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How to start a sucessful Consulting business

By jpcandiff ·
I am currently employed as a Novell Administrator however I would like to start consulting. I cannot afford to quit cold turkey and would like to start with doing "weekend warrior" type of work till i can get myself situated. I would like to do everything from PC repair to network design for small businesses. I am experienced in Microsoft, Novell and As/400 networks. Any info would be greatly appreciated. I would like to know everything from pricing, to advertising on a budget, to working around your current employment obligations. I posted this same topic in another forum and EVERY single responce involved my leaving my job cold turkey. My whole purpose is to find a way to establish myself before giving up my current position.
Thanks

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Right Answer

by timwalsh In reply to How to start a sucessful ...

Just because you got told something you didn't want to hear doesn't mean you weren't given a correct answer.

The bottom line here is that you will NEVER be able to establish yourself as a SERIOUS consultant unless you put ALL of your effort into it.

First of all, many of the businesses that tend to be a consultant?s core customers don't tend to work weekends.

Second, by "establishing yourself" and "getting situated", if you mean becoming self sufficient (i.e. making enough money to let you quit your present job), it's NOT going to happen if you approach consulting on a "part-time" basis. You might be able to make enough money on a couple of weekend jobs to offset one or more of your regular paychecks, but without a steady customer base, it won't last. Also getting a reputation as a consultant who is ONLY available on weekends or at night wont get you established (or steady customers) either. If you aren?t available when your customer needs you to be available, your not going to get hired.

Now to answer your other questions:

Pricing: What you charge your customers will differ vastly from what your current salary is. If you are in the US, as a consultant, you are now responsible for taxes (state, federal, Social Security), benefits (health insurance, unemployment insurance, holidays, retirement fund, etc.), and other business overhead expenses (business insurance, unemployment insurance, liability insurance, business licenses, legal fees, accounting, advertising/ business development, tools, phones, Internet connectivity, etc.). And on top of all this, you need to obviously make enough money to live on and make all this worth your while. All of these costs need to be defined and factored into your pricing.

Advertising on a budget: Realize that probably 50% of your business will be based on word of mouth advertising (a satisfied customer recommending you to a business colleague) based on your reputation. Everything costs money (whether an ad in the phone book, or a printed brochure, or an ad in an industry magazine). You need to research and discover which medium (print, radio, television, Internet) is likely to reach the largest percentage of your target audience and spend most of your money there. Trying to advertise everywhere means there isn't much money available for any one advertisement. Cut-rate advertisement ends up appearing just like it sounds, and it sends the message that you aren't serious.
(continued)

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Right Answer (part 2)

by timwalsh In reply to Right Answer

Working around your current employment obligations: Assuming you aren't doing any type of shift work (where you could possible trade shifts to provide you a more advantageous time to work your consultant job), trying to commingle the two is a lose-lose situation.
1. Your employer might have rules about employees working second jobs.
2. You can't slacken your enthusiasm or effort in your current jobs or you risk getting fired before you are ready to quit.
3. Unless you cut back on the hours worked at your present job, the ONLY time you REALLY have for consulting is your free time (lunch, after normal business hours, weekends, holidays). Trying to do anything on the sly while you are actively working your present job could be grounds for getting fired.
4. Don?t use ANY resources at your current job that benefits your consulting. This again could get you fired.
5. If your consultant work could eventually put you in competition with your present employer, don?t try pursuing any of your company?s current customers or word WILL get back to your boss, and you could get fired.

So what?s the bottom line here:
Can you become a successful consultant while working another full-time job? Sure, anything is possible. But your true chances of successfully accomplishing this are slim and none.

If you are REALLY serious about becoming a consultant, I'll give you the same answer you got elsewhere: Quit your present job and put ALL your efforts into building your own business. BTW, it is common wisdom to have 6-12 months worth of your present salary saved to tide you over while you are building your customer base.

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I bridged over gradually

by Oz_Media In reply to Right Answer (part 2)

You don't HAVE to leave your job cold turkey. I don't know if the employment laws are THAT different in the US but it seems a lot of loyalty is put into companies that don't show the same for employees. I know when a US company took over the Canaidan Telephone Corporation, everyone quit within a week and the company changed names, entered bankrptcy and moved to Toronto. A year later they closed that office and went back to the US.

People here don't buy into the "you're lucky you have a job with us" way of thinking. It's more like, "you lucky bastards got me working WITH you."

At my last job, I was trained as a Master CNE. When I got tired of the payroll and wanted to write my own check, I offered to work as a contract admin. they didn't want this at first so I worked full time, built a website for my own private consulting/admin work and made up some flyers for local distribution.

When I started taking MORE and MORE time off to go and do my own work, the company agreed to let me work under contract. I moved to Vancouver Island and now only remote network with them and use thier domain for Internet access, while I fix other problems and finish my house.

I spent a lot of time as a sales manager and marketing administrator, in this time, I hung out at one of the more popular bars for the business class (stock brokers, lawyers, COE's etc.)this is where I picked up a lot of contacts that owned businesses. Many of these 50+ year old guys (no offense to anyone who is over 50)hadn't grown up with computers and pretty much hated the idea. they knew that the business needed them to stay on top so they hire me to deploy servers, VoIP and train them how to use email etc.

I still monitor the first cmopany's network, organize mail and prepare thier sales brochures, multi-media presentations, website etc. but I didn't have to LEAVE them in order to get started.

It's a no brainer, if you can do something, tell people about it and ask for work. I don't buy this stuff about YOU MUST leave your existing employer. I know many people who have done this and more move on to new things each day. If you are consulting and administering another network and your employer fires you, your employer FIRES you, so what, you're working and paying yourself.

Believe me, if you find a few contracts, you won't need to work full time to equal the money you make working for somebody else.

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Insurance?

by chinze In reply to Right Answer (part 2)

What kind and how much insurance should a consultant carry to cover hardware/software/data losses while working on a client's systems? You know, just in case something bad happens while making a change, adding hardware, or updating software.

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I AGREE WITH TIM WALSH

by lavon_699 In reply to Right Answer (part 2)

I agree witih Tim Walsh, if your going to start a business go fulltime, you won't make enough money parttime to support yourself. I tried to start a computer consultant business parttime the money I was making sucked, I made more money working for someone else. I decided to go fulltime with the business BUT I didn't quit my job until I had paid for the business license, reseller ID, Federal ID, insurance and I also made sure I had contracts established before leaving. The transition was smooth. Make sure you to find out what the company policies are about working a second job. The real money is fulltime.

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Thought of this?

by Zulj In reply to How to start a sucessful ...

Would your current company hire you as a consultant? If you're the admin there you would know the setup better than anybody else and you've probably already proved yourself.

I've been planning on doing a similar thing, and the day my company starts is the day I give my current company a proposal to support a network I built up. I haven't ruled out the possibility that they may not go for it, but I think its the best way to start off. If it works, then bam, your opening day and you have a contracted client, and one you know very well. I won't be making as much as I am now, but I can survive. I've saved enough money to get me to the end of the year without income.

But I don't believe you can establish yourself without going at it full tilt.

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Thanks

by jpcandiff In reply to Thought of this?

Thanks for all of your advice. One of my main problems is that i am now located in New Orleans where the economy is horrible. I took a $25k pay cut when i moved here from atlanta. I am litterally living check to check. I have been providing support/Administration for 8 years for various companies. So far, its just me, i have no employees. How would I go about factoring in the possibility of bringing in more help if needed(sub contracting)? Are there any legeal issues?For example, If i agree to set up a network for a small busines that wants fiber running on their backbone and I hire someoene to run the fiber, does that cross any legeal or ethical lines?

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Sub contracting

by Zulj In reply to Thanks

Well, I not 100% sure of the legalities where you're at. I live in South Africa. But as far as sub contracting goes, I don't see why not. The previous company I worked for (IT support company) we sub contracted all the time for stuff like running fiber. We made a small profit and the sub contractor was happy cos we found him work. Win-win situation. Just make sure that when you sub contract someone to do a job that he is indeed good as what he does. If he does a bad job that may end up reflecting on you.

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You'll need someone in your area to answer this

by HAL 9000 Moderator In reply to Thanks

But usually provided they are sub contractors they pay thier own way like health insurance public libality ect and you're not responsible for any of their problems but the moment that they become employies it a whole new ball game and from my experience it will actually cost you about double what you pay them to employ them with everything like Work Cover {or whatever it's called over there} health insurance and then there are all the tools, equipment that they have to carry around with them.

By the way the above is only applicible if they don't screw up too badly because if they do manage to screw something expensive up you wear the costs and again I don't know what it's like over there but here if one of your employies damages a phone line and telephone exchange if it is tracked back to you it's your cost and currently here a main trunk line between major cities costs $1,000,000.00 per hour that its off line + the costs of repairs. An exchange can cost about the same if it is badly damaged but there isn't the high up front fee but the costs of parts is over the top and it generally works out at about the same as a mojor trunk cable if you or your staff manage to damage an exchange. So you'll need lots of insurance that covers you for everything.

Even something as simple as moving a fax machine and while you are behind the desk someone moves it back so they can use it and when you squese out you catch it's power lead and drag it off a bench and trash it. Things like that happen and while they are reasonibly cheap to replace it isn't worth making an insurance claim as the excess is above the cost of the damaged equipment anyway.

I know it sounds silly but it is unexpected things like this that do happen and you have to be prepared for them.

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Subcontracting

by timwalsh In reply to Thanks

There is probably nothing illegal about subcontracting out a part of any job. But the key thing to remember is that if the subcontracted job gets botched, it is you whose reputation is trashed, and it is you who is responsible to get it fixed. It is up to you to attempt to recover any costs from the sub.

In a situation like this, you are acting more like a construction general contractor who is responsible for managing all of the sub-contractors he hires.

Another possible downside is that you may have to pay off your sub-contractors before you get paid by yur client, or you risk getting your reputation trashed in the sub-contractor world.

Your client probably won't care who actually does the work. The give you a job, you see that it gets completed to the customer's satisfaction.

I would imagine that culture can have a bearing on how the use of subcontractors is perceived. You need to have a good idea of the business culture in the region you are working. Culture could dictate that "Things just aren't done that way around here!" to "There's usually not problem if you let the client know ahead of time." to "Who cares?"

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