Setting up a small "consultancy" - Success stories?

[jf2010]

Anyone have success in running a very small consultancy company, yourself and at least another employee?

Basically with an abundance of work, and contracts that stipulate that I have right to substitution.

Obviously this would come with a myriad of things to look out for, anyone successfully try this or similar?

Possible downsides or legal ramifications?

[Lance]

Point of note. Being a consultancy and providing other people is not the same as substitution.


Your question is asked quite often. Almost always the answer is that if you are here asking how to do it then you haven't the faintest idea about what's involved. Agencies aren't going to touch you. So you're left with direct only. If you have direct customers already then maybe you are on to something, but if that was the case why haven't you already offered them more people?

[Lance]

for a start you have to convince the client that you can find better resource than they can, for less money than they can, and manage them better than they can. Quite a stretch if you're new to contracting.

[edison]

I've known a few people who have managed to build small consultancies (IT and non-IT.) Typically it's a long hard grind to get to the point where you have a few people working for you. It's much harder than being a one man band contractor and you have to spend a significant proportion of time on business development.

One example was a few ex-colleagues of mine from my perm consulting days who set up an ERP consultancy. They had an interesting niche proposition to assist clients who had failed to realise the benefits of their large project investments. They did well for a while but like many small consultancies, became reliant on one or two key customers and were prone to periods of feast and famine.

I have a relative who started out as a sub-contractor to another consultancy over 15 years ago. He then set out on his own a few years later and has always worked direct since then. He's built up a portfolio of mainly long term clients that he does a few days a month for. It's only in the last 3-4 years that he was able to leverage this to start delivering larger pieces of work and now has about 5-6 associates working for him. Most of his time is now spent on business development and client management, he does only a few days a month of actual client work.

Finally, I know someone who has grown his consultancy to about 20 people in the public sector. Once he got onto the appropriate procurement frameworks, he seemed to grow quite quickly, but again, took a few years to get to that point.

[ladymuck]

My previous contract was with a small start up consultancy and, as edison said, most of their time was spent managing clients, chasing for payment, looking for new business.

Initially you don't want to be taking on employees as you're contracted to pay them regardless of whether your client has paid you. That means you'll want contract associates doing the client facing work and you (or your partner) doing all the admin work for free until you get a healthy enough bank balance and work pipeline to be able to hire an employee to help you.

It's not impossible but don't think you can start up tomorrow and be rolling in it by Friday.

[eek]

My previous contract was with a small start up consultancy and, as edison said, most of their time was spent managing clients, chasing for payment, looking for new business.

Initially you don't want to be taking on employees as you're contracted to pay them regardless of whether your client has paid you. That means you'll want contract associates doing the client facing work and you (or your partner) doing all the admin work for free until you get a healthy enough bank balance and work pipeline to be able to hire an employee to help you.

It's not impossible but don't think you can start up tomorrow and be rolling in it by Friday.

You also have to find those contractors at the lowest cost possible.

If you want to be a consultancy - you really want either a very good relationship with a recruitment agency or to employ a recruitment consultant.

[d000hg]

Almost always the answer is that if you are here asking how to do it then you haven't the faintest idea about what's involved.

I think it's a tautology that asking a question means you don't know the answer (apart from people who like asking questions just so they can show off that they know the answer). When you start off looking to contract you know nothing about how running a Ltd company works, doesn't mean you shouldn't do it. When you have an idea for a 'real' business like an app or a B&M company making stuff, you have no idea how a business works, how to employ people, etc but that doesn't mean you shouldn't. As someone who has literally built a business including our own premises with several employees, not having a clue is not a reason not to push on a dream. It's just one of the steps along the way.
Finding others who have/are doing the same thing is a great first step.

I did this for a few years - a project I was initially hired for needed to grow so I found additional resources and charged them out. At one point it approached double figures though several were part-time, and all were freelance/contractors so no employees. I considered going all-in but it turns out I don't really have quite the business hunger or appropriate risk threshold and when that project fizzled out, I went back to contracting.

I don't know many stories from here of people who have done it, but people who do pull it off (if there are some) probably aren't active on the forum because they are no longer contractors. It's pretty common for a couple of people to team up doing this sort of thing when they see a gap in the market, I imagine.

[ladymuck]

You also have to find those contractors at the lowest cost possible.

If you want to be a consultancy - you really want either a very good relationship with a recruitment agency or to employ a recruitment consultant.

Not strictly true - my rate was very good! It's about being able to demonstrate value and ability to deliver.

[TheDude]

I think it's a tautology that asking a question means you don't know the answer

The first rule of tautology club is the first rule of tautology club.

[eek]

Not strictly true - my rate was very good! It's about being able to demonstrate value and ability to deliver.

Yes your rate was good - would it have been as good if there was a recruitment firm in the middle adding 10-15%....

My point was that as a consultancy, unless you recruit the contractors yourself the recruitment costs will destroy the profit.