>>What the statistics you site don't take into account is what percentage of these small businesses are willing to spend on IT services at all, let alone the expense of custom software.

These firms generate more than half of the nation's GDP. We're talking trillions of dollars. If those companies invest only a fraction of a percent of income on IT, that still means there are billions to be made from IT services.

>>I know far, far more developers who tried to do something on their own who didn't make it, then the 3 you state who made it rich. I saw several resumes during my last round of interview where the resume included some timeframe of owning a small development shop.

I am reminded of the man in court who, when told that the prosecution had 5 witnesses who saw him do it, replied that he could easily find 10 witnesses who didn't see him do it. ;-)

>>But at the same time, is would it be easier for a developer who knew dotnet and sql server to get a group of friends, form a company and go out and market themselves? I don't think there's any question that it would be far easier for them then a VFP group.

But how will they distinguish themselves from 100 other groups of friends who also decide they are a dotNET shop? The best advice you could give them is to wake up and focus on domain expertise and/or distinguishing themselves in an increasingly standardized and commoditized IT arena. If they have domain expertise, their best bet might be to upskill on project management and design, making even better $ by overseeing projects with development outsourced cheaply to the commodity market.

>>There are currently 4 developers, including me, in the group I work in know, soon to be 6. Of the 4, 3 of us are actively learning dotnet. Because we know we have to, to maintain our marketability. Of the 2 new hires, 1 has done dotnet work. He is willing to join us, because of timing. He likes to keep employed.

For interest: are you offering distinct products or contract development?