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Hi All,

I was after some advice on how to start up an IT business. I’m not looking to do this right now, but definitely in the near future.

Key questions I have is:

What do i need to consider, how much do I need to start, what profits will I make, how much are business rates (not fussed about water or gas), should I have a business partner? etc.

It would be very beneficial if there’s any IT business’ around that could give me some advice as to how to get started and settle in.

My experience is with hardware repair, networking, troubleshooting, software issues etc. (I’m an all rounder and could easily handle repairing PC’s and sorting out faults).

Thanks in advance

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First of all this all depends on location. I could not tell you how much it would cost to operate a business where you are if I don’t know where you are. I would do some Google searches about owning a business in your area and how to go about it. I believe you need some type of insurance like limited liability as well. Depending on how well you market, starting the business at your home may be a good idea. There are some restrictions to this as well though.

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Profits: Very little. Most IT businesses lose money. And not “kinda most” but “nearly all.” IT service providing is an extremely competitive and poorly appreciated business. Very hard to make money in it.

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We had a great conversation about this at Spiceworld 2013 but… they forgot to record it :frowning:

Some highlights:

  1. Get an attorney and incorporate. Don’t even think for a second about doing anything less than an LLC. LLC is fine, but it is a minimum. If you don’t incorporate, don’t do any business.
  2. Get a good CPA / CPA firm to help you. Taxes suck and you need guidance.
  3. Outsource anything that isn’t your core business.
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Partner might be a good idea. Going alone is essentially impossible. You have nothing to stop you from burning out.

Consider working with a “Meta-MSP”, a big service provider who offers a back stop to fill in your missing needs like 24x7 coverage, wide range of skills, able to work for your clients while you are tied up with others, provides technology, etc. A successful service provider needs a minimum number of people and it is quite a few. Like six is around a bare minimum. Go below that and you can’t keep the business going without burning the proverbial candle in dangerous ways.

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I’ve done what you’re considered doing. Might I make a recommendation. Before you take the plunge, you should take a job with a MSP or IT Support company just so you can learn some of the basics on someone elses $$. you’ll gain valuable knowledge, and possibly future employees. It takes a special person to be idiotic enough to leave their 9-5 and plunge into 24x7 work. It’s a lot of work, there is a ton that goes into it. many relationships to form, products to master, sleep to miss…coffee to drink.

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Thanks for all the replies guys, I’ve worked in IT support for a number of years now but definitely taken on that I should do the LLC and get a good accountant etc.

I’m not looking to be a provider of anything currently, just thinking about a small shopfront with basic desktop and laptop repairs etc. A store I used to work in would take in £250+ a day just for malware removal, changing an HDD, backing up and restoring data etc.

That’s essentially my passion and something I’d like to do in the near future.

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$250 a day is nothing.

Well, it’s not nothing. You’d be OK if you could count on $250/day, every day. However, break/fix is not sustainable. You’ll never know from month to month how much of your business will come from this. Worse, break/fix clients are - bar none - the worst folks to deal with. The average unit will be around 5 years old, infested with malware, and have had no maintenance at all since it was taken out of the box. Owners will want to drop it off at 4:50pm and have it done by 9am. (This is not hyperbole.)

Toss in the erosion of the PC market by tablets and all-in-one units, and there’s very, very little money in break/fix.

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A few numbers:

You’re not going to be open 365 days a year. I’m not sure about the UK holiday calendar, but let’s subtract 10 days for actual holidays (Christmas, New Year’s, etc), another 14 for actual vacation, and 104 for the weekends. That leaves you with 237 days in your year. $250 a day gives you a gross income of $59,250. Applying the “Rule of Thirds”, that leaves $19,750 for your annual income. Divide that out over a typical 2,040 hour work week, and you’re making $9.68/hour. Before your personal taxes.

IF - and only if - you can actually get $250 a day.

Also, my numbers are a bit off. I’m not adjusting for the exchange between USD and BPS or the variances in tax law between the US and the UK. Point being, though, $250 a day sounds like a lot. But it’s not a lot. You’ll want to be bringing in at least twice that, and three times would be a more comfortable number.

You can’t do that on only break/fix.

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I don’t ever want to discourage anyone when it comes to going into business for themselves. I fully believe in, and support, small business. I just had a similar conversation with my daughter last night. Keep that in mind…

I have had 2 computer businesses in the past. Both of my computer businesses (and an auto parts store way back in the early-mid 90’s) are long gone. I’m currently working for a corporation. Scott and Bryce pretty much hit it with the following:

That being said; Nothing ventured nothing gained. Just be prepared. I didn’t give up after the first business closed up but after 3 I kinda gave up on it…for now anyway. One thing it DID do was add business experience to my resume which got me to where I am today.

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What about the small-med business part of IT? You know the one that clients pay you on a quarterly basis for your services and some of these clients are very quiet. How is that kind of life? I would not target home owners because my skill sets are not worth that waste of time. How hard is it to be a small-med business consultant that handles tasks like networking, backups, and so on. I see a lot of consultants earn 5k/quarter from multiple business by just managing the companies firewall.

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Thanks guys, your comments have been very realistic and down to earth. I think I’m going to speak to a few store owners to see how they survive, I wouldn’t mind also supporting a few companies as remote support either.

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I have been doing SMB consulting as a one man shop for 16 years. If you thrive on adrenaline, laugh off stress, and can juggle 3 emergencies at once then it might be for you. And you can net about what you would make as a manager at McDonalds, except with no benefits.

Seriously, I have a pretty good lifestyle business. I have a steady number of clients that I love working with. It is a 24/7/365 career, you have to answer the phone when it rings. It will take several years to build a client base, even longer to weed out the bad ones. I can bill out about 1 in 2.5 hours worked, use that as a rough guide.

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“Surviving” is not what you want to do. You want to thrive.

A few other thoughts, in no particular order:

  • Clearly define your market. If you’re going to target break/fix, fine. Go for it! But know how many other legitimate businesses are offering the same services in your area, what they charge, how long they take (on average), and (if you can) how much they make.

  • Understand your costs. This will set your rate.

  • Don’t compete on price. This is a race to the bottom that will slash your throat in a hurry.

  • Define your “voice”. What makes your company different from “Bob’s Deli, Computer Repair, and Mobile Phone Sales”? Build on that. It will help add value to your brand. Read The Power of Unpopular by Erika Napoletano for more on breaking out of the crowd.

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SMB clients are actually where many (most?) small IT shops make their real money. Be advised, however, that they are both the best and worst clients to have. Best because you’ll find yourself dealing with a lot of different challenges. Worst because not all of them actually value what an IT pro brings to the table.

Vet your clients. Be very clear about the way you do business. Don’t take on ones that don’t fit, and fire ones that seemed to fit but actually don’t. For example:

I strongly insist anyone getting into the SMB IT field as a consultant insist that they are the primary source of all IT. You don’t have to sell everything (in fact, you may not want to - more on that later), but everything needs to run through you. Planning a plant expansion? You need to be included in those meetings. Thinking about adding guest wireless? Bring you in before they make a decision. Sales manager is pushing for shiny new iPads for the sales guy(s)? Owner thinks he can save money through BYOD? Definitely talk about those! Enforce this with contract language. Failure to do so will see you cut out of decision making and simply tasked with doing things that make no sense, have no coherent vision, and will ultimately make you look like you have no idea what you’re doing.

Clearly define how you work. Is email the best way to reach you? How soon can they expect a response? Are you available outside of standard business hours? How much extra does that level of service cost? (HINT: A lot) Consider bringing on an MSP partner, like Continuum to help with after-hours work and silly user issues. What happens if they don’t keep up their end of the agreement? What happens if you don’t?

Have a lawyer draw up the contracts. Never - ever - begin work without a signed contract in place. I lurves me some DocuSign for this. Standard contracts take seconds to issue. You can have your contract in place in minutes and begin work almost instantly.

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That’s more like $450/day. But still.

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Be aware that computer stores are a dying (dead?) business. Ten years ago they were a completely different animal. They’ve been in decline for decades. And the continue to decline. The idea of having to take your computer somewhere for service is becoming less and less popular. You are facing an ever shrinking marketplace. That’s a bit scary.

Having a storefront in addition to other things? That’s different. But having nothing but that would be rough.

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On the subject of sales:

Think long and hard about hardware and software sales. Some consultancies love them, and they can be a great way to supplement income. If you go this route, insist that all IT purchasing go though you as well. The downside here is you’ll need to figure out how and what inventory to keep, whether to ship product for payment later (which can speed deliver and give you a competitive edge, but could require a substantial line of credit on your part), or operate under more standard “pay first, get after” arrangement (which might delay delivery compared to other sources, but won’t require nearly the same amount of credit to manage). You may find there are special perks (like priority service) that come with being a reseller of hardware that can set you apart from the competition.

Some shops, however, find this is icky. They may not like being tied to a single product line or vendor, or they may find that selling a specific line of hardware makes them look like they’re more concerned with hardware or software sales than they are with finding an appropriate solution for their clients’ needs.

Neither is wrong. I’ve seen both done quite successfully on more than one occasion. It’s all a matter of what’s right for your brand.

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I know. I mentioned earlier that I wasn’t taking the exchange rate into account.

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To help in this, I agree, neither is wrong. But the names are different.

The reseller is known as a VAR (value added reseller.) The other is a service provider or consultancy. The VAR aspects may or may not overlap with other things, but a VAR is always a VAR. I’ve worked with both.

NTG is a non-reseller service provider / IT outsourcer. We really believe in our non-reseller neutrality. But boy does it make things financially tough because we don’t have that extra revenue stream.

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