Ask HN: What was your experience starting a tech consultancy?
I took the &quot;easy&quot; way and started a services company. My plan was to do that for a few years make a few million and then start a product company.  19 years later and Im still running a services company, though we finally are at around 9 million and I am working on a product based startup.<p>During that time Ive had many friends&#x2F;acquaintances start and sell product companies for 10+ million. The &quot;easy&quot; service company was about as hard as the product companies, but with a lot less value in the end.<p>On the plus side there were many years I only worked 5 hours a week while making 300k+&#x2F;year take home with 300K+ left in the company. The downside is during the 2001 and 2008 recessions we almost lost everything.<p>Your sales and your services will never be in balance. You will either be making customers mad because you dont have enough people, or paying for people that have no work to do. This will cause your delivery managers and sales managers to regularly be mad at each other.<p>Your main job will become keeping your managers happy which means mediating conflicts between them.<p>I started constant recruiting from day one, we always have people ready in the pipeline to hire. I also outsourced bookkeeping&#x2F;payroll as soon as possible.<p>A friend of mine had his wife embezzle all his money and run off with one of his customer&#x27;s. You should be the only person able to touch the money. Even today I sign every check and approve every wire transfer.<p>Get the largest line of credit you can before you need it. When you need it, there is no way you are going to get one. It will take two years of operation before a bank will give you a line. Your line will be 80% of receivables, with a max of 25% from any one customer. You can generally get under 100K as an unsecured personal line with good credit.<p>There is a really challenging point when you are about 4-8 people. When you were a single person you made all the money. As you add more people and continue billing, you are flush with cash. Around 4 people you need to manage them and then find new business. At that time you start making much less money but with a lot more headaches. This happens up until about 8 people.  Lots of small consultancies never break past this point<p>I have always been torn with putting employees first vs putting clients first. This is a very challenging dilemma.<p>You might think having broad services would get you the most potential customers, but the opposite is true. The smaller you are, the smaller your niche needs to be.<p>Collect your receivables, if you arent the type of person who can keep at it, make sure your bookkeeper will do it. We had a customer owe us 500K going into the 2008 recession and if we hadnt collected most of our money before they went into bankruptcy we would not have made it. For public companies we look at the 10K to make sure we understand their cash position.<p>Never be a 50&#x2F;50 partner. Every single one I&#x27;ve seen has eventually gone bad. One person needs to be able to call the shots.<p>Sales is actually pretty easy for me, marketing is really hard. Once you crack the marketing, the really hard part will be having enough senior people to take on completely new clients.<p>The people who grew their service businesses the fastest aligned with a technology that took off. The downside was that if their technology provider lost then their business took a big hit. They also tended not to develop their marketing muscle because all their leads were generated by their technology parter.<p>If you are not a detail oriented executer you must have one as a partner or a senior employee.<p>In the entire history of the company we only won maybe one RFP. Enterprise sales are done with relationships and the RFPs are usually just people jumping through hoops to satisfy procurement. Generally speaking the buyers already know who they want and they will craft the RFP so their desired vendor will win. If you are not that company, then you will lose. Generally we will never do an RFP.<p>Some of my favorite actionable books are:<p>Managing the professional services firm<p>First break all the rules<p>Five dysfunctions of a team<p>Spin selling<p>Sandler sales technique (there is a book called you cant learn to ride a bike at a seminar, but it doesnt fully represent the full sandler sales process, which is an anti sales process)<p>Getting to yes<p>Blue ocean strategy<p>E-myth (revisited?)