The big theoretical disadvantage is that consulting doesn't scale as well.
If people pay for your time then the three ways you can grow the business are:
1) Charge more (which has an upper limit. This limit is higher than you think though - eg: lawyers are effectively a very specialized form of consultants)
2) Work more hours (which has an upper limit)
3) Hire people (which increases your costs along with your revenue)
If you sell software though, you can sell the same piece of work an infinite number of times. Maybe you need to spend more on marketing to increase your revenue, but marketing budget scales much better than paying full time employees as other consultants.
However this advantage is often theoretical. The risk/reward ratio of consulting vs startup makes consulting more attractive to many. It's pretty simple (and not very risky) to jump from an employee to a consultant: sign up for a medium term engagement, then quit your job. Provided the engagement is long enough and you set your rate correctly you don't even need any savings to do it.
If people pay for your time then the three ways you can grow the business are:
1) Charge more (which has an upper limit. This limit is higher than you think though - eg: lawyers are effectively a very specialized form of consultants)
2) Work more hours (which has an upper limit)
3) Hire people (which increases your costs along with your revenue)
If you sell software though, you can sell the same piece of work an infinite number of times. Maybe you need to spend more on marketing to increase your revenue, but marketing budget scales much better than paying full time employees as other consultants.
However this advantage is often theoretical. The risk/reward ratio of consulting vs startup makes consulting more attractive to many. It's pretty simple (and not very risky) to jump from an employee to a consultant: sign up for a medium term engagement, then quit your job. Provided the engagement is long enough and you set your rate correctly you don't even need any savings to do it.