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The Rise Of The Million Dollar, One-Person Business

forbes.com

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Re: The Rise Of The Million Dollar, One-Person Business

#41

Post by peterjancelis »

tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

Why not simply keep doing what you are doing and buy dividend stocks with your savings? There is no rule that you have to start your own business to become a business owner...

Re: The Rise Of The Million Dollar, One-Person Business

#42

Post by hkmurakami »

tunesmith wrote: post #40
simonreed wrote: post #37

Earlier quoted context omitted.

"What's left is real estate, but I'm regularly told I shouldn't even bother if I'm not a fix-it handyman sort, which I'm not." You don't need to do the fixing yourself... My advice would be to read 3+1 Plan book ( http://en.wikipedia.org/wiki/The_3%2B1_Plan ). You can get it for free in PDF from the author if you sing up for one of his websites.

Looks like the 3+1 Plan is basically to buy a property, pay interest only, wait for it to appreciate, remortgage, use proceeds to buy another property. I think I'm looking for more detail from a hacker perspective - how to get access to RMLS systems, mine the data, what kind of criteria to look for for best arbitrage, what kind of moves you can make if you have $x in capital, etc.

my friend has been doing this for a few years but he's saying that opportunities are drying up with the housing recovery. Also he is a handiman so his margins are higher than the average person yet he's still seeing fewer opportunities.

Also keep in mind that brokers take ~6% on both the purchase and the sale of a property, which means that the property has to increases in value substantially for you to be able to effectively "flip" it. (rates are negotiable obviously, and I think you can get a certification to be able to handle some things yourself instead of getting outside service)

Re: The Rise Of The Million Dollar, One-Person Business

#43

Post by hkmurakami »

peterjancelis wrote: post #41
tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

Why not simply keep doing what you are doing and buy dividend stocks with your savings? There is no rule that you have to start your own business to become a business owner...

A lot of the really attractive dividend stocks have become substantially less attractive over the last 6 months due to the market rally. There were quite a few stocks giving 5-6% with good prospects of increasing in value as well 6 months ago, but I can't say the same now.

Re: The Rise Of The Million Dollar, One-Person Business

#44

Post by hkmurakami »

OldSchool wrote: post #7

In our industry, it's pretty safe to count the one-person cases as outliers (hit app, etc), however I can attest to a number of people consistently pulling down 7-figure NET incomes from privately-owned small businesses without ever involving VC's or other investors. If it's a sustainable pace and you don't become so visible as to be a patent or other legal target you can quietly live very well on that or half that,…

You can kind of think of it as a small-mid size private contracting/gardening/pool-service shop imo. Some of those companies are well entrenched in their communities and pull down a really healthy amount of revenue reliably every year.

Re: The Rise Of The Million Dollar, One-Person Business

#45

Post by tunesmith »

peterjancelis wrote: post #41
tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

Why not simply keep doing what you are doing and buy dividend stocks with your savings? There is no rule that you have to start your own business to become a business owner...

Yeah, that's in the mix - it just feels like a mental leap, as for years my only savings have been in retirement funds, where I've focused on mutual funds. Plus I have a bit of a problem with the market just because it seems like however deep you get into the abyss of researching stocks, behaviors, fundamentals, etc - there will always be the finance firms who will have access to better information.

On top of that, the media is full of inaccurate stats of how good an investment the stock market is, long-term. They'll say things like 8% net (after inflation is accounted for). I did my own study(1) and over my investing lifetime it's been around 3.5 - 4%. That makes a huge difference in all the sample spreadsheets out there - for someone who maxes out on the Roth since age 18, that's basically the difference between being able to retire at 62 with $2 million, and having to continue working at age 62 with savings of $500k. I guess it seems like there's more control in investing it in my own business.

(1) - Looked at dates/amounts of my entire retirement contribution history, pretended I bought S&P-500 index fund each of those dates, backtested using Yahoo's "Adjusted Close", ran an APY/XIRR calculation, subtracted avg yearly inflation over same rough time period.

Re: The Rise Of The Million Dollar, One-Person Business

#46

Post by physcab »

tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

It sounds like you see yourself limited by time, not ability or even money. Since you're a programmer you probably have the intuition to seek out other good programmers. So what you can do is search for a technical partner to create some type of lifestyle business where you can split the profits. I'm sure with all your client relationships you might be able to come up with a few good ideas that solve some niche problems, and you'll even have a starting base of customers if your solution caters to their problems. From my own perspective, I would love to work with someone technical albeit with little time to jump on a side project with me. Even if I was the primary contributor, knowing that my partner can bring money, connections, and technical ability is an enticing proposition.

Re: The Rise Of The Million Dollar, One-Person Business

#47

Post by mhartl »

It's nice to see coverage of an exciting trend (of which I'm happy to be a part), but it always cracks me up when financial publications classify companies based on sales rather than profits. Defining a "million dollar company" as a company with a million dollars in annual sales is absurd.

Re: The Rise Of The Million Dollar, One-Person Business

#48

Post by bergerjac »

tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

Assuming you're American, if you work remotely and have no dependents, you could consider moving abroad to a country with lower cost of living. (Easier to cut expenses than increase revenue.)

You may qualify for the Foreign Earned Income Exclusion (~$96k) if all of your work is performed while you're physically outside the U.S.

I've been researching this topic religiously for the last 9 days and have contacted companies to help me structure everything. I'll write a detailed article when everything is said and done.

As far as Real Estate investing goes, find something that has good bones (layout, HVAC, plumbing, electrical, etc.) and bad aesthetics (overgrown shrubs, needs paint, etc.). Make a low-ball offer, hire someone to fix the aesthetics, and execute a 1031 Exchange to move up the ladder.

Re: The Rise Of The Million Dollar, One-Person Business

#49

Post by reeses »

tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

First of all, f### "first-world problems" when it comes to something like this. It's personal and it's your life. You only get to perceive one run at this one.

I posted a few things in Patrick's thread that I won't repeat here[1] regarding the move from a simple hourly rate to the ~$1m+ range.

The thing I would work on in your case are your basic assumptions. I would try to get past the "long-term high-security relationship."

It's good to have long term relationships but they are never going to be highly secure. Instead, work on maximizing your value and adjust your income accordingly. If you do think of relationships, think of it in terms of your reputation and your network. If you went to a decent school, use the alumni network. If you worked at a company that has a "former employees" network, use that. Keep in touch with people you've worked well with, even if it's just watching them on LinkedIn and congratulating them on a move or helping them find a new job/gig/whatever.

It's something that can be tough to crack the first time, but you're in a good position already. "Enterprise-level architectural programming" is nerdalinga for "Enterprise Architect," "Consulting CTO," etc.

Getting the first big "gig" is usually a matter of timing your availability with opportunities (i.e., what unlucky people call "luck"). Reach out through your network and have people recommend you. The first strategic position you take will probably be similar to what you have now, but at least you can put your shingle out as "Consulting Enterprise Architect".

Then you should work on getting a couple marquee clients to put on your NASCAR slide. They don't have to be massive, but they should be respected companies. I targeted the top of the Internet Retailer 500 and established build, launch, replatforming, infrastructure, scaling, and security relationships with enough > $1b/year sites that new clients ask about what "leaders" do in the industry. Enterprise work is mostly about minimizing perceived risk.

It's good if you can build partnerships with platform vendors. For example, Oracle PS don't really like to touch projects below a certain size, so I get a lot of semi-qualified leads in the ~$1m range that I can knock out in about four months with a few fellow consultants/friends. If you bring in the vendor to one of your clients, they'll usually keep in touch and mention prospective clients even if they're not going to go out on a limb and drop your name on the desk. I wouldn't knock myself out on this, though – just make sure you are the one making the introduction and are present at the pitch meeting.

Also, you'll need to be solid when talking at the C-level. Get your presentation skills down, have a suit or ten made (cough go to Anderson & Sheppard once and Shanghai soon after), and gain confidence that you know what you're doing.

You're going to have to get out of your comfort zone a little bit. I actually loved interviewing (both sides) so the sales process (which is generally just letting someone validate claims made by a referring member of the network) is not unpleasant.

I'll also tell you the biggest secret of "consulting": find out what people are complaining about. Write that down on slide one. Find out (or know) how people resolved the top three problems on that slide and put them on slide two. Make those slides beautiful and extremely succinct, so you're conversing, making eye contact, and reading body language. Make it look easy.

One last thing: You should become aware of the product market in this area. EAI is a massive opportunity and even if you just build a toolset leveraging Mule/Camel/ActiveMQ/etc., that's a product you can license to clients. I don't often advise this, but saying there's no productization opportunity leads me to recommend one of the Enterprise Integration Patterns books.

[1] https://news.ycombinator.com/item?id=5963096

https://news.ycombinator.com/item?id=5963169

https://news.ycombinator.com/item?id=5963135

https://news.ycombinator.com/item?id=5963113

Re: The Rise Of The Million Dollar, One-Person Business

#50

Post by pjungwir »

tunesmith wrote: post #33

I think about this a lot - I made the jump from salaried worker to self-employed programmer/freelancer/contractor/consultant (depending on how you look at it). But I'm doing enterprise-level architectural programming. It's not very amenable to productizing, so I'm basically stuck being paid for my time. What that means is that if I want to have a long-term high-security relationship with a couple of key clients, I ba…

As a consultant, there are three ways to raise your income: work more hours, raise your rate, or add leverage (i.e. hire). It pays to take a few walks and think about the structural differences between each option. For instance, working more hours is not sustainable, has a low ceiling, has painful non-monetary costs (especially with a family), and doesn't get easier as you progress in your career. But there may be things you can do to increase your billable hours without increasing your working hours, e.g. by selling retainer or support agreements. Even still, as you approach 100% utilization you're making asymptotic improvements.

Re raising your rate, I suspect that once you break through the ceiling for general-purpose skilled developers ($100-150/hr?) into the "specialist" range ($200-500/hr), your billable hours actually drop, because to justify that rate you need to spend more time giving talks, publishing papers, updating/promoting a blog, contributing to open source, prospecting for clients, etc. I'm personally contemplating making the jump to specialist work, but I don't have real experience there.

So I don't know if this helps you, but I feel like we're in a similar situation, and to me this line of thinking at least helps clarify the territory.

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