Starting a IT services business.

I was recently approached by a family member that asked if I would be interested in starting an IT consulting business. I never had really thought about the opportunity, but have seen many successful IT consulting firms that my company deals with on a day to day basis, even though the technical talent is "sub par". I was wondering if anyone here has experience in this and wondered if they had any input. As always looking for the good and bad from TE.

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Comments

dave330i

Planning on starting my own business by fall. I think how sucessful really depends on the area. In my area, there are many small professional service providers and they're very flexible about working with you as corp to corp.

Danielm7

It can be great, or it can go nowhere, and about 500 ways in between. It really depends on your skills, your ability to network (with people, not cables) marketing, etc. There are plenty of people out there who aren't the most skilled but still run a good consulting business because they have enough connections in the community or have been doing it long enough and there are plenty of people who setup shop, don't do anything afterwords and sit home waiting for the money to come rolling in, it normally doesn't work that way.

NightShade03

A friend of mine has been toying with this idea for years. He has done consulting on the side of his normal day job for about 3 years and starting in 2013 he finally quit his day job and went full time consulting doing his own thing. So far he has been doing awesome and bringing in enough money to equal what he was making full time. I will say this though....part of the reason he is so successful is that he had and still has a good client base. Before he went head first into consulting he had a client base of around 75 - 100 people with really good word of mouth marketing. That will really make a difference for you particularly in the first year when you are just getting on your feet.

If you do take the plunge good luck and let me know if I can be helpful in any way

BigMevy

I don't have first hand experience, but the biggest problems I've heard of people running into is not communicating expectations well, and not doing a good job of making agreements. If you're careful with that, it should go a long way.

ptilsen

It can be, but I voted no. I did not get into this industry to manage a business, do marketing, accounting, or anything like that. I am content to do what's within my expertise and collect a paycheck, as long as the paycheck is good.

The good side of things is you can potentially make astronomically more than you would as a day job. As a consultant for a small start-up, I was billed out for anywhere from $100 - $300 an hour, generally around $170, and I'd absolutely love to make even half that. However, considering all the expenses and other work that goes into it, I'd have to be very successful and have a high bill rate to even approach half that effectively. Part of the reason we were billed out so high was a necessity -- overhead was high enough that profit on that was actually pretty slim, maybe $20-$60/hr.

Doing everything independently as corp-to-corp or a subcontractor seems easier/more stable than actually starting up a full consulting firm and hiring employees and paying for outsourced services, but even there, there's something to be said about the stability of a full-time employment. I guess I would say make sure there's a strong market for the skills you're offering and that you can definitely get good access to it. It is definitely a huge step to take.

Bill3rdshift

To run your own IT consultant shop you must be good at developing leads, marketing, sales, book keeping, management, people skills/soft skills, writing proposals/contracts, and other skills that come with the territory. The actual technical skills is the easy part. Also you should have plans to get investors of some sort. Say you charge a minimum of $75/hr. after you pay your expenses i.e. rent, insurance, equipment, car usage, clothes, employee salary/your salary & all the hidden costs, your left with little to invest into the business. IMO it is VERY difficult to grow a small company by what is left over after you pay your expenses and your own salary. A small business loan if obtainable is a good method of investment and is how many SMB's get off the ground.

Our IT consulting company mainly provides service to medical clients that run EMR/EHR's which has proven to be effective. I think location is very important too.

Again our biggest hurdle is marketing. Depending on your budget you want to be able to spread the word about your superb service. Word of mouth is always the best, then direct mailing is effective, specific advertisement works if done properly, etc.

These are all things to consider.

The area that I operate in has many businesses that do not put much value in IT. Our clients that do understand the value of IT and invest wisely have businesses that are booming. On the contrary the others that do not value IT typically have poor growth and bad business sense.

Danielm7

Bill3rdshift wrote: »

Say you charge a minimum of $75/hr. after you pay your expenses i.e. rent, insurance, equipment, car usage, clothes, employee salary/your salary & all the hidden costs, your left with little to invest into the business. IMO it is VERY difficult to grow a small company by what is left over after you pay your expenses and your own salary.

This is why when you see local consultant companies charging 125-200 an hour and we think... man, that's crazy! Then you have to realize all the additional costs involved, they also don't bill 40 hour work weeks either. A good portion of time should be used for marketing, pre-sales questions, travel, etc, just not the same as what you'd get paid at a regular job.

With all that in mind, I still think about going full time consultant frequently.

Bill3rdshift

Danielm7 wrote: »

This is why when you see local consultant companies charging 125-200 an hour and we think... man, that's crazy! Then you have to realize all the additional costs involved, they also don't bill 40 hour work weeks either. A good portion of time should be used for marketing, pre-sales questions, travel, etc, just not the same as what you'd get paid at a regular job.

With all that in mind, I still think about going full time consultant frequently.

Indeed... Don't get me wrong, there are a lot of up sides. Personally I love the wide (and I mean real wide) range of services and technologies that I work on. I see VoIP management/design one day, Wireless microwave VPN deployment the next, Daily Linux CLI, Windows server work, and physical wiring all in the same week. We are the complete antithesis of an enterprise IT professional who is very compartmentalized that is used to working on the same technologies day in and day out. Much respect to any enterprise employee, I'm just saying that when you're in a smaller company you have to wear many different hats. You don't have a security department, network infrastructure dept, web dept, etc.

Also we try to get our clients on a maintenance agreement. There are different schools of thought on this. But for us we like the maintenance contracts. In our SLA/contracts we define our response time and availability, typically available 24/7 and can be on site within an hour of contact. That is the benefit to a service contract, a guarantee that we are available.

If we have a client that is T&M (time and materials) we like to have a retainer of a couple hundred dollars just like an attorney would. This means we make ourselves available for when that client calls i.e. they are retaining our services.

Just a little insight.