Grow or Die, the Choice is Yours

grow-or-die

Guest Post by Ronn Hanley:
My home based clients don’t do business with me because I know more than they do about computers, networks, and servers – there’s always someone who knows more about those things and my clients know it.

They do business with me because I insist on making the interactions with them reasonably pleasant.  They are happy to see me coming and know that I’ve helped them in the past and will do what I can to help them now.  Many of them understand that I can’t solve every problem, but they’ve grow to understand that I will do my best.  I make it clear to them that they aren’t simply numbers on a spread sheet.  I enjoy helping even when things are blowing up in our faces and the world appears determined to stay in disaster mode.

Here’s the problem though, on average, home based businesses can’t offer enough work to build and sustain a full-fledged business – a business that I can use to act as an employer to others.  Don’t misunderstand, I know that there are brick and mortar stores that have built a reputation for working on systems brought from people’s homes, but realistically, how many home users or even small offices have the capital to pay for recurring managed services?

A few weeks ago I was working on an idea to help me get new business and something occurred to me.

I’ve been maintaining a bit of a fiction (I’ll explain in a bit).  There are two ways to look at how you are doing business.  If you’re like me, you’re the chief cook and bottle washer.  You’re also the head steward, bean counter and sole tax payer.  This is fine in the short term, but this method – known as working IN the business, is just that, short term.  It’s not sustainable in the long run.

The primary reasons it’s not sustainable are pretty plain, there isn’t enough of you or hours in the day to go around.  It really doesn’t matter how much you bill per hour, over the course of months or years you will eventually burn out and then where is your business?

When I say that I’ve been maintaining a fiction this is what I mean.  I realized a while back that I can’t keep up this pace for long.  Where I need to be is developing new business leads and products.  I need to be sitting down and creating proposals for new clients and building stronger relationships with existing clients.  I need to employ others to help grow this thing I’m doing.  This is known as working ON the business and it’s what a true entrepreneur is all about.  The other method is just being ‘the computer guy’.

But NONE of that will happen the way I am doing things now.  I am spending 10 to 12 hours per day working IN the business.  Yes, I’m making money and taking care of my family, but like I said earlier, it’s not sustainable. I hope that you’re in business to do more than make money; hopefully you’re trying to build something that didn’t exist before, something that will last and be a benefit to your community.  In my opinion, that’s the true purpose of small businesses around the world.

I came up with the concept of Grow Or Die two weeks ago and put those words on a piece of paper on the wall right behind my center monitor.  It’s the first thing I see when I boot up in the morning and the last thing I see when I go to bed at night.

Kind of melodramatic?

Perhaps.

But consider this, if my business isn’t growing what is it doing?  If I’m not growing, what am I doing?

Look at the following facts:

  • The SBA and Census Bureau both report that on average 1 in 3 businesses fail in their first three years. (I start year three this coming January)
  • Some of the reasons for failures are poor marketing, poor business planning, poor management, and lack of clear objectives. (Ummm… yep)
  • Some small businesses fail because the owner fails to understand and adapt when their market changes causing them to get overtaken by their competition or lose too many customers too quickly. (Watching it happen to local businesses as I write this.)

Some or all of these things could quickly end my business or your business and put us right back in line looking for a job.  And, really, who wants that?

Guest Post by Ronn Hanley: Ronn is a technology enthusiast from way back, during the dark ages of the Arpanet and the Purple monochrome monitor screens. His first computer was a Commodore PET and his first laptop was the size of a suitcase. Despite that, he loves computers and technology to distraction and has been working in the tech world for almost 10 years full time, currently as the owner of a Desktop and Network support company in Atlanta, Georgia.



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Comments (9)

  • Dean Alexander says:

    Thank you for a very important reminder to spend time “ON” the business. Too often we are pulled by daily fires and rarely take a minute to reflect and refocus. To that end, we secured an advisor to periodically evaluate our business from a birds-eye view and develop a few steps to work “ON” the business. This friend and mentor offers excellent insight that we would otherwise miss. He then holds us accountable to work on each agreed upon goal. I tried running a business without an advisor and it rapidly failed. We are entering our 9th year of growth with Gregg on board.

  • Lincoln Chiappone says:

    This is he second post that I have read from you and I couldn’t agree with you more. I can easily relate with your views and you do a great job putting your feelings and emotions in your writings. You’re a great writer to boot (pardon the pun). Your posts are really beneficial to all new technicians out there trying to make it on their own. I can’t help to think that many readers feel the same way. Please keep them coming! Thanks

  • Tom Miller says:

    It seems like you need to spend upwards to 50% of your time on sales (not service) calls to make a small business go. So when you are already spending 110% on service calls it looks like you need to start scheduling your time and explaining to customers who need your service that you have X number of people ahead of them.

    It also sounds like you need to start some kind of preventive and automated maintenance for your customers so they call you less often.

    And is another person noted, if you are too busy its time to raise your rates. And for customers who don’t really generate revenue but do use time pass them on to another lower-end technician.

    Even with these ideas you are right. You need to spend more time ON your business.

    Good luck!

    Tom

  • Khan Mujeeb says:

    Ronn,Thanks for valuable thoughts and good addition by Tom.
    Yes guys this is true,most of new entries in computer service business are missing Planning strategy and being Firm on Plan.Yes it is very hard to split time between favor services to friend and family friends and real business services.First avoid spending time on Non $(Dollar)value calls, second make a plan to reach most Business/peoples in your coverage area by splitting area map into small chunks and spend your one or two Hrs.every working day reaching every possible targets with your Business card and Flayers.It might take some time and pain but The results will be positive.Even 1 to 5 % calls from your visited targets is your winning.I am getting Results, I am new too,Recently lay off and don’t want to work as Jobie (job person)I am Running as Khan’s Computing Solutions for PC,Printer and Network support in Toronto Canada.
    Khan mujeeb

  • Tony Scarpelli says:

    Congratulations on making that mental step. Awareness is the first step to becoming a wealthy business owner.

    I have consulted 100′s of SBA clients and what I found was that most make the same mistakes. First they under value and under price their services. As employees they made $10-16 per hour so now they are happy to make $45 per hour.

    For Example: In my area the going bench rate (carried in work shop) is about $59 per hour and the going in home or into their office rate is about $99-120. The goal is to be at about the 75% of pricing in your area. You don’t want to be cheapest nor the highest but you want to be on the top side of midway average of all competitors who are offering the same service as you.

    What you ask for your services says to others who you think you are. If you are cheap then you obviously do not feel you are very good. Many people will not go to bottom feeder type services and specifically look for a big company or a professional company who charges professional prices.

    My point is to any owner who is working 8 or more hours a day and cannot hardly take on any more business without hiring help is at that point where he review his price strategy. Actually its the Pricing, promotion, product mix.

    In order to grow you have to raise prices and be able to afford to hire at least one employee (for this next step).

    Second to pricing strategy is your actual implementation of it. Even a one man show should be billing and collecting for about 75 possible 80% of his time so working 8 hrs a day you should be able to collect your hourly rate for 6+ hrs a day. At $59 per hour that works out to about $360 per day and at $120 per hour that works out to $720 free cash flow per day. If you are working out of your home or small office then you should be putting away money like Wells Fargo.

    2nd biggest mistake I see with SBA type clients is that they give away service in the wrong headed belief they are building re pore or loyalty. There are volumes written about this. it is absolutely wrong for many reasons. What they are really doing is training their good customers to be mooches. You can ruin a good customer. Start every new customer out invoicing him for every minute and invoice and collect cash/check/visa on the spot/time of service. This is your most profitable client.

    If you continue to harvest mooches you will wake up some day and see (what you thought were) your good clients go to the next guy who is giving his services away at deep discount. So they are not the type of clients to get or keep. Raise your prices to market levels and invoice them for all your time, collect payment at the time of service to see who the good clients are.

    The good news is that if you are busy 75% or more of the time it is the perfect time to get serious about your business and make sure your prices match your professionalism. The perception of value says that you are worth what you demand. If you feel you are worth less than everyone else then why should I trust my business or computer to you? In consulting we do not want to be the cheapest. Its not like buying the cheapest apples at the mart. I want the best consultant to help me. My son had to hire a defense attorney one time and the attorney showed up in a 91, paint bleeding off Saturn Ion. What message did we get from his prices and lifestyle? If he wasn’t successful how could he defend us? We had our appointment with the guy and then hired someone else successful.

    If everyone in town is charging $99 per hour and you are doing it for (less) $65 then you are leaving money under the table, fooling yourself into feeling you are building for the future. and possibly chasing away potential customers who just do not think you can do the job professionally. This step takes guts but you will see your available resources swell.

    The next step after raising your prices, stop giving away free services (all time on site is billable no matter if you are talking to the owners or what, all time researching, all products purchased for clients should be marked up at least 45%), is to either hire an employee or outsource some work to give you more time to make money. If you are doing your own accounting get help from a bookkeeper. Or hire a girl Friday to help answer the phones and enter invoices, and checks. Or you can hire a jr tech who you can train in your way of offering IT service and have him take most of the redundant work with you backing him up on the phone. later he and others will be able to do all the work without your input.

    I’ve owned an IT company for 20 years and I have not worked in the company for about 14 years. I perform the executive duties while I have a manager and techs to perform the day to day operations. With that said I do use myself as a slack resource in that when everyone is busy they call me and I am another Consultant. When we bid really big jobs I do the pricing myself. But I work less than about 5 hrs a week average on clients/in store work.

    Your goal is to stop working in your business so that you can can work on your business.

  • Sean says:

    We’ve been there.

    A one man band. Working the long days, raking in the cash but feeling completely exhausted and overwhelmed. Not fun.

    Now we have two staff – one full time technician and one bookings administrator. We still find it tough some months, making sure there is enough work for everybody… but at least I’m not working ridiculous hours. This is closer to the sustainable point.

    The E-Myth by Michael Gerber is a fantastic book on building a real small business. If you haven’t read it and are struggling long days – put it on the top of your reading pile.

  • pctutorials says:

    Nice article,something everyone in computer repair business should consider.

  • Hightechrepublic says:

    Good article ,keeps on posting such informative articles.
    Really, in today’s globalized world all depend on your awareness you have regarding your business entity you are dealing.Now client loss their their valuable service provider due to price war,although they will not think about whatever the quality of work.
    Everyone using computer facing problems on daily basis so need to find a best service provider for you.

  • badhamunaptra says:

    Nice article and comments, thank You!

    Actually, they reminded me of something i had forgotten a long time ago. It is true that us, small business owners, keep forgetting the IN’s and ON’s.