Solo or Scale-Up? Some dilemmas to consider

by Dale Davidson March 18, 2026

Jason Cohen, a successful tech entrepreneur, wrote a smart article about the math behind consulting companies.

The unfortunate math behind consulting companies

He is writing from the perspective of someone who thinks they can make a lot of money starting a consulting company (hiring consultant and billing them out) and potentially start a product or software company with the profits.

Though he's not talking about government contracting, the business logic and (dis)incentives he describes are largely the same.

For example:

Employees are lot more expensive than their nominal salary cost
Staying billable is incredibly important for profitability
Even a small increase in billable rates makes a big difference
If you hire people, your job changes from "software consultant" to sales lead, marketing director, and HR VP, and just being a business owner
It actually requires a lot of discipline to build a product with your consulting team in your off time

And here is the core dilemma of staying solo vs. building a consulting company:

"But consider this: If your underling can be billed at $100/hour, can’t you bill at $150/hour at least? And if you worked just 20 hours/week (on average) at that rate you’d clear $150,000 annually without the hassle of hiring and managing an employee. Isn’t that better?"

In the government contracting world, I've decided to choose the hassle of building out a company vs. staying solo.

But you might choose to stay solo. And that's totally okay!

That being said if you do want to build out a government consulting business, starting solo gives you both options. Just know that building a company is a different job altogether than just being a solo 1099 consultant.

Want the full playbook? Check out Going 1099.