Selling time for money is usually considered to be a pretty terrible business model.
Pitfalls
The pitfalls of selling time for money are that it’s not scalable, not investable and the business is heavily reliant upon the founder’s skills and energy.
Another trap of selling time for money is that opportunity cost becomes painfully apparent in every decision you make.
An example of this would be if your hourly rate is €50 and you have the choice of either doing client work for two hours or researching a new business idea that you have. The exploration option may never directly yield income so it can be hard to justify versus the definite short-term financial gain of client work.
Who does it
The usual businesses which sell time for money are consultancies, freelancers and agencies.
Reasons why you may want to sell time for money anyway
Despite all of these real constraints and many more that I haven’t mentioned, I believe there to be some merit in running a “time for money” style business. Here they are:
Learning to Survive
- Stages of business maturity are often categorised into existence, survival and success.
- Learning to go from existence to survival is not easy, no matter what type of business it is. Running your own freelancing business, consultancy or agency will teach you necessary skills to getting any business to survival stage.
- When Andrew Mullaney spoke metaphorically about starting a second business after just failing with his first – he said a crucial difference in succeeding the second time was that even though he was out in the desert with way less water and way less food than before, he knew how to survive.
- See the interview here.
Fundamental Business Knowledge
- Whether you run a product company or a “time for money” business, core business fundamentals will remain the same.
- Embarking on a venture to create a scalable, investable product is difficult enough without having to learn these fundamentals for the first time simultaneously.
- These business fundamentals include sales, marketing, invoicing / billing, making tax returns, hiring freelancers or employees, providing an excellent customer experience and much more.
Total Accountability
- When running any business, the buck stops with you.
- Being 100% accountable for the service you provide, legal compliance and revenue compliance amongst other things is scary at first.
- As Ray Nolan put it in his talk at the start summit in 2018, “There’s no entrepreneur’s union. When shit goes wrong, it’s your fault. There’s no one to complain to.”
- This feeling of total accountability is something you can also become comfortable with while running a “time for money” style business.
Conclusion
While there are many reasons not to run a “time for money” style business, they can also be a realistic stepping stone towards starting a scalable product business.
