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Started a consultancy, ran it for 5 years, closed it down. YMMV.

My experience:

Running a successful tech consultancy has nothing to do with actually building tech. The only thing that matters is sales. I'll say it again: the ONLY thing that matters is sales. Every consultancy will be more successful by selling crap than by failing to sell great work.

(That said, do great work. Referrals are typically your best way to get clients you actually want to work for, so do good work. But you're here on HN already, so you probably don't need to be told that.)

Someone in your company will need to be spending just about 100% of their time attempting to sell your services. If you're running a one-person show, this will be very hard. You will need to make much more money per job, so you can float financially between projects.

Did I mention that the only thing that matters is sales?

Why is sales the most important thing? Because in a consultancy you only make money if you're working on a project. There are no residuals. No one will signup for your services and automatically start paying you, then keep paying you indefinitely. You will need to close a sale, start work, then charge for it.

All of that means that you are ultimately selling time. Your time. And that time is finite. Take a vacation? You're making less and spending more. Get sick? Making less and spending more. And if you're close to the line on your overall finances, this can be devastating. Which leads me to...

Cashflow. Cashflow is your new master. It owns you, controls you. Everything you do will be to serve your Cashflow. The only way to keep it happy is to feed it more sales. If you don't feed it constantly, it punishes you, brutally.

When you aren't feeding Cashflow sufficiently, you will lay awake at night trying to figure out what sacrifices you will have to offer. And, there will be sacrifices. When you _are_ feeding Cashflow, you will wonder how much longer you will be able to feed it. You will know how much Cashflow runway you have. You will know when you will be out of money.

Consulting is just a game of kicking the run-out-of-money can farther down the street. When it catches up to you, the game is over.

I'd echo many other things I've seen in this thread:

* Charge for specs * Charge high rates for good work * Pay your taxes * Say No to projects you know will be awful * Don't give discounts for any reason

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