[5] How I Transitioned From Consulting to Products, Full-Time

Today I’m going to talk about how I completed the transition from client work to product work. I’ll talk specifically about 5 things that helped me make this mission a reality.

First a little backstory…

Between early 2008, when I left my job working at a web design agency to go freelance, up until 2012, my income primarily came through doing client work, specifically client web design projects. Over those years I went from charging an average of $1,000 dollars per project to an average closer to $15k or $20k per project at the height of my consulting business. I made a decent living doing 10 to 20 big client projects per year. 2011 probably marked my highest annual income to date.

But 2011 was also the year that I began really thinking about making a transition. I found that my stress level was increasing with every new client project I took on. I found that I really didn’t enjoy working on client projects, even the big-budget ones. In fact, many times the larger-budget clients were the hardest to deal with.

So I began re-thinking the way I made my living. I had already dabbled in building products on the side. I had started a WordPress themes business called ThemeJam in 2010. I also released a niche WordPress product called WP Bids, which is a WordPress theme for creating client proposals. But those were very much side-projects, which amounted to about 10% of my income. The other 90% was still very much client work.

In mid to late 2011, I started planning and building Restaurant Engine, which would turn be my first successful launch of a SaaS business. It wasn’t my first attempt though… I had started a few other things which never got off the ground.

But anyway – I managed to launch Restaurant Engine to paying customers in early 2012. Like everything I do, it’s a bootstrapped startup, so it had slow and gradual growth throughout 2012 and through today.

So I slowly built up Restaurant Engine until it got to a point where the income from that can replace my client income. In January 2013, I completed my final client project and have been focusing on Restaurant Engine and other products full time ever since.

I have to say, that day when I received the final check from that final client project felt absolutely amazing. It was an event that I built up in my mind for a very long time that I had finally achieved. From this day forward, I can officially say “I don’t do client work anymore” and man, that feels great.

So how did I do it?

I gave it some thought today, and boiled it down to 5 key things that helped make this transition a reality.

1. I set a very clear goal with a deadline.

I had been poking around trying to do something with products in 2010 and 2011, but it wasn’t until 2012 when I really made the concious effort to dedicate that year to making the transition. I started telling people that my goal is to stop doing client work by the end of 2012. I started out the year of 2012 with the expectation to earn less than I did the year before. I knew this would be a transition year.

That change in mindset really helped me focus on that goal every single day. It’s about having a very clear vision for your long-game, by giving yourself a one-year plan. Then use that long-game to dictact all of your decisions in the short-game.

What should I work on this month? What should I work on this week? What’s on my plate today? During 2012, as I asked myself these questions, I never forgot about my #1 goal for this year — making the transition.

2. I didn’t quit cold-turkey

Quitting client work is not the same as quitting cigerretes. You can’t quit client work cold-turkey.

If had I decided to stop all client work on the day I launched Restaurant Engine, I would have run out of money very quickly. Then I’d probably go into debt, and then come crawling back to doing client work to dig myself out. That would have discouraged me and probably would have kept me locked into client work for many years to come.

Instead, I made it a very gradual and closely monitored transition.

At the height of my consulting business, I took on about 5-6 client projects simultaneously. As I started working on building Restaurant Engine, I reduced this to 3 client projects at a time. As the year of 2012 rolled on, I made the concious decision to take only 1 client project at any given time. That allowed me to basically split my time 50/50 between working on Restaurant Engine and working on a client project.

This approach allowed me to keep my bank account afloat – keep paying the bills – while also building up my new SaaS business.

Maintaining that cashflow from client work also allowed me to reinvest some of that money into Restaurant Engine, which helped build traction. Again, had I quit client work cold turkey, I would have run out of money very quickly, with nothing to invest into Restaurant Engine.

3. It wasn’t my first attempt

Restaurant Engine was definitely not my first attempt at starting a product business, or even my first attempt starting a SaaS business.

I was involved in a few other startups, which for one reason or another fizzled out before they had a chance to launch. There were partnership issues, there were product validation issues, and so on. But I learned a lot from those attempts, and I took those lessons with me into Restaurant Engine.

I was very concious of this as I started Restaurant Engine. I knew it wasn’t my first attempt. And I think that made me that much more serious and determined to make this one work.

As you know, I’m a very firm believer in learning by doing, and failing early and often. I always expect a few failures before finding something that works. In my mind, I felt I had paid my dues with a few failed attempts, and I was ready for something to work. That mindset helped me really put a strong push behind Restaurant Engine.

4. Embrace earning less money

In 2012 I made significantly less money than I did in 2011. I didn’t struggle, and we were able to stay out of debt. I made just enough to pay the bills.

But I definitely took a pay cut, and that was because I committed myself to transitioning my business. I knew going into the year that I’d probably earn less.

Most people, especially people my age, I’m 30, expect to make a little bit more every year. A lot of my friends are starting to hit their strides right around now. They’re no longer in that entry-level position at their job. Now they’re starting to make real money.

Had I stuck with client work and committed to growing the consultancy, I could probably be making a lot more right now. But it was more important to me that I get out of that business and focus more on products.

Today, I’m aiming to match what I made last year, which is just enough to support my lifestyle. Of course I want to earn more in the coming years, but right now my focus is on setting the groundwork to make that happen. My focus is building product businesses that are poised to grow steadily over time.

5. Leverage assets from my consulting business for my products business

The last thing I’ll mention here is that I was able to leverage certain things from my consulting business to help me build my products business.

One of the biggest things I carried over was my network of contractors. Over the years of doing big client projects, I had developed relationships with some really talented designers and developers. It took years for me to work through some flaky freelancers before I found a few who I really liked working with.

So when it came time to outsource a few of the pieces of Restaurant Engine, I didn’t have to go through that process again. I knew exactly who I would hire and for which role, and I knew exactly how much that would cost me. Making a bad hire can be devestating, especially when you’re hiring a contractor to deliver a specific part of your product and it doesn’t pan out. Money goes to waste, but more importantly you lose so much time. It’s a huge setback. I was able to avoid that by working people I’ve worked with before, and I knew exactly what to expect.

Another asset of course was all of the skills that I myself learned during my years of doing client work, particularly all of the time I invested into becoming an expert on the WordPress platform. I would not have been able to build such a complex system like Restaurant Engine — which is built entirely on WordPress Multisite — had I not spent years prior to that doing countless custom WordPress CMS sites for clients.

Takeaways

So to recap some takeaways from this episode, the five things that helped me transition from client work to products were:

1. Set a very clear goal with a specific deadline. For me, I decided early in the year that by the end of 2012, I will no longer do client work — and I won’t go into debt do make that happen.

2. Don’t quit cold-turkey. Make it a gradual and closely monitored transition.

3. Don’t expect to be successful on your first attempt. It takes some trial and error before you can get everything dialed in.

4. Embrace earning less money. I invested in the transformation of my business and that meant taking a pay cut.

5. Leverage assets from consulting for your product business. I leveraged my network of contractors as well as the skillsets I built up during my years of consulting.

  • WP Bids FTW! 🙂 Sent out three proposals on it last week alone.

    • Awesome Dave! Glad to hear it’s still useful for you 🙂

  • impossibilia

    I just visited your site to send it to a colleague for a potential project… guess that’s a no go! Congrats on making the transition. Restaurant Engine looks like a great product.

    • Thanks! I often refer potential clients to a trusted group of designers/developers or point them in the right direction. Feel free to connect us if you want 🙂

  • MikeMeisner

    As someone who has followed a very similar path, making 100+ websites for myself and others, I can sympathize with your feelings about the demands that clients bring, and the extra hand holding that always seems to arise. My question is, in transitioning to the SAAS model with RestaurantEngine, do you still encounter a lot of needy, demanding clients? It seems like no matter how you set expectations, they’re going to be confused during some part of setting up their website and I expect they will turn to you for support. At the low price you charge for a monthly service, how does that affect the overall productivity and ROI?

    • Yes, customer support is significant on RE.

      But one big difference between a hosted SaaS platform like RE and doing fully custom web design for clients is that there are very strict limitations to what we can do. While we try and go above and beyond in terms of service, and even do some custom tweaking on our templates, there are things that simply aren’t possible within the confines of the system we’ve built. So there are more cases where it’s easier (and OK) to say “No” to certain client requests on RE.

      With custom web design, when a client request comes in, the answer is rarely “No”. Usually it’s “Yes it can be done, here’s how much extra it will cost.”.

      Still, the support costs are significant on RE, but the model is scalable and customer lifetime value is high enough to make up for it.

      • MikeMeisner

        Seems like you can manage expectations much better with that model and don’t open as many doors to custom requests, which is nice. And when they do request a custom design for example, you can accommodate them at an extra cost.

        • Theoritically, yes. However, the market for a product like Restaurant Engine is quite different from a market for custom web design. Far different price points.