Starting your own business

Anyone do this and have some good tales to tell? Now’s probably not the right time for me and my family with the recent birth of child #2, but I’m starting to think about it strongly because I’m dissatisfied with the way most companies do things.

Personally, I’m facing some artificial barriers to entry in my current industry. I am a consultant/installer for a large software product geared towards a particular (large) industry. To be a consultant, you have to get certified in the different components of this product. There are a few hundred people certified in the world, but only a handful - maybe half a dozen - who have all the certifications I hold. Most of the consultants out there got their certification on this software directly through the software company and are linked to one or more dealers who sell the software. I currently work for a dealer who sells this software.

A few years ago, the dealers and the software company got together and “modified” the terms of the certification program. Now certifications are only authorized through the dealers and not directly from the software company. At the same time, the software company has consistently told the customers that working through a non-certified consultant will void any warranty and customer support. It also decided to limit the number of dealers.

So now, if I want to start my own business in a field I’ve spent many years in becoming an expert, my hurdles are as follows:

  1. Non-solicit agreements on my current customer base, some of whom use (or even transferred to) us simply because of me (not a problem, I wouldn’t do this anyway)
  2. If I leave and go independent, I lose all my hard-earned certifications (some that have taken years to get).
  3. The software company has told customers they can’t use non-certified independents or they violate the ToS and all warranty work.
  4. I can’t start my own dealership since they’ve limited the number of dealers. Even if I could, the capital requirements they currently have make that an impossibility.

A few years ago, I could have broken off, started my own company/dealership, kept my certifications and provided a service to the customer base of over 35,000. Now? The current players have made it a good ole’ boys club. Essentially, the barriers to entry are such that I cannot start my own business in this market. I would have to give this market/product up and start fresh with something else. The good thing is that the capital requirements in this industry would be extremely small since most of it is knowledge-based.

So, with that in mind, does anyone have any advice? Am I better off learning a competing product (in my spare time) and getting ready to launch my own company once the economy turns? Is there a way to leverage what I do now to start my own company in my current industry (and I’m just missing the loophole here)? Can anyone provide me some food for thought on this Monday morning?

Well first off you need to make a financial assessment. How long can you go without your income? How much do you have saved? How good is your credit to get loans? If the answer to these questions aren’t real positive, then you really need to get your financial house in order, then decide if you want to go into business.

Many people in your position do what you are already thinking of doing…study up on their spare time. Now be sure that you don’t do anything to jeopardize your current employment unless you don’t mind being fired, but spend as much time as you can learning about what you can do. has a really good article called Take a Library Vacation, which basically says to go to a good library and spend some hours researching what’s really out there.

I don’t know much about consulting. so I can’t be of more help, and actually I’m interested to know more about it too, so hopefully others can jump in.

First thing I’d do is look at your motivation for starting your own business. It sounds like your business plan is to essentially do what you’re doing for your current employer, but on your own.

Presumably, you’re doing this because you think you can make more money cutting out the overhead eaten up by your employer. And sometimes you can.

But a lot of people overlook the time and money that it takes to run your own business, and subsequently are shocked to find that they don’t have the time to be as productive in revenue generation as they were when an employer was handling the paperwork, the bookkeeping, the accounting, the marketing, the advertising, etc.

I just passed 4 years of owning my own business, and though I wouldn’t trade it for anything in the world, there are a ton of downsides. I don’t make nearly the amount of money I estimated I’d be making, and I work constantly. There’s only so much that one person can do in a day, and I should’ve hired help a year ago.

I’d definitely suggest reading The E-Myth which might put you on the right track to answering some internal questions about what you want to do. The biggest hurdle you’re going to face is the fact your dependents need you to have a stable income, so your risk/reward equation is going to be different than a single person with no obligations. It may behoove you to do some after-hours consulting in a non-competing field in order to get your feet wet with the entrepreneurship thing before making it your sole source of income.

I’m also a technical expert on a specific software product. I’ve worked with most major American companies at one point or another and have flown to Europe to help out over there.

For me the certification doesn’t matter as much. Its nice to have and if needed I can list out a long string of letters behind my name and a dozen or so certs. But experience is the key. Being able to lay out the projects I’ve worked on and the worlds largest deployments of the product means much more than my individual certs.

10 years ago (just before y2K) when every IT job was available I considered my options. Though I had a good job supporting the product as a customer it was a good time to make a career move up. Starting a company and joining a consulting company were both options that I considered.

In the end I decided that I wanted to work for the software company directly. The major reason was to get the experience I listed in the first paragraph. My thought was that a few years at the software company would look better on my resume than anything else if I decided to make another jump. If I did decide to start my own company having years of experience as the software provider (as well as contacts) would be invaluable.

Its 10 years later and Im still working for the software company. Frankly its a great company and I will happily retire here if they let me. But outside of that I still think it was a great move for me personally, and if I do decide to start my own company Im much better set to do so. I’d recommend the same to you if its an option.

A couple of thoughts…

  1. I could relinquish my certifications and go “rogue” on my current product while selling/installing/consulting on a new one. The one I’m certified in is an older, but well-established software. That is an option.

  2. Credit is fine. Capital is not. That’s a major issue since I’m the only one who works in my household. That, more than anything else, may dictate what I do (or don’t do). If I were single, I’d have already struck out on my own.

  3. My motivation is simply that I think I can do it better. I’m sitting here on this website because my current employer hasn’t hired a sales staff that can fill my calendar in the last 5 years. If I go sell for them, sales gets the credit. No thank you…I’m tired of doing the jobs of other people and watching them skate by. The good thing is that I have a lot of experience - and success - in various areas of business. There wouldn’t be a single area if I started my own business where I don’t have extensive experience - accounting, finance, operations, sales, marketing and management. I’m pretty damn well rounded and that’s a huge advantage.

  4. I have considered trying to get hired by the software company that makes this product, but jobs are tight there (recent layoffs) and they are a coast away.

I’m just starting to kick this around again - I’m a long ways off from getting started. I don’t have a business plan. I don’t have a firm product. I don’t have customers lined up. I don’t even have the motivation yet. Those all have to be done before I strike out on my own, if I do so at all. But I’m getting restless, so the creative juices have started flowing, if only at a trickle right now.

Is there any chance at all you can talk to someone in your current company to get the sales policy changed so you can get credit for your own sales?

At the same time, the software company has consistently told the customers that working through a non-certified consultant will void any warranty and customer support.

That does strike me as being a good reason not to base self employment around providing “rogue” consultancy around the product in question unless you can maybe pitch yourself as a middleman between the company buying it and the dealers’ consultant trying to sell it.

I have had my own business for seven years now, and I would certainly encourage it if you can get the details worked out. It is certainly true that it can be very stressful, but the freedom to make your own decisions is priceless.

That being said it sounds like your industry has your hands pretty well tied. Hope you are able to find a way to circumvent that. .

Seriously, that’s just stupid. This policy actively undermines the company’s ability to make money. Support/deployment and other technical people that deal with customers can often be natural vectors for sales and dissuading them just limits sales opportunities. They really should have a finder’s bonus or some similar incentive for non-sales people to bring in new business.

Unfortunately it also leads to people fighting for commisions. Multiple people deal with a company on large deals and getting 3-4 comign to the boss claiming that it was “their sale” is problematic.

Why not start this now with a very low risk venture? You don’t always have to quit your job with huge fanfare, take out a mortgage, and “launch” a new business in order to start one. Trying something new also means that you aren’t putting all your eggs in one basket; if you lose your job or your industry tanks, you can move all that time into the side business. And if it fails, you haven’t lost much.

If multiple people are involved then there’s already been some point of entry, but I can see that sort of thing happening but having a policy or dealing with getting the right people the commission seems like a lesser problem than missing out on possible sales. People aren’t going to want to go that little extra if all the reward is going to be handed to someone else. As Blackadar said, he’s tired of doing other people’s work.

Not to mention that 1/2 of the sales should be coming through existing customers. There’s really no chance of getting that policy changed and frankly it’s not all that uncommon in business. Most sales managers don’t want anyone else to sell but the sales group and I actually understand (and generally agree) with that policy.

I really don’t mind passing off stuff to the sales group, but they simply can’t keep me busy (and they are responsible for generating my hours - I specifically asked that question before I was hired some years ago). So it bugs the ever-livin’ shit out of me when I gift wrap a sale and they don’t sell any consulting hours with it. They’ve done that too many times and continually bitched about the number of consulting hours needed on a new sale, so I’ve simply stopped providing them any leads. My “reward” for providing sales leads should be additional consulting, but the sales girl here keeps “forgetting” to sell hours. The last straw was me gift wrapping a sale that covered about 1/3rd of the sales girl’s monthly quota, but she “forgot” to sell any consulting hours with it and then wanted me to help the customer for free.

But I don’t want to turn this into a rant about my existing company. Let’s get back to starting a business. For example, Merryprankster - how’d you go about it?

That is utterly astonishing. My own personal experience has been that companies make a good deal of money on the consulting hours and it’s always part of the sales package. Around here, it boils down to a test of wills on whether we need the software more than than they need us as a customer to determine the amount and cost of support and consulting.

I’m not surprised that you are frustrated by this but is there not any channel through management to get this changed? After all, ringing up $$$$ usually motivates management to correct these types of situations.

Not if you suspect one of the owners is getting “favors” from the sales girl. :(

I used to work in IT, and then worked for years as a freelance IT consultant. I now run a very small (mostly just me) games company.

some general points;

  1. Now is not a bad time to start a company. Many huge success stories start during a recession. If you start worrying about whether its a good time to start up on your own, you never will.

  2. Being your own boss is worth a lot. The freedom to choose your own hours, tell difficult people where to shove it, and not have to ask permission for holidays or flexible hours or a long lunch… It’s priceless.

  3. Don’t think because you are the only breadwinner that you have to spend your life in a job you dislike. Any short term worries about money will be forgotten in 10 years when you are happier, better off and have a job you can fit around the family rather than the other way around.

  4. Thinking you can do what your current employer does, but better is a good start. Thats one reason I started what I do, and its the same with everyone else I know who works for themselves.

Good luck, and ignore anyone you currently work with who cautions against doing it. People who are too scared to go it alone will often try and reassure themselves they are doing the right thing by telling you that you are doing the wrong thing :D

I would agree that now is a good time to start a new business. You are going to have ramp-up time no matter what, so go ahead and get it over with while things are still a little slow. Then when you are really ready to go, the economy may have caught up and you’ll have customers when you are ready for them. Naturally as you are starting your business, be sure to make those potential customer contacts so when they are ready, they’ll contact you.

Some more (general) tips:

The best thing you can do is see an accountant ASAP. A good one will help you file your LLC/Inc paperwork, along with helping to determine which of those is better for your business model and tax situation.

Get your business bookkeeping software 100% set up before you have a single client, so you’re not scrambling to figure out which bucket to put things into when it’s starting to pour.

Make sure your friends and family know what you do exactly so they can be a resource for referrals or assistance when needed. I had years go by where a lot of my family didn’t really understand what I did which means there were years I wasted their abilities as potential word-of-mouth referrers.

Time invested in social media will pay you back leaps and bounds above money invested in advertising. Social currency is real, but you need to start making deposits before you can cash some out.

Make sure you know what you’re going to do for health insurance, etc. If your family is insured through your employer, you’ll need to get coverage on your own, which ain’t cheap.

It looks like we might have a public option in a short amount of time!