Our margins are thin. Billing on a weekly or monthly basis is a fantasy for us. Clients are never interested in this arrangement, they want to do hourly only because they think it'll save them money. When I try to pitch things as a business solution instead of just renting a coder, they invariably push back and say it's only fair to tell them what it'll cost to build, and they'll pay that.
I don't have a huge personal network so we've relied on platforms like Elance to make many of our contacts. The nickel-and-diming, even outright scamming on these platforms defies the imagination. We had a client last year who was very lucrative in the beginning, but he ran out of cash. After a lot of sob stories and assurances that it was a temporary situation, we ultimately did five figures worth of work for him on credit. Of course now it's been six months, we haven't seen a dime of what he owes us, and he continues to demand more work. If I say no he attacks me with some of the most vile personal abuse and insults I've ever seen. I want to get rid of this guy so badly, and I finally drew the line with him and said no more work yesterday after he insulted me and called me names in front of other people in my industry. But the reality is he owes us tons of money (well, by the standards of what I make) so I'm very afraid to burn that bridge for the same reason I took him on in the first place: I need the cash.
Recently we did a small job for a payday loans affiliate website. (I know, I know, I know, but again, we needed the cash.) The guy who owned the website congratulated us on a job well done, and then of course proceeded to "not notice" that there was $200 still owed and not reply to my messages. After a week I reverted the changes we made to his site and he was super responsive after that. He chewed me out for how unprofessional it was, of course, but he paid up.
Look it's not all bad. We've had some good clients and we're very proud of the work we do -- I'm in love with the craft of software development, not in the "chase the latest framework like a puppy on adderall" sort of way, but in the "this is an amazing and never ending intellectual challenge" sort of way. My employees are like this too. We work in an EXTREMELY difficult environment and if we weren't very good at what we do, we would have been replaced by $8/hr programmers in India a long time ago. We get some good business from referrals because we do (IMHO) great work, but when half of your clients are broke and/or scammers, how good are their referrals really going to be?
I started my career at one of the tech giants where the compensation was good, the coworkers were amazing, and I learned a ton. But not about running a business, where I clearly have a lot more to learn. Sometimes I look at where I am now, squabbling with a freakin' loan shark over 200 bucks, and ask, "Holy crap, how could I have screwed up this badly?"
Building a product with the proceeds of our consulting business? What proceeds? I can only dream.