Starting a Web Design Company - Competing w/ Offshore Companies

[123websitedesig]

Hello All:

I am very proficient in PHP and MySQL, and am also a web designer. Most of all my work in the past has been for myself, or very close friends. I would like to start my own company designing websites and programming.

However, in order to make a living, is it really possible to compete with the cheaper offshore companies who do the very same thing?

Any advise is greatly appreciated. Thanks for your input.

--
Ed

[rulian]

I think that anybody doing any business online is competing at a global level reguardless of whether they intend to or no. Luckily for us at least at the moment the pot for web development is large enough for everyone to dig in and still each a healthy dose.
Unfortunately offshore developers can run much cheaper rates then I could. I've come to find so far however that people still get what they pay for, and that goes for both US/European markets and Indian/Russian/Chisese / ect markets.

Being US based I cannot (nor have the desire to) work for a month on a 1k budget. If that is resonable in India then I really cannot blame them for doing so. I think the market is big enough for both people who do work cheaper offshore and local developers to coexist. I still find jobs at my budgets, the trade off is however people who pay more want better quality which IMHO I still think is lacking with faster/cheaper companies. I have yet to see a low ball offshore company output a project that exceeds my quality expectations, in other words, i have never seen a 2month for 1k project look/work like the 3month 10k projects I've worked on here.

The tradeoff to quality is however you need to be on your game and really deliver to exceed your customer's expectations. At least for now however I think each sector fullfills a certain need of the industry. Something I've come to admire so far about our industry is that developers are supportive to each other rather then competitive. I think this is so because everyone can help out and still put food on the table. If in a few years demand declines I think that competition will stiffen up and that is when low balling companies will make a mark on other higher budget companies.

I've also come to understand that like any other industry, web development is less to do with how good you are at programming and more of how good you are at making business and sales. Those abilities are universal and transcend industries.

[cretaceous]

build contacts - all my work is from people I have met/been introduced to/cold called etc - only one contacted me from nowhere

it's the reliability and professional service they come back for (it can't be for my short temper..) - not one of my customers would consider offshore and my clients range from one man co.s to a multinational - they want to know you are there to fix a problem and offer sensible advice and go that extra mile - just make sure they pay for it!

they also like prompt replies to phone calls or emails

and good design needs to fit the product - only meeting the client face to face will let you understand their business

get local work first - people who like your work will recommend you to others

[rulian]

My best piece of advice, answer your phone, and return missed calls and emails like cretaceous said
People have tough time with developer who get too busy to deal with people. leaves a bad taste in their mouth. If you do get too busy it's either time to cherry picking and telling people you are simply not available (kiss that contact goodbye) or upscaling your comp

[Weedpacket]

If you do get too busy it's either time to cherry picking and telling people you are simply not available (kiss that contact goodbye) or upscaling your compOr hire someone, or start outsourcing the smaller jobs :).

[NogDog]

Or hire someone, or start outsourcing the smaller jobs :).
To someone in one of those off-shore, lower-rate locations, right? ;)

[dougal85]

I actually don't think there is much competition with offshore developers. Unless it's a small project or has an unrealistic budget.

Working in a closer proximity and allowing for better communications and meetings really helps a lot. If you are in the same country you have more legal power over each other too. Companies like that piece of mind. I've dealt with a few clients that have started off hiring overseas and then they had to scrap the project because either the quality was poor or miss communication led to many problems.

I'm sure there are some very good overseas companies that can do it cheaply however they do seem to be over shadowed by the atrocious results most other companies produce.

When you start getting too much work, you can start cherry picking as before and just slowly increasing your rates. Just make sure you get a contract in the bag before you scare them all away and sit twiddling your thumbs.

Oh yeah, and get to know a few decent freelancers that you can hire to help when you have crazy rush periods. You'll probably have to pay them more than you would like (and cut into your profit margin a bit), however, its worth it if you can get a decent working relationship formed.

[NogDog]

I think the key here is how much effort you are willing to put into the non-technical part of the job, if you want to go it alone. It doesn't matter how good a designer or programmer you are if you can't do the sales job to get the work, plan and estimate the work correctly so that you can meet schedules with the required deliverables, and do the accounts receivable work to make sure you get paid for your work. If those non-technical parts of the job are distasteful to you or not something you feel you can do well, you might be better served looking to join a small (or large, for that matter) web development company where you can focus on your specialties and let other experts concentrate on those other areas.

[rulian]

NogDog hit a very important point. Getting paid for work complete is a much more difficult task then it sounds like (or ought to be). Keeping up with invoices specially if you do work at smaller rates and therefore will have higher volume, the "business" side of it is in itself quite a job.
I handle no more then 4 projects at any given time, I usually release about 2 a month, and with estimates, deposits, invoicing, contracts and proposals I actually reserve days off the month to focus simply on billing.

I think they said it best, it's kinda messed up to say but I'm actually glad some of these low budget bare bones projects do go overseas rather then handle them myself. I tend to find clients with really low budgets who would go overseas are going to be difficult to deal with in terms of managing their expectations and deliverables.

Clients will change their minds and you cannot help that, you can only protect yourself and try to manage them to make sure that you do not get involved in something that becomes dragged on or beyond your scope.

I've also come to learn to charge for EVERYTHING, otherwise people will exploit you if you do try to throw them a rope here and there.

[nrg_alpha]

On this topic.. I have some questions (as I'm no pro developer by any stretch). In the illustrations industry, I have a friend (who has been freelancing for over 20 years). What he does is charge a 'kill fee' of %50 (granted he has the portfolio / credits / accomplishments to back this). So basically, if the client withdraws during the illustration, well, kiss your %50 upfront money goodbye!

Is there such a generally accepted system in webdev (not necessarily %50 mind you.. but some upfront charge)?

What is the general time frame to send out the invoice after all the work is done?

How much time do you give for your clients to pay?

How do you enforce overdue amounts if the client plays 'hard to get'?

What interest do you charge for overdue amounts?

What last resorts could you turn to if the client refuses to pay?

[dougal85]

Is there such a genrally accepted system in webdev (not necessarily %50 mind you.. but some upfront charge)?

It probably depends on the country/location etc. However, I found this very hard to get until I had a bit on my portfolio etc. Now I don't do a project unless I get a % up front. It really depends on the size of the project however. Last I got about 33% but if its a big paycheque I'd settle for less than that too. I always try to agree on milestones and payment as the project continues. So as you give them deliverables you get more money.

What is the general time frame to send out the invoice after all the work is done?
How much time do you give for your clients to pay?

Send an invoice the moment the work/milestone is done. Ask for them to pay within 30 days. This is by no means a legal requirement but 30 days is usually fairly standard for all the work I've done in the UK anyway. If you can get a payment schedule into an initial contract all the better.

How do you enforce overdue amounts if the client plays 'hard to get'?

Just have to keep sending reminders and call them etc. Eventually they will usually pay up. You can write strongly worded letters implying that legal action will be taken or advice is already being sout after.

What interest do you charge for overdue amounts?

I've never got to the stage where I've had to ask for interest yet. So I'm not sure about this...

What last resorts could you turn to if the client refuses to pay?

Legal action if its worth enough money. If you provide the hosting or have access to it you could write to the client and tell them the website will be coming down if they don't pay up. Make sure you give them warning though, otherwise you could cause trouble and give them an reason not to pay!

[NogDog]

With new customers I normally request a minimum 50% down-payment before I deliver any code to them. This is not necessarily an immediate up-front payment, but it does ensure that I get paid something before they have any code in hand. With repeat customers who have a proven track record with me, I may waive that requirement, particularly with smaller tasks.

But all things are negotiable and may vary depending on where they are located, whether they were referred to me by someone I trust, etc.

[nrg_alpha]

Thanks for the response guys.. kind of makes it clearer.
Was more curious than anything else. My friend has had one hell of a time collecting during his career... many clients tried to screw him over (even though he upheld his side of things on time and with good quality). He once told me not to bother with freelancing (I think he was going through hard times and was near the end of his rope when he brought that up).

While I have no intentions at this point in time to do freelancing (especially with my limited webdev experience), perhaps down the road, when the 'time is right'... I just feel badly for people who are skillfull and qualified and uphold their end, only to have to do this rediculous song and dance with clients who are trying to wriggle out of it.

[rulian]

The reason you stated is exactly why you MUST do down payments.
Clients can pull out of projects at any time whether you want them to or not. If you work simply to get paid on delivery then you risk alot of your time and money. For example if you work for 3 weeks and a client pulls the plug, you didnt get paid those 3 weeks. A 50% down payment is a good basis as where it gives them reason to keep on top of their project and also guarantees you will not be out on your ass come rent.

I did have a customer who didnt pay, didnt answer my phone calls or email and simply ignored me for weeks on end. After about a month and a half I simply stopped trying since the amount owed wanst worth me spending money on other resources to aquire it. I simply didnt deliver the some smaller products and wrote that customer off. Sooner or later when they come back (if they ever want to finish the project) to get what I still have, I will either refuse to continue or require they pay double what was owed upfront before delivering.

So be smart and protect yourself specially if working by yourself means you get no other money from a fulltime or parttime job

[nrg_alpha]

Something tells me I won't have to worry about this for a while (if ever). But sounds like problematic clients are more common than I originally anticipated (given the stories I hear).

So it is sound advice to be sure. At first I thought a %50 'kill fee' was a little steep when my friend told me about it.... but makes sense if someone backs out on you.

[dougal85]

I've had some slow payments, but otherwise only one real problem.

I missed out on payment from a company because they went bankrupt. Fortunately they only owed me about 15% of the total fee but it was still a bit of a hit to the bank account as I had expected to get it at some point.

[NogDog]

I only recall one client I've had who "took the software and ran". But it was one of the first things I did as a freelance project and was quite small, but after that I started my 50% down-payment policy and have not really had any problems. (I guess once I started that, any potential customers who might have tried to stiff me found out about that, we never got past the preliminary requirements/estimate phase, so I've only had to deal with legit clients.)

[BillKat]

@ the OP: one thing is, what's offshore to you i.e. what country are you in?

In my experience (UK) I have yet to see an organisation who was satisfied with work outsourced to developing countries (pun not intended). Most ended up abandoning their stalled projects part way through, losing money.

There will always be someone cheaper that you. The thing is to decide your approach, your model, and what strengths you will play to. Reasonable price is one factor, but only one of several - e.g. quality, reliability, etc.
Some clients do look only at price, mainly for small projects, but I always left them to it. Not worth chasing.

In 8 yrs I've never had to ask for a deposit, and have never been done over, except for a tiny amount when one place went bust. I think that comes from not chasing anything and everything, the result being decent projects and decent folks to work for. Or it could be blind luck ;)

[Ilyes]

Start as a freelance programmer and designer in freelance websites to find projects( example: scriptlance (http://ilyesoft.99k.org/scriptlance.com.html) ).
Freelancing is a good start for every expert and company, you can bid in projects and start working as there are a very big number of projects and you can register and bid for free.

The clients you get there will laso be a long-term clients, they will contact you every time they need something from you without posting the project, so you will get clients... and this is what you are looking for :)

Also webmasters can register there for free and hire programmers :)

Link in sig.

[nrg_alpha]

Start as a freelance programmer and designer in freelance websites to find projects( example: scriptlance (http://ilyesoft.99k.org/scriptlance.com.html) ).


Ah, the hamster in the wheel between my ears just woke up and started running (can't you hear the wheel squeeking?)

This gave me an alternative idea. Over at another PHP site, someone was working on a site called CodeKindness (http://www.codekindness.org/). It's a site where people volunteer to do site work for non profit organizations.

This would be a perfect 'test bed' for newer developers who have not amassed quite enough experience to go it alone as a full fledged freelancer, yet enable them to try out their skills.. after all, its all free.. so the stress of performance for pay is not there. Try out a few small projects, become more skillful at web development in the interim. Might be a great way to add to your webdev portfolio. If things happen to go sour, well, at least there is no financial disputes nor any massive commitments (none that I am aware of anyway). Once you feel more comfortable with your skill level and have a few projects under your belt, then move on to paying jobs.

Just a thought.

[dougal85]

I don't think I would ever do the probjects that you bid online for. They seem to dodgy for me and you are never going to get decent money.

These are exactly the projects that offshore companies can undercut you on. So basically, a waste of time if you ask me.

nrg_alpha, you bring up a good point for people to get experience. Sounds like a good idea, I'd do it if I hadn't got some already :)

[Ilyes]

I'm a php programmer, and my first "n" projects was online in these freelance websites, and I was paid for them with a good amount of $$

criptlance gives me a good chance to start wrking, I know it's not easy to be selected for a project, but there are a lot of projects there, so everybody had a chance :)
And there are as many design projects as programming ones, so designer are very wellcome in freelance website, and also writers and seo expert and data entry workers... You can give freelancing a try.

[dougal85]

I guess that depends on your definition of good money.

I don't work in $ I workin in £. Different ball game since people in the US could undercut me easily nevermind India etc.

[Ilyes]

Yeah, but I don't work in $ I workin in £. Different ball game since people in the US could undercut me easily nevermind India etc.

I don't think the currency is a problem, after project done and get paid just withdraw money to your paypal, moneybookers, bank account, or the good one is the Payoneer Mastercard. (PS: they offer a Mastercard prepaid card to pay you lol $).

There are freelancer from allover the word as I see there, the most are in USA, India, and few from Europe,Pakistan, Other Asia countries...

I'm from Tunisia, my currency is Dinar, but I don't care if I was paid in USD, I will just exchange it to TND later, http://www.google.com/search?q=usd+to+tnd

There are a freelance website that is in Euro, www.eufreelance.com (http://www.eufreelance.com/affiliates/ilyesoft/)

[dougal85]

I think you completely missed my point. The only reason the currency is a problem is because £1 = $1.8 US.

So basically the GB Pound is stronger than the US dollar and it means I need to almost half the value in dollars to work out how much I am getting paid.

let me demonstrate further. I've no idea if these websites are accurate but I have linked my quotes to the sources;
"Average income per person [in Tunisia] $2,110" (http://www.24-7prayer.com/ow/country2.php?country_id=48) (thats in USD)


"The average salary in the UK (according to ONS) is approx. £22K." (http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=5361&cat=44-0-0)

£22,000 in USD is $38,330 (http://www.google.co.uk/search?hl=en&rlz=1B3GGGL_enGB243GB243&q=%C2%A322000+in+USD&btnG=Search&meta=)

So thats $38,330 compared to $2,110 - So, to sumarise, in your country you can afford to be paid less.

[rulian]

He means that if he make $500 bucks in a week it may be great in India, it may be okay in the US, but in the UK it wont pay his rent

The bottom line is I think when you are just starting out you're going to have to eat some crud and starve a little before you get the kind of demand that can start putting food on your plate. Do not sell your services short either, a year and a half ago I was shy about asking $15/hour on a project, now my rate is steadily 50 an hour simply because I was getting abused at that rate for the volume of work I was doing.

[dougal85]

Yeah, I should have just said that. lol