Why you should do consulting work (despite making huge money from product sales)

Many startups go thru this, Once they start something and launch a few products, they will get offers to provide some consulting service (for eg. customization of their product, development of a similar product for diff. uses etc.). Now what should the startup do? Should they dilute the energy in to consulting work? Or should they focus on their core products and march ahead?

I was in the same dilemma and I choose to offer my services on consulting basis. And in this post, I will share with you why doing consulting work is a good idea for start-ups.

1. Consulting work keeps you hooked to real world

Many startups run from garages or study rooms (or in my case, from a bedroom).  Startup founders strive to keep expenses low and minimize un-necessary clutter. That means, less social interaction and attending fewer conferences / trade shows. If you do this for a few months, you will grow apart from real world and get obsessed with your product vision. And this is where you will distance yourself from end customers.

A good business always stays close to their customers and leads them. If you work in isolation, you cannot do this. That is why consulting work is good. By doing few consulting jobs every month, you can interact with customers alot, understand their problems, challenge your mind with new situations and altogether improve your perspective on various things in the industry.

2. Consulting work leads to new products / upgrades

Quite a few of my project management template customers have asked me to modify the dashboard template to include tracking for multiple projects. After doing this work on consulting basis for 4th customer, I knew I had to upgrade my product to include a project portfolio dashboard template. Right now, I am working on that so it can be included in next product upgrade.

3. Consulting work brings fun & randomness back to your life

Start-up work involves ample amounts of product development, launches, marketing & selling, customer service. If you have done these for a few cycles, you will have developed a process to do them better. That means, they get monotonous.

This is where consulting can help you. It brings certain amount of randomness to your work. Since each customer has their own problems, the solutions can teach you new things and keep you mentally occupied.

4. Consulting brings extra money

When you are starting out, every extra dollar you make helps. The money you make from consulting may not be as much as you make from product sales. But it gives you confidence and it can meet urgent cashflow needs. That said, you should not be lured in to consulting just for money alone. Consider the above 3 benefits too. Otherwise you may be tempted to become a full time consultant alone.

If Consulting is so good, why not become a full time consultant?

Of course, if consulting is what you enjoy most, you should certainly become a freelance consultant. But I think doing consulting alone is a dead-end game. The reasons?

  • Consulting is not scalable: If you need extra income or more free time, you have to hire someone exactly like you. And we all know how difficult that is.
  • Consulting is time consuming: Based on my experience, for every one hour of billed consulting work, you will spend 30 minutes on unbillable work. This includes doing research, finding alternative solutions, optimizing your code / models, customer support, invoicing, time tracking, emails, phone calls etc.
  • You can only make so much with Consulting: Even if you charge top dollar for your services, it is unlikely that you will make a lot of money by doing consulting work alone. Also, the ability to find customers goes down significantly as you increase the rates.

What about you? Do you offer your services on Consulting basis?

Do you do consulting work? What is your experience like? Please share your experiences & ideas using comments.

Do you want to become a consultant?

If you want to become a consultant read up this excellent advice.

Also, if you want to test the waters, sign-up at oDesk as a provider. You can immediately meet several prospective customers and see how this works.

8 thoughts on “Why you should do consulting work (despite making huge money from product sales)”

    1. Hi Avadhut,

      ODesk is not a market space. It is a place for prospective freelancers and employers. You need to look for websites that host marketplaces for financial products or advertise on other financial websites.

  1. Dear Chandoo,

    I do the consulting work, as you have rightly mentioned, keeps one in touch with ground realities. Otherwise, we would be doing the things in vaccum. The expectations of the client have to kept on top priority.

    For regular bread and butter, the consultancy are extremely. It takes care of your regular expenses and keeps things going. The product development takes time and lot of efforts and hence should not be considered as your regular income.

    Hence, I’ll advocate going in for Consultancy work simultaneously.

  2. Hi Chandoo

    I do a lot of consulting work. Mostly for overseas clients, and in areas such as copy and content consultancy. I don’t have a product line, but what you say makes so much sense that I am wondering if I should start a product line alongside. 🙂 Any ideas?

    Sharon

  3. Hey Chandoo .. I am sure you’ve seen my name a few times on your excel blog comments, I follow your blog daily. I recently discovered this blog, and I was really happy to know that not only do you share your excel knowledge, but your entrepreneurial as well.
    I started my own business a while ago, and it’s been a total failure, but thanks to your blog, I think I see many areas where I’ve gone wrong.
    I have never tried odesk, but I tried freelancing with freelancer.com, and my problem was that the competition is very high, therefore people bid very low. Low bids are not an option for one-man consultancies, they may work for companies that hire several people and depend on quantity rather than one job at a time. Do you know any work arounds or could you give me feedback? Perhaps you may write a post about this, because I’m sure many face this problem. Thanks Chandoo

  4. Hey Alex,I think that it is great that your son wants to provide a svecire or rather product but never the less that he started with giving or providing first. Not sure if this reply to this post will reach you late, but i have a buddy that owns a shirt making or rather a printer tytype machine that I don’t believe he uses any more. I can ask him if he feels like selling it. Let me know and i will get in touch with him.

  5. I have 3.6 years of experience in providing Spreadsheet Solutions, specifically on excel, leveraging Excel-VBA. Now I am contemplating to become a Excel Consultant. I am not sure how to start. Could you please help in this regard.

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