What is the failure rate?

[RetiredGuy1000]

when I sold life insurance, the failure rate for new agents was like 90%. It was brutal. Straight commission...you eat what you kill.... kind of like this business!

Does anyone know the failure rate for new self-employed computer techs?

 

[Kitten Kong]

I suppose its similar failure rate of any small business.

I'm lucky in that I started my business up just around the start of the latest recession. I've been in business now for 14 years.

I'll never be a millionaire, but we don't live hand to mouth.

 

[HCHTech]

I don't know of a spec on the failure rate is, but based on the number of businesses I've seen come and go in the last 15 years I've been running my business, I'd say the number is high. I have no reason to believe the specs are any lower than the SBA trope which is often stated:

===
The SBA states that 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10.
===

My guesses as to the reasons for this:

• As you noted, the barrier to entry is low for this field, so lots of folks try it out
• To succeed, the "business" skillset you have is more important than the computer skillset - a fact appreciated by few when they first get started.
• I don't mean to downplay the computer skills, but many answers are at the end of a google search (lots of which turn up posts in these forums)
• People skills are also important. If you are going to be doing residential service, you have to like the process of working with individuals. This is not a common trait in the universe of "computer people."
• Starting is easy, learning from your mistakes and figuring out how to carry on and get better is hard.

HTH

 

[RetiredGuy1000]

I don’t need to make a lot of money. I’m blessed in that I have disability income payments that continue coming in until I am 65. So that helps quite a lot.

Still, I don’t want to make $30,000 either. It would be nice to make somewhere between $50k and $100k.

 

[Kitten Kong]

Businesses don't plan to fail. They generally fail to plan.

Write up your own business plan. See what information this gives you.

 

[RetiredGuy1000]

I guess it’s just a matter of exposure. I’ve got plenty of time for that.

In insurance, we followed the 10-3-1 sales cycle. It took 10 prospects to open up 3 cases to successfully close one case. I wonder what the sales cycle in this biz looks like..

 

[mraikes]

Based on a quick Google search, you have a butt-load of competition.

I don't know what the avg hourly or per-job rate is in St. Petersburg, but starting from scratch you have a long row to hoe to hit that target of 50-100k. Then subtract expenses and self-employment and income taxes, etc.

Regarding the old 10-3-1, if your close rate isn't a HECK of a lot better than that in this business than insurance you're going to fail. I was also a prior insurance agent (Allstate) and financial services (Edward Jones). And while this business isn't anything at all like those businesses, sales skills are sales skills. But with computer repair, you have only minutes to close to the deal and if you don't, you won't get a second chance. Someone else will fix that computer for them.

However, one big difference that works in your favor is that in this biz you don't have to convince someone that there's a need. They already have a need that they clearly understand - a broken computer.

The hardest part is getting your phone to ring. When it does, and it's someone with an actual problem that you can solve, your close rate better be about 90% percent or you aren't going to make it. Now that's differentiating between "real" customers versus time wasters/tire-kickers.

 

[lan101]

Based on a quick Google search, you have a butt-load of competition.

I don't know what the avg hourly or per-job rate is in St. Petersburg, but starting from scratch you have a long row to hoe to hit that target of 50-100k. Then subtract expenses and self-employment and income taxes, etc.

Regarding the old 10-3-1, if your close rate isn't a HECK of a lot better than that in this business than insurance you're going to fail. I was also a prior insurance agent (Allstate) and financial services (Edward Jones). And while this business isn't anything at all like those businesses, sales skills are sales skills. But with computer repair, you have only minutes to close to the deal and if you don't, you won't get a second chance. Someone else will fix that computer for them.

However, one big difference that works in your favor is that in this biz you don't have to convince someone that there's a need. They already have a need that they clearly understand - a broken computer.

The hardest part is getting your phone to ring. When it does, and it's someone with an actual problem that you can solve, your close rate better be about 90% percent or you aren't going to make it. Now that's differentiating between "real" customers versus time wasters/tire-kickers.

Yeah I'd say I close 80-90 percent of new customers that call me. The 10-20% that don't just wanted free advice or price checking in most cases. Occasionally you may not match up personality wise with someone and that's ok...it happens. But yeah if my closure rate was only 30 percent I'd have to work at Micky D's to supplement lol.

 

[mraikes]

Yeah I'd say I close 80-90 percent of new customers that call me. The 10-20% that don't just wanted free advice or price checking in most cases. Occasionally you may not match up personality wise with someone and that's ok...it happens. But yeah if my closure rate was only 30 percent I'd have to work at Micky D's to supplement lol.

Exactly right - that's why I was attempting to differentiate between actual potential customers versus time wasters.

 

[lan101]

Exactly right - that's why I was attempting to differentiate between actual potential customers versus time wasters.

Yeah always gonna be a few time wasters. Sometimes on a slow day I know they're time wasters and I'll shoot the **** with them anyway for a few. Sometimes it ends up being a decent customer later on, so I never like to rush anyone right off. I always spend at least a few minutes with everyone or if I'm super swamped I'll tell them I'll call back at the end of the day.

 

[timeshifter]

So did you sell life insurance for most of your career, i.e. several decades?

 

[RetiredGuy1000]

15 years with Northwestern Mutual. Then I opened an independent financial planning firm for five years. Then sold it.

 

[timeshifter]

So then you've got good sales and people skills with that kind of background. There are lots of people in this industry that have excellent tech skills and terrible people skills. Sounds like you've got a good blend of both, which could be your competitive edge.

 

[NETWizz]

Well, I didn't exactly make it. Don't get me wrong, I was faster by far than most and my work was better. I could fix virtually ANYTHING, and I have fixed EVERYTHING. At one time or another, I have done more hardware/software repairs than most folks on here unless you worked for a repair depot for Dell or something, lol.

The problem for me was finding jobs in a saturated market. You really need word of mouth, and I didn't have much of that. Then I always hated charging individuals hundreds of dollars for things because I know they are struggling on their own $50k to $100k, and it ruins their month to have an extra $200 bill to pay me, yet at the same time I was NOT going to touch anything for less than $60.

It gets worse because often times I would go on-site, and parts would be needed. Naturally, I would get the parts and have to return. I really did not charge them the full cost for the return trip. I also hated seeing everyone have different malware problems and everyone is my boss. I hated the unpredictability of their systems in that there was no standardization. I always liked it when I got to work on a Dell due to familiarity and ease of getting parts.

*****

Ultimately, I went to work and specialized because I can easily make more than $50k to $100k employed by someone else while getting benefits, and paid-time-off. Stress is minimum, and I get paid even when business is slow. Additionally, a large employer provides me a larger network and budget, so I get to buy things like Cisco 48-Port switches for $11,000 that no residential or small-business customer would buy.


What I will leave you with is this. If you need any networking help, let me know. I am not going to charge you short of me traveling out to Texas.

 

[RetiredGuy1000]

Thanks for the offer AND for your story. It was really helpful.

 

[Markverhyden]

You need to go beyond failure rates in any industry. You also need to look at structural changes that occur in that industry due to technology changes. Some of us have been around this business for many years.

In this business, hands down, the biggest influencer is Moore's Law. At least as far as I'm concerned. That's why we can walk around with a device, the smart phone, which easily surpasses systems that occupied several hundred square feet, required a full time team of 2-3 to run, and easily cost 1000 times the price of a smart phone.

For example. I do printer and plotter repairs. 10 years ago I used to have 15-20 calls per month, last year I had 3 total. So little gets printed these days.

Learning from the past helps one understand the future.

 

[fencepost]

I'm looking at what @NETWizz said and I'm looking at the other side - I've contemplated trying to get back into corporate IT (god knows I'd likely make more), but frankly between 13 years of now-obsolete software development experience and 16 years of IT consulting/break-fix/half-assed MSP I literally just incorporated for my own on Monday. If I can manage to get going with good-to-premium services with compliance and business continuity as a focus, I'm hoping to be able to build a small MSP focused around that.

I'll keep working with the guys I'm with for a while as I try to build things, but I also have someone that may be as good a source of leads as an accounting firm we used to work with, but in a completely different industry (construction & contracting).

One of my big concerns was everything I see about age bias in everything technology - I'd be concerned about a corporate job being viable for another 15-20 years, and the further along I got the harder it'd be to actually shift to something like this.

 

[NETWizz]

I'm looking at what @NETWizz said and I'm looking at the other side - I've contemplated trying to get back into corporate IT (god knows I'd likely make more), but frankly between 13 years of now-obsolete software development experience and 16 years of IT consulting/break-fix/half-assed MSP I literally just incorporated for my own on Monday. If I can manage to get going with good-to-premium services with compliance and business continuity as a focus, I'm hoping to be able to build a small MSP focused around that.

I'll keep working with the guys I'm with for a while as I try to build things, but I also have someone that may be as good a source of leads as an accounting firm we used to work with, but in a completely different industry (construction & contracting).

One of my big concerns was everything I see about age bias in everything technology - I'd be concerned about a corporate job being viable for another 15-20 years, and the further along I got the harder it'd be to actually shift to something like this.

You talk about age bias, but I think I would rather hire YOU!

Personally, I would rather hire someone who is older not younger. Young folks cannot take any constructive criticism, and they don't know when or how to reciprocate it. If they have something to say about something - even if they are right, they will drop the big bomb on you right in a meeting with your biggest account for example. They do not seem to understand there are ramifications for actions in the real-world and that reputation is everything. They don't understand when the dress code is business-casual that there is a time to button the top button, put on a tie, and slip on the dress shoes like when going into a meeting with outsiders to show mutual respect! If your clients footing the bill are out-dressing you, there is a problem! They haven't learned that when they open their mouth nothing they say can be taken back that all you can do is move past what was said. Lastly, they do not realize that you rarely regret what you do not say; specifically, people think well of you by default until you open your mouth. They also don't understand that there are professional duties and obligations that just because I am friendly and easy to work with and may even be your friend doesn't mean I don't put the companies interests above yours and mine. That means as a rule you don't hire a friend whom you wouldn't be alright firing.

I am tired of millennials; they come into the interview telling you why the job would be good for them and help them grow, which is great, but they never tell the interviewers what they will do for the company that makes them the good pick. They also seem to think that education is everything, and it is trumping everything except experience, which they seldom have any. Tell me a real story about your work and a problem you solved and explain it in technical detail. What was your role, and what what did you personally do to contribute. This is what I want to know.

I like experience at the top of a resume! Education is just something that everyone needs to have certain level to get past the screening process. I learn more on the job than I ever did going to school.

 

[Tony Hutton]

I think the failure rate of new businesses that is often quoted by the SBA is inflated because it doesn't take into account the fact that people sometimes decides to close their businesses for a variety of reasons. Sure, a lot of businesses fail because of unrealistic expectations, under-capitalization, no business plan, incompetence, etc. However, in my case, after running a successful cellphone repair shop for six years, I just decided that I wanted to do something else. Was the business a failure? I don't think so - considering it grossed over $1.2M for the duration of its life and allowed me to put my two kids through college and build up a six-figure savings cushion.

 

[VISA MC]

You talk about age bias, but I think I would rather hire YOU!

Personally, I would rather hire someone who is older not younger. Young folks cannot take any constructive criticism, and they don't know when or how to reciprocate it. If they have something to say about something - even if they are right, they will drop the big bomb on you right in a meeting with your biggest account for example. They do not seem to understand there are ramifications for actions in the real-world and that reputation is everything. They don't understand when the dress code is business-casual that there is a time to button the top button, put on a tie, and slip on the dress shoes like when going into a meeting with outsiders to show mutual respect! If your clients footing the bill are out-dressing you, there is a problem! They haven't learned that when they open their mouth nothing they say can be taken back that all you can do is move past what was said. Lastly, they do not realize that you rarely regret what you do not say; specifically, people think well of you by default until you open your mouth. They also don't understand that there are professional duties and obligations that just because I am friendly and easy to work with and may even be your friend doesn't mean I don't put the companies interests above yours and mine. That means as a rule you don't hire a friend whom you wouldn't be alright firing.

I am tired of millennials; they come into the interview telling you why the job would be good for them and help them grow, which is great, but they never tell the interviewers what they will do for the company that makes them the good pick. They also seem to think that education is everything, and it is trumping everything except experience, which they seldom have any. Tell me a real story about your work and a problem you solved and explain it in technical detail. What was your role, and what what did you personally do to contribute. This is what I want to know.

I like experience at the top of a resume! Education is just something that everyone needs to have certain level to get past the screening process. I learn more on the job than I ever did going to school.

Millennial checking in here...
Not all millennials fit those characteristics. I have no formal education beyond high school. I have a couple IT classes at our local college and a couple years in the retail technology world.

I knew I never wanted an equity partnership, but I formed a strategic partnership with a local POS company, and I know it was hands down my experience that closed that deal. I am the poster child for the phrase “business owners work 80 hours to avoid working 40”. In fact my first date with my current girlfriend involved two customer stops on the way to dinner. I had to set the bar early!

A few years back we added VOIP to our offerings and I have since built a client list reaching into quadruple digits, not including our walk-in customers. Have I made mistakes along the way? Absolutely everyone has, but I learned from them and immediately corrected the course.

I am a millennial. Not your typical millennial.