Ask HN: How do I start my own consulting firm?

#1

Post by cosmorocket » Sat, Mar 11, 2017, 3:22 PM UTC

I work as a senior frontend developer in a company and have experience with backend stuff and devops, learning new things constantly. My colleague and friend is the team lead of our team at that company (10 members in the frontend department). Before working in the company I had a long successful path as a 100% remote freelancer (7 years of work).

The stuff we now work on in the company is quite complex - a realtime trading platform with tons of inner components, complex logic, large codebase. To me seems like we got quite experienced and gained precious expertise by the moment. We have the ability to extend our expertise to other fields as well.

Now I feel like my career path now is to establish something on my own and work on a product.

I talked to my colleague about his will to join me as a partner in growing our own business and it looks like we are on more or less the same page about what we want and should do.

Here is my plan:

1. Do preliminary research. Prepare the basement in form of a site with portfolio, our focus, expertise and articles.

2. Start looking for projects online to work on for companies as a contractor team. I will bring us some coins for the first time.

3. Setup the business processes and make the workflow stable and profitable.

4. Keep working as a team for clients and start working on our product ideas.

5. Switch from contract work to our products gradually.

Here are my questions:

- Willing to find projects for a small team (2-4 members) of developers/designers should I look for larger projects in a different way?

- How do I identify that a company might be in need of a team like ours? I don’t want to spam everybody trying to catch a project.

- Should I prioritize our online sales channels over local ones?

- Should I partner up with firms like ours? Contact them and show our offer so that they could be interested in subcontracting with us?

- Should we have mentors/coaches?

- Should I hire a salesperson to look for projects?

Re: Ask HN: How do I start my own consulting firm?

#2

Post by philiphodgen » Sat, Mar 11, 2017, 3:33 PM UTC

Might I suggest Step 0?

0.1 Start marketing. Something as prosaic as a blog, if necessary. Demonstrate your capability. (Capability does not mean technical skill. It means your empathy with another human to understand his/her pain, and show him/her that you care. You demonstrate caring by talking simply and clearly. If someone understands you, they feel good about themselves. If you are talking simply and clearly, that means you have taken the time to really give a shit about the other person).

0.2 Get a customer. For really really cheap if necessary. Train people to give you a small amount of money in return for some help.

. . . onward and upward.

I personally would not take on a partner and employees for a while. I can tell you from personal experience that it is a profound psychic burden to be responsible for other people eating and paying the rent. In addition, the HR component of having employees is pure, unadulterated shit swimming in a pool of pee. It's as if our government wants to discourage employment. California (where I am) is the worst.

Re: Ask HN: How do I start my own consulting firm?

#3

Post by [deleted] » Sat, Mar 11, 2017, 3:33 PM UTC

[deleted]

Re: Ask HN: How do I start my own consulting firm?

#4

Post by bigmanwalter » Sat, Mar 11, 2017, 3:43 PM UTC

Welcome to the dark side :)

Starting a services firm is all about building up a client base that can sustain you. Your big challenge is to get into the best referral circles, as the best projects come via word of mouth.

My suggestion is to take whatever you can get at first. Take as many coffee meetings as possible and network like crazy. You never know where your first big lead will come from.

Expect most potential clients to be sceptical of your ability to deliver until you have portfolio pieces that are of both a similar level of complexity to the clients' needs as well as written in similar technologies. Clients will be sceptical of anything that you wrote while still employed unfortunately.

For me, this meant that I had to take projects at a loss or on razor thin margins at the beginning. I was strategic about it though and this allowed me to build up the type of portfolio I needed to get my ideal contracts.

Online markets are very competitive. Expect to be up against 200 other bidders. It can be fruitful, but I consider it to be a full time job in itself.

Until you're established, you'll need to follow up on every potential sales channel you can think of. If you have sufficient capital to float sales people, it's always a great thing to have, but be careful as employees will spend your money faster than you make it at first. Contractors, freelancers, and commission only sales can help you out here.

I found most of my first clients by announcing my availability to my network. There may be some less saturated job boards on Facebook that are localized to your specific city as well.

You may need to take on smaller projects than you would like at first. It will feel useless but it is actually valuable networking. Some of my 1 day projects have turned into handsome referrals :)

Get as much mentorship and help as you can find. There will be hard times before the operation is running smoothly.

If you ever want to chat about it, you can hit me up at eric@dualgravity.com

Re: Ask HN: How do I start my own consulting firm?

#5

Post by umarniz » Sat, Mar 11, 2017, 4:16 PM UTC

4 years of consulting experience here with a similar situation to yours.

Step 5 is elusive and almost impossible. Lost 2 products to the services mindset with further strain by partners to bring in capital by doing services. The chicken-egg issue becomes much harder when you are working hand to mouth.

The problem roots from 2 main things, services/consultation mindset and in-consistent projects.

The people who outsource or consult other teams to build their solutions start with a bidding process which inherently means that the cheaper and faster the better. This sole focus on cheap/fast is fun at the start as you become creative to work with tight deadlines and I atleast started doing more automation than ever before but can be useless considering how varying the projects are in nature and how the clients sole motivation is to be cheap & fast. This results in repetitive unchallenging work which is highly demotivating.

Inconsistent Projects. Our first year we landed a huge chain of projects from a massive global brand giving us enough capital to last a couple of years. But with clients there is no guarantee, we couldn't display most projects we did in the first 2 years cause their launches were delayed and NDAs were signed which means nothing to show as portfolio of big names. Finally when we could, most of our project contacts were going dry meaning more inconsistency.

For your question of sales, we had business developers who would get commission for each project who would spam companies to get us in the door. Mainly marketing agencies or contractors who would sub-contract us projects. The only reason we could get a lot of projects was because one of our business dev was an industry veteran wanting to do exactly what we were doing and we worked together though giving up high margins.

If your end goal is to build products, i would recommend go straight with a product. Find something you love to build, take out weekends for it with your team and try to get it into an accelerator for more advice/exposure.

Re: Ask HN: How do I start my own consulting firm?

#6

Post by tootie » Sat, Mar 11, 2017, 4:16 PM UTC

The thing you're missing is project and product management and sales. Those parts can be really hard. You're coding skills are worthless if you can't deliver the right thing on budget.

Re: Ask HN: How do I start my own consulting firm?

#7

Post by htormey » Sat, Mar 11, 2017, 4:17 PM UTC

I'm doing this right now in the Bay Area. Most of my early clients came through me reaching out to a lot of people in my network.

I also had a lot of luck on angellist. My strategy there was to apply to jobs and then ask to meet the head of engineering for coffee. I got one of my best customers through that method.

If you don't have a strong network you need to be going to a lot of meetups or other events where hiring managers are present.

Re: Ask HN: How do I start my own consulting firm?

#8

Post by fnbr » Sat, Mar 11, 2017, 4:20 PM UTC

I work for a reasonably high end software consulting firm. We find most of the work through word of mouth or in-bound responses due to projects we've put on the web.

Two suggestions:

1. Patrick McKenzie (http://www.kalzumeus.com/; patio11 on HN) has a lot of brilliant work up talking about his consulting work, consulting work in general. Give him a read.

2. Focus on solving business problems, not technical problems, and start approaching people that you think would make a lot of money if you solved one of their problems. Customers rarely push back if you make them more money than you cost them (to an absurd degree- it's shocking how much you can charge for a recent grad's time).

Regarding your plan:

- I don't know if you need to prepare a portfolio site. If you have a strong portfolio & can offer references/testimonials, that's probably sufficient.

- I don't even know if you need to make the workflow stable as long as it's profitable. If you have the product people working as contractors, then you can get by with instability. Also, charging large amounts helps substantially as you can spread out the cash over time rather than having to constantly search for work.

Regarding your questions:

- As mentioned above, you want to find people who have business problems that you can solve. The best way to do that is to meet lots of people and ask them about their business problems. Lecture 19 of "How to Start a Startup" has a good discussion of this [1, 2]. I would start looking at large organizations in your area who aren't tech companies. Governments will often have public bid processes that you can start applying for.

I would not prioritize online sales channels over local ones. I think consulting really only works when it's enterprise focused, as that's when you can charge the large rates to justify your time & overhead. That's going to necessarily be in person due to the way that enterprise sales works (unfortunately). However, internet marketing can work well. We've had a lot of success attracting in-bound interest from viral posts on social media (visualizations, projects, etc.).

- I wouldn't partner up with firms like yours. I would partner up with firms that lack the expertise. e.g. large management consultancies like Deloitte (easier said than done).

I'm happy to provide more specific advice over email. My email's in my profile.

[1]: http://startupclass.samaltman.com/

[2]: Transcript: https://genius.com/Tyler-bosmeny-lecture-19-sales-and-market...

Re: Ask HN: How do I start my own consulting firm?

#9

Post by bitexploder » Sat, Mar 11, 2017, 4:23 PM UTC

philiphodgen wrote: post #2

Might I suggest Step 0? 0.1 Start marketing. Something as prosaic as a blog, if necessary. Demonstrate your capability. (Capability does not mean technical skill. It means your empathy with another human to understand his/her pain, and show him/her that you care. You demonstrate caring by talking simply and clearly. If someone understands you, they feel good about themselves. If you are talking simply and clearly, th…

Don't work for cheap unless you have to. Word of mouth matters and cheaper customers are in a totally different market segment.

It is very tempting, and easy to do as a one man shop, but it dramatically undervalues what you produce and you can end up trapped in that lower tier of work and pricing model and have a hard time escaping. (opportunity cost, etc)

patio11 has written openly about his efforts here and I think it is well worth it to review as well.

Experience: partner at a small, but growing infosec consulting shop.

Re: Ask HN: How do I start my own consulting firm?

#10

Post by kleinsch » Sat, Mar 11, 2017, 4:38 PM UTC

Been freelancing for years, spent some time working with a guy that used to run a design consulting firm. I was thinking about starting a dev consulting firm, and his suggestions on how to find project were:

Identify complementing firms, see about partnering with them to do the stuff they don't do. Partner with a design firm to do the dev part of their gigs. Partner with a marketing firm to do dev work on App campaigns. Etc.

Identify much larger competing firms, see if they can toss you the projects that are too small for them. If you're a 20M/year big consulting firm, a $15K project might not be worth the hassle, so if you know the people that review the projects, they can refer people to you when they turn them down.