone calls and Google Hangouts. It is absolutely critical though that YOU do these tasks to start. Don't try and hire a sales guy too early and push everything off to him. You must interact with the clients at the start to discover pain points, processes, and pattern matching.

In terms of partnerships, I'd say don't get bogged down in that. Companies will reach out wanting you to use or pitch their products, all good, but don't waste time setting up partnership meetings yet.


I have a TINY consultancy. I have a gig based set up. I am in NYC and there is a LOT of work here. I can't promise anything but maybe we should talk. I have maybe 3-4 clients who are growing and keep asking me about moving to AWS / DO manage infrastructure , etc...


Typically do these gigs require one to be physically present onsite ? I ask because I too am on the fence to try AWS consulting, but don't want to on-site type consulting [i.e you need to be at their site from start-to-finish]


I've been doing digital consultancy for about a year now in my own firm. Me and my co-founder started with a client from connections we made when we were salaried consultants, and took it from there.

Here's what I've learned since I started that I haven't seen others mention.

- Paid networks are great. We pay about 2-4k USD / year for gold memberships. The companies there only send their executive branches or other people with deciding power, so you'll meet relevant business contacts from the start. We've gotten business worth ~35k from these in two months, so 31k+ with ten months to go of the year for a 4k investment.

- Being able to speak in front audiences will give you leads. We generally just speak about digital stuff to our paid networks.

- The more people see you as a friend, the more likely you are to get big referrals. I go running with the CEO of large company in our field and we've become friends. About 200k coming from his referrals this year.


Could you say some more about paid networks? Which networks are you a member of, why and how did you join them?


Chamber of Commerce is an international organization. Networks for local science and technology.


Welcome to the dark side :)

Starting a services firm is all about building up a client base that can sustain you. Your big challenge is to get into the best referral circles, as the best projects come via word of mouth.

My suggestion is to take whatever you can get at first. Take as many coffee meetings as possible and network like crazy. You never know where your first big lead will come from.

Expect most potential clients to be sceptical of your ability to deliver until you have portfolio pieces that are of both a similar level of complexity to the clients' needs as well as written in similar technologies. Clients will be sceptical of anything that you wrote while still employed unfortunately.

For me, this meant that I had to take projects at a loss or on razor thin margins at the beginning. I was strategic about it though and this allowed me to build up the type of portfolio I needed to get my ideal contracts.

Online markets are very competitive. Expect to be up against 200 other bidders. It can be fruitful, but I consider it to be a full time job in itself.

Until you're established, you'll need to follow up on every potential sales channel you can think of. If you have sufficient capital to float sales people, it's always a great thing to have, but be careful as employees will spend your money faster than you make it at first. Contractors, freelancers, and commission only sales can help you out here.

I found most of my first clients by announcing my availability to my network. There may be some less saturated job boards on Facebook that are localized to your specific city as well.

You may need to take on smaller projects than you would like at first. It will feel useless but it is actually valuable networking. Some of my 1 day projects have turned into handsome referrals :)

Get as much mentorship and help as you can find. There will be hard times before the operation is running smoothly.

If you ever want to chat about it, you can hit me up at eric@dualgravity.com


I recently started freelancing after moving out from Bay Area to a different continent. I used to network a lot in Bay Area and thus I have had good luck finding people who would be interested in my services. However, I have needed to turn down potential clients because they have essentially said that they would like to hire me as an employee. I am young and it seems like most companies are looking to hire me in order to comb me into something useful for them.

Most people here tend to be parallel entrepreneurs rather than serial ones -- they have a half of a dozen projects going on at the same time. For this reason, I would not want to commit to a project to which even the CEO does not seem to have much time for. Some companies also seem to lack the much-spoken thing in Bay Area of product and/or market focus, which would make my role ubiquitous, which is not what I want. Although, because of my young age and mainly software expertise, I don't want to directly say that I think their way of running the business is bad. I do think that most of the companies are able to make it into a profitable business, but for me to engage into payroll positions, I would want something riskier than that.

Have you found the same kind of struggles early into your service firm? Would you have any tips on how to pitch these companies into buying what they want as contract work instead of hiring me as an employee? Any nice way to tell these people that I don't believe in the way they are running the business?


I encounter this situation constantly. The economics of outsourcing doesn't always work out for every project. As a consultant, you'll be charging 2-3x the hourly rate of an employee, and the company is giving up the benefit of having in-house expertise on their own product.

If you're okay with working for one client full time for the duration of a contract, my advice would be to work with a few recruiters. They'll take a 30% cut, but as they know about some of the best contracts it is often worth your while. Their clients are using contractors to deal with spikes in their workload, or for projects where they don't expect to need you in 6 months.

Another route is in finding clients who want you to manage the full project. Things like building MVPs or building Version 1 of an app. Usually they have a limited budget and aren't looking to take on the risk of an employee. These clients don't generally have any in-house technical expertise. In order to bag this type of client, I have found that having a solid project template to work from and speed up development is a must. It took me almost 2 months to fully set up my build pipeline and get a start project up and running just the way I like it (don't hate my just because I'm a perfectionist.) But now I can kick off projects with a running start. Deliver a fully functioning app in under a week, albeit with only the first couple features, and your client will be happy to pay your rate for the duration of the project.

Finally, the last route I know of is to specialize in a hot technology. AngularJS seems to be popular in my area. A lot projects were started with the thinking that Angular would do all the hard work for them, and now they are neck deep in spaghetti written by a junior. If you can market yourself as an Angular expert, they will be willing to pay higher rates as well as put up with the fact you aren't sticking around. But you need to have a hard-to-find talent for this power dynamic to exist. A friend of mine is a Haskell freelancer and finds it gives him good leverage.


Do you want to create your own product or do you want to consult?

My customers are sick of consultants who are really just pitch men for products, products they probably do not need. When i consult i openly say that i am not tied to any product, that while i do suggest and evaluate products i never accept comissions. That's pure consulting. The client comes first.

The other type of consulting is to offer consulting services as a way of getting your foot in the door. These are the people that bid low (or free) with the goal of selling product later. I dislike this approach. I find it dishonest and so do my clients.


That is one of the big challenges to consulting these days - trying to be "independent". In every IT space there are consultants that represent products. They get a lot of consulting leads from the product companies, and in return they are always looking for opportunities to plug a product. I'm not saying there is anything wrong with that - IT consulting doesn't happen in a technology vacuum. In fact for a new consultant there is probably no better "network" then the product network. For example, I'm doing more and more cloud computing consulting. It probably would make sense for me to join the technology partner networks of Google, Amazon, and Microsoft.


Much depends on the type of consulting. I do legal stuff, mostly compliance and privacy issues. Hypothetically, if someone asked me which cloud service best complied with a new EU data directive I would recommend one. I might be wrong. Maybe that cloud wasn't the best. Everyone makes mistakes. But if i make that mistake and my client finds out I was taking a kickback from the cloud I recommended, then it doesn't look like a simple mistake. Now it is negligence. That sort of consulting is different than more technical work where the real issue is whether a recommended service or product functions as expected.

A common request of me is to recommend a pen-testing or scanning service (pci, iso, dfars and such). I often write out requirements and even negotiate pricing for such clients. Any kickback whatsoever would be a disservice.


Consultants resell the products from Amazon, Microsoft, and Google. The client will know that the reseller is getting a cut. It's not a "kickback". I would doubt that these cloud vendors could even offer a "kickback" (but then again, I could be naive).

But I do get your point. There are several types of IT consultants:

1. Those that help choose a vendor. They should be independent.

2. Those that hold a vendor's feet to the fire. I would claim that a good reseller could still do that.

3. Those that are really just outsourced warm bodies of the vendor. Don't expect much if any independent thinking.


> Setup the business processes and make the workflow stable and profitable.

This should be the top priority. You personally don't want to be tied up to any client/project. You could help developers as time permits. But your priority should be about getting projects, hiring, managing cashflow keeping it profitable. Not very "engineer-ish". If you are a hardcore developer - you will (almost) hate doing this. Assuming you can get high value projects - executing those projects while keeping the customer and the team happy - is a perpetual challenge.

> Should I prioritize our online sales channels over local ones?

Local ones are always better and surprisingly easier compared to online sales that are highly competitive. The only discomfort is to actually move out of your office and meet people in person. The exception is if local ones are financially infeasible. You should also do online sales - And people (top 5-10%) do earn money from online projects too, so do not let myths discourage you from going online.

> Should I hire a salesperson to look for projects?

After some time - Yes. You should be the first sales person for your firm. Later you will be able to define sales-team profile that you need

> Should we have mentors/coaches?

I believe the answer is Yes in longer term. And by this time you would have been already successful but the growth might feel stagnant (or just boring).

> Switch from contract work to our products gradually.

A product guy is usually always good at consulting - but moving from consulting to products is pretty difficult. And it's definitely not because of the lack of execution capability.

If your goal is to do products - do just that and don't get into consulting. And it is easier to start validating, building product as an employee - compared to owning a consulting firm.


Decide whether you want to start a consulting firm or work on a product. Then do that. Don't start a consulting firm with the idea that you will work on products in your "spare" time.

If you want to work on product ideas, you are much better doing that while you still have a day job, rather than trying to do it while you are also worrying about where your next contract is going to come from.


I started this journey 3 years ago. Information security consulting, but the challenges are largely the same.

I could write a book about this. You can find me pretty easily (search my hn handle in Google, find my company, mail info@, and we can exchange other contact info), and I will happily talk with you via voice chat, my time is limited to get this out.

3. is hard, if you are primarily a technology person do not assume that because you are good at tech you can just figure all this business stuff (you can, but ... it is non-trivial)

4. This is a beautiful idea, but much harder than it sounds. I have seen it done successfully and can tell you how I have been a part of a team that made this happen

5. See 4.

Sales: Another book-worthy topic. Basically, you need to talk to people and be at every event vaguely related to technology to network with people. Go to mainframe user groups. Go to toastmasters. Network. Also if you are good at what you do you might be surprised at when and how work will magically end up in your lap once the world knows you are for hire (don't expect this to get you started, but it is neat to see in effect).

Partnering with other firms never worked for us.

Mentors/coaches... heavens yes. Find /good/ business consultants. People that can help you crystallize the outcomes you want and help you keep your eye on the ball. If you want to do more than just a one man shop, this is really helpful.

Hire a sales person? Technical sales of development and infosec consulting services is /hard/. The good ones are really expensive. Part time sales and referral type relationships rarely work (though they can some of the time, it has rarely worked for us).

That is all I have time for, will chat more later if you track me down.

edit: welcome to the big show. I can't ever imagine going back to working for anyone other than myself and my employees. It is a weird inversion to finally truly get how special and important running a business is. I do it for me, but I also do it for my employees and our freedom to live in a world with minimal red tape.


I manage a 2-person remote design and development team that seems similar to yours. We all got started doing individual freelance work, and then we raised some money as a team to pursue building our own software product. When we ran out of money, we went back to individual freelancing. We decided to actually start a consulting firm when we landed a big client that required combining all of our skills. We still actually operate with individual S-Corps which contract with our consulting firm LLC, which we own equally. Sometimes we still do individual freelance work outside of our firm. You may want to talk to a CPA about the best way to set things up for your particular goals.

- Look for projects everywhere. Even if someone is looking for an individual freelancer, there's no harm in presenting yourself as a team and trying to get the gig anyway.

- Local, remote, doesn't matter. The quality of the project is what matters most in my experience. Burnout matters even more when your team is small and everyone is relying on getting income from a project.

- Definitely reach out to other agencies, particularly local ones. Tell them you can help with overload and custom coding problems they might not have the in-house talent to tackle.

- I've never had a mentor/coach, so I can't really say if it's worth it.

- You should probably start by doing the outreach yourselves. Try subscribing to some paid curated lead generation services for freelancers/agencies. For a couple hundred dollars a month you can get dozens of leads sent to your inbox every day and a few of those might be promising. Follow up with everyone relentlessly. I use a service called Cloze for this.

Other thoughts:

- Keep expenses other than payroll in mind as they can add up. You can probably start with less, but there are a lot of great tools that can streamline things and save your team a lot of time. We pay for a co-working space, DocuSign, Slack, GetHarvest, UberConference, Google Apps, and Cloze, to name the ones I can remember right now.

- It's a really good idea to have a written contract with all of your clients. This is my favorite video on the subject: https://www.youtube.com/watch?v=6h3RJhoqgK8. The lawyer in that video, Gabe, reviews all of our contracts and he really is my favorite person to pay.

Best of luck!


Me and a fellow open source contributor just started offering services around a real-time open source project we created/worked on and we've seen an increase of inquiries recently. See http://socketcluster.io/#!/services - Maybe get in touch (email form is linked from the bottom of the page) - We're looking to build connections with people who have expertise with real-time systems. We're literally at the very beginning so anything is possible.


I'm doing this right now in the Bay Area. Most of my early clients came through me reaching out to a lot of people in my network.

I also had a lot of luck on angellist. My strategy there was to apply to jobs and then ask to meet the head of engineering for coffee. I got one of my best customers through that method.

If you don't have a strong network you need to be going to a lot of meetups or other events where hiring managers are present.


All of my colleagues who transitioned to running their own consulting firms did so by leveraging existing relationships with their employer's ex-clients. This is in conflict with every one of their non-competes. Since then they've built their businesses mostly on referrals. This is not what anyone would advise you to do but it's what I've seen pay the bills. YMMV.


Sorry it doesn't directly address your questions, but I have one comment based on observations of people who have tried to go from starting a consulting firm to their own products. That observation is, they get so busy running the consulting firm it takes all their time and energy and they never got to making their own products.

Thought to consider - if you really want to make your own products to sell, just jump right to working on that and spend all your energy doing that. Unless you genuinely want to do consulting work, of course.

Consider that starting and running a business is the same amount of work from the paperwork perspective. And a consulting firm just sells services where results are often owned by the client- whereas the product you make for your own company can be owned by you.

That's not to dissuade you at all if it is your dream to take this path. Just food for thought about what your dream really is and how much time/money you have to pursuse it.


I started a consulting business about 10 years ago. We're >80 people now and only do full team projects that include design, product management and engineering.

As others have said in this thread it's all about relationships and sales. Technical ability will help you retain clients and build bigger things over longer timescales, but won't help you get clients in the first place. Also, technical ability rarely leads to happy clients - they don't review your code - but a focus on helping the client achieve their mission is the key to success.

You need to start by getting 1 client. Then 2, and so on. You don't need a website, or even the name of a company to do this. I didn't know the name of my consultancy until about 6 months into it after we were 5 full time people.

Subcontracting with other firms when you start is possible, but is mostly based on relationships, not capability. When I started I had a relationship with a design agency and they subcontracted us their heavy engineering work. In reverse, I saw this as outsourcing sales and account management to them.

To grow the business I started a meetup.com group back when meetup was just starting. There were no other groups at the time and I was able to make a good name for myself in the community which lead to word of mouth business. Once a month I would have a different big name company in town host an event where I would bring 50-80 engineer types and do some tech talks for about an hour. It took about 5 hours to organize per month and barely any out of pocket costs since companies were happy to open their spaces to technical types and provide food.

You need to figure out what you're willing to sell. Staff augmentation? Time & Materials? Contracts based on scope? They're all very different in sales process and delivery.

You need to think about account management as a real thing. Developing the empathy and focus around happy customers over "best code" or "ideal features" is critical.

Developing your sales beyond word of mouth is the hardest thing to do. Hiring a sales person alone won't do it. There are way too many small consultancies reaching out to potential customers everyday and you can't distinguish yourself from the noise. If you have a clearly differentiated product offering or services approach that a sales person can leverage to make a clear pitch that's not just "we can do your projects!" then it can work.


Check out Thoughtbot's "playbook" - https://thoughtbot.com/playbook - it's a thorough and up-to-date guide to running a consulting firm.


Consulting will murder you. You'll never build a product while consulting.

Read your employment contract and talk to a lawyer. Don't put anything on paper before you leave. I'm not a lawyer but you have 3 problems:

-- if you design products while employed, your contract may assign ownership of those 'thoughts, ideas and inventions whether reduced to practice or not' to your boss

-- you're planning to recruit your coworkers to come with you? may violate your non-solicitation clause.

-- if you're a senior employee and your new company is in the same area as the old company, your old company may be able to stop you from working (period) under your noncompete.


Hey cosmorocket — I've gone on a similar endeavor last year starting my own full-time, one-man company focusing on contract software development. Most of my work is independent contracting vs freelance though I'm starting to experiment more. I'm also doing related work such as (paid) technical writing. Having this flexibility is perhaps the biggest advantage to me. So far all work is purely contracting, not consulting, though the terms seem to be thrown around interchangeably these days. My business website is sparse but is at [1] for reference.

I've found that finding clients is not as big of a challenge as envisioned. Marketing / sales / and all that turned out to be pretty irrelevant in my use case. I also didn't bother making a portfolio — my best work is private low-level backend dev that can't easily be shared and often not even discussed (this is a challenge). So far I've received most work based on personal reputation as opposed to any type of proposal or competitive process.

Partnerships are very helpful — being able to recommend a front end dev or graphic designer on a whim is a big service to your clients. This one I underestimated initially and am still working on developing a nice organized rolodex (and currently seeking software to simplify the approach).

Feel free to reach out if I can provide any other relevant thoughts from my experience (email in profile).

[1]: http://www.edmistonsoftware.com/


I'm a Loan Officer (Mortgage Banker) with IT experience (5 years) Ran my own IT consulting firm for a year before giving it up. It was hard to do it on my own. I had 4 clients under contract doing both the Technical side and sales side.

Let me know if you would be interested in working together. I would be interested in being a salesperson.

Certainly qualified to do so, originating mortgage loans in 11 states.


Would you be interested in helping me out as well? See profile for info and business (DevOps-as-a-service and infrastructure) consulting company.


#2 You are in the right direction. Take your time to find the right first clients to define your niche.

#3 You must be profitable in the first couple months if you are doing services. It doesn't make sense to make a service business and not being profitable.

#4 At least a year before that.

#5 it's not as easy as it seems. But it's good u look to get out of non-recurring revenue.

As soon as you have your first decent client, you should commit full time otherwise your priorities are wrong (burn the bridges).

Quality and word of mouth sale more than a sales person if you are doing service. For a product it's a different story (mkt., sales, etc.). It's way harder with a product.

Partnerships never work, they are a big distraction and a way for your competitors to gain insights about your business. Focus on getting off the ground.

You need to define which niche you wanna target. You should have a network that knows what's your next move in order to make it work.

Started 3 years ago, going great, we are based in Bangkok with decent revenue. Successful internal products are elusive tho. Good luck with your next step.


Full time freelance consultant here, specializing in product strategy and early customer acquisition. This should apply to your situation as well. What other people have said in this thread is mostly accurate: consulting is 100% about client development, and 70% of client development is doing good work for the clients you do have, because almost all your clients will be word of mouth.

But, that doesn't answer the question of how you get your first clients. Here's what I suggest:

- Start networking. Set up meetings. Lots of meetings. With everyone you've ever met, at all levels. Depending on who you are talking to, float the possibility of leaving your current job to 'see what opportunities are out there'. In some cases you can be more specific ("I want to go freelance"). In other cases you can be more declarative ("I am freelance now.") The purpose of these meetings is connecting with people, most of whom you probably haven't talked to in a while. The purpose of networking is making friends. You want to catch up with people and slip into the conversation that you're going freelance now or already are. You don't have to ask them for work; work will find you. It's important to realize that networking is ultimately about increasing the number of nodes in your network so when one of your nodes has a friend who is looking for work, your name is top-of-mind for a referral. The best sales come from INCOMING connections, not outgoing ones. Engage in your networking activities to maximize your incoming referrals.

- How do you start networking? I'm sure you have friends at work who won't go blabbing to management about your desire to leave your job. Ask them to connect you with people because you're looking for new opportunities. You don't even have to mention consulting--saying something like "I've been working here for a while, and I'd like to see what else is out there. Do you know any people I can talk to who are doing something interesting?" will work. This will be your initial word-of-mouth funnel that will lead to clients.

- Use meetings as a way to get to more meetings. It will come up naturally in the conversation. "Oh, the work that Acme Inc is doing with data warehousing is really interesting. I would love to find out more about that!" Make the goal of every meeting to get a new meeting.

- Go to networking events. Not coding meetups, where you'll only meet other engineers, but boring industry-related networking events where you'll meet real companies who can hire you. If you work in a real estate tech company, go to a real estate industry event. Go to tech industry events like Techweek. When you're there, meet people. Make friends. Make sure they know what you do, and you know what they do. Get their business cards. Follow up with people you like. Set up more meetings. Etc, etc.

- One thing that could work for you: there's nothing wrong with taking job interviews, especially at small companies that can't necessarily afford to pay for a full time person. If you establish yourself as a freelancer and do a good job, it's easier to get freelance work at higher levels. Many companies who bring you in for an interview will be responsive to something like "I can't really take on something full time right now but all you need to do is deploy a new framework for your site, so I can do that in two months for $X,000. How does that sound?" Boom, your first fixed bid contract.

- In summary: you should spend 100% of your time outside your job networking. I promise you will get clients quickly.

Those are some DOs. Here are some DO NOTs:

- Do NOT try to sell to anyone in your network. This seems counterintuitive, but you will almost NEVER hard sell consulting services to someone you already know. Networking is not about sales; networking is about making friends, and you will LOSE friends if you try to sell freelance services to your friends. Instead, like I wrote above, maximize incoming connections. I guarantee you will meet with someone and halfway through the conversation they'll say, "hey, I have this friend who's building an X, can you help with that?" Boom, instant sale, and the best part is, their friend is referring you so your reputation will start warm rather than cold.

- Do NOT hire a salesperson. You are not a company, even if you have a logo. Your company is YOU. Clients will hire you because they trust and like YOU. Until you have 10+ clients full time, you will be indistinguishable from your firm. There's a reason why even major consulting firms (McKinsey, Bain, LEK) are named after their founding people, decades later. Oh, and by the way, those firms don't have salespeople either.

- Do NOT waste time on marketing, research, positioning in a market, etc. Your market will be determined by your unique skillset and your referrals. Treat this like a MVP startup: let the customer guide you to a product-market fit. You can spend 2 months building a website that no one will visit, or you can spend 2 months building a network of thousands of people. Choose the latter.

- Depending on your cash situation, I wouldn't quit your job yet. Until you have a client or clients willing to pay you at least half of what you're making now, pretend your current job is your current client. Use it as an opportunity to get new clients.

=====

TL;DR: Spend all your time networking until you have clients. When you have clients, do amazing work and they will introduce you to more clients. Never try to make a sale. Sales will find you. Good luck!


bmmayer - that's a very insightful post. I'm in a similar boat. I recently left a VP, Product level position in a software company to start my own consulting practice. I'm trying to focus on early customer discovery/development/strategy for small/mid stage B2B startups. I'm wondering how your experience freelancing has been so far? How long have you been doing and what were you main motivations to switch to consulting from FT? Do you have any plans of (or are already) scaling your practice beyond yourself and getting partners/employees to work with you?


d33kay--Happy to talk offline about it. Connect w/ me on LinkedIn? https://www.linkedin.com/in/bmmayer/


IMHO - 2 thoughts...

1) The way to find out if this is a pipe dream is to see if you can get a first client. Get a first client for yourself. If you can't, nothing else matters.

2) There is a huge fight in consulting companies between investing in "products" versus serving existing clients. This is why it's so rare for consulting companies to create products of their own. The best people wind up serving clients, and the internal products get sidelined. It only works if you're 100% explicit from Day 1 that the consulting exists purely to bootstrap the product. That's admirable, but if you're really into products, why not just get VC money?


There are a lot of things that you need to do to start your own consulting firm.

One of those things to do needs to be:

* Watch this video: https://www.youtube.com/watch?v=6h3RJhoqgK8


This talk is actually pretty good. Contracts in consulting are critically important to have in place as they establish expectations. Without a contract, you'll be surprised how many companies will no-pay or try to wiggle out of financial obligations.


I recently started a remote development team with a friend(http://whiteboarddynamics.co/). We use 2 lead generation services as well as the monthly HN threads for freelancing and hiring. I find that spending time every day working on the business and searching for clients is key. I think that it is important to be able to market yourself, in relation to hiring salespeople. You know your business best so you won't over or under sell it.


Almost all of your questions come down to relationships, so the answer from WhitneyLand is important, but I'll be specific:

>> How do I identify that a company might be in need...?

By having connections and a solid reputation, they may actually start coming to you. For now talk to people you know to see if they have a need you can fill.

>> Should I partner up with firms like ours? ....

Yes. But they will need to know your reputation before they are willing to do so. So it's connections again.

>>Should I hire a salesperson?

Probably not. You will be your own best salesperson and will start with your own network.


Your plan is nice, but you'll never get to 5. You will most probably get stuck in doing client work with that strategy.

I would rather continue in your current position and prepare everything to not "Switch from contract work to our products gradually" but switch from a known and secure context to your new product. Either gradually or abruptly if you have enough cash.

Haven't replied to the other questions due to blocking point 5. But mentor and coaches are great to have an external point of view : try to use them wisely.

Good luck!


If your ultimate goal is to build your own product, then starting a consulting business is a distraction. Maybe it helps to just focus on the goal? How you make money while you pursue the goal is not important. So keep your day job and work on the product as your side project. I'm almost certain your day job is MUCH easier than starting a consulting firm, so you'd have more time to devote to the goal. It's also much more stable and predictable in terms of income.

Good luck!


> Willing to find projects for a small team (2-4 members) of developers/designers should I look for larger projects in a different way?

Selling yourself as a team is to ultimate goal, but initially you may need to focus on leveraging your experience as a freelancer. Sell the same way you sold as a freelancer, but twice as much and contracted through your company, and expect your partner to do the same. As you gain relationships with customers, look for opportunities to pivot into larger projects or staffing two freelance positions with the same client. This base of work will keep you afloat while you figure out how to sell larger projects or build up a software portfolio. Ideally you'd find an anchor customer willing to commit to an extended contract to take some of the pressure off.

> How do I identify that a company might be in need of a team like ours? I don’t want to spam everybody trying to catch a project.

Same as above, this is something you'll need to learn from experience. Start with the skills you know from freelancing and the connections you've gained. Don't worry too much about "spamming" people, your hardest job now is marketing and selling yourselves. You may be surprised how willing some people are to help out a fledgling company.

> Should I prioritize our online sales channels over local ones?

Sell any way you can and keep what works, ditch what doesn't.

> Should I partner up with firms like ours? Contact them and show our offer so that they could be interested in subcontracting with us?

If you have opportunities to partner with a larger established consultancy, then yes this is a good way to grow while letting the bigger guys do the selling for you. This works especially when you have relationships in the industry you can leverage and/or specialized skill sets that other consultancies need to backfill. Otherwise, consultancies generally try to avoid subcontracting so it may be a difficult nut to crack.

> Should we have mentors/coaches?

Absolutely.

> Should I hire a salesperson to look for projects?

If you and your partner can't sell yourselves then your company won't survive. You shouldn't worry about dedicated sales people until your quite a bit bigger. That will be you and your partners job for the time being.


If front-end UI components for enterprise apps are your "niche", then I'd suggest a 2-pronged approach:

1) Publish a library of pre-built, generic UI components suited to a particular domain. Use a license like Creative Commons to charge for commercial use, but make the library available for free trials.

2) Offer hourly consulting services to enhance/adapt the components to specific needs.


Lets say that you're a small start up past the MVP stage. What would be the types of tasks that you would outsource to a consulting firm? Isn't it much more likely that you would try to hire full time and build a team / culture? Does consulting even work for this market segment?


There are situation it makes sense. Mostly around needing a specific feature by a certain date. Maybe for a particular sale, or maybe to lure a certain investor in. Either way, if your team is saturated already, and the new feature is something they aren't fond of building (eg: something heavy on frontend when your team is mostly backend), then a contractor or consultant is often the only way to have it built on time.

Finding the right employee can take time, and hiring the wrong person can destroy a team's productivity. Better to pay a premium than to get burned.


Do you think that there's room for consistent work from a company like this, or would it be more project specific work like you explained?


My experience is that it's usually project specific. If it is recurring they will, at some point, bite the bullet and hire someone.


I work for a reasonably high end software consulting firm. We find most of the work through word of mouth or in-bound responses due to projects we've put on the web.

Two suggestions:

1. Patrick McKenzie (http://www.kalzumeus.com/; patio11 on HN) has a lot of brilliant work up talking about his consulting work, consulting work in general. Give him a read.

2. Focus on solving business problems, not technical problems, and start approaching people that you think would make a lot of money if you solved one of their problems. Customers rarely push back if you make them more money than you cost them (to an absurd degree- it's shocking how much you can charge for a recent grad's time).

Regarding your plan:

- I don't know if you need to prepare a portfolio site. If you have a strong portfolio & can offer references/testimonials, that's probably sufficient.

- I don't even know if you need to make the workflow stable as long as it's profitable. If you have the product people working as contractors, then you can get by with instability. Also, charging large amounts helps substantially as you can spread out the cash over time rather than having to constantly search for work.

Regarding your questions:

- As mentioned above, you want to find people who have business problems that you can solve. The best way to do that is to meet lots of people and ask them about their business problems. Lecture 19 of "How to Start a Startup" has a good discussion of this [1, 2]. I would start looking at large organizations in your area who aren't tech companies. Governments will often have public bid processes that you can start applying for.

I would not prioritize online sales channels over local ones. I think consulting really only works when it's enterprise focused, as that's when you can charge the large rates to justify your time & overhead. That's going to necessarily be in person due to the way that enterprise sales works (unfortunately). However, internet marketing can work well. We've had a lot of success attracting in-bound interest from viral posts on social media (visualizations, projects, etc.).

- I wouldn't partner up with firms like yours. I would partner up with firms that lack the expertise. e.g. large management consultancies like Deloitte (easier said than done).

I'm happy to provide more specific advice over email. My email's in my profile.

[1]: http://startupclass.samaltman.com/ [2]: Transcript: https://genius.com/Tyler-bosmeny-lecture-19-sales-and-market...


What about working for the same employer, but as a consultant (usually involves leaving and coming back) while working for other clients on the side? Having seen quite a few people going this route, they seem to be doing pretty good.


Write a business plan to focus your energy. It doesnt have to be long or fancy. Include your resources, your market, your one-year and five-year goals. There are guides and samples on the web. You may revise on an annual basis.


Sales, sales, sales.

* Your are a developer, so everything else, you can figure out on your own.


So what you're saying is that to engineer a system where clients pay me to do work for them, all I need to do is engineer a system where clients pay me to do work for them?


The thing you're missing is project and product management and sales. Those parts can be really hard. You're coding skills are worthless if you can't deliver the right thing on budget.


You're not in a good position to start consulting - you have no understanding how that business works.

If you really want to build a product, start building a product right away.


I see a lot of good answers here already... but understand the reason you want your own firm... and the reason why it sucks to be a developer at most agencies... is the same as why it's really hard to be a developer out on your own. It's not talent that matters, it's the ability to sell. The sales guys have all the power because, without them, there is no viable firm.

Now... you can say, "Oh without delivery talent there isn't a firm either..." and you're not wrong. But, a firm can always fake it until they make it -- many do. Then scramble to hire devs once they get a sale. It's not a discussion around what comes first -- the chicken or the egg... it's sales that comes first.

If you're just looking to freelance, find a "cash cow" client or two. Bend over backwards to keep them happy. You'll make an OK living billing out at your hourly for them. If you have time, try and grow... but at some point you'll have to make the call if you want to do sales or delivery work -- and if it's the later you'll never have time to do the former correctly.

So to keep a client happy... you have to talk to the project manager on their side, the VP on their side, the C-level folks on their side... all the lunches and emails and gifts and crap that you never see because the sales / accounts team handled it for you. And if you don't do it... rest assured someone else is, and you'll end up losing your contract to someone who is willing to waste a day playing golf and building multi-layer relationships.

Having done my own business for a number of years... it's empowering to be your own boss, but even getting all my clients through reputation / word of mouth... it's a never-ending struggle to keep up with sales / accounts and it takes a lot more of my time than I ever thought it would.

It takes a lot more than just doing the job right for them. Let's face it... most of the higher up folks making the decisions about budgets... they aren't perfectly in tune with delivery anyway, so when someone comes along who tells them they can do it cheaper, faster, better, whatever... and turns on the charm... your relationship with the client's project manager isn't going to mean all that much.

It's exhausting having to be so aggressively inquisitive about my clients' businesses so I can get out ahead of them before they send out an RFP or invite another contractor in that could be trying to vie for my job. At the end of the day... is it worth it? Sure -- for me -- for the freedom. But I'd probably have more money, and a lot more free time, if I just worked for someone else.


A great resource for burning through your idea and getting your business setup/organized -> startuprocket.com. Free, too.


I have interest in speaking with you about a consulting opportunity. Please e-mail me: ron.michel at vmconfig.com


Be a consultant first. I didn't think it was as tricky of an industry as it is, but it is.


I have run a consulting firm for the last 8 years. Feel free to email me.

Ken@erdosmiller.com


Let me save you 18+ months of agony by recommending: expensiveproblem.com/hbin

worth every penny, IMHO. Been freelancing 3+ years, getting off of hourly and onto value-based billing has been life-changing.


Started on my consulting firm around 5 years ago - quite organically. (I was a freelancer taking on more work than I could handle so I hired help). Now we have around 40 people, a pretty remote team, some big Fortune 500 clients as well as lots of startups. We're also incubating our own SaaS products.

I'll address your questions as well as offer my own experience as lessons / pitfalls.

As many have said, sales and BD (business development) doesn't seem like a priority for you, but it probably takes a good 70% percent of my time nowadays. The other 30% are a mosh of running the company, maintaining relationships, and figuring out more sustainable avenues for the future (ie SaaS products).

Should you look for larger projects? Yes. Look for projects that will feed a big team. The 80/20 rule applies here. I would say 30% of my clients are responsible for 70% of the revenue. The double edged sword here is, make sure that 30% is not just 1 huge customer which happened to my friend. He learned the hard way that when 80% of your revenue comes from one customer and that customer goes away, you're toast. I lost a big whale which took out a HUGE chunk of revenue, but we were pretty diversified. Otherwise we would have been in real trouble. It sucked, and it was painful, but we recovered.

How do I identify that a company might be in need of a team like ours? Should I prioritize our online sales channels over local ones? - I'm 5 years into the business, and I have to say, most of the business I get is still from referrals and relationships. Almost nothing is from online channels, although that is SLOWLY starting to happen because of some marketing channels. Also I didn't really have much of a marketing team until recently. And even then, it will take some time to figure out the right marketing activities to focus on. If you are still small, you might be out of business by the time you figure it out. Most of your business will come through relationships. Hit up all your friends who work at big companies.

Should I partner up with firms like ours? - if you look on our site we have several impressive partnerships, but I can tell you exactly how much business they've brought - a big 0. Partnerships are hard. The partner is having enough trouble dealing with bringing money for themselves, much less worrying about bringing you money. I've never seen it work out in consulting. If you sell a product, there's no end to people who want to resell your product via VARs (value added reseller) or affiliates.

Should we have mentors/coaches? YES. I constantly talk to others who have had much bigger consultancies who are not my direct competitors (not in the same geographic space etc). I try to talk to them when I have specific issues - that they've probably run into before, or regularly so that I have a sounding board. I constantly ask for feedback on things I'm trying to implement etc. Learn from people who've done it before. Nowadays I also spend a lot of time with SaaS mentors because that's where I want to be.

Should I hire a salesperson to look for projects? I've not seen any small agency early on have success with a salesperson. This is because you'll probably only be able to attract mediocre or subpar salespeople with your small projects and small commissions. The best salespeople tend to work for companies like Salesforce so they can earn HUGE commissions and drive expensive cars and afford expensive watches. Also, everyone I've known in consultancies go through multiple sales people before they find the right one. You'll burn a lot of money before you do. Even after 5 years, I still do most of the sales myself. When you are this small, people want to deal with the owner. Also you are still figuring things out - your unique value prop, what you sell and truth be told, a salesperson who's not technical, won't be able to explain what you sell or even know how to sell it until you figure it out and systematize it for them.

As for products, I've always budgeted time and money for products since the very beginning and I've had MANY failed products. The nice thing about consulting is that it does give you runway to experiment. However the experiments will take more time and run slower. However, I would say you have more runway that "traditionally" raising some angel or seed. In helping lots of startups, I see a lot of this happen. People have an idea, they want to do a product. They find a team, raise a small amount of capital, and try it out. It doesn't work for whatever reason - maybe the hypothesis was wrong, they couldn't execute, they couldn't market, whatever. They run out of runway and investors don't throw in more money. They disband and usually end up getting jobs in more stable startups or big companies. That's it - game over. Or if they disband and try again, it's usually with a different team etc. To me that's a hugely disruptive way to do it. If you have a team you work well with, ideally I'd like to keep that team regardless of whether 1 idea works out or not. Remember, these are experiments. So the consultancy let's me keep my team intact while I iterate through different ideas.

Business process, (and technical processes). When you are small, and all sitting in the same room, you'll have a lot of tribal knowledge you pass on when you look over the shoulder. That doesn't scale, so the sooner you capture that into a document or process, the better. If you have to do something more than once, don't expect other people to know how to do it like you do it or like you want them to, so best to document it. We probably started that way too late but we have some processes now and we're still implementing new processes.

I want to end by stressing RELATIONSHIPS, RELATIONSHIPS, RELATIONSHIPS (read with Steve Ballmer's enthusiasm). This applies both in clients and talent. Most of my clients have come through relationships. We did a good job for someone and that someone knew someone who needed help in a similar area. A lot of our talent also come through relationships. Good people know other good people and want to work with those good people. If you have a good work environment, your team will recommend their old coworkers who they want to work with.

Hope that helps.


I started my own consulting firm one year ago. In all honesty, it is still a struggle, but I managed to grow it to the point where it is self sustainable.

My current challenge is to scale it up!

I used a very simple approach. I talked with a bunch of startups and SMEs and asked what their main challenges were. With all this information, I was able to find some trends and develop an offering that they really needed.

Best part of it was that I already had my first set of customers. By talking with these guys, they were fully aware that they needed and better solution and actually asked me to do it. In fact, I had to bring 2 people into the team in order to manage all the work.

By the way, I just wrote a new post and am promoting it around. I would love to hear your thoughts and know if there are any other topics you would like to see discussed in my blog.

http://untamedpotential.com/business-development-finally-cle...


I hope this isn't read as a off color comment,

but from reading cosmorocket's statement of inquiry,

I would say that he has to loose referring to anything as "stuff" right out the gate, from this morning's coffee on, and forever.

I mean to illustrate a more valid, less snarky, point, however:

When people hire consultants,

very often, if not prototypically, it is because they want to understand something that is outside their domain or their immediate efficient use of time, or to learn about something they are unsure whether it may meet their needs.

Hand waving and calling anything, "back end stuff"...

well, it rather blows as a pitch.

Certainly it fails at making a impression of confidence in our own knowledge, whether that is unfair doesn't much matter, if you don;t get the chance to expatiate further.

Knowledge != knowing what something is, and how it works. at least not in any consulting gig I think worth the name.

Knowledge is, very definitely, the breadth and depth of understanding a domain specialty sufficiently to relate and connect that to as yet undefined but potentially complimentary scenarios.

I want to be very very harsh, here, towards cosmorocket,

and this is intended well,

but all cosmorocket's questions are about the mechanics,

and it is utterly transparent to the reader that the absent component is appreciation for what it is that cosmorocket can bring to the table.

At least in the above question for HN, the reality of the quantity for sale is sorely absent.

I think this is why we've got a busy discussion full of anecdotes about corporate life, but nothing much at first glance that answers, "sure, you can do this, so you put it like that, and take home that". Hmm, in a roundabout way, some answers are a bit like that. But to really work, a proposition has to be simple enough at its core to be a one liner. The most sophisticated product in existence, can still be sold as "solves all your storage deployment problems whilst making IOPs a commodity you control, and compliance facility and data discovery and data loss guarantees a fixed affordable price".

Many people admire the sophistication of big sales outfits.

Corporate sales is not something many actually encounter, in life. Being pitched by EMC on a roll, eager to sell you dozens if not hundreds of TB or mainframe class storage in the nineties is a spectacular memory, like going to a grand opera. But it does all boil down to people who can cut through the chaff in a instant, so that what is too easily dismissed as frippery and trappings, are really aides and props for detailed discussions, not valueless glossy blurb. Great salespeople use their tools in ways not immediately obvious, and with skills akin almost to artistry. I may gush a bit much for your taste, but having been pitched by full on gung-ho teams, and felt at times overwhelmed by the sheer onslaught of energy and attrition of new supporting roles that a major enterprise sales effort fields to win your PO, i developed a real respect for the orchestration. I'm saying this by way of a analogy, that the casual onlooker might see glossy brochures that are terrible at defining anything, but their purpose is more discussion prompts, than hard data points.

I'd like to take cosmorocket aside, grab a empty conference room, and brain dump a whole 30 years of stories.

But the one thing I hope cosmorocket might get from my putative one on one, is the one i can give right now, just it won't seem like a hill of beans: If you want to be a consultant, and the adjective successful is a condition, because a unsuccessful consultant doesn't exist any more, or never did, you need one fundamental skill: to be able to relate to people by understandng hw they understand the technology you are discussing, so that you can get into their minds how they see their use, and whilst adding a core skillset and experience base, and maybe some tech sauce you might have rolled yourself, such as tools for cloud deployments you scripted, read back to your customer a interpretation of both what you can add, and what they might be missing, evaluated against as hard data as you can find, so that they understand the value to them of the next step they take with the technology you discuss.

Consulting is about making people understand the values of technlogy that matter to them, and educating them about tools that leverage technology to aide their needs, which needs you have to understand both from their appreciation of their needs, as well as what that adds up to in reality in practical as well as technical terms (i.e. sanity check, and eval whether they are risking expensive or dangerous poor assessments or make bad assumptions...) and explaining this in a way they can accept with the least impact for the biggest result your bill plus any extra dollars spent, can get your customer.

Selling to the next customer (i do prefer that word, even if people would say I got clients, not customers, because saying "customer" makes you focus on a product delivery, not wishy washy relationships, that frankly are strong only when you deliver as if you were shipping product) you get the next sale by opening up how you got the last, not by detail, but by example, and that is your pitch, then: "I did x for Z Corp, by this method, and they got a, b, and c, and i can give you this ROI for my work, and this customer reference."

Bu the first customer youwill get, probably you will best emphasize that you have a command directly of tech, that you have extensive domain experience in, where you see a edge that youlearned through your work, that is not widely enough deployed or accepted to be able to offer exceptional returns, and with a very low (relative, but do not ever sell yourself low, that is fatal, you must charge a market rate, even if you think big consultant rates are ridiculous for the customer you pitch, you need to be relatively in the same order as that, or else offer a discount plus earn out / bonus on other results that can add a big multiplier, if not a zero, to your contract payout) initial cost. As one man, you almost guaranteed got the low initial cost (another reason to watch tonor pitch yourself low) so you must move fast top the steak of your offer: which is "I do this with that, and it rocks your ___blank___ to the next level, and we can measure that, and we can do thisby performance in next to no time." To get a start, you must optimize time as a component. Your hours get multiplied by everyone you touch with the work you do hours. Your $400 hourly rate (not ridiculous a number) can touch and cause cost at $4,000 /hr moment you interact with any significant team in any operation.

I started very down / skeptical, but you have to.

Biggest and only advice I would ever personally offer:

there is nothing like the wrath (and bad PR effect) of a upset client for your consulting. Everybody will dump on your head.

cosmorocket, i've been harsh, sorry, but i mean well, i got not stacks but enough time to kick about, if you wanted to email me, i'll shoot at explaining better why I am right down on how you pitched this question, but also why that, and maybe the answers that arose from that, are not end of world is negative, or foreboding. But i would not encourage you to be optimistic for enthusiasm's sake. Consulting has fewer pom pom girls than startups. And far less of that, directly or indirectly, is allowed around any scenario i reckon you might find yourself in. Anyhow, I' be happy to traduce any optimistic cynicism I can, if you shout me. Good luck!


Hi John,

From reading your comments, you seem to have quite a knowledge. I'd like to email you but can't find your address, do you mind sending me the first message at lmenus@lmen.us? I am also in London.

Thanks,

Lubos


First and foremost, if you have an idea for a good product then just work on that. Don't complicate your life with consulting unless there's a dire need to save up a bunch of cash. It'll be easier to work on that while maintaining a 9-to-5 job, as opposed to trying to build a product while running a consulting business.

That said, consulting is a great way to learn a lot, gain experience, make good money, and figure out what you don't want to be doing. If you want to go this route, read on...

Speaking from experience (having incorporated two software consulting firms and worked at that for a few years), I completely agree with the comments about sales/selling be such an important part of things. If you don't enjoy this (or have someone on your team who does), then you're going to get worn out pretty quickly. However, if you can land 1-2 big clients and setup some kind of continuous (ex. retainer-based) relationship then you're golden.

One option is to try and contract from your current employer. You obviously have the experience and the relationships already in place. Your employer won't be happy about you leaving, but might be amenable to hiring you on a short-term gig.

An alternative is to subcontract. Expect your rates to be lower, but you'll have more opportunity to gain valuable experience and won't bear the risk/burden of landing clients yourself. It's a lot easier to find your own contracts once you have a few projects (and a network of contacts) under your belt.

Regardless of your approach, advice I always give to people when they ask me about starting a business are: get a good lawyer ; and get a good accountant. Don't take the cheapest options because you'll regret it later. Find people in the space who come recommended, whom you like, and who have a track-record in dealing in your line of work.

Whether or not you decide to incorporate is up to you (talk to the aforementioned lawyer), but in my experience it's a no-brainer.

In terms of legal, you'll also want your lawyer to provide you with a standard NDA and contract that you can use in all of your engagements. Any lawyer with experience should be able to provide this pretty cheaply (at a fixed rate, hopefully).

In terms of an accountant (or a small accounting firm), you won't need much to get started, but a 1-2 hour consultation to get your bookkeeping and invoicing setup will save you a lot of time (and grief) later. Make sure that you can hand easily hand your invoices, bank statements, receipts, etc. to your accountant when it comes time to file your taxes. Again, if you cheap-out on this it's going to cause you a lot of pain down the road.

Other notes from experience:

- Switching from consulting to product is difficult and almost always fails unless you're willing to make a clean break. As a consultant you eat what you kill; as soon as you stop working then your revenue stream drops to zero. I've seen people try to work around this by expanding their consulting firm to handle larger and larger projects, but then the people at the top just spend more time managing everything and have even less time to work on products.

- You'll eventually come up with a good product idea, at which point you should be willing (and able) to completely stop consulting to work on it. This transition will hurt, but you should have enough cash saved up to make a go of it.

- It's okay (in Canada, at least) to start working as a sole proprietor on some (smaller) contracts, but don't expect any client to be amenable to you changing the nature of your relationship with them half way through a contract (for instance, if you decide to incorporate).

- The larger the client/contract, the more likely you'll need insurance (errors & omissions, liability, etc). This doesn't come cheap. I recommend starting with smaller clients and projects to mitigate this.

- Figure out what taxes (if any) you need to charge ahead of time and be very upfront about this (and your rates).

- If someone wants you to be on-call (ex. 2-hour response time to a phone call), then great. Charge them more for it.

- If someone wants you on retainer (ex. 20 hours/month for dev ops), wonderful. Consider giving them a discount for multi-month agreements because it's a low-risk and guaranteed revenue stream.

- Make it very easy for clients to pay you. Include all of your payment information on each invoice. Have multiple payment options, if possible.

- Expect to terminate agreements with some clients. This sucks, but it's sometimes necessary.

- In your contract, be sure to state that the client doesn't own the work product (copyright, etc) until they pay you. This doesn't mean you don't deliver things according to schedule if payment is a little behind schedule, but you have some recourse if things ever get nasty.

- Finally, be sure to check your current employment agreement to make sure there's nothing that would get you (or your colleague) in trouble if you both decide to leave and start a company. Two things come to mind: there might be some onerous (and probably unenforceable) non-solicitation clause that a lawyer could twist to state that you solicited your colleague (or vice versa) to leave (this probably won't be an issue); and there might be some non-compete that you have to be careful about if you're consulting on similar products/features to your current employer. In both cases, I think this would be low-risk, but talk to your lawyer.


If you've been successfully freelancing for 7 years, then it's likely that you already know much of what I'm about to write. I'd say scrap partnerships and salespeople, and focus on what sales channels are best for you, online or local, whatever works. The two most important lessons I've learned in consulting so far are:

(1) It's really all about trust. The client wants someone who can reliably solve their problem, and tooting your own horn has a very limited effectiveness in building that credibility. Trust heavily impacts what projects people will give you, and how much you can charge. It's common that a company will somehow find 2-3x budget to hire a partner who they know will get the job done.

(2) Referrals and good deeds are the fastest way to build trust. When you come well-recommended by a prospect's trusted friend or partner, then a good amount of that trust gets instantly transferred to you. This transitivity of trust is key to building a good referral network that will consistently send work your way. If you don't have this, then you have somewhat of a cold start problem. In this case, providing value to people on a regular basis could really help with establishing your credibility. I don't mean doing projects for free, but more like offering people free 30-minute consultations about how to build their things, or sending them resources (articles or books) on a consistent basis that would really benefit them. This demonstrates that you can already deliver value, and makes it more convincing that you would do much more of that if you actually got paid for it.

Here are some more resources that could help someone get a start:

[1] Getting Started in Consulting by Alan Weiss is a little antiquated, but talks about what's important in getting your firm going and how to think about your work's impact on your client. (https://www.amazon.com/Getting-Started-Consulting-Alan-Weiss...)

[2] Book Yourself Solid by Micheal Port talks about the best ways to build these client relationships that will result in trust. (https://www.amazon.com/Book-Yourself-Solid-Reliable-Marketin...)

[3] Double Your Freelancing by Brennan Dunn actually has very good information about the tactics of pricing and the business side of project management. It's pricey. The accompanying podcast has good information for free. (https://doubleyourfreelancing.com/)

There are thousands of different info products online about this stuff, but this bundle should give you the most core knowledge for your money.


cosmorocket,

i owe you something i can't explain:

the mass of answers here are all brilliant in their ways,

but they are touching my memory of a very long time ago, in my twenties, when i first was throwing my all into business, my own startup, which i was indescribably lucky to keep from trashing..

i had the benefit of insane experience around me. By accident of a very long story, i had 200 years of multi national board level experience advising me, and i started silly young.

And i sounded nothing as good as, but really like pretty much all of the above.

Now, is many many years later.

Please nobody take this in any way meaning anything down on the true effusion of positive comment, above,

but for me it is a nostalgia trip,

i just got reconnected with a barely twenty something me

the outpouring here is amazing

i so wish there was anything like such a community, anyplace, the poles i'd relocate..

.. the energies i read above, are what i yearned for, when starting out

and yet despite i had the most amazing advice, counsel, business partners even, i only now realize to the extent at which they nurtured me, were patient with me, and how- long after each of those great guys retired or we parted ways - only now do i actually sound a little like they did, and it is so unlike the brilliance here, so much tempered, so much becalmed by blows and booms i never could have imagined, so much moderated by - not really cynicism, but by simply the experience of years distilling everything to the shortest short hand I could... Now i know how hard it was for my mentors to expand arguments they had reduced to great simplicity. I seem to have come full circle.

Oh, this isn't coming across how I wanted. But i mean without the slightest ill comment, to say how reading this discussion reminds me of me, what i wanted for colleagues, when young, but now i find, decades later, i think entirely differently, and feel so distant from the first energies I tried to let run in the world, and i rather have become what i once thought was cynicism in my elders. I hope i've not appeared cynical. But I really really want to say to cosmorocket, whose life may be changed by this, that a great deal of the replies here are exactly what my mentors railed against, were aghast against, when i expressed myself similarly. That does not invalidate any replies, but without addressing any individually, i really see the critical elements as missing in the debate entirely, which i note in my above comment. And my company survived because I was babysat by guys retired form boards of multinationals (fluke, fluke times a million, very difficult to believe, my story, really) who somehow tolerated me. But I was wrong, and i sounded like - rather I wanted to sound like but also be as confident, as what seems to majority here. And it took me all this time to learn why that ain't the full ticket, by some long way.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact

Search: