Note: This post was originally published on Medium on June 17th 2020.
I’ve read many stories about entrepreneurship and making money on Medium, written by people with amazing profiles, and impressively actionable calls to action that take you to nice websites used to collect my email.
Just yesterday I read one, and left a simple comment: “Are you a millionaire?” which drew some attention, but no response from the author. Another reader responded to my comment and pointed me to where I could read more about the author of the story.
I’m not here to bash anyone, I’m here to read and learn. But if I’m spending my precious time trying to learn something, I want the people offering the advice to have actual experience. Otherwise everything they’ve written is some just rehashed bullshit with a click-bait title that does nothing more than fuel dreams.
So I decided to write a simple story about how I actually earned over a million dollars by starting a company and selling it three years later.
I’ve always been an outsider, preferring to cut my own path as opposed to walking the one that’s recommended by parents, teachers, and guidance counselors. In my younger years I worked as a lifeguard, construction laborer, and brick masons assistant. I love being outside, but I also love making money, and it was a challenge to find an “outside job” that paid enough to allow me to do all the awesome shit I like to do.
I have a problem with authority. Which seems odd since I did an enlistment in the U.S. Marine Corps, serving with the 10th Marines. Be that as it may, I still have a problem with people telling me what to do, particularly if I perceive them to be less technically competent than I am.
I am a self taught computer programmer, and I despise working in a cube. In spite of that, I did it for a number of years to educate myself on how offices work. Working in an office has some upside, in that you can see people and readily bounce ideas off your coworkers. The downside(s) are incredible: commute time, non-technical managers that want to control your creative output, office politics, and having to wear pants. So after a few years of that nonsense, I had a “fuck this shit” moment, and went home. They called a few days later. I told them to please mail me my final check as I had no plans to return.
I started a technical consulting company. We placed computer programmers and systems engineers with large commercial and government clients. There will always be a demand for U.S. based computer programmers that are capable of passing a background investigation.
Just because you can find programmers on Upwork willing to work for $15 an hour, doesn’t mean anyone wants to hire them.
Particularly on large Government contracts, and that’s where the money is. You don’t have to be a prime contractor to make money with the Government.
Find a prime contractor, and supply them with talent.
The market for competent technical talent is tight. but there are ways to source talent that others don’t utilize. Personally, I utilize long standing personal relationships and would go to user groups to meet people. The options today are even greater. As an example, you can go to Meetup and find a local tech event. Your ability to source talented people is where you provide your value.
You can do this from home. I know this because I did it, and it was in 1996. If you worked from home back in the 90’s people assumed you were a bookie, a drug dealer, a prostitute, or a bum. Many Old Skool pointy haired manager types still think that way in 2020, because if they can’t put a hand on a throat, they don’t feel like they’re in charge.
It all started on a shoestring. I had two partners, we had complementary skill sets, and having partners seemed less scary. Each tossed $500 into the company, we filed articles of incorporation, bought some business cards, and started beating the streets. Within a few months we had placed some programmers on contract and were cash flow positive. After the first year, we were taking a little over $200k each from the company in salary and bonus, plus each of us had a leased Mercedes-Benz(you know, because image). After three years, relationships between the partners started to go a little south (never go into business with partners), so we decided to sell as opposed to letting it fail. We contacted a business broker who shopped the company around. We eventually sold and each walked away with a little over $350k.
How It Works
It’s easy, but takes time to build relationships. This is a 100% relationship business.
- Find a company looking for talent. Google for websites that announce the award of government contracts. Go to SimplyHired, Monster, Indeed, and Dice and look for companies that are hiring. Contact the companies and tell them that you have access to an untapped source of talent and would like to enter into an arrangement (subcontractor or contract recruiter). Most of them will ignore you, some will eventually respond. You only need one. Make sure you know your fee and get a signed contract.
- Find talent. Finding talented people that are willing to work as contractors is where the rubber meets the road. Personal friends and family that are technical, Facebook Groups, Meetups, community colleges, universities, user groups, conventions, etc. It takes some skill, be influential, be genuine, don’t try to bullshit technical people. Taking some free classes on EdX or Coursera will give you the background you need to talk intelligently to this crew.
- Put the talent with the company. The money is made in one of two ways: you are paid a fee for placement, or take a percentage of the bill rate. I would always prefer to take a portion of the billable rate. For example, if a programmer is willing to work for $75 per hour, and the company is willing to pay $100 per hour, there is a $25 margin. You will either split that with someone, or keep it for yourself. In this arrangement, make sure they know they will get paid when you get paid.
It seems simple, because it is. You just have to be willing to ask questions, negotiate, and present the win-win.
The value you provide is being able to identify talented people and get them to take a job with a different company.
- Incorporate and get some general liability insurance.
- Get template contracts for both the companies you will place people with and the people that will work for, or through, you as contractors.
- Find an attorney and accountant that you can work with.
- Start looking for companies that want to hire, and finding technical staff that can do the work. Put them together.
- Invoice on a regular basis, follow up, and don’t be afraid to visit in person to collect.
- There are books on Amazon that detail starting a business and specifically staffing companies. I’d stay away from the books on starting staffing companies though, because they go out of date pretty quick. Focus on business and consulting (people) skills. I’m a huge fan of the “Dummies” series, and Starting a Business All-in-One For Dummies is a useful guide to getting a business off the ground legally. (I usually give a copy to my consulting clients after we’ve met.) And as cheesy as the title sounds, Million Dollar Consulting: The Professional’s Guide to Growing a Practice is literally worth it’s weight in gold.
You make your money on the margin.
I am a programmer, and know technology, so that’s why I started a company sourcing and placing technical talent.
But the idea applies across a wide variety of professions: general laborers, construction, office workers, technical tradesmen, medical, etc.