Starting a software Consulting Business
some suggestions for anyone considering starting a software consulting business, including people who are out of work and have been approached by someone they know to do a bit of freelance work.
Recommended books and resources
- Entrepreneurship for Dummies, by Kathleen Allen, is another good reference, a little more oriented towards “making it big”.
- The Concise Guide to Becoming an Independent Consultant, by Herman Holtz, is a good guide on how to start and run your consulting business.
- Crossing the Chasm, by Geoffrey A. Moore, is the excellent standard reference on high-tech marketing
- Guerrilla Marketing, by Jay Conrad Levinson, is a guide to marketing on a budget, focused on what will help you make a profit in your business
Skills you will need
said, here is a list of skills you will also need:
- The specific skill you are selling as a consultant (i.e., your niche of software development) — you will need to have lots of skill and experience (not just a degree) to establish credibility so that people will want to hire you as a consultant.
- General organization skills — you may be able to hire a professional organizer to help you.
- Self-motivation — the ability to get things done once you’ve decided they need to get done, stay on task, etc. without anyone prodding you — you may be able to hire a business coach to prod you.
- Willingness to live with uncertainty — at least at first your income will not be steady, and you will probably never have certainty about your income level. If you aren’t willing to live with that, you might want to consider getting a regular job, rather than going into business for yourself.
- Flexibility — if the initial idea of the services you want to provide doesn’t work out, or if your initial business plan proves to be unsound, you will need to be flexible enough to change course.
What and when to charge
I can’t include any discussion of specific amounts to charge, as that might be construed as price fixing. But here is a suggestion for how to figure out what to charge:
- Start with what you think you would be making, or should be making, in a full-time regular job, as a reasonable annual salary. That is, your gross annual pay, not including benefits, and assuming that the job comes with the usual benefits (health, dental, and life insurance, sick leave, vacation, etc.).
- Divide that amount by 1000, to get a reasonable hourly consulting rate. For instance, if you think your reasonable annual salary is $30,000, then your reasonable consulting rate is $30/hour.
This is just a “rule of thumb” calculation. It takes into account that you have to pay for the fringe benefits a job would provide yourself, and that you will have some “overhead” time (time spent finding, rather than working for, clients).
Contracts
I don’t think it’s necessary to have a long contract filled with legal terms. It’s better to not work for anyone that you don’t trust, unless you are willing to take the risk of not getting paid, or of getting sued. And if you do get sued, a long legal-language-filled contract is not going to help you. At least, I don’t think it will, but I’m not an attorney, so you might want to contact one to get their opinion.
Getting clients (Marketing)
In order to stay in business, you will need to have clients, and in order to have clients, you will need to do some marketing. My suggestion is that you develop a marketing plan, and this section discusses some aspects of creating a plan. You may want to hire a marketing consultant to help you through this process, or attend a business planning workshop — your local SBA office is a good place to check for workshops.
Accounting and records
Note: Consult a professional — this is not advice from an accounting professional, just some things to think about.
