Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Aaron Franklin
At StartupDay 2009, I learned that many entrepreneurs initially fund their companies through consulting. Despite all the focus on ‘getting funded’, there are alternatives. Consulting is attractive because you maintain full control over your product and company. But it also has down sides and risks. Consulting is very distracting, and it will slow down the development of your startup. Here are some tips to make sure your consulting strategy pays off.
- Commit to Consulting
Be willing and able to do great work for your clients. If you’re just consulting to make money, you won’t survive long as a consultant, where most contracts are based on word-of-mouth referrals. - Know your price
Figure out the hourly fee that makes the distractions of consulting worth it. A month’s salary is useless if it delays your own project a month. - Choose your Projects
Be confident in what you have to offer, and find the client that is the right fit. You’re choosing your client as much as they are choosing you. Find opportunities to add to your portfolio/resume that will help you further down the line if you are fundraising or job hunting. - Be upfront with your clients
Let your clients know about your startup. Most of your clients will admire what you’re doing, and many will be entrepreneurs themselves. Work with your client to create a schedule, expectations, and fee that is win-win. - Maximum Client Time
Agree on a schedule with your client. Include maximum weekly hours, and stick to it despite how tempting it is to make extra money. When clients call with “urgent” work that needs to be done immediately, let them know if it breaks the schedule, and if it will push back the timeline of other work. - Size Matters
Find projects that are the right scope for what you can deliver. Small projects mean you’ll always be searching for the next customer, so shoot for something larger and ongoing (it’s even worth a lower fee since more of your time will be billable). - Don’t forget your startup
Obviously you won’t forget your startup –but you may become less obsessed with it. Some of the best breakthroughs for your startup will occur while in the shower or walking down the street. When you work for someone else, you risk obsessing over your client’s work when you’re off the clock. As someone who is passionate about everything I work on, I found it very difficult to split multiple passions at once. - Focus on Clients with Revenue
Most of the consulting opportunities you’ll find will be for startups. Without revenue, the client may run out of money and shut down at any time. And do not work for equity – you already have your own startup.
Many people ask me how to get started as a consultant. Networking is of course key. A good strategy is to lower your hourly fee for your first contract to build a portfolio (find out the average bid, and go lower). It also helps to differentiate your service – for example, many consultants can build a web presence OR provide advanced marketing services, but our team is able to offer both, so the client doesn’t have to become a project manager between multiple contractors.
At LazyMeter, we decided to pursue consulting instead of funding for two reasons. First, we didn’t want to invest our time in fundraising until we had a product and users. Second, as a non-technical co-founder, I had extra time while the product was being built. Last week Nathan Parcells wrote about what the business guy does in a startup – I will add to his laundry list of items that any of their spare time can be converted into cash.
