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I'm in a pretty similar situation, but it's actually working really well for me because of some important things. 1. Having a healthy amount of savings before

by rcconf 8y ago

I'm in a pretty similar situation, but it's actually working really well for me because of some important things. 1. Having a healthy amount of savings before embarking on a bootstrapping business. There has been never a point where I have had trouble paying bills. I have 5-6 years of expenses saved up. 2. Doing the research in terms of how to run a business. I have an accountant, I did tax planning from the beginning and I make sure to evolve on the business operating side constantly. (use software that makes the process easier, such as automatic invoicing, working with an accountant, working with a lawyer.) 3. Working in a start-up environment and learning how to prioritize work. 4. Reading The Great CEO Within from Matt Mochary, there's so many tips in there that have been amazing and helpful I'm definitely struggling with the scaling issue of consulting tho. It's great and all, but I find it a struggle to add people to the company because of how specialized and good I am at my work. I'm generally the selling point. I am working on 2-3 products on the side of the consulting work with the hope that the products eventually become the focus. I do understand the downfall of the consulting taking a lot of my time and not spending enough on product work, but somehow I've been able to keep up. The great part about doing this is that you work with a lot of different companies and you actually get to learn a bunch of of things that work and do not work. You get to see how different business models work and scale and it's very enlightening on your own company. For example, I'm averse to starting any sort of agency in terms of web development, since I've seen multiple of my clients have issues with scaling the business model and retaining customers. Overall, consulting has been a pretty positive experience. I've only been doing it for 2 years, so we'll see how it works in the long term. But my side product is generating $800 / mo in income and I hope to scale it to cover all my expenses and then I'm more able to work on products and do less consulting.

thestepafter 8y ago
Thank you for sharing where you are at and your struggles. I am having a similar issue going from a one person shop to hiring people. Mainly because I too realize that people are buying me because of my skill set and communication. I don’t want to be hands to the keyboard for the rest of my life though so I’m trying to figure out how to move forward from here. Do you think reading The Great CEO Within would help?
- rcconf 8y ago
  I'm not sure how much reading that book would help in terms of creating a sustainable business model that does not require significant daily work from the founder and also allows you to scale in a reasonably way. It does help with the operations side of running a business and does give you insight on how some other CEOs might run certain parts of the company (such as marketing, hiring and finding product market fit.) I've been looking at similar business models outside of software development (such as law firms.) to get a better idea on how this business model could scale. Long term tho, I do not plan to scale the consulting side of the business, but hope to phase it out since I believe products are probably a better way to scale a business. I don't think consulting is entirely a bad thing for us tho, I still strongly believe it gives you insights into other companies and allows you to see other companies mistakes every day and that's super useful. Good luck to you.
  - abalashov 8y ago
    You raise an interesting point with your mention of law firms. As I implied in the article, I've not wanted to scale out consulting far beyond myself; it's a means to an end. But if I did, I think the way I would do it is to try to build a partnership with other consultants like myself in my specific area. Professional associations such as law firms have all kinds of partnership mechanisms, but a common one is something like: there are four partners, every one of them has a monthly quota of hours to deliver to the firm. For every one of those hours, (let's say) 50% goes to the company and 50% goes to the partner. For every hour beyond the quota, the partner gets to keep, say, 80% and the firm gets 20%. Then the firm's annual profit is distributed among the partners at the end of the year, month, whatever. And although partners are presumed to be able to generate their own business, common resources such as marketing, administration, etc. are pooled and paid from the firm's common funds. The key issue with a partnership is that it really has to create (ugh, I cringe at a non-ironic use of the term) synergies. Every partner's earnings have to be greater enough in the partnership than they would be on their own to warrant the bother. Otherwise, you end up with the all-too-common best-case scenario of two partners who together double the revenue, but each take half the profits, which makes it a bit of a wash, notwithstanding some small gains in economies of scale through expense sharing.
ryanwaggoner 8y ago
Making any product revenue from a side project is a huge accomplishment, so congrats! I still remember that first dollar ;) One question: why not kill or sell all your side projects except the one making money? Splitting focus between consulting and a product business is hard enough, let alone multiple product businesses.
- abalashov 8y ago
  Well, without knowing whether the products are somehow complementary or derivatives of the same thing, it's very hard for us to make that call. But instinctively, I agree. Churning out one product as a side project is hard enough; to really execute well, one cannot split focus among multiple products.
  - jaamidor 8y ago
    This is a great discussion. The initial article is good too. I have been consulting on my own for about 3 years - though the first was more during a transition out of full time employment. A couple thoughts on what HAS worked for me: -I have been very focused on a specific and limited scope, product/market strategy for smart building/real estate tech firms (mostly startups who do not have their on product mgmt resources). I know folks who have been much more broad in focus and it doesn't seem to work. If you find a good gap in the market, you may find a consistent stream of work with enough flexibility on timelines to balance the days/weeks out so it's not so lumpy. -much of the marketing I do (free newsletter, articles in trade journals) do generate leads but it takes ~6 months for a particular article or effort to generate leads. I'm not sure why this is, but most people who reach out to me for help cite something from months ago as "how they heard about me" -pricing is difficult and the best response I have is that once you get a couple projects that are similar, you can use that average price as your list price - and you will have some confidence that it's a fair price based on the market. Also, I have thought the easiest move into a product, for me, would be syndicated research. Instead of charging clients for consulting engagements, could I write reports that are of interest and then sell them. A few firms in my space do this, and I think it would be the most organic product I could deploy. I've been brainstorming ways to test this, as I don't really want to spend a long time writing a long report only to find that it does not sell...
tmshu1 8y ago
Thank you for sharing your experience and recommendations! Definitely going to check out The Great CEO Within. How much time would you say you spend on consulting vs. product, per week, and how do you find your clients? I tried consulting for a little, with the same goal of wanting to work with and learn from lots of different companies while working on my own product on the side, and found myself struggling to dedicate time to my product, with finding clients taking up a lot of my time (outside of working for my clients). Granted I was in very different circumstances than you--not nearly as much as 5-6 years of expenses saved up, I'm also pretty inexperienced, hey I'm young so yolo--but I'm still interested in hearing what's worked for you!

by rcconf 8y ago

thestepafter 8y ago

Thank you for sharing where you are at and your struggles. I am having a similar issue going from a one person shop to hiring people. Mainly because I too realize that people are buying me because of my skill set and communication. I don’t want to be hands to the keyboard for the rest of my life though so I’m trying to figure out how to move forward from here. Do you think reading The Great CEO Within would help?

rcconf 8y ago
I'm not sure how much reading that book would help in terms of creating a sustainable business model that does not require significant daily work from the founder and also allows you to scale in a reasonably way. It does help with the operations side of running a business and does give you insight on how some other CEOs might run certain parts of the company (such as marketing, hiring and finding product market fit.) I've been looking at similar business models outside of software development (such as law firms.) to get a better idea on how this business model could scale. Long term tho, I do not plan to scale the consulting side of the business, but hope to phase it out since I believe products are probably a better way to scale a business. I don't think consulting is entirely a bad thing for us tho, I still strongly believe it gives you insights into other companies and allows you to see other companies mistakes every day and that's super useful. Good luck to you.
- abalashov 8y ago
  You raise an interesting point with your mention of law firms. As I implied in the article, I've not wanted to scale out consulting far beyond myself; it's a means to an end. But if I did, I think the way I would do it is to try to build a partnership with other consultants like myself in my specific area. Professional associations such as law firms have all kinds of partnership mechanisms, but a common one is something like: there are four partners, every one of them has a monthly quota of hours to deliver to the firm. For every one of those hours, (let's say) 50% goes to the company and 50% goes to the partner. For every hour beyond the quota, the partner gets to keep, say, 80% and the firm gets 20%. Then the firm's annual profit is distributed among the partners at the end of the year, month, whatever. And although partners are presumed to be able to generate their own business, common resources such as marketing, administration, etc. are pooled and paid from the firm's common funds. The key issue with a partnership is that it really has to create (ugh, I cringe at a non-ironic use of the term) synergies. Every partner's earnings have to be greater enough in the partnership than they would be on their own to warrant the bother. Otherwise, you end up with the all-too-common best-case scenario of two partners who together double the revenue, but each take half the profits, which makes it a bit of a wash, notwithstanding some small gains in economies of scale through expense sharing.

ryanwaggoner 8y ago

Making any product revenue from a side project is a huge accomplishment, so congrats! I still remember that first dollar ;) One question: why not kill or sell all your side projects except the one making money? Splitting focus between consulting and a product business is hard enough, let alone multiple product businesses.

abalashov 8y ago
Well, without knowing whether the products are somehow complementary or derivatives of the same thing, it's very hard for us to make that call. But instinctively, I agree. Churning out one product as a side project is hard enough; to really execute well, one cannot split focus among multiple products.
- jaamidor 8y ago
  This is a great discussion. The initial article is good too. I have been consulting on my own for about 3 years - though the first was more during a transition out of full time employment. A couple thoughts on what HAS worked for me: -I have been very focused on a specific and limited scope, product/market strategy for smart building/real estate tech firms (mostly startups who do not have their on product mgmt resources). I know folks who have been much more broad in focus and it doesn't seem to work. If you find a good gap in the market, you may find a consistent stream of work with enough flexibility on timelines to balance the days/weeks out so it's not so lumpy. -much of the marketing I do (free newsletter, articles in trade journals) do generate leads but it takes ~6 months for a particular article or effort to generate leads. I'm not sure why this is, but most people who reach out to me for help cite something from months ago as "how they heard about me" -pricing is difficult and the best response I have is that once you get a couple projects that are similar, you can use that average price as your list price - and you will have some confidence that it's a fair price based on the market. Also, I have thought the easiest move into a product, for me, would be syndicated research. Instead of charging clients for consulting engagements, could I write reports that are of interest and then sell them. A few firms in my space do this, and I think it would be the most organic product I could deploy. I've been brainstorming ways to test this, as I don't really want to spend a long time writing a long report only to find that it does not sell...

tmshu1 8y ago

Thank you for sharing your experience and recommendations! Definitely going to check out The Great CEO Within. How much time would you say you spend on consulting vs. product, per week, and how do you find your clients? I tried consulting for a little, with the same goal of wanting to work with and learn from lots of different companies while working on my own product on the side, and found myself struggling to dedicate time to my product, with finding clients taking up a lot of my time (outside of working for my clients). Granted I was in very different circumstances than you--not nearly as much as 5-6 years of expenses saved up, I'm also pretty inexperienced, hey I'm young so yolo--but I'm still interested in hearing what's worked for you!