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December 27, 2010

Consulting gigs to bootstrap your startup ?

Consulting services can be a good way to make some cash. But is it really a good way to bootstrap your startup? I would say the answer to that question is not a simple yes or no.

I come from a tech background and will speak about tech startups in general.

In theory the idea looks excellent. You have a great product idea. You need money to get that idea to the market. You do consulting to generate some cash that pays for the development and other expenses. I wish it was that simple in practice.

First off, it takes time and some money to find the right consulting projects. What I mean with "right" is a project where you have sufficient margin to generate some good money. Such projects are not easy to find esp if you are just starting in the industry. One way to find such projects is to do consulting in a particular niche. For eg, if you are in the tech consulting and an expert in ipad applications, you may want to find projects in ipad application development rather than focus on broader technologies such as Java.

Secondly, consulting eats your time. In a startup, founder's time is very critical resource. You need to be completely focused on your product development effort instead of troubleshooting client issues. May be hire a consultant to take care of the consulting projects? Well that's a dangerous path to tread into. Sooner than you realize, you have transformed into a fully service consulting company.

Also, investors consider consulting income as a distraction. Many of them would want you to completely stop consulting before they would even consider your business for funding.

This does not mean that consulting is not a way to bootstrap your startup. There are product companies that have used consulting gigs to bootstrap their product development effort. In fact a consulting company is exposed to lot of customer pain points and could be a platform for innovation.

Posted by manish at December 27, 2010 06:47 PM