How to Get Clients for Your Software Company | Multithreaded Income Episode 11

It's amazing when you hit stop on a recording, how many good conversations happen after the recording that you wish you had gotten into the recording. But that's not what we're going to talk about today. Now, David had an interesting set of circumstances coming in compared to some of our previous guests and David's secondary form of income is drawing and anyone who's listening here, I pretty sure you have seen a David Neal avatar.

On the internet, if you're active on Twitter or X or on Instagram, you've probably have seen a David Neal avatar because he has a very distinctive style and how he draws. And I have, I know I've collected a handful of his avatars myself. He does an amazing job. And from a standpoint of someone like me, I've been able to watch him progress as professional drawer over the past several years.

It's been so much fun to see him be somewhat successful with that because I don't think of drawing as as a skill. I would ever have. And David has really showed that it's something that you can develop and. You can monetize and I think the first thing that we might really want to talk about one of the big ideas and I'm interested in hearing your guys's feedback on this is that David basically started for free.

He knew his skills weren't quite at the par of being able to go off and do all this commissioned work. He just wanted to put some stuff out there. people responded. And I believe from the interview, he started with a drawing of Mr. Ray bingo, who is. Fairly large personality in the developer community and Ray, Ray didn't like it. That was the funny part for me. He said, I I'd rather have a, a different photo kind of copied and given the David Neal flavor.

So David went and did it and Ray shared it to his audiences. And other folks came looking for some of that David Neal magic. I'm going to. Kick this over to Sean first. Sean, what are some thoughts you have on the do it for free to get started?

I was shocked at the number of years that he hadn't done any, any drawing or doodling from when he remembered it and he had this like hidden skillset that he hadn't used in a long time and then from there, just did some stuff for free, which led to some paid additional income coming in. And so the way he was able to, I guess, validate. No skills and that it was something, something he could get paid for. He did on social media. Right.

And he started that by, I think his first example, um, I forget who the person was, but he created an avatar of, of someone in the industry and just for free. And the person, um, actually I can't remember. Do you all recall, was it. Was it the, uh, the person from Microsoft? Was that his first client or was that later on the hero

And then he started just drawing some other ones of people, putting a few other drawings out there on the web for free. Others were starting to notice that and then randomly got a message for someone that wanted to want to buy and pay him for those skill sets. So we see this a lot, actually, I think. Maybe just in the, the vast web now, right. With all these products that are out there, all the marketing that's going on. It's very hard to stand out anymore. Right.

And just do something that others are going to notice. So. Unfortunately, maybe fortunately, I think, uh, the way we have to do that nowadays is by offering a free product, right. To get people in the door, build that trust, build that validation, show that you have value to bring to someone and then start to learn from there what the actual monetary value might be for that. And it actually reminded me of another example.

Coming up in my career, I think one, maybe we don't really think of too often is an unpaid internship. I mean, think about it. Like you're offering some free services, right? You're learning something. You're getting kind of feedback on your skillsets and things that, you know, you might want to do in your career, but at the same time, you're offering services for free and then validating that you could do the job and maybe even get an offer from that company.

Or you at least can put that on your resume later on for someone to actually hire you. I had a story of someone who interviewed at the company I'm currently at, so one of the products that we do involves a website crawler and during his interview process. Uh, or before his interview process, actually, he built a website crawler and sent it to the interview person just to show like, Hey, I can do this skill. I went ahead and took the time to do something for free, right.

For your company, just something you were interested in maybe doing. You may, you may not use it, but I was able to show my skills off, validate it. And he ended up getting the job as part of it. Now I know it's a little different process. It's more of the employee employee model, but a few other places you see this are. You know, software as a service products. What do you notice about those nowadays? Even apps nowadays is always typically a free trial, right?

Uh, upfront and getting people in the door, using the product, feeling the value of it, and then trying to convert them into buying it later on. One other way in the consulting space, I actually did this recently is the discovery part where you're actually learning about.

Uh, the problems that you're trying to solve for someone, I was just been networking with people locally here where I'm at in the local chamber of commerce and through that, just, um, hearing some of the problems people need help with in the tech industry and offered some of my services to say, Hey, I can help you. I can at least come talk to you and maybe try and find someone if I can't help you and such. And I know that can lead to in the future.

If you have a lot of clients, um, you can actually start charging for that discovery process. And maybe Chad or Kevin can speak to that here in a minute, but just me offering some, some free kind of, uh, discovery questions up front. I was able to build some trust. They wanted someone locally that they could talk to about this as well, validate that they could get the services they needed. And then I ended up getting that, that, that job as well. So now I have another threat of income coming.

Coming in for, for consulting that just came from wanting to help someone out with a problem they have. So the discovery process, you know, if you're new early on, you could offer maybe some of that discovery, just learning about the problem and helping someone for free rather than charging for that upfront.

I can do all the work. A free tool on my build to promote that service is an SSL certificate checker. And. My checker can look at when your certificate expires. Do you meet all the certain criteria for, for a certificate? And if for some reason you lapse in one of the different areas, I can recommend my service as a way to come in and help you fix the problem. And there are. Probably dozens and dozens of different opportunities like that.

And I just recently thought about that, Sean, when you were talking and what David was doing is the, you know, the drawing version of, of all that, give the goods away, Chad, any thoughts from your side?

It's actually a great way, ongoing, if you can continue to provide value up front and show that, hey, my service, my product, whatever it is that I'm selling, is actually worth this, uh, that can go a long way, because if somebody looks at what you just gave them for free, and they're like, wow, I got this for free, what if I paid this person, what would I get at that point, right?

And so when he started out, um, He started out, uh, free because he, he wanted to create, uh, something for somebody that he admired, right? So that was, that was an interesting thing as well, that he made that contact, uh, with Persona if he had much contact with Ray beforehand, but he provided value to that person, period. Now, Ray didn't actually like his initial thing, but...

Ray then turned around and actually had a conversation with him and said, Hey, would you mind doing this photo instead? Right. And then that began a relationship is my assumption. I don't know the exact details, but the fact that he was kind of looking up, uh, to, to this Ray and submitted that, that's my Assumption. And so it's just another piece of advice here.

If you want to get the attention of somebody, somebody you admire, um, a potential mentor, something of that nature, figure out how you can provide that person value. That, that's the key. Figure out how you can provide them value and provide that value. Don't ask for anything. It's all about building the well before you're thirsty, right? You can't wait until I need something to drink to go and then build your, your well to get something to drink, you'll, you'll, you'll die.

You won't get any water in time. But, if you are thinking about it up front, of what can I do to build a relationship, to provide value to somebody? And then later on, if I need something, I can actually ask. And I'm now dipping out of a bank account, if you will, that I've deposited goodwill into. To get something back out of it. And again, the motive doesn't actually have to be for that reason.

But if that's what you have to do to tell yourself, Hey, I'm worth X amount, I should charge what I'm worth and you should charge what you're worth at a certain point in time. But until you get to that point in time, provide value for free. I've heard this and I think is really good. And I'll wrap up my thoughts with this. Thank you. When you're first starting out, especially in a service based type business, is you determine how many people you can service, uh, over a period of time.

So whether, you know, if we're talking about David here, so many avatars that he can create in a week, um, or so many clients you can handle in a month, whatever the case is, you determine what that number is, 2, 5, 10, whatever it is, and you put it out to the world, to your contacts, through social media and everything else, organically, say, Hey! I am starting this adventure. I'm doing this thing.

I am actually accepting whatever your max is, 2, 5, 10, whatever it is in this time frame, for free. I will do this work for free. The only thing I expect in return is a review, if you found it beneficial, or honest feedback to me of how I can improve. Right? You do that for the first segment, and then, or the first time frame. Once you're done with that... You do it again, but this time you do it at 80 percent off what you're planning on charging. Right?

Because a lot of times you don't know exactly what you should charge. And so whatever you have in your mind, you just do 80 percent less. So you're only charging 20 percent for the next 5 people, let's say. You get those done over that month, and then you charge 60 percent of what you would or 60 percent off of what you would actually charge. All the way up until you're finally charging what you think you should be charging.

And if you're still getting those five people a month or whatever it is, well, the next month you do 20 percent more and then 20 percent more for that until you're no longer filling your bucket of time. I can't, I can handle five people. I only got four people at this. So here's my price. My price is 40 percent more than I thought it should have been. Or maybe it's 20 percent less than what I thought it should have been because like nobody's going up to my full price at that point, right?

That's how you can, that's a way to figure out some pricing, uh, strategy, but

So I really, I like that, that idea of just take on a little bit more, charge a little bit more, take on a little bit more, charge a little bit more.

And if you don't get the deal, it's like, wow, they got a ton of my time and I got zero for it. But, and that's okay, because you learn stuff through the process. But as you build up that expertise of doing the discovery, knowing which questions to ask. And in an effective way, so it doesn't take you, you know, uh, a long, long time to figure out what a client actually needs. You can actually charge for discovery.

And right now, I'm actually at the point where I charge about 7, 000 for discovery work. So if a client wants to talk to me and try to figure out what it is, I'll have a couple introductory calls. And then, it'll actually be 7, 000. And it's over a course of a few weeks. To actually determine exactly what their needs are and then from there They'll determine if they actually want to move forward with the project with me or at the end of that discovery They'll actually have a project plan.

They can go and send off to another development agency if they desire to or whatever But there's another tidbit here when you have multiple touch points with a client You build up that trust so even though you're charging for that you're still providing again.

The key here is value so the 7, 000 For me, personally, your number could be totally different, but for me the 7, 000 is critical because it shows that based off the budget of these typical projects I'm involved in, these custom software development projects, that they're serious about it and they're willing to spend some money. Because sometimes you can get something, oh I want this new, brand new system nobody's ever created before and I got 100 to spend.

It's like, well, it just, it doesn't compute, you can't do that, right? On the flip side, that 7, 000 provides as much value as you can. So it's actually worth 15, 000, 20, 000, 30, 000 for them. Because now instead of having to spend somebody a million dollars on something, they can do 100, 000 or less. Right, because of all this focus you had put them through to figure out exactly what it is they want instead of all these change requests that happen by the time you're done with the project.

And we all know that's the obvious first step to any new business venture. No, David just went out there and said, I will take your requests via a Twitter direct message or an email and pay me. PayPal, which seems like it's the simplest possible thing you could do to just start collecting money. Sean, let's jump back over to you and get some of your thoughts on that. Starting with the simplest thing first.

Uh, and our accountant told us that we could backtrack all the expenses that we do actually pay for all the other business things we might buy ahead of time before we actually incorporate and want to start tracking all that expanse against some income that we. Otherwise it might not really make sense to even go through the process of, you know, getting attorney and accountant, setting up the LLC, all that stuff.

I know people that like think that they have to go trademark their brand before it even has any value or anything like someone else is going to steal this. And I think I also learned that. Even in the patent space, and we, you probably want to fact check, excuse me. You probably want to fact check this listeners, but I believe I was told I was told this actually, and I don't know if it's actually true. We need to find out.

But if you actually end up selling anything, then you own some type of rights to that patent later in, in, in time down the road. So even if someone else tried to go get a patent, or if you, when you do eventually try to get the patent, as long as you can prove that first sale of the product from some previous time through some kind of receipt or transaction, then you actually own the initial rights. The patent to that.

Now, all of these, I just said about waiting to incorporate the patent laws and everything. I'm not an attorney, so you should always consult with someone first. I mean, there are, there are some liability protections and other reasons to get incorporated depending on the line of work you're doing and how much risk you really want to take individually and when you're going out to do some type of consulting work or individual products. So that risk appetite is ultimately your decision in my case.

And in the case that I know sometimes with Chad and Kevin here as well, uh, we choose. In many cases, could we do it? We've been involved in many startup companies. So maybe not go all the way gung ho right away and spend all this money to just try and get the entity set up without making that first dollar, or at least having a path to it where we know that first dollar is coming in. I have actually done that as well on.

Uh, consulting gigs where I will go and actually get the check to, to the company that, uh, um, uh, I'm coming to the client as once I have the check, I'll incorporate deposit the check as well. Um, because it might actually not actually come to fruition. I don't do a whole lot of consulting gigs personally. I'll do them every once a while, because the fact kind of what Chad was talking about there earlier.

Where it's just based on how much time I have and how many jobs I really want to take on currently. So luckily when I do actually have a project I want to do, I do, I, or I can charge a high enough rate to actually get that done. But, um, as far as like scaling, I love what you've said in the past, Kevin, I think you've said it many times to me personally, and you've heard this advice from others where you don't, don't do the things that.

Uh, or sorry, you do the things that don't scale initially, right? Start with the things that don't scale, gain the traction that way. Do the hard stuff that, you know, you're worried about later on that you'll have to set up this awesome system to be able to do all this work. It's the whole analysis paralysis stuff. We get stuck in a software developers. Actually, my favorite, my favorite software development principle is YAGNI. You ain't going to need it.

I haven't, because so many times have I thought that, Hey, if I build this, you know, I solve for every problem that could happen, or, you know, the customer might need this, I go and build something that's not actually needed yet in production or that the client doesn't really need yet, just to kind of save me of something I think I might need later when I'm, when I'm trying to scale this business or make it generic for multiple types of clients and different industries and such, the truth is

when that actual use case comes around and someone wants that need that I thought they needed, it's completely different than I thought. Upfront and I have to change something anyway, so I do actually end up having to go around and doing some rework later on as well. Um, so yeah, I would just, uh, you know, the use case or the client you have in front of you, think about what do I really need to scale and what do I not? What can I do manually today?

What can I do simple through PayPal or Venmo or even talk to my accountant, like I said earlier, and see if I can just keep track of some expenses on a spreadsheet. And just send that later to my accountant, um, down the road when it's time to do taxes versus going out and getting, you know, all the subscriptions for QuickBooks and, and all the others, you know, staff SAS products you may think you need, um, to run your company.

Yeah, we're not even going to talk about that because that's a whole different set of rules. But then what happens is a text time you say, all right, I made. Several hundred or 1, 000 worth of additional income that wasn't taxed and your account, you know, whoever you do, your taxes through, we'll figure out how much you owe. We don't recommend that because you end up paying substantially more in taxes on that money than you would if you were going through some sort of legal entity.

But that's, yeah, some really good advice is the things that don't scale and eventually you can start to automate and you can set up the systems for the stuff that you're doing by hand. Chad, what are your thoughts on doing the simplest thing first?

They're thinking about stuff. They're reading things, but they're not they're not really They're not learning as they're doing so a lot of times the software guys It's very common to, some new tech comes out, you kind of go learn the tech, so that's kind of cool, but you don't use it, you didn't really, you didn't really learn it, you know, until you actually get in there and you start working with it.

You start working with it, then it becomes real to you, but it's that taking the action of actually creating some project with it, not just watching some video, reading a book, and not taking action on it. So take an action. is the most important thing. So the fact that he did PayPal to begin with, that was him taking action. I just need to accept some money and I'll set up a PayPal account, like super easy to do now. I've had, I've talked to folks.

Who have only just accepted a credit card over the phone and then they've gone through and actually pretty much typed that into PayPal themselves or whatever. So the user didn't have to go set up, you know, this is kind of earlier on, but the whole key here is start simple, start with stuff that doesn't scale. On the whole aspect of business entities that you're talking about. Obviously, none, none of the three of us are accountants, none of the three of us are lawyers.

So you do need to talk to an accountant. You do need to talk to a lawyer when you're trying to determine ultimately what you want to create from your business entity. From my perspective, when you, again, my perspective, not being an accountant, not being a lawyer, my perspective is you can start out as a sole proprietor, which is just default. That's what it is. You're just accepting money and it's just extra income under your social security number. You can start there.

If you think you're going to get to the point where you are bringing in hundreds of thousands of dollars a year, then it could make sense to actually either start an S corp or you start an LLC that you can be taxed as an S corp. That could be beneficial. But again, you have the whole point from a legal perspective, why you want to ultimately get an LLC, but not start here. is for protection. So if somebody does seal you, then they'll sue the company, the LLC and not get your personal assets.

Right? So from a legal perspective, that's why you want that. But if you know who you're actually doing this business with up front and you don't believe you'll get sued, you don't need to take that action right away. At the same time, if you are just starting out and you are concerned about who you're going to do business with and they may actually come after you, it could be worth a couple hundred dollars.

Yes. To incorporate LLC, because at least with the LLC, once you have that, you can then tax it however you want to later. So take action, uh, but don't leave yourself overly exposed either, would be my suggestion, but definitely talk to an accountant and a lawyer. But

You don't have to put that fee on top for some of those expenses that you're having to incur by going through all this legal work. But unfortunately, that's the world we live in nowadays, right? Where people are so happy or if they're... You know, really it just comes down to, um, not being trustworthy and doing some of the things people promise.

So that would actually be the real, real suggestion there is if you feel like, oh, I really need to set myself protection and LLC like on this deal, you probably shouldn't even do that.