Reply to: Setting up a small "consultancy" - Success stories?

[d000hg]

Yeah I get that but IMO the OP has started on completely the wrong foot. They talk about using their RoS which to me would indicate they are messing about with individuals in contracts

If the start point is to take a load of contracts and sub in others that sounds pretty dodgy I agree. OTOH "I have someone I could supply to fill this role" would be legit. You don't want to get large companies upset with you forcing RoS that they never really expected to be used, you can't afford any legal agro.

[clearedforlanding]

As much as we all bitch about agencies do not underestimate how much mundane tulip they do, that you are abstracted from.

[northernladuk]

It's a pretty common route for tech startups SMEs I'd say - I've worked for two who started this way (one had Lehman Bros as their customer #1 !) and were successful yet totally reliant on a single customer even as employees reached double digits and beyond. That fight for the second customer is pretty scary and not something I would really want to do myself... I've also been involved (I would have been the CTO if it had come to anything) in a nascent company that began with a single project and ambition to diversify, but could never find that second project and wound down.

Yeah I get that but IMO the OP has started on completely the wrong foot. They talk about using their RoS which to me would indicate they are messing about with individuals in contracts and not starting up a consultancy that is bidding for packages of work which is where their plan falls apart. Yes it is possible to be in a client and see opportunities to hoover up work packages and, same as you, I've seen it but in the two best cases I can think of they got stuck with one client and in both cases the work eventually dried up and both companies went under.

You make a very important point about the single company which is not a point to be overlooked but also they approach the OP has (from the limited info given) is all wrong. Before they start something like this they've got to be very clear with their business model and what they can do for a client and that appears to be missing and it's just the contractors pipe dream of getting other bodies on site which isn't consulting.

Only the OP knows and the same points have been made a few times so I think they've got the message. Up to them to re-look at what is going on at the client and work out which way this is going.

[courtg9000]

After I left the IT side. I built up a "boutique" with a number of different services and product offerings.

This boutique did very little "straight consulting" for the reasons outlined elsewhere in this thread. I would say that from 2013 -2018 when I wound 80% of the business down after the first bout of heart trouble that 9% was "straight consulting a'la contractor or similar to my colleagues here" or "doing what an employee might". The rest was shifting products, investing cash, managing that cash or shifting product service combos or defined services. Thats 9% total not 9% per annum.

Also of the 9% noted above. 70% of that 9% was for one punter I had a longstanding relationship with way prior in fact to me becoming a contractor in 1998. The other 30% of that 9% was newly developed business.

Any other "consulting" or advisory was inside a defined product or service or a combo with a beginning, a middle and an end.


As others have mentioned you will do very little of the work you are doing now if at all. I found that. I did some web stuff after leaving in 2013 but that was for the business not a paid deliverable for an end client like a contractor.

The reason for this is that the modern budget holder wants to buy things where they can not people. They don't really want to buy "Bob Smith" because Bob smith isn't as easy to control as "bob's wonderful product".

I will say this: If you are on say £500 a day, will you then get to double that by becoming a consultancy? I very much doubt it. It will most likely drop below that. Will you better off as contractor financially and mentally? Quite possibly.

Will you have more fun running an operation like mine?

Well I did. I took a drop in income from £5-600+ pd outside. Did I have more fun? F*** Yes until the health got bad.
People very close to me will say that I should have never been in IT but done creative investments and marketing. It was fantastic. I have to say I got the best buzz out of product development. For once I actually wanted to go to work.

I don't thing the route I took will suit everyone here.

Just my 2p

[d000hg]

I wouldn't call those consultancies - i'd call them projects wrapped up in an incorporated entity.

I didn't say they were - they are the seed of a consultancy/business. The directors' main job is finding customer #2. Many of these can last years though.

[Gonzo0]

A great thread to start my first reply after a few years lurking....

I have personally been on this journey since 2016. I was contracting for a few years then gained a few clients which I couldn't manage by my own so took on quite a junior consultant full time but trained up and slowly grew from there to where we are today with 8 full time employees and some near-shore developments on a part time basis.

Before you decide to jump in head first you need to decide why you want to set up a full blown consultancy (not to be confused with placing bodies in to a client ala agency style).

Is it to make a quick buck fast or to build a truly scalable and ultimately SELLABLE business.

If it's the first then that comes with a huge amount of risk and I would say stick with contracting, you will make far more money with far less stress. If it's the latter then buckle yourself in for a rollercoaster of a ride.

Your biggest challenge will be finding clients. Now unless you have huge cash reserves to finance all your pre-sales period (which can sometimes be lengthy, some of our deals can take 6 months to close) then your probably want to remain contracting where you can to fund living and parts of the business.

My advice would be to pick a specific technology rather than be a jack of all trades consultancy. Once you have chosen your preferred technology then look to form strategic partnerships where you can lean on bigger consultancies or even large software vendors for your source of leads. This is in itself a challenge as you will be seen as 'the new kid' and are going to find it hard to get traction. Prove your salt winning and closing on small projects and grow from there. Consultancy is built on relationships and once you are seen as a reliable and proven business the flood gates can begin to quickly open. It takes time to get there though, all of which your spending money (staff, insurances, hardware, software subscriptions, etc, etc, etc).

You need to also have excellent commercial acumen and awareness as well as strong people skills. You will having to put a fixed time and cost to what your delivering and generally (if its of higher value) be dealing with directors and senior execs of larger companies who can make life very difficult for you as they will want deals etc.

My final advice (especially if your doing SaaS) if to constantly build pipeline and layer it as such that you have consistency in deals closing, cashflow can quickly ruin you if you have a few months with no deals closing. Likewise if you have multiple deals all close together your customers will want you to deliver on them effectively, I've seen far too many consultancies over promise then under deliver and find them selves at the end of a clients legal team, not a pretty sight.

Remember, these days your ultimately selling a solution not bodies, that solution needs to be backed up with a time and cost, that you have to stand by. Contracts need to be watertight!

Good luck if you do decide to jump in!

[Paralytic]

It's a pretty common route for tech startups SMEs I'd say - I've worked for two who started this way (one had Lehman Bros as their customer #1 !) and were successful yet totally reliant on a single customer even as employees reached double digits and beyond. That fight for the second customer is pretty scary and not something I would really want to do myself... I've also been involved (I would have been the CTO if it had come to anything) in a nascent company that began with a single project and ambition to diversify, but could never find that second project and wound down.

I wouldn't call those consultancies - i'd call them projects wrapped up in an incorporated entity.

[d000hg]

As others have said getting a bod in isn't a consultancy but also you've got to look past the current gig. Shovelling people in where you see an opportunity doesn't mean you can get the next business which is going to be impossible.

It's a pretty common route for tech startups SMEs I'd say - I've worked for two who started this way (one had Lehman Bros as their customer #1 !) and were successful yet totally reliant on a single customer even as employees reached double digits and beyond. That fight for the second customer is pretty scary and not something I would really want to do myself... I've also been involved (I would have been the CTO if it had come to anything) in a nascent company that began with a single project and ambition to diversify, but could never find that second project and wound down.

[northernladuk]

As others have said getting a bod in isn't a consultancy but also you've got to look past the current gig. Shovelling people in where you see an opportunity doesn't mean you can get the next business which is going to be impossible.

[d000hg]

I'd suggest that trying to set up a consultancy nowadays to provide run-of-the-mill architects, developers, testers, BA's etc is a non-starter - you can never compete with the offshore companies in that area. But, find that gap or niche, and go for it...

The main thing is, if you come at this from a "a want to set up a consultancy", it will never work - you need to have that product or service that the market wants.

Absolutely agree. Let it grow out of you and your mate "we are both doing a lot of X, maybe we should team up" or "I do X and the client always needs Y to work alongside me which is what you do, shall we pair up as X+Y?"

A lot more stressful than contracting too as it is much harder to actually get paid.

That is a very good point. You might easily end up on 90 day terms or longer, plus clients who are perennially late payers.

[Guy Incognito]

Did it for a while. Spent all my time pitching and doing marketing and very little doing actual work.

The work we did get was paying about double contractor rates but we were only working about 30% of the time.

A lot more stressful than contracting too as it is much harder to actually get paid.

[Paralytic]

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.

I did this 15 years ago. A former colleague and I saw a gap in the market around an up-and-coming technology stack and formed a consultancy around it. We initially worked as individual contractors for clients, using this technology as an accelerator to delivering solutions for them. After getting a couple more clients we incorporated into a ltd company. We then took on some more contractors, and a commission-only sales guy and, once more stable, employees. We were eventually bought out by the product vendor themselves to become their professional services team in an area where they did not have one. We both left after our handcuff periods had ended and our shares had vested (and the technology stack was superseded by standardised alternatives).

I'd suggest that trying to set up a consultancy nowadays to provide run-of-the-mill architects, developers, testers, BA's etc is a non-starter - you can never compete with the offshore companies in that area. But, find that gap or niche, and go for it...

The main thing is, if you come at this from the perspective of "I want to set up a consultancy", it will never work - you need to have that product or service that the market wants.

[GregRickshaw]

Yes I managed this quite successfully, we found a niche in the market and did quite well for a while.

Used all the great contacts (for work and for partners/employees) I had built up and it was good.

Then people start to inevitably leave (your partners and your employees), someone then undercuts you and then you get accused of being an MSC... so successful in part but kind of wish I hadn't bothered. Hindsight eh?

[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.

[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.