Growing One's Consulting Business (2012)
training.kalzumeus.com
training.kalzumeus.com
I would certainly be curious to know how much patio11 is really making from his consulting business. It sounds like he would be making at least $300,000 (a lowball estimate of $x0,000 would be $15,000, and a lowball estimate of how many weeks he works in a year would be 20). And possible up to $1.2M (40 weeks at $30k).
So, if your client perceives that you will create $1M in value, you may be able to charge $300K for that. However, if the client perceives that someone else can deliver the same $1M for $100K, you can only charge $100K.
However, too many people get caught up in the $100K vs $300K, or, even worse, the $100/hr vs $300/hr, rather than the "here's why you get $1M in value instead of $200K in value."
Note that if I am right, this suggest an arbitrage opportunity, uber for small business consultants. It's most important issue is vetting the people who are doing the job and making sure clients know that they can count on them.
The "partners" are well-reputed deal-makig salespeople, and they farm out work to associates .
Doesn't sound like an economically rational move.
For example, I didn't know that Design Patterns were a thing. I'm learning about it now. I don't know what I don't know, yada yada.
Not sure what to do. I really do aspire to make new code, but it seems like if I never give up and I never win, then I'm wasting my precious remaining years.
Recently I've been writing a ruby grape-based api server and I thought I had a handle on it. Then I had the privilege of seeing a similar project for real and I wasn't even close. Theirs was so much better. Maybe I can get to that level but these guys are young, half my age, and they know 4x what I do.
I don't want to get negative but it feels like my career has just stalled and is at risk of never starting up again. I'm at a loss as to what to do exactly.
What would you do?
I would recommend contributing to open source projects, find some that may interest you and are at an early stage.
If none exist, you can also just use a couple hours every day, and some at the weekends, to create something from scratch on your own. You will run into problems and you will have questions, use the internet (e.g. stackoverflow)! Also - it will help me too - could someone recommend some books please?
That's what I've been doing. :) I've pitched a couple of patches but they usually get turned down. I'm wondering if I should take a break or just accept that I won't be a good engineer.
> Recently I've been writing a ruby grape-based api server and I thought I had a handle on it. Then I had the privilege of seeing a similar project for real and I wasn't even close. Theirs was so much better. Maybe I can get to that level but these guys are young, half my age, and they know 4x what I do.
Don't blame yourself, there may be many reasons for that, I would try to find out why they were turned down, and then look at some patches that weren't turned down. I know it's hard not to feel bad about being rejected, even if it's just a patch to a project, but at least you'll have the benefit of learning from it.
> Then I had the privilege of seeing a similar project for real and I wasn't even close
Sure, there will always be competition, but is the project made to be sold, or is it made to have more experience apart from fixing bugs? If it's the latter, I don't think there's any way to lose. Study the other project and see what they did better, then try to implement them yourself :)
"they are younger and better", that doesn't matter. Just try to get yourself better, there's always someone who's better than someone else!
Edit: formatted the response to be a bit more readable
Just push yourself to figure out what you don't know, and then go after it. Finding one or more mentors can be pretty strong, too.
Source: I taught myself to be a recruiting consultant, and then taught myself to be a software developer. Neither was easy. Now I'm growing as a software developer, and that's going pretty well.
For example, at Guidearama.com, our platform lets businesses turn marketing assets (videos, white papers, case studies, etc.) into a resource center on their website with lead generating landing pages. We've often ended up managing the entire program our clients are implementing around our platform. This can be packaged at a fixed cost and is much easier to price based on value than normal time & materials work. To our clients, we look like heroes because we can produce results very quickly using guidearama.com that in their minds should take 10x longer to complete.
There are a few benefits to this hybrid approach:
* The consulting work becomes decommoditized. You gain an unfair advantage because you developed the product the client is interfacing with.
* Your product builds your pipeline for you so you spend less time on sales and marketing.
* Your consulting work becomes more efficient because you can automate many tasks in your product that would otherwise take time if you were doing straight consulting work
In patio11's case, I don't think there wasn't an opportunity to do this because his consulting work and Bingo Card Creator didn't overlap - the case might be different with Appointment Reminder.
Our margins are thin. Billing on a weekly or monthly basis is a fantasy for us. Clients are never interested in this arrangement, they want to do hourly only because they think it'll save them money. When I try to pitch things as a business solution instead of just renting a coder, they invariably push back and say it's only fair to tell them what it'll cost to build, and they'll pay that.
I don't have a huge personal network so we've relied on platforms like Elance to make many of our contacts. The nickel-and-diming, even outright scamming on these platforms defies the imagination. We had a client last year who was very lucrative in the beginning, but he ran out of cash. After a lot of sob stories and assurances that it was a temporary situation, we ultimately did five figures worth of work for him on credit. Of course now it's been six months, we haven't seen a dime of what he owes us, and he continues to demand more work. If I say no he attacks me with some of the most vile personal abuse and insults I've ever seen. I want to get rid of this guy so badly, and I finally drew the line with him and said no more work yesterday after he insulted me and called me names in front of other people in my industry. But the reality is he owes us tons of money (well, by the standards of what I make) so I'm very afraid to burn that bridge for the same reason I took him on in the first place: I need the cash.
Recently we did a small job for a payday loans affiliate website. (I know, I know, I know, but again, we needed the cash.) The guy who owned the website congratulated us on a job well done, and then of course proceeded to "not notice" that there was $200 still owed and not reply to my messages. After a week I reverted the changes we made to his site and he was super responsive after that. He chewed me out for how unprofessional it was, of course, but he paid up.
Look it's not all bad. We've had some good clients and we're very proud of the work we do -- I'm in love with the craft of software development, not in the "chase the latest framework like a puppy on adderall" sort of way, but in the "this is an amazing and never ending intellectual challenge" sort of way. My employees are like this too. We work in an EXTREMELY difficult environment and if we weren't very good at what we do, we would have been replaced by $8/hr programmers in India a long time ago. We get some good business from referrals because we do (IMHO) great work, but when half of your clients are broke and/or scammers, how good are their referrals really going to be?
I started my career at one of the tech giants where the compensation was good, the coworkers were amazing, and I learned a ton. But not about running a business, where I clearly have a lot more to learn. Sometimes I look at where I am now, squabbling with a freakin' loan shark over 200 bucks, and ask, "Holy crap, how could I have screwed up this badly?"
Building a product with the proceeds of our consulting business? What proceeds? I can only dream.
You even know where you need to be, but you perhaps dont know how to get there. Well, one of things you've already mentioned, you dont have a personal network. Perhaps you dont want to be going out there and meeting people but its not as hard as you think its going to be and once you do, you'll start getting work.
Also, in order to get the decent money, its about reframing your offering, on your website it says: "Hello! We're a digital agency focused on quality code, deep client relationships and user experience." which sounds like your customer is other digital agencies. What if your customer is a small/medium business? What if your website said instead: "Hello! We're a digital agency focused on showing businesses how to expand their customer base and increase turnover.".
A business owner doesnt care about code quality or understand what user experience in a digital context is. If you instead said to them that you will make them money by using the internet, they understand that and are willing to hear more. I could go on and on forever about this... Shoot me an email.
1) Expand your services offerings beyond "Wordpress consulting", even if it means putting your company on the back-burner for a bit to acquire more lucrative skill sets. "Wordpress consultants" are a dime-a-dozen and there's simply too much noise in this arena for it to be sustainable.
2) I'm not sure what city you are located in, but try to tap into the local market first before aiming for national or international clients. Small/medium sized businesses generally like to have people that they can interact with face to face. Also, participate in and join your local chamber of commerce. From my past experiences, they love to do business with other members.
I see you appended "HN_repost" to make it unique.
The title could use a (date) on it, though. I no longer work at Matasano; instead, me, Patrick, and Erin now run a company together.
I tried it twice and twice I nearly burnt out. Luckily, after the second time, my business was making me a good living already, so I never looked back.
The problem is that consulting will take a lot more time out of your life than even a regular job. His clients sound professional and fairly large, but the majority of your clients will be small and mid-sized companies. They will try to nickle-and-dime you for everything because they want to save money.
You only have so much mental energy and I found that I didn't have much left over to work on the business. On top of this, you then needed to worry about chasing down customers for payment, which adds to the stress.
I also worked for a consulting company (they grew like what is described here). It was very difficult for them to find reliable consultants. We went through so many different people, I was the only one that was still there after a year, when I finally left.
It's a brutally difficult business and will sidetrack you to the point where your other business may not ever succeed.
In case anyone reading this is considering going into consulting: There are good clients out there. You don't hear about them because people don't complain about good clients, they only complain about the bad ones.
I've been consulting for two years and never had these problems. It helps to be on a monthly rate (vs hourly) and choose your clients wisely.
I think this is a key bullet point people often forget when they idealize the whole notion of becoming a freelancer/consultant. Essentially you are taking on several jobs at once, which are generally staffed by full time people in other companies, while also burdening yourself with all of the risk that comes with running a company. Once you become a consultant, you are the company, and there's quite a bit more to it than just filling out the paperwork for the LLC application.
I have this hybrid model going on. I do consulting, I do products and I do training too. Products make 2-3x Consulting revenue. If I pushed it, it would go much higher than that.
However, I just like my job. I like consulting. I like solving problems for businesses. I like it much more than building a full scale business for myself, actually.
What I want to say is this: If you're a consultant and want to scale, you won't be doing what you're doing now. You will be running a business. If you do software deelopment, you won't be doing any of that any more. You will be figuring how to hire people, how to train them, how to retain them, how to get them work, deal with accounting and a million other things.
Another thing to think about is competition. When you're a solo operation, competition is not a problem. When you grow a company, however, it becomes a big problem. Not only direct competition. Indirect one too. Take for example PPC (pay-per-click) agencies. Firms offering search engine optimization started offering PPC, so the ones specializing in PPC had to start offering SEO too. Then SEO became all about web development and now those firms had to compete with web dev shops. Hire, train, retain people for that? Then traditional ad agencies started getting into digital too and they have a lot of other expertise to offer.
Growing a business is like taking a life-long trip without knowing the destination and you might be very unpleasantly surprised at the end.
[1] http://www.amazon.com/E-Myth-Revisited-Small-Businesses-Abou...
But I still have to do the same "CIO" stuff - negotiating the trade off between "right" and "right now", project and risk management etc etc. but this time it's for me alone, with far less positional authority, far less face time with decision makers and generally less support.
It's called being a professional I suppose. But I simply do not trust that contracting or consulting without working on a client funnel and focusing on a niche and so on is going to provide the richness of work I want.
So despite having thought I was going to be happy, it turns out I need to work on the business in some fashion so I can later on work in the business - without worrying so much about the future.
Tl;Dr - if you are a consultant and want to keep on being one without constant fear of empty schedules or just being a cog in a giant machine you have no control over, you need to work on your business. Automate as much as you can, but if you are not marketing yourself and building some funnel then you are accepting whatever comes along - if anything.
Edit: Oh, and when you are just a solo operation, competition is definitely something to worry about - you are almost a commodity, pitched about by shiny suited agents or vaguely remembered contacts in past contracts.
Edit2: hmmm, and this is me after two weeks holiday. Might need a long look at things Monday Morning.