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Hey folks,

For any of you who started your own SMB/IT Provider, how did you do it?

I imagine you did not start earning money straight away as that takes time… did you keep working your normal job and do the business in the evenings/weekends? Did you just leave work and start the business (Big Bang approach)? Did you work and save some funds and then leave to work fully on the business?

What did you do and if you could do it again, what would you do differently?

How did you get knowledge of your business to SMBs in your area? How long did it take to start making an impact/profit? Months/Years?

What other pointers do you have?

Thanks,

Jim

26 Spice ups
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Go here:

www.tmfproject.org

Read everything, preferably in chronological order.

For me? I rather jumped into it. I’d been laid off from a job with a consultancy firm. A former co-worker was running his own PC repair shop, and we sort of went “barber shop” with it. That is, we shared the space but were responsible for our own clients. It didn’t last long for a variety of reasons, but when it shutdown I just kept going.

I was, however, working a full-time 2nd shift factory gig for about 5 years while it got off the ground. I’m sure I could have moved into it as a full-time gig had I been willing to take on a large business loan, but as it happened the entire business was self-sustaining (if not exactly making enough to live on). Don’t underestimate this.

If you’re looking to start your own gig, I’d start building your professional network now. Start attending Chamber of Commerce events in your area (you can be a member of the Chamber without actually owning a business). Join a service club like Rotary or Exchange. Look for professional networking groups in your area. Consider starting one if one doesn’t exist. (coughSpice Corpscough) If you’re not on LinkedIn, create a profile and start posting things related to what you want to focus on.

(Side note: Read this lovely blog post on the subject of LinkedIn network request jackassery. No, really. Go read it. Yes, RIGHT NAO!)

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Also, a business plan is a necessity. Not only will just about every source of funding on the planet want to see yours before they even think of throwing money at you, the process of writing one will force you to make decisions about how you want your business to run. I wish to $deity that I’d had someone tell me that 11 years ago.

Not sure how to write one? Go talk to your local Chamber of Commerce. They typically have experts available for consultation on such matters.

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Get your legal ducks in a row. Don’t even consider operating as a Sole Proprietor or Partnership. LLC is an absolute minimum. Depending on the specifics, S-Corp or C-Corp may be a better option. Talk to an accountant and a business lawyer about the specific benefits of each.

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If you don’t have the expertise to do X, hire it done.

X is anything from bookkeeping to marketing. Odds are you’re very good at the bits and bytes of IT work. Odds are you’re also not necessarily proficient on things like time tracking, invoicing, business accounting, web design, social media engagement, and payroll.

You have two choices: take it all on yourself and spend 126 hours a week trying to make it work (and having your hourly pay rate dip to less than the average pre-tip rate of a server at your local Denny’s) or hire that shit out. Having done the first, trust me: do the second.

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Do market research. This may cost money. Ask your local Chamber about it. You need to know who else is operating in your area. Keep in mind that with Managed Services, you may be competing with a five-person operation two states over … but focus first on the folks within, say, 60 miles of you. Don’t underestimate the power of facetime when landing new clients.

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When planning your business, keep a few things in mind:

  • The Rule of Thirds. 1/3 for teh Tax Man (cuz he’ll come get it whether you plan for it or not!), 1/3 for your business (payroll, operating expenses, cash on hand, etc), and 1/3 for you (y’know, for silly things like food and shelter).

  • Don’t compete on price. That’s a straight-up race to the bottom where everybody loses. If you read the stuff I linked in my first post (re: TMF Project), you’ll already know what I’m talking about. If you haven’t read it, go do so. Ash Ambrige says it better than I ever could.

  • Stand out. For the love of $deity, be different than every other bland IT consultancy out there. Read The Power of Unpopular for more on this. You don’t need a gimmick (gimmicks suck), but don’t be afraid to have a brand personality. In fact, I’ll say it’s critical.

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Finally, a little business inspiration from my second-favorite redhead:

http://erikanapoletano.com/blog/19-things-i-wish-i-knew-when-i-started-my-business/

Pay special attention to #13 on that list.

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Wow. This is basically a Bryce Katz™ consulting session.

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I am just consulting on the side, but I will do this full time one day.

+1 on what Bryce said. Basically all of it. I’m going to read some of this myself.

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You should heavily consider writing a how to on this, you’ve essentially put gold in text form.

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Can’t be overstated. LLC minimum. S Corp can be tricky make sure you have an attorney if you want to consider that. C Corp isn’t tricky but is a pain. LLC is by far the easiest.

Have an attorney and a CPA, no question. And develop a good, local bank relationship.

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The biggest thing is… really consider carefully if this is something that you want to do. Is your passion business or IT? If IT, you probably don’t want to stop doing IT in order to run a business. If business, why are you in IT at all?

Running your own business is very different than being an IT person. That’s why I stopped doing that in the 90s. It was interesting and I learned a lot but wow, it sucks as an IT guy. That’s why I work for a consulting firm. I’d rather work for a great shop that has people that do those business things and just focus on where my skills are. I’m not a sales person, I’m not a manager, I don’t do payroll, I don’t understand benefits, I’m not good with accounts receivable. In a pinch I might do any one of those, but to do all of that plus the actual IT… no way.

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This one, you’d hope, would be obvious. As an IT consultant or MSP, your business plan is to have people outsource their IT to you because they are not good at it. The same logic that makes you make sense as a business tell you that you should be outsourcing everything except for your IT.

  • Accounting
  • Bookkeeping
  • Legal
  • Payroll
  • HR
  • etc.
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Be wary of funding. Funding sources means increased risk. The more funding you get, the more risk you are under. If you can’t make a go of it without needing funding, be afraid. Doesn’t mean that you shouldn’t do it, but you are going to have a harder to the more you have external money keeping you running.

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Another reason to be incorporated…

You spend years building up your business. It’s worth something. One day you decide to quit, move, retire, get sick and can’t work, etc. If you are a real business (LLC especially) you can run to companies like NTG and sell out. There is a way to be bought out. If you are a sole proprietorship - tough cheese. You are worth exactly zero. No real business will talk to you - your “business” isn’t worth a thing. That sucks to build a business for years and have it have no value.

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Major Plus one for Bryce Katz this will help me even more…awesome…also I can recommend SCORE

Also +1 to SAM he is awesome as well

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This makes perfect sense…

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I agree, everything at this stage (and probably going forward) is self funded.

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Thanks Bryce,

Lots of interesting and useful information… I will go through this tonight.

Thanks,

Jim