And even if they do pay, larger companies often insist on net-60 or even net-90...so you have to wait potentially months after delivering work to get paid. For a small or new shop that alone can put you on the ropes, especially since the companies most likely to do this are likely to be large enough and pay well enough to be the bulk of your inflow.
There are solutions for literally all these problems, you can find banking relationships where they’ll lend on your outstanding invoices, you pass on interest to the client, and everyone gets paid.
I feel compelled to comment because there are all these people who act like running your own business is some impossible task. it really isn’t. The vast majority of business owners aren’t super geniuses, my 60-year-old mother does it, has no formal education and couldn’t write “hello world” if her life depended on it.
The reality is that owning a business is effectively monetizing your creditworthiness (not unlike being a landlord), which is a pretty easy way to make a living, assuming you start out with a decent supply of capital/creditworthiness.
I don't think the problem for tech people is in thinking it's too hard.
I think it's trading working on what they like vs doing admin / sales / marketing.
That said, I wish everybody were a contractor and employees wouldn't exist.
(Good) Contractors are accountable exactly to what they are paid for (no more and no less).
Employees are accountable to drinking coffee and it's a damn pain working around them to try to get something done.
The only exception is people with equities working in startups and dreaming big.
> I think it's trading working on what they like vs doing admin / sales / marketing.
That's certainly one of many good reasons not to run your own consulting business. That said, it's entirely possible to hire/outsource support to do much, if not all, of the admin/sales/marketing work.
> (Good) Contractors are accountable exactly to what they are paid for (no more and no less). Employees are accountable to drinking coffee and it's a damn pain working around them to try to get something done.
In my experience, productivity tends to depend more on the "good", than on the contractor/employee dimension, and a non-trivial part of the "good" stems from how well they are being managed by the business... which yeah, a huge part of being good at managing either contractors or employees is about accountability. Sometimes you get better employees or contractors than you deserve, and that can imbue the contractor/employee characteristic with more causal significance than it deserves, but by and large, you don't.
The article, and much of the commentary here, said exactly the opposite.
It's not that it's too hard; it's consulting businesses aren't very profitable, don't scale well past 1 person, and if you scale, fill the owner's life with way less enjoyable work.
That's pretty simple to manage though. If you're going with say... 2/10 net 60, you charge them at a 3% higher rate. Clients might perceive this as charging interest, which it is, and they'll be perfectly happy with it. If you have cash flow issues, you borrow to cover the float —net 60 billables to large companies tend to make you not a credit risk; even with high interest rates of today, you'll come out net ahead.
