Is Consulting a good transition from 9-5 day job to product biz?

Discussions
#1

I work a fairly standard day job as a software developer, and I am currently planning my own business in my free time. My goal is to grow my business to a full time income as quick as possible, since I cannot see myself sustaining 2 jobs indefinitely. I am risk-adverse, in that I don’t wan to quit my job without having replaced the income, but I think this puts me on a slower path from the start.

I hear a lot about people transitioning from consulting to products, and I’m wondering why this is. Do people choose consulting because they think they will get a certain amount of freedom, then realize that the real freedom lies in products? Or are there enough advantages in consulting to make it a good step for bootstrappers building their own product business?

I don’t have experience consulting, so my feeling is that I’m better off sticking with the day job and continuing my bootstrapping exploits on the side. But I’m wondering If I may be better off moving to consulting/product biz rather than 9-5/product biz.

For those of you who have done either, I would love to hear your take.

  • Would you do it the same way again?
  • Pros and Cons of consulting vs. 9-5 employee. (while bootstrapping)
  • What does it take to ramp up to a decent consulting income? (maybe $5K/month)
#2

The advantage for us of consulting was that we could essentially treat our product as another client and assign time to it. As time went on it just became a bigger client! That said, I think having the product and really wanting to spend all of our time on it did start to make the client work quite frustrating.

If you are working 9-5 for someone else it is going to be harder to develop a product in the same way that we did, unless you can negotiate to work part time as your product starts to provide an income.

#3

Having done both, and in this particular order, I would probably do it roughly the same way again.
There are 2 main reasons for this: time management, and choice of clients.

Running any kind of business will have a non-trivial learning curve, and especially for people coming from a technical background, getting the fundamentals down will require a lot of reading, and experimenting. Time, however, is never something you have -it’s something you actively make, and claw out from other activities.
Consulting allows you to dynamically balance learning / experimentation against client requirements within reason.

Choice of clients is a great conceptual shortcut for killing two birds with one stone: by consulting either for startups, or established businesses, you can bill for some of the required 10000 hours to learn the skill of entrepreneurship; and furthermore do active customer development with people living, and breathing business problems -some of which might be malleable to software solutions.

The greatest barriers to consulting is lining up clients, closing deals, managing expectations, and getting paid. Read a little, and practice a lot: I’d recommend Getting Started in Consulting by Alan Weiss, and actively sending 1-2 qualified sales proposals every weekend for the next 2 months. Once you close your first client, you can get a feel for what it takes to survive on consulting alone.

#4

Just to cover all the options:

There is a third way. The one I’m following now.

Consulting can bring in a lot of money, and give a lot of free time, too. But it is also very stressful since you’re always on a look out for the next client or your cash flow will dry up. You at first may get less time and less money than working full time 9-5. You may have troubles with client paying, too.

I’m doing contracting via agencies, and outsource my future products.

I have to cut the agencies about 20-30% what they charge to the client, but there are benefits:

  • The revenue is 2-3x bigger than FTE (I get ~$100/hr to my business account), and you can write-off all kind of business-related stuff (including subcontractors)
  • Agencies never late with pay check, even when the client is
  • Minimal engagement is 6mo+, typical 1 yr+, non-stop
  • I almost never have a down-time, agencies book me some time before the previous contract ends
  • I get to work with good-paying companies where I wouldn’t have a chance as an independent consultant, because I simply do not know anyone over there

Now, I take that extra income and channel it into developing my future products. I do it via oDesk, where you can find a great developer in a sub-20 range somewhere in Ukraine or Philippines.

I spend about an hour a day after my kids are asleep to check the progress and give the directions. I spend a few hours every weekend to do more substantial work (e.g. mockups). A contractor typically puts in about 20 hours a week (at $10 to $20 range), so the product gets some full 30 hrs/wk, something I couldn’t have done for long if I were a consultant.

It may be not the fastest way, but it fits my situation better.

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#5

Consulting typically pays 3-4 times what a day job would per hour, so in theory you’d be able to cover your expenses while working a quarter of the time on something non-product related. I say in theory because in practice most people I know who have done this end up under billing time (and working the same amount or more then FTE) or they realize they are making 3-4 times what their already lucrative job paid and start enjoying that, and never get around to a product.

I think consulting is a great way to come up with a product if you don’t have one. You’ll often find a unsolved problem that is a huge opportunity.

#6

I have done both – starting Catch the Best right after starting consulting, and starting Honeybadger while working a day job, and there are pros and cons both ways.

The primary advantage of consulting was having the flexibility to work on the product anytime (since I do all my consulting remote), so you could take a support/partnership call, handle a server emergency, etc., whenever you wanted.

The primary advantage of the day job approach was having a stable workload and salary so I didn’t have to worry as much about client work being crazy for X amount of time, which would keep me from consistently working on the product.

I will say, though, that it depends on the nature of the product you are building. Honeybadger got to the point (since it’s ops-heavy and people depend on it being responsive 24/7) that I couldn’t keep the day job while giving Honeybadger what it needed, so I left the day job and now fill in part of my income with consulting. So give that part some consideration in your deliberations.

Since you don’t have experience consulting, I would say seriously consider staying where you are while you build your product, unless (as rfctr mentioned) you have a consistent way you know you can get consulting work. It can big a big ball of stress to chase after the next paycheck. :smile:

#7

I’ve never technically worked a “real” job (except for that 7 week period nearly a decade ago…a moment of weakness :wink:), so I can’t speak on the transition itself, but I can say that consulting is a pretty great way to sustain you while you build your own business.

The single greatest reason is this: flexibility.

You can do whatever the heck you want. I don’t think typical 9-5ers get that. What. Ever. You. Want.

You’re free to bust your butt for a couple of months and rake in a ton of cash from clients and then take the next couple of months off to focus 100% on your own thing. You’re free to charge clients whatever you want. You’re free to use your clients as a way to get paid to learn new things. You’re free to sell clients the product you’re working on. Etc etc.

Sure, there are downsides to consulting. There are downsides to being an entrepreneur. But the flexibility that being self-employed brings really cannot be overstated. It’s the perfect setup.

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#8

Thanks for all the great responses! You sure make consulting sound like a good idea, I think I will dive a little deeper to see if its really a good fit for me. So where do I start looking for opportunities?

I don’t live in a big city, so I doubt I’ll find much locally unless I can find a small business niche. Remote work is probably my best bet. Though, I don’t want to throw myself into a pool of low-bidding freelancers … is there any good resource for high quality part time gigs?

I have a feeling my best bet is to network with people I know, build a reputation, etc. However If this doesn’t work so well, I may not come out ahead of where I would be at with FTE, since I’ll be spending my current spare time on building a consulting business rather than my product business.

Thanks!

#9

I’ve lived in big cities and small cities and 99% of my clients are never were where I lived. So, location certainly doesn’t matter.

My suggestion is to hit up job boards (not job sites where you have to send in a resume…“gig” type places).

A few I’d recommend:

Those are less about low bidding and more about connecting with the person posting the job to see if you’d be a good fit.

Stay away from Elance and the like. Hit up those links I mentioned to get some initial work going and then grow from there.

Tips on becoming a successful freelancer/consultant
#10

Two more job board links (since the forums only allow 2 links per post)…

#11

I agree with @Shpigford. Like him, I’ve never had a “real job” as programmer so I cannot comment on the transition part but I can tell you that consulting while trying to build your own product can feel a bit like insanity if you are risk averse like you mentioned. (Guessing you have a wife and kids, correct??)

There have been MANY times I have considered going to work for a regular paycheck but also like @Shpigford, I value the flexibility too much. However, as backward as it may sound given my own choice, unless you honestly don’t mind a bumpy ride, my advice would be to keep your job until you can afford not to.

Something I’d like to add is that you could also consider building a portfolio of sites that kick off enough passive income to allow you to work on your product. I combine that with periodic client-work to afford time to work on my bigger objectives.