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Starting new company

By riverdale.consulting ·
Hi,

I have been asked to join my current boss in starting our own consulting business, it is a flattering offer. Basically our previous company was taken over to acquire other areas of the business, as a result we have not benefited from the take over as others have, despite trying to ?join the party?
The new endeavour comes at a time when we were both thinking about leaving anyway, my boss?s golden handcuffs expire in October and I was thinking about working for myself.
The division of labour would be along the lines of he is the customer face and although he would get his hands dirty technically, I would be the main technical resource (we would employ contractors on an as required basis to fulfil specific tasks)
My main concerns are around things like,
1. Business decisions, he is about ten years older than I am, and will be fronting more cash than I am. How do I make sure I can make my voice heard without having to beat him down?
2. Liability, I am a young man, I do not want to be paying for any mistakes well into my later life.
3. Securing our existing customers, we would stand a good chance of taking the majority of our customers with us due to the fact that they all realise that I am central to my bosses service offering of support and consulting services. But also they would have contracts with our employer.

I do think that this is entirely the right move, as we have secured a large customer already based on our reputations, his from a management/customer prospective and mine from a technical one. But time does not take long in passing, and we are looking for solicitors and accountants to help us construct the company. Does anyone have any further advice for me or both of us in this?

TIA
Michael aka Riverdale

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Be careful with customers

by jdclyde In reply to Starting new company

Depending on where you live, there can be litigation against you for "stealing" customers.

On the other hand if you change the phone number on your business card to your PERSONAL cell number, later they can still contact YOU. You can also causually mention that you are striking out on your own, so you will not be available through your existing firm and wish them well.

make a copy of the customer database and make a point of them being a PART of a mass mailing of a flyer or postcard to let local businesses know of the new company in the area and what is being offered.

Put both of your PICTURES on this annoucement as even the ones that don't remember the name will remember the face and they will come to you.

Get everything in writing with your current boss. Get it out front. Are you partners or is he still your boss?

How will money be distributed? Will he keep a bigger share? Remember, he has more money coming in, but that doesn't do him any good without your knowledge so you are bringing more to the table than money.

I would take the offer, but plan on having ZERO income for at least the first few months, and then just enough to pay the bills for this new company. You have half a year to get yourself financially set to handle this. Don't go out and buy or finance any new toys. Pay off bills and get some savings built up.

Hording is the word of the day, my friend. You will NEED this to get through the startup time while your waiting for people to start beating a path to your door.

Also work out hours and hiring. If he is the sales guy out knocking on doors and you are the tech out fixing things, who is answering the phone and setting appointments?

Who do they answer to when you hire people? It never works to have two bosses, so you have to agree to have one be the "boss".

How much can you pay someone? Remember, employees get paid BEFORE owners do. So does the phone company, internet provider, utilities, and rent.

I would make a go of it, as it sounds like a great opportunity. I am personnally working to get myself in the position to do the same thing with a tech I know. Just getting all debt out of my life first, and then get that nest egg to get things rolling. My boss will be retiring in a few years and who knows what this place will be like to work for after that! I want to have options available.

Good luck!

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Customer database and other ideas

by M_a_r_k In reply to Be careful with customers

"make a copy of the customer database and make a point of them being a PART of a mass mailing of a flyer or postcard to let local businesses know of the new company in the area and what is being offered."

No. Do NOT make a copy of your current company's database. Do not take anything from your current company (except what is in your head) to promote or advance your private business venture. Do not work on this new venture during your current workday. Do not use your current company's resources (email, phone, fax) to promote or advance your new business. Be careful about crossing a line. Your current company has a lot more resources to shut you down or stonewall you than you realize, especially if you are going to take a large number of customers.

jd was right about specifying up front a clear delineation of responsibilities, expenses and compensation between you and your business partner.

Prepare a business plan. What are your business objectives? How do you plan to meet those objectives? It seems as if you are assuming that you will be able to steal your customers from your current company. What if you can't do that? What plans for getting customers do you have then?

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Don't plan on smooth sailing...

by ideallypc In reply to Starting new company

I agree with all of your concerns and those raised by the others. I would be VERY VERY careful about harvesting clients from your existing employer. You, yourself stated that the new guys "bought" the business. As such, they bought the same customers you are potentially calling yours. It sounds like you are thinking of using your position as "employees" to steal the business, but as employees you are being paid to support the business' customers. Quite simply, the customers aren't yours to take, they are your company's customers and you can find yourself in a deep legal mess that you will lose through attrition....you will find that the deeper pocket, your present employer, will win by simply outlasting you and spend you down. This doesn't even consider the non-compete agreement. Don't assume you know how your current employer would respond to such a challenge. It will probably get nasty before it is calm...especially if you are gutting their IT staff too (even if they are taking you for granted now). Only an experienced attorney can tell you what is legal and not in your state, but even if your actions are legal, they can still sue you and that's not pretty.

I'm not an attorney, but I would sure recommend that you make friends with one now before you do anything you regret.

Assuming that you can get out without getting skinned alive, the next piece of advice I have is try to stay lean. Don't go out and rent an office suite or buy new PCs, lease company cars or copymachines or enter a 2 year T-1 contract...line up your clients that ultimately will determine whether or not you can afford all of the stuff that goes with having a business. Consider new business incubator facilities where all of the infrastructure is shared by new businesses trying to get up on their feet. Think about setting aside room in your house or that of your boss. Always wait out the good deals - they will come, but if you are stuck in lease that is twice as much, the eventual deal is no deal at all.

Personally, I have been in business about 16 months. My fixed costs are still less than $400 a month. I have an office in a basement of a downtown building that keeps me close to the business center, but is nothing pretty. I rarely meet customers here anyway. I have a couple of phones, share a building phone system, share a building T-1, and pay for a couple of monthly services required for my business. That's it. I still don't have any employees because I don't have the base of customers to support them. If business goes really well where I can barely keep up with demand, I figure I can operate at peak load for about 6 months, fill the bank and then re-assess. Rather than considering employees, I would more likely align myself with independents....much less paperwork, liability and hassle.

Also, now is a good time to sketch together a business plan. Rough out the game plan. Consider not only how you will devide ownership interests, but ask yourself the questions "Why am I doing this? What are my goals? Does my partner shares the same goals? Do we see eye to eye on the service we want to offer? Do we have similar revenue targets?"

Another consideration is to ask yourself and your boss whether you foresee your relationship changing dramatically so that you are equals or peers. Generally the pecking order doesn't change if the people remain the same.

Most of all, consider talking to a business attorney. They have been there, seen that and generally have experienced advice about ventures such as yours. It will cost you a little now, but like you said, you are young and don't want to screw yourself so be smart and don't.

Jeff Adams, Ideallypc.com

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