Lessons Learned from Running an iOS Consultancy: Part 1

Understand the Investor

An investor is a business partner with a single focus — the exit. They’ll push you to be profitable and sellable early on, even if it means you have to take steps that are not in your interest, or conflict with your vision for the company.

When you take on an investor, you trade equity in your dream for cash early on. So ask yourself: If you really believe you have a billion dollar concept, do you want to trade 30% of it for a few thousand dollars and a lot of pressure?

Later stage investors are more common for consulting companies. As you expand your business, increase your profits and experience success, investors that want a piece of the pie may approach you.

On the positive side of the equation, these people can bring more business, marketing power, advertising budgets, networking opportunities and even just good advice. However, they can also start arguments, bring woes and demand unexpected changes in direction.

Think Before You Leap

Before you dive in with an investor, it’s crucial to understand what’s in it for him or her and anticipate the inevitable exit strategy. If his or her goals and motivations don’t align with yours, there will be many bumps in the road.

A single question has helped me make tough decisions about bringing in an investor: “Is this the right move for the business, the clients and the employees?”

After carefully weighing everything, I have to be able to say yes to all three. Otherwise, the influx of capital isn’t worth the hassle.

5) Know When You Need Help

A cliché about business ownership is that owners “wear many hats.”

Especially in the beginning, you’re the defacto accountant, legal department, bookkeeper, human resources manager, design team, development team, manager and every other role the company needs. Likely, you’ll do a few well and the rest poorly.

Eventually, you’ll find your breaking point and you’ll have to start deciding when to hire and whom to bring onboard to fill these roles, and whether it’s better to hire vendors, contractors or employees.

Giving up profit for resources and help is never an easy decision, especially when the helpers don’t directly generate revenue. Waiting too long will bite you, and not waiting long enough will bankrupt you.

Get Help Protecting the Business

Unless you passed the bar, a lawyer is likely to be one of the first roles you need to fill. Many years ago, I thought I was smart enough to review my own contracts and that my limited cash flow shouldn’t go to a lawyer who bills $200 an hour. Like many others who’ve been in there, I made a mistake that cost me much more than a lawyer would have.

Here’s what happened: there was a clause in the contract that reduced my total payment by 5 percent for each day the project was delivered late. So if the project was 20 business days late, I would receive no payment at all.

When I negotiated the contract, I noticed the term but felt confident I would deliver on schedule. As the deadline approached, the client — who was responsible for design — had not delivered. When they finally handed it off, it was too late to finish on time.

I delivered the final product almost a month late, due to no fault of mine. Because of the wording in the contract, I received no payment and had no recourse.

For more than three months, I worked for free.

A fair contract would have set terms for both parties’ deliverables, and a good attorney would have advised me of the same. I thought I could be my own counsel, but my lack of experience and knowledge ended up creating a problem that bit me hard.

Don’t Wear More Hats Than You Can Fit on Your Head

A single line in a contract can really harm your company, be it indemnification or payment terms or other clauses.

Likewise, a miss on a line in your tax returns can cost you your entire life, and poorly composed marketing copy can make you look inept to potential clients. Really, there are endless problems that can arise from donning too many hats.

If you’re like most entrepreneurs, you’ll need to make a misstep before you realize you need help — it is a hard thing to see coming. These types of mistakes can cost you a lot, even your entire business.

Learn to admit when you’re in over your head and need help in one form or another. There is no shame in it, and you literally can’t wear all the hats, all the time – as fashionable as that may be. :]

Where To Go From Here?

I hope some of this advice has been helpful for you – hopefully you can avoid some of the mistakes I’ve made! :]

Stay tuned for the next article in the series, where I’ll cover some tips on scaling, communication, networking, and more.

In the meantime, if you have any questions, comments, or your own lessons to share, please join the forum discussion below.