Jon Dahl of Slantwise Design presented at Minnebar on "Consulting for fun and profit"
Dahl provided a Jeopardy style list of topics to choose from. The thoughts below come from a combination of Dahl and audience participation.
Hiring
Pitfalls to avoid with hiring employees. Should you fire friends? The audience differed on the value of this. Don't hurt your business by hiring someone just because they're a friend, but do hire those who are truly valuable.
90% of working with people is chemistry. But it's hard to know whether someone will have the right chemistry based on interviews. Try to find people with complimentary skills. Don't mistake the effectiveness of your personal relationship for a relationship that would work in a business setting.
You may like the people you work with but not hang out with them. That's fine.
We have found all of our developers through Craigslist and the community (events like Minnebar).
Finding Customers
Look for small projects first. Easier to complete some projects and build a portfolio.
Consider partnering with other small firms to build relationships.
Have a blog. Prove that you're well-spoken, smart, and thing about interesting things.
Have your principles do sales. Customers want to talk to the people who are ultimately responsible for the success of the project on your end.
Placement agencies can help to find projects.
Rates & Prices
"Everyone does work hourly, but it doesn't make sense to me." explained an audience member. Reusable work seems to make more sense to sell on a project basis.
User-interactivity: Better off billing hourly since people generally don't know what they want when they're starting.
If you're "a person on the team" consulting, hourly works well.
Fixed bids seem to work better with government and large companies who are used to bidding. But be sure to contractually lock down the deliverables.
Fixed bid requires a closer eye on the scope / more project management.
Hybrid: Do an hourly project to determine requirements. Then put together an estimate for a fixed-bid project.
Scope Creep
What to do? Get new customers if you're doing fixed-bid work. For hourly, keep billing them.
Determine the customer's budget when determining an appropriate scope/bid.
Don't change features during each iteration. Write down and hold features until the next round.
Dealing with Difficult Customers
Fire them.
Raise prices until they fire you.
Do a bad job until they fire you?
You can fire customers, and you can find new work. However, even difficult customers can be dealt with if you work with them.
Tools and Work Environment
Coffee
Good Accountant
Good Lawyer - Dahl uses NewCouncil.com
IRC or Campfire - Especially great when working contractors.
Basecamp for Development - Audience member: "Where programming project go to die."
Bug Tracker
Location: Spare bedroom? Basement? Office? Whatever works for you and your team. Some developers can't stand an office setting. Others work much better face to face.
"If you really need to know something from a client, pick up a phone."
Consulting vs Products
"I find myself wanting to work on my own projects, but need to focus on paying the bills [through consulting]." Audience member.
Product development is really alluring. Tough to balance with consulting.
Find some efficiencies through reuse of code (almost a product) with similar clients.
Cash Flow
"Consulting makes me bipolar." Audience member.
Checks don't come in on a steady basis.
Figure out your baseline expense and cover that. Then aim for a huge padding above that.
Selection is important. Find clients who pay and pay on time.
Get some money up front. Discounts for early payment is mixed.
Winning Contracts
Clients are most concerned about whether they can trust you.
Improving Customers
Bill appropriate prices for your value.
Building a Reputation
Do good work.
Have a blog.
Be known in the developer community.
Establish a niche. (Ex. Ruby on Rails)
Size
How big do you want to be?
Each person makes the team different and dynamics more difficult.
Quality vs Profits
Important question. You can't compromise.
To be an excellent firm, you have to do excellent work.
1. Posted by: Aditya Gholap on May 10, 2008 10:43 PM:
Jon speaks about tools and the work environment, while i agree with most of that, i cringed when he said that a business should have Basecamp! i sort of agree with the audience member!
Basecamp seems ridiculously expensive for what it does. There are much better project management tools that are around! - i would suggest any of you reading this to take a look at Zoho . I would also strongly recommend Deskaway . Both are relatively similar with respect to price (both are probably 2 of the cheapest tools around). Zoho has a great suite of services and an extremely cool 'work is fun' kind of brand but i dont particularly like their project collaboration tool in terms of functionality. Their CRM tool is fantastic. With respect to Project Collaboration Tools i think Deskaway is the best i have come across so far in terms of price, interface, features, performance etc.
So Jon - if you happen to visit this blog and read this - Please dont Promote Basecamp next time :p - especially when there are better tools around!
I also sort of dont agree with the idea of having principles do sales - it eats into so much time and productivity. Agreed that they make the most sense but you need to have a passionate sales team that understands the broad framework of the offering as well as the principles do - atleast thats what i think!