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Both the examples in the article are agency/consulting businesses. There's a reason for that. Such businesses offer no respite of any kind, especially so if you
by shubhamjain 4y ago
Both the examples in the article are agency/consulting businesses. There's a reason for that. Such businesses offer no respite of any kind, especially so if you've decided to scale. You're constantly on the hook to find new clients, and to meet the demand, hire more employees, and then, find even more clients because the hires aren't getting utilized enough. And let's not forget about downturns. Even a small dip is enough to left you scrambling to pay your employees. In most cases, the revenue multiple tends to be much on the lower side in the case of a sale. So, don't except a big pay day.
I am not saying, product business is easy either. But, consulting business is relatively easier to start and lures you into thinking that it will also be easy to scale, which is an easy trap to fall into. With entrepreneurship, the kind of ship you're driving matters. I don't think there's much to regret when you're running a profitable software business with 80% gross margins and <10 employees. In today's economy, it's not an impossible dream.