A consultancy usually starts by nucleating around the contacts and first few engagements brought in by the principals. Given a few starting engagements for a few different customers, one of them is likely to turn into recurring revenue, and another is likely to provide a referral.
Then, if your delivery establishes any kind of track record at all and you're working in a "hot" area (Rails in 2008-2009, iOS in the last 3 years, &c) you can start picking up cold inbounds just by putting your name out there (on a website, with a blog, posting on message boards).
Things snowball after that.
Most small consultancies I'm acquainted with never advertise and don't have salespeople.
One thing you really need to understand is that successful consultancies don't treat clients the way HN tends to think about customers. If the process of extracting recurring engagements and referrals from customers is mysterious to you, it's because you're thinking too transactionally. You see this all the time on HN on threads about people's time tracking and invoicing techniques. The people on those threads often sound like they can't wait to get away from their customers. Of course they have trouble finding new ones. Their business processes are client-aversive.
"The people on those threads often sound like they can't wait to get away from their customers."
Great point obviously. Some people are bad business people plain and simple.
A good business person is totally separate from a good programmer or a good anything.
A good business person knows how to make a buck and most certainly knows how to treat a customer (or a lead, see below) and how to encourage more business.
An actual email from a contractor we found (who paid adsense for the lead this was for a joomla upgrade we were looking into as a favor) after a back and forth string of similar conversations:
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"Honestly, their site is completely outdated. Whoever built it put no love into the project. For what they do and the audience they are trying to target, they need a more professional image. Additionally, their content is NOT content. It is images that Google cannot detect. No one can find them on the net if they were looking for such a company because Google can't read images of text. Their security is at risk as well. We found at least two weak areas that were patched with the upgraded versions.
Tell them we would do the complete rebuild/design for $10,000 if they provide all content in text format."
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We weren't the people who did the site and we weren't the people who embedded graphics and while the points are valid the tone and the approach is way off. I mean how did this person know that the person writing to them wasn't the fuck up? Ooops.
Good point. People here see clients as if they were sitting on a stack. Just going through them one at a time. FIFO. But thats not the way to treat people. Clients are human beings, they want to be taken care of and understood. Some of them are easier to understand than others, but at the end of the day, everybody wants the same thing. They just want to find someone who will listen, take them seriously, and be there when shit hits the fan. I always keep in touch with clients, and make an effort to send them business. For example, I did a project for a startup who has a great product. From one of my ads on HN, I got contacted to do some engineering work. But hey, my client's product can do what this other person needs at a fraction of the cost. So I advised the person inquiring and got him in touch with the client. They were able to agree on terms. My client made a huge sale. The prospect saved thousands of dollars. And I was able to expand my network with another happy person.
I have never met someone who hired a programming consultant or contract company. (not talking about a MSFT contract employee. ) I have seen a few Oracle database contractors.
Who are these companies hiring Pivotal or whoever less famous?
Then, if your delivery establishes any kind of track record at all and you're working in a "hot" area (Rails in 2008-2009, iOS in the last 3 years, &c) you can start picking up cold inbounds just by putting your name out there (on a website, with a blog, posting on message boards).
Things snowball after that.
Most small consultancies I'm acquainted with never advertise and don't have salespeople.
One thing you really need to understand is that successful consultancies don't treat clients the way HN tends to think about customers. If the process of extracting recurring engagements and referrals from customers is mysterious to you, it's because you're thinking too transactionally. You see this all the time on HN on threads about people's time tracking and invoicing techniques. The people on those threads often sound like they can't wait to get away from their customers. Of course they have trouble finding new ones. Their business processes are client-aversive.