Ideas and Validation December 27, 2019

How about just... starting a regular IT business?

mpodlasin

I had an interesting conversations with 2 of my friends.

Both of them have non-tech businesses (tattoo place and renovation business).

Both recommended to basically quit my job, open 1 person freelancing business and build a company from there.

Their idea is that there is for sure a big need for various IT services - making websites, online shops, applications, whatever. Instead of trying to come up with "a software idea", they tell me to just build something other people want.

Starting from smaller jobs, building portfolio and contacts. If later there is more jobs than I can handle - recruiting my friends to work with me etc... until a business grows to be an actual company.

If on the way there is an idea for a product - awesome, but why to wait with working for yourself, when you can just... well.. begin right now.

Granted it's not as sexy, as having own Sass. It's like working in a software house but you are your own boss and you are working whenever you want / only if you need money, which is all what I wanted from this "making a business" thing.

That's what my friends did - just doing the same thing they do, but starting to work under "own brand" and immediately they started to earn more money and are more independent.

Hell, now they earn more money than me... Much more...

So what do you think? Are we overcomplicating the process of creating a business? Have some of you tried this "freelance route" to starting a business without a "startup idea"?

  1. 8

    The freelance/consulting route is one of the possible and very common one. There is no problem to go down that path. The risk is that you will never build a product business if your service business goes well. The advantage of product business is that it scales better than service business because in service business you are selling your very limited resource: time

    1. 1

      I agree with this. 2019 was a year I started a software development service business and to be honest it went well - I landed big clients and was getting consistent work making great money, at some point though I took a step back and realized that I was still trading time for money and still answerable to clients demands/deadlines, things I want to try to move away from by creating a product centered business.

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        You basically "own a job" instead of "having a job". And you're too lost in the execution to extract yourself and think strategically, because you have to continue to bring home the bacon.

    2. 1

      There is a podcast on here where I guy said he should have started with Saas, and he’s making $20K a month with agency

  2. 4

    I did some freelance and worked a job. Working a job is a lot less stressful and if you learn the latest skills you can earn a lot of money.

    Most freelancing < job < good job (high paying and a tech company who care about their developers) < some freelancing (great clients) < SaaS

    Most freelancing is a race to the bottom and unless you have a network getting good clients is very hard.

    Also don't quit your job unless you have a lot of savings, having no money will force you to take terrible clients which will lead to burnout etc.

    1. 1

      I usually argue with you :) but this time I totally agree!
      Freelancing is very challenging and it's really hard to beat competitors (because usually, a freelancer doesn't have any "killer features").

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        You can create "killer features" as a freelancer too :) But you've got to think of yourself as a business, not as a drop in a sea of service providers. Personal branding efforts go a long way towards achieving this. But overall, I would suggest starting as a freelancer, putting some money on the side, and building your own productized service business. It's a good middle ground between having a SaaS and not having any time at all because you're a full time freelancer. You also learn how to collaborate with other people! Which is extremely important (and stressful if you're not used to it, like I am).

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          I agree that there are some ways to find clients like building a personal brand but you will not argue with the claim it's not easy, especially at the beginning.

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            I agree, but I also think that nothing is easy, so that reasoning does not particularly apply to me... I love a good challenge. I was recently looking at job openings out of curiosity and, to be quite honest, the job market is much scarier to me than the freelance market as it stands today. What they ask out of a candidate is outright ridiculous many times... You will find that you have the skillset that they ask, and then they double down on it with 5-6 years of experience on that skillset... So, I'd much rather stay a freelancer where finding good clients is hard, but the ones that you find are willing to have you try things out instead of always worrying that you might not be senior enough, or that you might not know the latest and coolest tech. You grow a lot this way and you learn from your own mistakes, which in turn gives you even more experience in that skillset. This is my personal experience after 1,5 years as a freelancer :)

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              Yeah, and, to be honest, I hate to be an employee. I really hate it, hate the office life and all this crap. You can't imagine how mad on it I'm :(((( but freelancing is not much better to me. Yeah, a little bit more freedom, much more stressful (in some situations) and much less money :((( but I didn't work as a freelancer long enough so I admin I may be totally wrong.

      2. 1

        :)

        Use to be able to niche into ruby on rails agencies etc, but now there are 100s for each language and framework.

        Same with different industries etc.

    2. 1

      Thank you for that.

      Well, I worked in (objectively speaking) amazing company (considered a "google" of my country, when it comes to pay and job quality).

      And I still had a horrible time. I am having a burn out, but this burn out lasts already almost as long as I work in IT (3+ years). I just don't know what to do.

      Maybe I just don't like programming in general, but I have no other marketable skills.

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        That's rough, I don't think freelance will fix that problem. If anything it will make it worse.

        I would read into burn out and see what others who have experienced it recommend doing.

        1. 1

          I’ve had burnout multiple times

          People always say “read about burnout”

          And then that stuff says do these things to get out of it

          But the advice is eh, and never worked for me, and I would guess rarely works for most people

          People just continue to burn and die - literally with heart attacks etc - and every ally quit or get fired and find the next thing to do, which is often the same exact thing

          My advice is usually get another job doing not the same exact thing — like if you’re a programmer then go do tech support

          Become a db admin

          Etc - something still nerdy but totally different in terms of day to day

          I think that is a real short-term solution for some people

          And start meditating for 5 min a day - I think this is prob the best advice, which is why it’s never mentioned in any burnout articles or books I’ve read

        2. 1

          Thanks.

          That's what boggles my mind out. If that's symptoms of burnout, I have had burnout for 3+ years, starting about 6 months into my first job.

          Maybe I am just too entitled.

          But the entire force driving me to educate myself, work on own projects and switch focus from front-end development to data science stems from the fact I am simply not satisfied at my job...

          I don't know...

          1. 1

            In my experience, most employees don't work very hard. If you're the type of person who takes there work home, I wouldn't categorize yourself anywhere near entitled.

            If you hate programming and are a low performer at work that's a different story completely. The fact that you have enough perspective to self-access probably means you're not entitled.

            This all being said, every individual must take full responsibility for work-life balance and if the company objects you probably don't have an "amazing company". Take some time off travel a little or pursue a hobby for a few weeks if you've been there for 3 years they should understand.

            I wouldn't quite immediately before trying to mediate the problem first (assuming you like your co-workers). I also would strongly encourage you to not start a company amidst burnout. I've done both and it doesn't lead to anything prosperous.

  3. 3

    It's quite a common route, but it doesn't mean it's easier. Finding good and consistent freelance gigs can be hard work, but if you do good jobs then ideally over time it 'should' get easier.

    Often what I've seen happen is that whilst freelancing, being exposed to and working on a variety of problems then ideas for products start to evolve.

    1. 1

      I found it easier - in that it takes less effort to make money from a service business compared to a product business and also has a higher chance of success. A product business will take time, effort, money and it can still be hit or miss.

    2. 1

      That's exactly what I would hope for - watching how businesses I work with operate and hopefully coming up with product solutions that would fit them best.

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        Yes thats a great takeaway from a service based business as you are generally working for companies that are product centered, so you get to see how their business model works.

  4. 2

    Here's my thoughts as someone who worked the freelance / small agency business for 5 years before pivoting into SaaS:

    • First off, you can definitely make more money than you can as an employee (even once you calculate in the cost of benefits) but that extra cash comes with trade offs. Running your own consulting business is always feast or famine. You need to schedule your workload perfectly or you will have times where you just aren't getting paid (often in terrible times when you really want some extra cash like December). The flipside is often even worse when you've overbooked and find yourself working two or three jobs at once. As a freelancer there were months when I just moved a cot into my office and worked until I couldn't work any more and then I slept on the cot for an hour and started working again. Literally I was pulling 20+ hour days to finish multiple jobs. It's really easy to get yourself in situations like this as a freelancer. After a while, it just becomes too miserable and stressful. If you notice, there's not a lot of career freelancers. People do it for a while then quit. I think it's because of the stress.

    • Second, there's a distinct cap to how much you can make as a freelancer. Are there freelancers who pull in $1m/year? That would mean you'd have to be practically billing around $600-$1k/hour. That's significantly more than doctors or lawyers make. I've never met an engineer who can command that sort of hourly rate. And even if you could somehow earn that sort of rate, it's all tied to billable hours. So there's a hard cap. But the economics of SaaS are way more scalable. You still work 40 hours a week on a $1m SaaS company but you'll make more than you ever could per hour by freelancing. And a $1m/year SaaS company is much more common than a $1m/year freelancer.

    Ultimately, I think freelancing is a great short-term option but a lousy long-term choice. Use it to make ends meet while you're moving towards your next business.

    1. 1

      I adore this answer. Thank you!

  5. 2

    You need to think about economics. Regular businesses are totally legitimate. Running restaurants, grocery stores, tattoo, or any services.

    The promise of software and digital content to us is this: our businesses make money for us while we are asleep - so we could get the freedom of time to do things we like.

    Hundreds of thousands of people have achieved this, so it's not a pipe dream. Our skill allows us to pursue this path. It's our advantage.

    Also, creating businesses is risky, and the rate of return is exponential. That means, initially the return is abysmal, comparing to linear rates of return. But once you start to make money it will out-grown service businesses fairly quickly, not to mention you will have more free time.

    Have some faith or conviction about software. There is a reason so many smart people think it's a good option. :-)

  6. 1

    What you have to consider is that it is never a straight path.

    Quitting a job for going freelancing has two sides, on the one, bright side, in principle you own your own time, and thus you can do whatever you want. On the other, you have to find something to do with it. Competition is fierce, and a starting freelancer is hard to prove your value. However, imagine you go that path.

    It is true that as freelancer you are trading time for money, but it is not true at all that it cannot scale. If you really are into expanding, etc. you can transform your freelancing into a very successful company. You can offer a better service by putting a group of people together, with different skills, you can increase reliability, performance, etc. thus increasing your value, but you still work the same 8h/day. Being a service company is no less valid than having a product.

    At some point, it can happen, you narrow down your niche and come up with a solution you can market as a product, but it can also be that it doesn't happen and you have a successful multi million dollar consultancy business in your hands.

  7. 1

    Hello @mpodlasin. I am also web developer and from Poland too. The most funny thing is that I think about the same idea, but with little variation. My idea is to start software house, get clients, hire programmers, earn for them from gigs and make own products with rest of the time.

    Did you think about it? If you are open to my idea, feel free to contact me, we may start together.

  8. 1

    There is a brilliance in identifying the unsexy, and capitalizing on that.

    It’s quite sexy to build an AI-driven Android chatbot app built on Scala, but it doesn’t mean it’s financially the best bet. Many people have made fortunes doing unsexy IT work. It is not glamorous and it’s a lot of work, but it serves a need and is lucrative.

    Freelancing specifically can be quite difficult especially as your income tends to be tied to time. Never scalable.

    If you have the means to start a niche IT business, I’d give a much higher chance of success than with any SaaS or original technology. Unless of course you’re an absolutely brilliant programmer and marketer, and maybe you are!

  9. 1

    Of course consulting is the easiest and most straight forward way of earning money within this field. I’m a consultant myself and work for one of the “big 3” management consulting firms, I’ve also previously worked as a freelancer for extended periods.

    The benefits are:

    • Pretty easy and straight forward to earn money.
    • You can quickly get to a six figure income.
    • If you work within a consulting firm then it’s a pretty good career development path.

    The downsides are:

    • Unless you work for a major consulting firm, most projects get quite boring. It’s a lot of repetitive work and quite crappy projects on the low end of consulting and freelancing.
    • You sell your time. It’s difficult to leave the business or sell it to someone else.
    • Your income is high, but also capped. It’s difficult to earn more than ~$200.000.

    Personally I quite enjoy it right now. I get the opportunity to work with some of the largest retailers in the world and get great insights into how they run their businesses. Some days I feel like my work is like going to Hogwarts and learning all the secrets and magic of the world.

    But I doubt everyone feel like that.

    1. 1

      Pretty easy and straight forward to earn money.
      ... if you already have a bunch of clients. I do consult and I'm struggling to find clients. It's not easy at all.

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        Get into a platform like TopTal and that issue will be solved. Quite easy if you are up to the standard required.

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          I don't see any connection between being hired by TopTal and looking for a clients to consult. And yes, I'm not a talented software developer, I'm a pretty mediocre one.

          1. 1

            TopTal do not hire you. It’s just an exclusive/closed platform for freelancers and consultants.

            Getting into one of those platforms eliminates the issue of having to find clients.

            1. 1

              Hmm but they a hiring project with many interviews, tasks etc. like any other head-hunter company. Do you mean that after this process if they accept you, you still will able to find and select clients?

              1. 1

                It’s an exclusive platform. They only accept high quality engineers unlike other open platforms that accepts anyone. So the application process is quite detailed.

                Once you are in, you can see the projects available. You are still self employed and you can work with clients outside the platform too. You are not “locked in” as some kind of employee.

                1. 1

                  Oh, I didn't know that. Nice to know and thanks!