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Ask HN: Creating a web development agency

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Re: Ask HN: Creating a web development agency

#11
here's some tips, based on having a couple of agencies. sounds like you don't have existing leads that you can immediately convert into contracts.

1. it's a sales job. get leads, and call them. important part of sales: pricing. $1k/page is a good heuristic

2. it's an account management job. be prepared to spend time being available, and talking to people at your customer

3. figure out a quick way to get people to a price; develop general ability to get a feel for 1k, 5k, 10k, 20k, and 50k projects

4. develop a production method that maps to how customers want to see their product develop. screen list -> wireframes -> visual design -> development works pretty well.

good luck!

Re: Ask HN: Creating a web development agency

#12
I run a small web development business to help fund my startup goals. One tip is to try to tapping the freelancing marketplaces such as oDesk. I have started on oDesk about 2 months ago and now I'm getting enough work to even turn a few potential clients away.

Service business can be grueling and your projects can quickly turn into nightmares if not planned well. The small businesses who want the websites from us can be very vague in what they want, and might not appreciate some of the great stuff that we do (like getting the Pagespeed score above 90) while appreciating lame stuff like those landing page flash intros.

In the initial phase (first 3 months) take more well defined tasks that can have less margins, but can help you appreciate the hardships in the business. As you mature, you can take up more complex projects that can give pretty fat margins.

Re: Ask HN: Creating a web development agency

#13
I think it can be done but have you thought about your competition? I see thousands of such companies driving the price down on a daily basis. Just type Web Development on Google and you will see how many companies pop up on the first page? I have seen international companies who put out ads on adwords for as low as $5/hrs rate. Granted, these companies may not be very reliable but unfortunately they do form a price ceiling. Ask how will you and your partner compete against such low prices?

In my humble opinion, the web development model is highly outsourced model and while I agree that it is broken, you will have to be very careful about entering into it. You should first identify and validate a proper niche that will provide you a steady stream of revenue. The unfortunate and brutal truth is that as soon as you put out your value proposition in you niche to earn a steady stream of revenue, 10 other international companies will simply copy your value proposition and advertise right underneath your ad for much lower prices.

Re: Ask HN: Creating a web development agency

#14
In my experience, it's very hard to making a living as an 'agency' unless the only value you're adding is to your developers - you leverage the arbitrage between the rate you can bill and the rate you can pay them, in return for a steady paycheck.

I've worked for and with ~20 agencies, including one as a founder and one as a co-owner. In each instance, those that were able to leverage their employees succeeded and those that relied on having talent did not.

It's a very sensible outcome. If you were working at Microsoft or Google, you would be earning ~10% of the value you created for the company. In service, that number is much closer to 50-75%, which is very dangerous unless you can guarantee you're going to make your sales numbers.

It's a great way to get some business experience, but I wouldn't recommend it as a long-term strategy.

It's also important to note that the major ad agencies are moving into the web world. Locally, the regional newspaper, three local radio station companies, and a billboard company are all getting into web development as an added service or for profit. It makes things difficult because they're capitalizing on the medium-to-large agency contracts (the ones that have a web site, TV ads, radio ads, newspaper ads, etc), which are usually the highest margin contracts (lowest ratio of account management to projects).

My advice to you would be to start a consulting company and build relationships with a network of web development agencies. Some of them will be able to afford your rates while others wont, but you wont have to do the hardest part of sales and AR will be much easier because you'll have much more established relationships with these companies. You can also do work for agencies all over your country (or the world) if you are a respectable consulting group.

Re: Ask HN: Creating a web development agency

#15

I run a small web development business to help fund my startup goals. One tip is to try to tapping the freelancing marketplaces such as oDesk. I have started on oDesk about 2 months ago and now I'm getting enough work to even turn a few potential clients away. Service business can be grueling and your projects can quickly turn into nightmares if not planned well. The small businesses who want the websites from us can…

Aren't many of the freelancing marketplaces garbage? I don't want to work for $10 an hour with the risk of not getting paid.

Which marketplaces are better or worse than others? Is oDesk different from the crapfest that is eLance?

Re: Ask HN: Creating a web development agency

#16
post #15

I run a small web development business to help fund my startup goals. One tip is to try to tapping the freelancing marketplaces such as oDesk. I have started on oDesk about 2 months ago and now I'm getting enough work to even turn a few potential clients away. Service business can be grueling and your projects can quickly turn into nightmares if not planned well. The small businesses who want the websites from us can…

Aren't many of the freelancing marketplaces garbage? I don't want to work for $10 an hour with the risk of not getting paid. Which marketplaces are better or worse than others? Is oDesk different from the crapfest that is eLance?

Not necessarily. I had a few bad experiences with vWorker, freelancer and other market places. oDesk is slightly better than the lot. In oDesk the initial 30 days was working on low priced contracts and couple of times with clients who didn't pay. It was a little painful learning.

But, then I got a little better at identifying the right set of clients and now the I set rate at $33/hr and most of it in hourly contracts that are guaranteed payment. I also take fixed price contracts from clients with whom I have existing relationship. Many guys I know are charging $60/hr and having a good practice.

The thing in the initial phase you come across a lot of noise and as you find out the 1-2 good clients from the 10 shabby ones, you get repeat business from them.

The difference between freelance marketplaces and direct sales is that in the former the clients have a real need, while in the latter the we have to convince the potential leads of the need to have a good website with proper attention to typography, speed and ux.

Re: Ask HN: Creating a web development agency

#17
post #15

Earlier quoted context omitted.

Aren't many of the freelancing marketplaces garbage? I don't want to work for $10 an hour with the risk of not getting paid. Which marketplaces are better or worse than others? Is oDesk different from the crapfest that is eLance?

Not necessarily. I had a few bad experiences with vWorker, freelancer and other market places. oDesk is slightly better than the lot. In oDesk the initial 30 days was working on low priced contracts and couple of times with clients who didn't pay. It was a little painful learning. But, then I got a little better at identifying the right set of clients and now the I set rate at $33/hr and most of it in hourly contract…

What kind of software are you writing? Is it mostly web oriented? What languages are you using?

Re: Ask HN: Creating a web development agency

#18
post #17

Earlier quoted context omitted.

Not necessarily. I had a few bad experiences with vWorker, freelancer and other market places. oDesk is slightly better than the lot. In oDesk the initial 30 days was working on low priced contracts and couple of times with clients who didn't pay. It was a little painful learning. But, then I got a little better at identifying the right set of clients and now the I set rate at $33/hr and most of it in hourly contract…

What kind of software are you writing? Is it mostly web oriented? What languages are you using?

I typically use PHP and many of my sites are built on Wordpress. I have previously done Web programming before realizing that it can get pretty expensive in terms of maintenance. With quality, premium plugins and themes, you can get a quality site out in about 6 hours and charge $300. I tweak the CSS and PHP of the existing themes to get close to the customer needs and have built a KB and a process internally to reduce the full site development 6 hours what it used to take 25 hours or more.

That is working good so far. It is also easy to maintain, I have WP_MU setup and can update a large number of sites in parallel.

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