AstonMartinOne77
Contributor
Greetings fellow fastlaners,
I’m looking forward to starting a business, however I am having a hard time deciding between two.
Personal context: 27 years old self-taught software engineer with 5 years experience living with parents working in a top financial institution (Will make 6 figures soon)
The first business is a ERP Software Consulting business and the second one is a Software Engineering Consulting business. The business models of both of these business are very similar. Find a client who needs consulting services (B2B) and hire employees who are willing to do the work. Small clarification: I will not be a headhunting company, meaning that I will actually train the employees myself and they will be employees of my business. The only difference I see between these two business models is that with the ERP business, I will be able to earn commissions on ERP software licenses sold, whereas with the software engineering business I need to find a need in the market, so I can build a software product and then sell licenses.
So the model is mainly : Consulting + Licenses sold = Total Revenue
I will have to partner up with 2 or 3 other guys for the ERP consulting business because I know nothing about that ERP, so this will be a huge investment of my time and revenue in the short term to learn the ins and outs of the ERP. For the software engineering business, which is my core field (actual job, writing custom applications for a specific company), we would be maximum a total of 2 partners.
So far, it looks like its better to go with the software engineering business because less owners, more share percentage ownership, no need to relearn my craft from scratch
However, I have a feeling that the ERP business can be more profitable because of the hourly rate ERP consultants charge, it goes from 100$/hr to 150$/hr (according to my ERP partner) and software engineers charge 70$/hr to 100$/hr (as far as I know).
Also, ERP consultants can also sell very expensive ERP licenses; Software engineers have to come up with an software product idea to build and then sell licenses, which seems harder and a longer process.
Both of the businesses seem to meet all the 5 fastlane commandments (CENTS)
Control: Less control with the ERP software business because we are more business owners and dependent upon the ERP software provider
Entry: Very hard to get into the ERP business, software engineering is more common thus easier
Need: There seems to be more demand than supply for both of these businesses
Time: Eventually, when the business has been built. I will not have to be always there.
Scale: Find more clients, hire more employees, sell software licenses and the business has scaled !
I’ve listed in a summary the Pros and Cons of these businesses.
Pros
Superior Hourly rate charged to client ($100 to $150+/hr)
Potential revenue by selling ERP licenses
Cons
We will be 4 business owners (Less control)
Very low share percentage of the company - around (10-20%)
I don’t know the ERP software at all, I will have to learn it from scratch
Maximum 2 business owners (Share percentage minimum 60% )
I know software engineering very well (its my actual job)
Cons
Inferior hourly rate charged to client (80-100$/hr)
Competition seems fiercer to acquire contracts with clients
This is a very hard choice
What do you guys think ? I'm open for constructive criticism, opinions, ideas, etc.
If I missed a detail or if I need to clarify something just ask a question, I'll gladly reply with the information
Thank you !
I’m looking forward to starting a business, however I am having a hard time deciding between two.
Personal context: 27 years old self-taught software engineer with 5 years experience living with parents working in a top financial institution (Will make 6 figures soon)
The first business is a ERP Software Consulting business and the second one is a Software Engineering Consulting business. The business models of both of these business are very similar. Find a client who needs consulting services (B2B) and hire employees who are willing to do the work. Small clarification: I will not be a headhunting company, meaning that I will actually train the employees myself and they will be employees of my business. The only difference I see between these two business models is that with the ERP business, I will be able to earn commissions on ERP software licenses sold, whereas with the software engineering business I need to find a need in the market, so I can build a software product and then sell licenses.
So the model is mainly : Consulting + Licenses sold = Total Revenue
I will have to partner up with 2 or 3 other guys for the ERP consulting business because I know nothing about that ERP, so this will be a huge investment of my time and revenue in the short term to learn the ins and outs of the ERP. For the software engineering business, which is my core field (actual job, writing custom applications for a specific company), we would be maximum a total of 2 partners.
So far, it looks like its better to go with the software engineering business because less owners, more share percentage ownership, no need to relearn my craft from scratch
However, I have a feeling that the ERP business can be more profitable because of the hourly rate ERP consultants charge, it goes from 100$/hr to 150$/hr (according to my ERP partner) and software engineers charge 70$/hr to 100$/hr (as far as I know).
Also, ERP consultants can also sell very expensive ERP licenses; Software engineers have to come up with an software product idea to build and then sell licenses, which seems harder and a longer process.
Both of the businesses seem to meet all the 5 fastlane commandments (CENTS)
Control: Less control with the ERP software business because we are more business owners and dependent upon the ERP software provider
Entry: Very hard to get into the ERP business, software engineering is more common thus easier
Need: There seems to be more demand than supply for both of these businesses
Time: Eventually, when the business has been built. I will not have to be always there.
Scale: Find more clients, hire more employees, sell software licenses and the business has scaled !
I’ve listed in a summary the Pros and Cons of these businesses.
ERP Software Consulting Business
Pros
Superior Hourly rate charged to client ($100 to $150+/hr)
Potential revenue by selling ERP licenses
Cons
We will be 4 business owners (Less control)
Very low share percentage of the company - around (10-20%)
I don’t know the ERP software at all, I will have to learn it from scratch
Software Engineering Consulting
Pros
Maximum 2 business owners (Share percentage minimum 60% )
I know software engineering very well (its my actual job)
Cons
Inferior hourly rate charged to client (80-100$/hr)
Competition seems fiercer to acquire contracts with clients
This is a very hard choice
What do you guys think ? I'm open for constructive criticism, opinions, ideas, etc.
If I missed a detail or if I need to clarify something just ask a question, I'll gladly reply with the information
Thank you !
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