4 ms·

> Or you can start a consultancy, very classic business, low risk. Low risk? Consultancy/freelance businesses are very high risk. Easy to start, very difficult

> Or you can start a consultancy, very classic business, low risk. Low risk? Consultancy/freelance businesses are very high risk. Easy to start, very difficult to maintain.

jerguismi 11y ago
What kind of risk do you mean? At least you don't need capital.
- rday 11y ago
  I've been running my "consultancy" for over 5 years. Roughly 15% of my annual revenue is lost to non-payment. Customers pay late all the time. Literally. I've never had an invoice paid on time. Customers cancel projects right before they start, or pause projects half way through to focus on other areas. Due to these situations, I try to always have 3 months of salary in the bank. I never do, but I try. If you are paid net 30, and invoice at the end of the January, that check will clear your bank account early March at best. This results in Just In Time mortgage payments. If I were to hire somebody to code, and focus on sales, I'd need even more money in the bank than I have. This leaves me in a bit of a pickle. You need a lot of capital. If 3 months of buffer salary for two employees isn't a lot of capital..... it's time to admit you are in a strong financial position and not everyone can simply be an entrepreneur. (To answer the inevitable "charge more" question, I'm available for hire and I'll charge as much as you'd like :)
  - lettergram 11y ago
    Have them put money in an escrow account. I have done freelance work since I was a kid and one thing I've always done was ask for money upfront, maybe not in my hands, but held by a 3rd party. Losses of 15% seem a bit high too me. Writing software for someone else is kind of like painting a scene from someone's dream. There is a good chance you wont hit 100% of what they were looking for, and your goal is to make them just happy enough to pay you. If they part with their money already, they are much more likely to accept what you give them, than if they haven't already bought it.
    - AJ007 11y ago
      With a few exceptions, businesses of all types have to deal with non-receivables. A better strategy is to make sure the company that owes you money knows you are serious about collections and will aggressively pursue. Something as simple as having your lawyer send a collections letter by certified mail will deliver a good portion of the time. If everyone did this, it wouldn't work. Companies that consistently pay late or continuously try to get out of paying are doing so because they simply don't have the cash. If they think you are going to cause them to spend more cash by them not paying you on time, you will get moved up the list.
    - burp3141 11y ago
      >Writing software for someone else is kind of like painting a scene from someone's dream. Love it
BjoernKW 11y ago
I can't imagine a lot of businesses that come with lower risk attached than consulting: You don't need equity. Profit margins are high. Depending on your particular expertise your services will be in demand for years to come (anything software-related). If you do it right you can work for several clients at the same time. At least you can always have a full sales pipeline so losing a contract won't be an end-of-the-world event for you. Growing a consulting business beyond yourself, not selling your time but results, those are more of a problem but risk? Not really. At least not when compared to other businesses.
- rday 11y ago
  I would love to see your consulting model. You speak as if keeping a full sales pipeline while making multiple clients happy is a simple thing. I'll agree that a single person consultancy is 0 risk. I can accept a job offer tomorrow and stop accepting new clients. But growing your consultancy is just as risky as any other business, if not more so. You don't have a wide range of low paying clients, like a SaaS model. You have a few high paying clients. Any one of them leaving (or not paying) directly affects you and your employees. I live in Washington DC, so I see this constantly. A large government contractor loses a re-bid on a contract, and they fire the team that was working on it. Fire them! Not speaking for anyone else, but having to fire people every time a contract goes away sounds risky to me.
  - samsonasu 11y ago
    Firing people is risky for the person potentially being fired, not for the owners of the firm. Growing and shrinking over time is part and parcel of running a consultancy. That's why you see it all the time, and I'll bet if you look closer at the ownership during layoffs you'll find that they very rarely miss a paycheck and usually escape unharmed. The fact that it's an unpleasant reality doesn't make it any more risky than e.g. having to pay taxes.
    - rday 11y ago
      I agree with what you're saying, and this is probably why I don't hold a management position anywhere. This also mirrors my experience with startups. I've been lied to about money many times to get me to keep working. The only things the owners care about is how they look to investors.
beachstartup 11y ago
they're low risk compared to other businesses, not compared to having a jay oh bee.

> Or you can start a consultancy, very classic business, low risk. Low risk? Consultancy/freelance businesses are very high risk. Easy to start, very difficult to maintain.

jerguismi 11y ago

What kind of risk do you mean? At least you don't need capital.

rday 11y ago
I've been running my "consultancy" for over 5 years. Roughly 15% of my annual revenue is lost to non-payment. Customers pay late all the time. Literally. I've never had an invoice paid on time. Customers cancel projects right before they start, or pause projects half way through to focus on other areas. Due to these situations, I try to always have 3 months of salary in the bank. I never do, but I try. If you are paid net 30, and invoice at the end of the January, that check will clear your bank account early March at best. This results in Just In Time mortgage payments. If I were to hire somebody to code, and focus on sales, I'd need even more money in the bank than I have. This leaves me in a bit of a pickle. You need a lot of capital. If 3 months of buffer salary for two employees isn't a lot of capital..... it's time to admit you are in a strong financial position and not everyone can simply be an entrepreneur. (To answer the inevitable "charge more" question, I'm available for hire and I'll charge as much as you'd like :)
- lettergram 11y ago
  Have them put money in an escrow account. I have done freelance work since I was a kid and one thing I've always done was ask for money upfront, maybe not in my hands, but held by a 3rd party. Losses of 15% seem a bit high too me. Writing software for someone else is kind of like painting a scene from someone's dream. There is a good chance you wont hit 100% of what they were looking for, and your goal is to make them just happy enough to pay you. If they part with their money already, they are much more likely to accept what you give them, than if they haven't already bought it.
  - AJ007 11y ago
    With a few exceptions, businesses of all types have to deal with non-receivables. A better strategy is to make sure the company that owes you money knows you are serious about collections and will aggressively pursue. Something as simple as having your lawyer send a collections letter by certified mail will deliver a good portion of the time. If everyone did this, it wouldn't work. Companies that consistently pay late or continuously try to get out of paying are doing so because they simply don't have the cash. If they think you are going to cause them to spend more cash by them not paying you on time, you will get moved up the list.
  - burp3141 11y ago
    >Writing software for someone else is kind of like painting a scene from someone's dream. Love it

BjoernKW 11y ago

I can't imagine a lot of businesses that come with lower risk attached than consulting: You don't need equity. Profit margins are high. Depending on your particular expertise your services will be in demand for years to come (anything software-related). If you do it right you can work for several clients at the same time. At least you can always have a full sales pipeline so losing a contract won't be an end-of-the-world event for you. Growing a consulting business beyond yourself, not selling your time but results, those are more of a problem but risk? Not really. At least not when compared to other businesses.

rday 11y ago
I would love to see your consulting model. You speak as if keeping a full sales pipeline while making multiple clients happy is a simple thing. I'll agree that a single person consultancy is 0 risk. I can accept a job offer tomorrow and stop accepting new clients. But growing your consultancy is just as risky as any other business, if not more so. You don't have a wide range of low paying clients, like a SaaS model. You have a few high paying clients. Any one of them leaving (or not paying) directly affects you and your employees. I live in Washington DC, so I see this constantly. A large government contractor loses a re-bid on a contract, and they fire the team that was working on it. Fire them! Not speaking for anyone else, but having to fire people every time a contract goes away sounds risky to me.
- samsonasu 11y ago
  Firing people is risky for the person potentially being fired, not for the owners of the firm. Growing and shrinking over time is part and parcel of running a consultancy. That's why you see it all the time, and I'll bet if you look closer at the ownership during layoffs you'll find that they very rarely miss a paycheck and usually escape unharmed. The fact that it's an unpleasant reality doesn't make it any more risky than e.g. having to pay taxes.
  - rday 11y ago
    I agree with what you're saying, and this is probably why I don't hold a management position anywhere. This also mirrors my experience with startups. I've been lied to about money many times to get me to keep working. The only things the owners care about is how they look to investors.

beachstartup 11y ago

they're low risk compared to other businesses, not compared to having a jay oh bee.