IT Employment

10 Things Call for Feedback: What should you consider when venturing off on your own?

If you're considering self-employment -- or you've already taken that path -- share your concerns and experiences in this month's Call for Feedback.

Even in today's down economy, in which many people are thankful for simply having a job, a growing number of employees are not content where they are. Most of those who would like to do something different will look for new full-time employment. But a few -- and the number is growing -- will look for things they can do on their own.

Taking that big leap from traditional employment raises some major questions and requires a lot of thought. What are the biggest challenges these would-be entrepreneurs face?

In this Call for Feedback, I'm asking you to join the discussion below and share your thoughts, experiences, concerns, and advice. If you prefer that your feedback remain private, you can email your response to tr10things@slowe.com.

I will peruse every comment, select 10 key considerations, and wrap them up with some of my own thoughts in a follow-up post.

Additional resources

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

16 comments
service
service

I am the classic dissatisfied employee, critical of management, processes, procedures that don't exist or don't work. I hate incompetence & too often share my negative feelings with just the wrong people in the organization. Knowing this about myself for many years, I have finally decided I can no longer be an employee, I must be out of the corporate world if I am to succeed and ultimately be happy. I am fortunate that I have a niche knowledge for the healthcare industry where few are doing what I plan to do. That said, the challenges are considerable, as I hope will be the rewards. I am still fully employed and working my contacts for the feasibility phase of my business plan. So far so good. Challenges are: my age (55+), my financial circumstances (no money, no savings, some IRA), debt (ouch!), high-risk medical conditions. Even with these roadblocks, I know that eventually I will get fired for my attitude & then what? Get another job? Start over again just to let my bad personality cause the same problems over again at a new company? No, the time has come to face the fact that I have a good skillset not suited to the corporate environment. I have always put customer needs first, which often causes problems with companies who only give lip-service (if that) to customer satisfaction. Somehow, that becomes every company I ever work for. So, here I go into the world of independence, fully confident that I can make it work, just like I have every other thing I have undertaken. My track record isn't that great, though! Still, can't be an employee any more; have to be my own boss.

pedro.siena
pedro.siena

I have been a Brazilian entrepreneur in the last 15 years, and for me developing people, and achieving results are two things that motivates me.

pwhite
pwhite

One can be extremely successful if maintaining up-to-date technology. One key things to remember, you have the opportunity to make more money. Unfortunately, many do not account for down time/between contracts. People tend to spend what they make vs putting aside funds for support during those down times. One can earn in 6 months what they would normally earn in a year! Over the course of 30+ years experience working w/these individuals, this stands out so much I wanted to share this w/you. Be prepared.

dennis
dennis

Managing your receivables is probably the most important aspect, unless you don't need the money. It is simple, yet difficult. It's mostly about managing your clients. Let???s say you start as a one-man shop, an IT consultant for SMBs in your immediate area. You sell deployments, integration, and break-fix services remotely and on site, and resell hardware and software, subscription-based services, SaaS, etc.. You can keep your cash flow current by billing your clients according to the delivery process. There may be exceptions, but basically it's like this: 1. Established clients are billed for service work with 15 day terms. Most of the work is anticipated by the client, even the 'unexpected' break-fix jobs. Nobody needs more than 15 days to get a check out to you. There are very few exceptions, where 21 or 30 days is the max. Past due invoices are assessed a late fee and interest. 2. New customers pay on delivery of emergency services, and an advance deposit or retainer for planned deployments or integration. There can be exceptions here, depending on the quality of the customer. I actually start a lot of my new customers with 15 day terms when I know they will be good regular clients; however, it takes a lot of talent and experience to know this. When in doubt, get paid in advance. 3. Hardware or software is payable on delivery if you have it on hand, or (usually) in advance. Generally you don't keep an inventory. Everything is bought as needed, with the client's money. It's their stuff; you don't need to be out of pocket for it. 4. Subscriptions, SaaS, etc., are mostly resold subscriptions for which you pay in advance, therefore, the client is billed as payable in advance. November's online backups have already been billed and paid. If you haven't received the client's payment by now, their service is suspended and they are charged a Reconnect Fee to be reinstated. ***How???s that workin??? for ya? It???s real easy to see. As a rule-or-thumb, with work and cash flow consistent, your receivables should be at a level that is more or less equal to your payment terms. Let???s say you average $2000 a week in service work (hardware, software & SaaS are already paid), billed at 15 day terms, your receivables should run around $4000; 2 weeks??? worth. If it???s gets higher than that you have a collection problem. If it dips below that, it???s a good thing, but if it gets close to zero you need more work.*** All of that is the simple part. The difficulty is in handling your clients. In my experience the best approach is to establish your policies, communicate them clearly, and stick to them. If you give even your best clients and penny they will take as much of your money as they can. Also, price your products and services fairly and competitively, commensurate with your levels of quality and expertise. Don't try to compete on price. That's the quickest way to lose respect from your customers and peers. We are your peers, not your competitors. We all have our special blend of talents to offer and there are more than enough clients to go around. Competing on price will only make us more respected and valuable to your prospective clients, and ultimately make them OUR clients. Approach your work like you don???t need the business. Do your work like it???s the only business that matters (because it really is all that matters at that moment). -- Don???t appear anxious for the work, whether you need it or not, and whether it???s a new or existing client. Approach it with the attitude that you seriously want to help and take the time to know what the client needs, prepare to deliver it, and make sure you get paid. After all, if you don???t get paid, you don???t need the business. -- Schedule it immediately, for the earliest possible time, or do it right now if possible -- Deliver the most value you can. Quality; timely service; full attention to client???s needs.

PC Services
PC Services

I started a PC repair business a few years ago, and I can identify with and agree on many of the great comments. My humble thoughts: 1. When marketing yourself don???t be shy about self-promotion. Drop business cards everywhere you go. Don???t rule out anyone as a potential customer. 2. Make sure you have a good web site. It doesn???t have to have a lot of info but it does need to look nice with good information. Don???t list prices on your site unless you are selling hardware, you want to take that call instead. Have easy to find contact info. There are several good companies to host your site with and easy to use templates to get started with. All consumers expect an IT professional to have a web site with an email address; preferably something that does not end with @Hotmail, or @yahoo. They are cheap and with the right wording you can list your company with the business side of search engines. 3. Don???t be afraid of competition. If a large company is bidding on a POS system or other hardware, services or development and you have the opportunity to bid, you should take advantage and do it. This is also a way to network and promote your business. You can consider some of the bids an education. But many companies like the personal interaction they get from smaller or owner operator businesses. Be sure to look around at another company doing what you want to do; someone who has a good track record. Look at their advertising look at their web page, check out their prices. 4. BE SURE TO BILL FOR YOUR TIME. Your work has value you should never have to apologize for charging a fair price for your service. There is nothing wrong with an honest profit. 5. Keep up with new technology. There are many online options for tech news and information. 6. Be sure you REALLY enjoy the area of expertise you have chosen. This will help keep you motivated if you enjoy what you are doing. Jim

n.devanathan
n.devanathan

1. Guts: This is the first & foremost thing that you need. Rest all would follow. Come what may you should stick on & plan to survive. 2. Cash Flow: Can you manage cash flows? Remember that getting an investor or getting funded does not always happen, and even if it does, the delay would kill you. Are you prepared for this? 2. Perseverance - You may have a solid pipeline. Every prospect would jump at your product & service. But you would later realize it is indeed a mirage! Are you prepared to wait? 3. Managing Perception - You should be best at managing perceptions - starting from managing it at home, then with your employees, then with customers, partners, etc etc - At one stage you might wonder what is the real reality? 4. Receivables - We would normally plan for a max of 90 days payment from customers. Dont be surprised if it takes twice that time to get the full payment from your customer. Especially, if you are in SME segment... 5. Loans - There would be many who would promise you to get loans. They would continue to do so all the time. Dont get distracted by them - unless of course you have a property that you can mortgage, or get a loan against a fixed asset. 6. Innovation - Encourage innovation & creativity within your business. Note that innovation & creativity is not about coming up with a great technical idea. It is about understanding the need of the market and coming up with the right product or service that can sell like hot cakes. 7. Networking: If you are a guy who shy away from networking, this is not for you. 8. People & Partners - Work with lot of successful businessmen - make them your partners or affiliates. Define what is in it for them. Make them run for you. This is not as easy as it is stated here. Also, ensure that you hire people more experienced than you. If you cannot hire, engage them with a win-win strategy...know that you cannot do it alone! 9. Sales & Marketing - This is the toughest nut to crack. Getting the right business model and the pricing & taking it to the market; evolving the right branding & marketing strategy...dont worry, you will get a lot of opportunity to learn. Changes in strategy is inevitable. No one gets it right the first time. You are not alone! 10. LEARNING - Finally, be prepared to face failures. There is a lesson and a message everywhere. Just look for it. Keep a positive attitude. Shun negative thoughts. Be persistent and practical. That's my 2 cents... Regards, Dev

yorkshirepudding
yorkshirepudding

I have dreams of starting my own business, but would like to dip my toe in the water, whilst still employed. This is harder than I imagined. Too busy at work, combined with helping my wife set up her child-minding business, being a non-executive director for a non-profit, and all the stuff around the house, means time to put aside to prepare and start is non-existent. Maybe it will have to wait until I get made redundant, as I don't have the cash to take the leap...

santeewelding
santeewelding

Of inner-directed Scott Lowe? Turning to the outer-directed answer? Turning to outer; to TR, to wherever: what does that say? It says outer, and the call siren, Scott Lowe.

rohitvvv
rohitvvv

The Idea Entrepreneurs are passionate , crazy people. They don't follow a rule book. However business Idea that interests you passionately is the best place to start. If you feel that the business model you end up persuing gels well with the existing business around its a nice start. If your idea is something out of the box, remember people resist change but love to adopt the useful.

cnichols
cnichols

I had my own graphic design / IT consulting business for 7 years and these were my experiences. 1. Long hours - forget the 8 hour workday, make hay while the sun shines and save for the rainy days. 2. Vacation? - a 3 day holiday weekend is the best you will get for a while until you can hire reliable help that you can trust. 3. Keep your own books if possible - when you do, you'll see where the money goes. 4. Pay your taxes on time! 5. Pay yourself what you can afford. Treat yourself as an employee when it comes to a paycheck. Set a reasonable and fixed amount to pay yourself and not a penny more. 6. Prepare for days when you can't afford to pay yourself. Keep track and pay yourself back when funds allow. 7. Do NOT mix personal and business funds - don't be cheap, open a business banking account and get the business it's own credit when possible. 8. Bootstrap - try to do as much as you can with what you already have available. As the money starts coming in, let the business buy it's own assets. Only borrow what you need and save for what you want. 9. Employees are expensive! Use a payroll service when you begin hiring. 10. Train yourself - You will not be able to afford expensive training. Buy a book, use online resources to learn new skills. 11. Your customer is your boss. 12. Be disciplined 13. Diversify - if you get one big client, start courting the next one, but keep up the level of service for all. Don't keep all of your eggs in one basket. 14. Be organized, pay bills on time and don't neglect the paperwork. 15. Sometimes you have to fight to get paid. 16. Write contracts with clients, even if they are close friends or family. 17. Do what you love and you will love what you're doing. 18. Have fun!

Alpha_Dog
Alpha_Dog

Odds are that you will not get rich quick, or for that matter, ever. Are you (and potentially more importantly, your spouse) prepared to make sacrifices? Are you prepared to accept instability as a fact of life? If not, keep your salaried job. Can you save? You will need to put things away for a rainy day, because feast and famine is part of most businesses, especially at first. Read a lot, but most importantly Josh Kaufman's Personal MBA. If I only knew what that book contains when I started back in '86.

Cbielinski
Cbielinski

1. Your first client 2. How much cash you have on hand and how long it will last 3. Your first project

msdrafter84
msdrafter84

I am married no kids yet and trying to start my own drafting database design business while i have a great fulltime day job, and i am trying to keep my hopes high and do an extreme amount of self learning. My biggest obstacle is losing my fervor and then finally getting so much work i will not have any time to stop and breathe. Also losing touch with other important things in life. I am committed to staying strong and utilizing a lot of the tips listed here. Maybe one day i can be my own boss.

Scott Lowe
Scott Lowe

I have to admit... not sure what you're saying!

punkinmunkin
punkinmunkin

Print the list above and keep it pinned or taped in sight of your workspaces as a constant reminder. This is ALL sage and excellent advice. Pay attention to it and you will be SO much more likely to succeed! I've seen many a business go down by ignoring #s 4, 6, 7, 14 & 16. They are critical for staying out of legal (and IRS) trouble! I WOULD ADD: Do your billing TIMELY & if you go back to a client for additional work, ask if you could pick up a check for your prior work while you are there. Don't be taken advantage of by your clients.

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