100+ New Business and Start-Up Hacks and Ideas (2019)

 New Business and Start-Up Hacks

100+ New Business and Start-Up Hacks and Ideas in 2019

This blog discusses 100+ New Business and Start-Up Hacks and Ideas to start Business in 2019. This blog also explains How do you research your business and How will you structure billing to reflect an appropriate profit margin.


Once you understand what you’re doing, you can start building an offer that reflects your goals and values. By creating an offer that authentically reflects what you’re looking for, you’ll quickly find that lots of projects are going to take you away from your core goal. And you’ll have to make a decision whether to pivot or to stay with your original plan.


Note One aspect of the offer to consider is specialization. You can and should charge a premium for your services if you own a vertical market in a given geography, especially if there are specific skills needed to deliver services for that vertical market.



Business Hacks

When we get busy, one of the easiest things to let go of is our exercise routines. Maybe others see the time we spend at the gym as an indulgence, or maybe 8 hours on a flight isn’t conducive to a quick run.


But not letting go gives us better self-esteem, makes us more resilient, and gives us time to let our brains relax away from it all, so those creative juices can get to flowing!


Eat healthily: Exercise is part of a healthy lifestyle, but eating properly is critical as well. We all need plenty of calories and a healthy mix of foods. Stay away from fast food and enjoy the art of cooking whenever possible.


Get help from others: When you’re spinning your wheels, reach out to others for help. No one expects us to be perfect, so we can admit it when we aren’t and accept help when we need it!


Automate more:


If you have to touch a piece of paper or perform a manual task, search an App Store to see if that task can be moved to automation on a device. And if you have a bunch of apps that you have to manually move data between, look for whether or not you can automate that process as well!


Subscribe to the Morning E-mails: I like getting business reports in the morning. They set my tone for the day. Build reports and have them sent to you so you can stay on top of trends. Avoid bad knee-jerk reactions based on crappy sales or delivery in a given day and focus most on the trends in front of you.


Wake up to the day’s most important news: The 24-­hour news cycle can destroy you. Limit what you read and access and isolate what actually matters to you.

  • Top of Form
  • Bottom of Form


Hire more people: I know, I know, we all get to a point where we just feel overworked all the time. If that goes on for too long, we have to accept the fact that being overburdened isn’t going anywhere and we need to bring in more humans.


Be diligent about building a better mousetrap: Is there waste in your day? Are there processes that, with a small tweak, would be able to be more efficient? Can you remove steps without removing quality? I like to set a quarterly or monthly task for myself to think about how I can do better at all things!


Learn to say no: Early on in our careers, we tend to say yes to more things than we need to. But as we progress, there are a number of things that we no longer enjoy or take any benefit from.


We still want to help our communities and stay involved in a lot of things, but ultimately, we have to learn to say no here and there in order to maintain our own sanity.


If you’re so busy you can’t take care of yourself, just stop making yourself so busy. It’s never too early to get started. Life is too short. I hope one or more of these tips help to spark an idea that saves you time and money and makes your life just a little bit better.


Research What Should Be in an Offer


You’ve decided to start a company! There are few finer things to do in this world, and a few more frustrating. Before you can start selling stuff, you need to know exactly what it is you are selling, and exactly how much to charge for it. In the beginning, you can be the person who does computer stuff.


But if you want to grow (and be happy while doing so), then you’ll need to draw lines between what you will do and what you will not do. Or, more to the point, what you would prefer to spend your time doing, which is often to chase profitable long-term contracts.


Those long-term contracts build more value for the company than anything else you can do. Long-term contracts also give you a more scalable business model to allow for building strong teams with long-term career potentials, without the fear of bankruptcy. Support contracts come in a lot of different flavors, though. Let’s look at a few these can easily include:


Hourly support: As the name implies, customers pay you hourly to do work for them. You can grow a business and make a lot of money doing so. But you will always have a direct correlation between the cost to deliver a service and the profit you can make off that service.


Retainer-based support: You are paid to deliver a certain number of hours per month, on retainer. These usually come with either an expiration date or roll through to the end of a contract.


Retainer customers should receive prioritization over hourly support customers to provide hourly support customers with a reason to upgrade to retainer programs, but without making them feel like second-class customers.


Managed services: You are paid to deliver an unlimited amount of services in exchange for a fixed fee every month, usually billed on a per-user or per-device basis. For smaller customers, the offering can include cloud mail, storage, backup, and more as well.


Hybrid approaches: I’ve seen a pretty substantial number of companies out there that are afraid of allowing for unlimited support. For example, many will provide an unlimited amount of help desk services for a set price.


Some go further and include a few hours a month of onsite work. These hybrid approaches are a good temporary fix for customers wanting a fixed price for all of their service needs.


Unless done really well, they don’t usually scale to a lot of consultants, due to operations costs caused by having too many ways to bill customers.


Fixed-fee projects:


Most companies that offer any of the above services will also provide project-based support as well. These projects fill the gaps that can’t be accounted for in a purely managed services business.


If you deliver managed services and do not yet do project-based work, then you will need to find a partner to deliver those services, or the companies who do come in to do those projects might end up carving out parts of the business from your hard-won customers.


Managed Leases: This is really just Managed Services with a lease to the hardware (and maybe software and insurance) tacked on so that those in charge of running IT can be proactive with budgeting.


I tried to list these in order of complexity. Standard hourly support is the first and simplest to deliver; there’s no commitment from either party. As you get later in the list, the relationship becomes more complex.


As relationships become more complex, customers are often required to sign annual or multi-year contracts. And of course, the longer the term, the less a contract costs and the more prices are fixed against inflation.




Pricing is one of the hardest things to get right in business. Sell too high and no one will want to buy your services; sell too low and no one will respect the services you deliver, or you won’t make enough margin to get by. 


There are a lot of factors in choosing how to price your services. There are no magic bullets. But there is guidance. We’re going to provide a little guidance on a pre-billing type basis:


Hourly: You can ask for whatever rate you want. That doesn’t mean you can get it. Whatever rate you can get is basically what you end up with. It's usually supplied on demand.


You can look on Craigslist and find many a provider willing to do work for $35 per hour. If you look in more traditional channels, you’re more likely to find support for close to $200 per hour or much steeper day rates for various specialties.


Retainer-based Support: You usually need to provide a discount of 10% to 20% when you sell longer-term support contracts.


For example, if you think a customer needs to purchase 20 hours per month, and your standard rate is $120 per month, then they might buy that bucket of hours, which would normally cost $2400 per month, at a discount of $240, which would move the cost down to $2,160.


Managed Services: Managed services moves the conversation away from hourly or daily consulting (time-based consulting) and into a fixed-fee model.


A common rate would be $60 per computer per month. Continuing on with the $120 per month number, this would mean you wouldn’t likely want to spend more than a 1/2-hour per month working on a given computer so that you can preserve a similar rate.


But if moving to an MSP model, you finally get to do all that proactive management you were trying to get customers to do for years. So your MSP pricing can often be looked at as an average amount of time spent working on a system provided you are able to extract useful data.


Keep in mind that when looking at Managed Services, you want to make a good margin, but if you take too much margin, you will not be able to retain customers.


Hybrid Support: A number of organizations enter into Managed Services contracts and then struggle with how to bring new services online that provide value to their organization.


Managed Services is meant to provide a customer with a predictable cost to maintain their existing assets. Many will move into cloud hosting models for additional services such as Customer Relationship Management (CRM), cloud storage, and project portals.


Many will then need assistance in setting those services up. You can charge a separate hourly or project-based rate for bringing on these new services. Just make sure not to endanger your Managed Services contract to get a few extra bucks out of these other services.


Keep in mind that you can always find a partner that might be able to do a better job at the services you’re providing as that’s the focus of their organization. And, they might do bilateral referrals to boot!


Fixed-Fee Projects: A lot of services companies have made a lot of money doing fixed-fee projects. Here, you estimate how long a project will take and describe the project in a Statement of Work (SoW).


You then build in an appropriate level of padding to the project and provide a customer with a fixed cost to complete the deliverables.


Once awarded, you do whatever it takes to complete the deliverables defined in the SoW. Most large organizations will need to operate in a fixed-fee modality with their vendors, given that line of business managers are typically held to remain within a budget for such things.


Managed Leases: Leases are tricky. Chances are that someone else can do the lease better than you can unless you reach a critical mass of thousands of devices being leased out.


For example, Dell, Apple, HP, and others can take this burden and often bundle warranties and even your Managed Services contract into the lease.


If you’re not already leasing hardware, then I strongly recommend giving up a few points of margin here in order to let a leasing company or vendor work with your customers so you can capture more revenue.


You’ll also want to verify that your rates are geographically appropriate. If you’re in Manhattan, you can charge more for services than you could if you were in Boise. They’re both fantastic, but the disparity of rates can be substantial.


If you can bill 1,200 hours a year, you’ll be in great shape. Reverse-engineer an hourly rate out of that. Think of a number you want per year and divide that by 1,200. That gives a good baseline. Then scout the competition.


Start with Upwork, Angie’s List, and Craigslist (or whatever your local equivalents are to these sites). What is the average rate for the other companies listing their services? You likely won’t be the cheapest vendor, although many build very successful businesses around being the low-­ cost provider.


That’s a hard game to win it, with low margins, but it can certainly be done. You likely won’t be the most expensive vendor either. It takes a lot of customers and referrals in order to organically raise rates to that point or to be the best (and no one is or has ever been, the best, so don’t forget to check your ego at the door).


Finally, browse around to see what rates your competitors have posted on their sites.


You could even call around to your competition. But if you think about it, would you welcome a question from your competitors about what your rate is, just so they can undercut you every chance they get?


Tip Once you finish your research, think about whether or not you want to post your offer. Many will only hire people with posted offers, but they do give your competition insight into what you’re doing.


As you grow and get better, more efficient, and known for what you do, then you will find that you can charge more for hourly work. If you rely on managed services customers, then you are likely to be at market rate, as most companies who purchase these types of services are not looking for quality contractors—they’re looking to fix costs.


Building the Offer


Now that you know what others are charging, look at what you were planning to charge and see if it makes sense. If there’s a huge disparity, you need to figure out why.


You don’t want to be triple the cost of the next highest paid vendor. Nor do you want to be the lowest, as people might not perceive a high enough level of value in your services.


Once you establish a relationship with customers, it’s hard to increase your rates without customers leaving you. Next, let’s explore the more common offers: hourly, retainer, managed services, and fixed-fee.


The Hourly Offer

If your offer is to sell hours of your time, then you have a pretty simple task. Or do you? What kind of work do you want to do? For example, I know several consultants that make a pretty sweet living only doing work on Apple devices in the homes of the rich and famous.


Likewise, I know a lot of consultants that won’t go to a residence and will only do work in companies. Remember, and I will repeat this so that it sticks, do what makes you happy, and you’ll find success. Or you won’t. But at least you won’t be miserable!


You’ve set an hourly rate. But let’s make sure you are being holistic by answering these questions:


Travel: Do you charge for travel? Or do you include travel in your rate? Do you charge hourly and have a small trip charge? Keep in mind, if you’re not up front with what you’re going to do, then you could very, very easily spend half your time on planes or driving around your coverage area without an appropriate amount of compensation.


The range of Services: Do you work on servers? How about firewalls? How about really, really big firewalls?

Do you write scripts or code for customers? Are you willing to drive out to fix a printer? In the beginning, many will do whatever a customer is willing to pay them to do.


But the earlier in your consultancy that you choose to limit the type of work you do, the more quickly you find your niche and focus, and partners to bilaterally refer work to.


Billing Methods: Do you warranty the hourly work or charge to continue fixing a problem?

Billing Methods

Billing Terms: Are you going to invoice customers, take payment up front, or accept credit cards when you complete the number of hours or days that a customer wants to use? If you are invoicing, do you need a Purchase Order (PO) first? What terms will you extend if not taking payment up front?


These are important because they need to impact the offer. If you need to charge an extra $10 per hour up front to cover these costs, then you want to know that in advance. Now if you bill out 40% of your time at your projected rate, how much are you going to make?


Note If you charge before doing work, make sure not to spend that money until you actually deliver the services you were paid for.


The Retainer Offer

Retainers are usually similar to hourly or daily offers. A customer is paying you to deliver time to them. But they are committing to a given number of hours or days per month.


Are overages handled by charging more the next month? Will you charge more for hours that are over the retainer than you would for hours in the retainer? Will you need a specific person at customer organizations to approve overages, or can anyone call in and request services?


Does retainer time have to be spent each month or will it continue building up until a customer cancels their contract? When does time expire? Remember that it’s a bad idea to spend money before you’ve earned it, even if a customer has given you all the monies! Is there a maximum amount of time that a customer can build up (like 2x their annual contract)?


Who’s allowed to engage your services? Keep in mind that you’re entering into a long-term contract, so be careful before you let just anyone buys your services.


Travel costs: Similar to the argument about hourly contracts, will you waive travel requirements for a retainer commitment?


What’s the term of the contract? What happens if a customer leaves prior to the end of the term? I am always willing to give a higher discount to people in order to get more business and longer terms on contracts.


Retainers are a great way to get from a new hourly startup to starting to establish a predictable, long-term income that usually gives you enough comfort to go out and hire some people already.


But the ups and downs of dealing with hours and overages can get in the way eventually. Some have opted to move to the next step of Managed Services.


The Managed Services Offer

Managed Services

Managed Services is an all-inclusive support contract. You can choose what exactly “support” means when building the offer. But Managed Services is about outcomes, not time–as was true with the previous two types of offers.


Note I’m going to be upfront about something before I start writing this section, though: I do not like managed services offerings that try to limit services based on a time-based model.


When using MSP services, customers want a controlled, predictable cost. If you can’t make this work, then I doubt your offering will sell as well as you think it will.


Managed Services can mean different things to different companies, let’s look at what it means to you, which shapes how you structure your offer. The following are some questions you need to ask yourself.


While you read through these, make sure your answer to each is included in your offer, which is likely to manifest itself in the form of an actual contract that customers sign.


  1. What is the scope of your services? What devices will you support, and which users can call or engage with your services?
  2. What is the duration of the offer? If a customer signs a contract for 3 years, will you give them an extra $5 off per device?
  3. What are the support hours?
  4. What is the Service Level Agreement (both inside the support hours window and outside that window)? Keep in mind that when it comes to Managed Services contracts, everything is negotiable.
  5. How are the tickets created? Can customers just call in or do they have to use a form to open tickets?
  6. Are “truck rolls” included in your offer or is it just remote support?
  7. How much self-help do you expect customers to use? Will you invest in “zero-tier” assets or those used to allow your customers to perform pre-built automation? These should help lower costs, but will customers actually use them?


  • Can customers bundle hardware and/or leases with your services?


How will you monitor devices? If you don’t, then how can you claim you’re meeting expectations? If you do, how do you react to incidents on devices?


But more importantly, can you automate ticket creation from a monitoring tool, and then have a script resolve the ticket, close the ticket, and e-mail the person using the device that the device was fixed? ‘Cause if you can, you just saved how much money?!?!


When pricing, did you factor in the fact that you’ll eventually need managers and directors to manage managers, etc?


One of the most critical aspects of Managed Services is tightly managing scope. Alternatively, you don’t need to have any services out of scope.


I’ve seen MSPs include bandwidth, software, leases for devices, and upper-tier Chief Technology Officer-style services with their offerings and still do so based on the number of users or devices that a customer has.


Typically, this type of service comes in at a minimum of double the standard device charges for other MSP business, but MSPs can take advantage of the scale in purchasing and scaled-down cost in managing a homogenous set of technologies to eke out more profit while providing a superior product to customers.


Keep in mind that if you choose not to include upgrades in your offer, you can still charge separately for them, even if you don’t try to include everything ever. To do so, you would usually provide an SoW.


The most common way to fund an SoW when you’re already in a Managed Services relationship with customers is with a fixed-fee contract, covered previously in this blog.


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The Fixed-Fee Offer

 Fixed-Fee Offer

Really, this is called an SoW. If you do the same SoW for multiple companies, you can think of it as a solution instead. Because you’re in a close-ended relationship with each customer that lasts the duration of the SoW.


You can provide an SoW that estimates hours as well, but when we work with more and more mature customers, they will want a fixed deliverable or set of deliverables.


Every SoW should have the following sections, even if they’re short:

Title Page: I like to put the customer’s logo and my own logo on the title page.

Scope: What are you going to do for the money you’re being given?


Expiration: How long is the offer valid for? You know, because you don’t want a customer trying to award a job 5 years later after you don’t do that type of work anymore.


Customer Responsibilities: What does the customer need to do (other than pay you) in order for you to build the solution the customer is paying you for?


Deliverables: A clear list of what the customer can expect as an outcome. This is different from the scope in that it’s to set expectations, not the work that will be done to meet those expectations.


A line to sign off: I’ve seen dozens of acronyms for this, but there should be a line at the bottom that says something along the lines of “this work is done and we both approve that the matter is closed.”


Ultimately, the fixed-fee contract can have challenges. If a customer asks your team to do things outside the scope of the agreement, then a conversation needs to happen before that work commences.


Otherwise, once you start work that is “out of scope” you might end up owning additional projects without being able to bill for them.


You might also estimate the time incorrectly when writing a bid and end up having to eat overages. This is all part of growing your institutional knowledge of how to estimate, and people go through it in every industry that provides a service for a fixed cost.


While there are challenges, though, working with customers under a fixed-fee contract is likely one of the easiest of all billing types–as nothing should be open-ended.


Build the Contract

Build the Contract

Once you have a solid offer that is easy to talk about on an elevator, you can then put that in writing–and thus make it impossible to talk about in an elevator.


Doing so means that you are creating a legally binding contract that customers will sign. Many don’t use contracts when they first start out; all use contracts as they mature. You need to protect yourself from levels of liability.


Here are a few sections that should be addressed in every services contract:


Definition of services: Define the services that are included in the contract. This includes the specific deliverables, as well as any details that shape those deliverables or tasks that need to be included as part of the deliverables.


Scope: The Scope of Work, or SoW, is a list of the tasks that you’ll be doing for the customer. The more detailed, the better. I’ve met some people that like to skimp on this section as they’re afraid a customer will shop an SoW around.


If that happens then so be it. I’d rather have another vendor be on the hook for a customer who’s only shopping around for the cheapest solution anyway.


The term of agreement: Show how long the contract will be enforced. If you’re selling an annual managed services contract, then you’ll want to call out that the customer will be bound to pay for the services described in the contract for 1 year.


Fees and payment schedule: Define how and when the customers will pay you. Standard terms are usually 30 days from the completion of services for the month.


You can negotiate for a better payment schedule, but in my experience, you might not actually get paid on the better schedule if the customer already does check runs monthly or something like that. Note that you don’t want to be a pain in the accounting department’s butt.


Taxes: Indicate who pays the taxes, where taxes will nexus, and make note of any tax exemptions (e.g., film industry taxes in Los Angeles, tax exemption for non-­ profits, and other areas where taxes are different for a given customer than for others).


Coverage Times: What times of the day are customers allowed to call the help desk as a part of the managed services contract?


If you have hourly customers, when can they contact you for support? Are there added charges for after-hours support? If a customer can end up getting billed more, then reference who is allowed to accept those charges.


Exclusions: Define specifically what is not included in the contract. If you only support a certain set of applications as a part of a managed services agreement, call out which apps you support.


If it’s a fixed fee contract, specify that unless a task is explicitly listed, it is not included, and then list any requirements that you need in order to complete the project.


Service Level Agreements (SLAs):

Service Level Agreements


An SLA is important for managed services customers. It lays out things like response and resolution times and often includes penalties for not meeting those targets. I’ve always felt as though an SLA is important for hourly and project-based customers as well, to help set expectations with customers.


Problem Management: You could also call this conflict management. It doesn’t really have to mean getting legal, but it could. I prefer to have an escalation tree that goes from an account manager to a manager, director, vice president, principals, etc.


I find that telling customers who to call when they have problems is better than customers just having to guess. And when customers call the wrong person, I never like to correct them unless it becomes a problem; they’ll figure out who the right people to call are based on who’s actually able to solve their problems.


Confidentiality: Sometimes you or the customer can’t discuss projects. It’s best to define that. And if you have a deliverable that can’t be shared, define that as well.


We’ve all heard the jokes about the accused who decide to represent themselves in court. The same is true with those contract templates you downloaded off the web and then sent to a customer. Have a lawyer review your contract before you send it to customers. And then have the lawyer validate each subsequent update.


When you’re small, you can use a service like LegalZoom or your mom’s brother’s uncle’s sister’s kid, the paralegal. But remember that when you flippantly e-mail that contract to a dozen potential customers, you are entering into a binding legal agreement.


But it’s a low-cost way to get legit. Try to keep this mantra of doing things on a budget, whether it’s legal, marketing, or PR.


Service Level Agreements

An SLA is a contractual obligation that you’ll meet a certain level of service. That service is usually as measured in uptime in a SaaS (or Software as a Service) or server environment.


But in a managed service or consultative environment, service levels are typically measured as the amount of time it takes to close tickets based on the severity level of the ticket.


Some organizations also look at customer satisfaction, such as meeting a certain standard metrics such as net promoter score.


What happens when a customer isn’t happy with a contract between your two organizations? Chances are you have stern language that if the customer wants to prematurely end a contract they have to pay the balance of the contract.


If you don’t define service levels, and remedies for missing those service levels, that kind of boolean enforcement approach is easily thrown out in a scenario where things get legal. The other nice thing about an SLA is that you are upfront with what a customer should expect from you.


We’ll look at various ways of implementing service levels in the next few sections.


Server Uptime


Service levels for servers are usually the easiest to measure and prove. You can use monitoring tools such as MRTG, Cactii, SumoLogic, and other tools (most notably including managed service automation tools).


Many an organization is already accustomed to dealing with service levels in terms of how many 9s worth of uptime they’ll get.


The formula to calculate uptimes is pretty straightforward, and simply think of it as ((Amount of Time In A Period – Outage Percentage)/ Time)*100. Total outage times in an annual contract would then include the following per year:

  • 99.999%: 5 minutes and 16 seconds
  • 99.99%: 52 minutes and 36 seconds
  • 99.9%: 8 hours 45 minutes and 35 seconds
  • 99.8%: 17 hours 31 minutes and 12 seconds
  • 99.7%: 1 day 2 hours 16 minutes and 48 seconds
  • 99.6%: 1 day 11 hours 2 minutes and 24 seconds
  • 99.5%: 1 day 19 hours and 48 minutes
  • 99.4%: 2 days 4 hours 33 minutes and 35 seconds
  • 99.3%: 2 days 13 hours 19 minutes and 12 seconds
  • 99.2%: 2 days 22 hours 4 minutes and 47 seconds
  • 99.1%: 3 days 6 hours 50 minutes and 24 seconds
  • 99.0%: 3 days 15 hours and 36 minutes


I recommend doing these SLAs quarterly or annually if possible. “5 9s” or 99.999% uptime is incredibly difficult to attain. Imagine that a server requires 2 minutes to reboot. That means if you run an update a few times a year, you’re in breach of your SLA.


But if you are trying to review these monthly, a bad month up front will have you in breach early in the contract; whereas if it’s an annual contract, you have plenty of time to allow the law of averages gets you back in good shape.


The uptime of a service on a server doesn’t mean the uptime of a node. That means you could run a monitoring tool and see that the server is up (it pings, you can telnet into port 80 for web servers, etc.).


But you might need to actually try to load a page to realize that the back-end of the site is down. So that should be monitored as well. Additionally, the node being down doesn’t necessarily mean the service that end users interact with (e.g., the website) needs to also be down.


You can typically fire up a cluster node pretty easily for patching and maintenance windows. If the 5 9s uptime numbers referenced earlier seem daunting, then you will either never-ever-ever be able to patch or you’ll have to cluster a system.

Thus, the sharp increase in costs that you should factor (and so charge for) for each of those 9s.


Time to Resolution and Average Response Times

A common misconception about SLAs when supporting endpoints is that they are based on the amount of time you have to close each ticket. I would strongly recommend never entering into an agreement based on that type of SLA.


Instead, look at the average time before you make the first contact with a customer (often referred to as the response time) or an average time you have to complete a ticket (or provide a resolution).


Many a ticketing system has SLA functionality built in. So, you can set up an alerting mechanism based on the amount of time a ticket has been in your queue. If it’s just you, then this is pretty straightforward.


But as your organization grows (if you choose to grow) then you’ll want to act as a point of escalation for tickets that are close to violating their SLAs.


Note Be careful with automation systems. You might hook up a tool like Watchman Monitoring to your ticketing system and automatically create tickets when there’s a problem.


I very much like this type of setup. But, let’s say a big software update comes along that causes every device to misreport something with a third-party piece of software. Now you might have to go and clear all those tickets or you’ll end up with all of your reports being completely off.



Without remedies, there isn’t much of a reason for an SLA, except to make everyone who wants the SLA happy. I don’t like being prescriptive on remedies, as every customer is different. But I’ll try to steer you in the right direction in this section.


If you don’t meet a certain level of service, then you have to pay the customer back or provide a discount on services. When negotiating penalties, try to do so based on future services.


This creates a liability for your organization in the form of lost revenue; however, it also provides an asset on furthering a contract that a customer might not have otherwise signed. I would be hard pressed to find myself agreeing to a penalty that results in a refund to a client unless absolutely required to close a deal.


Let’s consider the following example. You have a customer that pays you $10,000 per month. You are supposed to respond to tickets within an hour at a minimum 80% of the time. In a given month you miss that response-time window and only make the first contact within the negotiated window 70% of the time.


An example of a penalty might be a 10% credit on future services for every 10% you fell short. In the subsequent month, the customer should pay you $9,000.


Keep in mind that service levels and remedies are negotiable. This is probably the last thing that gets negotiated. But high service levels cost more for you to provide and so should impact the sales price.


Consider as an example the “Fanatical Support” service provided by Rackspace. You pay a lot more for your hosting, but it’s the Rackspace innovation that saved the company from failing when they dipped below 90 days in cash reserves!


Finally, what happens if you don’t provide a remedy for missing a service level that’s defined in a contract? You are in breach of the contract. When you breach a contract, the outcome can be left to the whim of a judge or mediator.


They could choose to simply dissolve the contract or enforce their own remedy. It’s better to work everything out proactively.


Does This Pass the Sniff Test?!?!

We all have those friends who are great at casting doubt on everything. I don’t know if you have any purple (or is it grey, or blue) friends with ribbons tied to the end of their tail, but think of an Eyore.


These types of friends have great uses, and this is one. And while many stopped listening to their parents a long time ago, it’s never too late to start listening to them again.


See what mom and dad say as well. After all, if you have an offer, you have the first parts of a business plan. And they likely have more business experience than you. And if they don’t, they’re wiser. Not to harp on this, but seriously, find a parent (or parental figure) to check things out…


Even if you’ve been in business for a few years, you need close business advisors. They are a key factor in the success of any institution.


Instead of parents, it’s time to look at a Board of Directors once you’ve crossed a dozen employees (assuming you’re still planning on growing). Why not just pay a business consultant for services?


The Board of Directors comes with contacts. Contacts are the most important thing that your fledgling company can have in the beginning. It also comes with guidance. Pick others who have found success in parallel industries without picking people who are going to compete with you.


Funding Your New Adventure


Oh, wait, if you have an offer then you have the first part of a business plan. The next part will be the financials. But what is it going to take to kickstart your company, or if you’re planning on adding a new line of business or offer, what is that going to require?


Starting a company on a shoestring, often referred to as bootstrapping, means you don’t need external capital, other than what it takes to pay your mortgage or rent and eat some ramen noodles.


Instead, you need elbow grease and to do various types of work until you can dedicate your time to your mission. This includes things like:


  • Hourly computer repair Potentially working on OS platforms you don’t want to be doing work on (like Windows, Android, or Linux)
  • Subcontracting work brought to you from other companies (which is also a great way to make contacts)
  • Going outside the geographical boundaries you might have initially set for your organization to cover (e.g., expanding into other cities)
  • Taking on completely different work 
  • A part-time job, such as working at a computer repair company 


Taking capital can help you weather the cash flow challenges you’ll initially face (most companies pay on terms rather than up front or bi-weekly like most employers).


In time you’ll hopefully end up self-­ sustaining your company, or you might be able to split roles with a day job and run your company for a time to build up some savings. In fact, if all goes well, you may end up seeking external capital in order to accelerate growth, which we’ll cover in the next section.


Growth Requires Capital

Growth Requires Capital

As you grow, you will eventually seek external capital. You don’t have to start off doing exactly what you want to end up doing. But you will find as you build revenue that allows you to be dedicated to your goal that investors will look for you to actually be dedicating all of your time to that goal.


After all, they’ll be investing in that, and not your ability to do work on the side. I would recommend classifying the various types of work you do and the revenue tied to them from the very beginning.


As you grow, you might actually expand into other areas of your industry. Treat each new line of business as though it was its own company.


This means that when you enter expenses, they should be categorized to the new business unit (or tagged if you don’t have multiple charts of accounts), and as you take income, that should be similarly classified. This allows you to evaluate each line of business independently.


Note You don’t have to take external funding ever! But doing so can help you grow smartly, without incurring too much risk.


One aspect of taking external capital that you should be aware of from the beginning is that if you’re growing a managed services business and you’re successful, you’re going to run into an interesting problem: success could easily bankrupt you.


It’s critical to make sure that you’re not just making money but accounting for the money properly, for even in the face of massive success, all your hard work can be rewarded with running out of cash.


While we’ll cover investors later in the blog, just keep in mind that if you have a good business plan and hit the point where you can’t sustainably grow any further without investment, provided that it’s a good investment, trust that you’ll be able to come up with funds. People love investing in companies that are doing well!


Just make sure you have plenty of time to source those dollars by watching trend lines. And when it comes to sourcing external capital, start with banks–unless you have venture capital needs beyond what a bank can get you (e.g., the contacts and discipline to run a company in a more rigid fashion).


Beyond Services

Once upon a time, an IT consulting shop needed to keep hardware on hand, such as sticks of memory. Engineers provided more value to customers and extended the amount of time they were working with customers by selling and installing that memory to make the computer faster.


While we don’t install memory on most computers (especially Apple computers), this is a great example of doing something that makes the life of those who hire you better, while making a little additional profit.


Consider instead bolting on additional cloud services, like a backup. And focus on things that will make supporting systems better or make your life easier in the event of a problem.


Also be aware of the competition. I once had a customer fire my company because we sold them a printer that they then found online for $30 cheaper elsewhere. The part that sucks here is that I’m pretty sure we lost money selling the printer in the first place.


You are never going to sell most of what you sell cheaper than anyone else. But you might be able to work out a deal with a vendor who can then give you more customer referrals than all of your possible hardware sales would otherwise be worth.


Having said that, if you deliver goods and services together as a package, then a customer can receive both with one Purchase Order (PO) in the same visit, and ultimately have a better experience.


In this section we’ll look at various ways to leverage third-party products that help expand your presence with a customer, bring customers into a standardized (and, therefore, more easily supportable environment), and make happier customers, which means more referral business (the best kind in my opinion).


Note If you are doing consulting part-time, I strongly recommend against selling or reselling anything to customers.


Reseller Accounts

Have you heard of Ingram Micro or TechData? These are distributors or master distributors. If you’re going to sell a variety of hardware and software, you likely need an account with one or both of these.


You might also leverage a company like Synnex, Avnet, Arrow, Jabil, or CDW instead. Chances are, as you buy hardware and software to sell to customers, you’ll end up finding a lot of different relationships. These will extend beyond distributors and directly to other vendors.


Note Taking on reseller accounts often comes with a credit check of the business. If you’re working on obtaining funding from a bank, be careful not to overextend your credit or have too many credit checks.


According to the type of company you want to have, consider the following ecosystem to provide to customers:

Cloud Solutions: We’ll cover this at length in this blog.


Hardware and software: We’ll cover selling hardware and software later in this blog as well.


Bandwidth: If you’re going to sell bandwidth, have a telco and a cable option, and play them against each other for the best pricing for each customer. You’ll have a local provider for each, so contact them directly. When you do, don’t forget to ask them if they can refer business to you.


Infrastructure services: Think of this as monitoring, backup, networking (wireless, switching, etc.), and phones. Yup, I said phones.

In addition to building out a full portfolio of service offerings that satisfy all of your customer needs, also think about other factors. These include:


What kind of terms can you get with these companies? Consider how long you have to pay them in order to figure out what kind of terms to work out with your customers.


What is the purchasing process like? You want an easy and streamlined purchasing process, preferably with a web portal and a licensing/support number. If you need to register a deal in order to get added discounts, then you want that process online as well.


How do returns work? A bad piece of gear can be a huge waste of time to get returned. Find out how vendors handle returns and how much of your time will be involved in each return, before you start selling.


How much money are you going to make? I saved this for last because as you might have picked up on in this blog, I consider the financial benefits to most of this stuff as ancillary.


The important thing is customer happiness, etc. But don’t sell if you lose money, or don’t make enough to make it viable. Instead, in those cases make relationships with organizations who can give you a good referral benefit.


Ultimately, selling stuff can suck if you don’t do it right. But according to the type of business you have, you could end up with a very nice additional revenue stream from selling.


Just be careful, and make sure you understand what you’re doing, and the tax/accounting implications of selling stuff before you start.


Selling Mobility

Selling Mobility

I used to get smoothies from a little one-person shop, right by my gym. The store is run by a fitness instructor. She doesn’t know a ton about technology. But she’s really, really smart. And she’s been growing her business.


She asks me a lot of questions about her devices when I stop in for smoothies, and sometimes they put the concepts I deal with at work into a whole new context. They help me understand how a small business owner thinks about technology. Her questions have changed how I consult with small businesses.


She doesn’t have a computer. She doesn’t want a computer. She also doesn’t use her cell phone for anything. She uses iPads. And sometimes, when an employee has been messing around on an iPad, she sees a little something she might not want to see in the browser history.


But, it’s a smaller company, and she’s happy to keep costs down in the beginning by leaving everything as open as possible and not restricting what people can do.


And this is how tens of thousands of new businesses are started every year (keep in mind that part-time Apple consultants aren’t the only ones making it work in the gig-based economy).


Sometimes I like to give her helpful tips (consider this free consulting). These are often things like “get an accountant” or “here’s an app for annotating PDFs.”


As she grows, she wants to stay on the iPad forever. This is similar to other businesses that have grown, like Smoothie King, which


Apple famously uses in its marketing documentation as a model, with over 500 franchises using Apple devices to speed up check-out. Or my local coffee shop, which now has 7 locations. But I’ve also given her tips on how to make a better Apple deployment using third-party tools.


Not all businesses and definitely not all job functions in even the smallest business can replace all of their computers with tablets. But many want to, because tablets are cheaper, easier to manage, require less training, and come with much higher customer satisfaction than desktops and most laptop computers.


Because of the limited real estate on the screens of most mobile devices, the apps that run on devices are often used for a specific job function.


In many environments, stringing together a workflow can require multiple apps, as we discuss throughout this blog.


But even if you load a number of apps on a device, you will often spend less than many of the popular traditional software packages on the market. Still, at some point, many jobs simply require more complicated hardware and need laptops.


It seems like every year, there are entire industries switching large numbers of desktop and laptop computers to mobile devices. This represents a huge potential source of new customers to the savvy new Apple consultant.


Apple started the trend of mobile devices in retail, but since then we’ve seen a proliferation in field services, medicine, and even evangelical environments, allowing for a never-ending source of customers.


And sometimes it just takes the mastery of one app or making one friend at an Apple Retail Store or Windows-focused consultancy to make all the difference to your business.


As mobile devices gain so much traction in these environments, interesting questions around security and scalability have started to crop up. Devices get lost and need to be wiped.


As you acquire a lot of devices, you want them set up similarly and you want that device configuration to be automated. The vendors have listened to what customers need. For example, Apple provides the following technologies about which you need to be knowledgeable when talking to customers:


Mobile Device Management (MDM):

Solutions such as Jamf Now (www.jamf.com), that allow administrators to manage devices remotely: managing apps, content, settings, and even actions on devices, such as remotely wiping and locking devices that fall outside the organization’s control (by getting lost and/or stolen).


If you’re doing a lot with mobile deployments, you’ll want a relationship with Jamf, AirWatch, SimpleMDM, or one of the other MDM/management platforms out there.


The Volume Purchase Program (VPP): Allows users to purchase apps in bulk and then deploy purchased apps to devices automatically. For more on the Volume Purchase Program, see http://deployment.apple.com.


The Device Enrollment Program (DEP): Forces devices into an MDM solution, automatically joining to the solution when a device is activated. For more on DEP, work with your account teams at Apple or the reseller of your Apple devices.


Many apps are only available for a single platform. For example, many of the apps on the App Store for an iPad will not have an equivalent on Android devices, and vice versa. Once upon a time, vendor lock-in was considered a bad thing. But these days, it can help to keep costs down.


A consultant or business owner can learn much more about managing devices if they only have to learn one platform. As the business grows, there may be a desire to move to another platform, but by then, the business should be to the point where hiring outside organizations to implement a new solution will be a major expense.


Many of the apps that organizations use to communicate with a website to store data. Little, if any, data is stored on mobile devices. Therefore, backup is less of a concern than ever, with Software as a Service (SaaS) solutions also supplying centralized management of app data without the need for physical servers in a startup’s office.


As custom and App Store apps cover more and more of the tasks that need to be performed in organizations, increasingly more small businesses are choosing to exclusively leverage mobile devices to complete work previously done with computers. And they should provide that doing so can be done securely. This drives down the costs to start a business.


The place that makes my smoothies started on a shoestring budget, compared to what it cost to start my first company and get to the point where we could accept credit cards.


Hopefully, less risk and upfront costs will allow progressively more startups to succeed and will cause increased innovation. Helping people to succeed should be our first and foremost goal at all times.


Apps, cloud services, hardware, and other tools can help your new business help your customers. In the next section, we’ll focus on selling and working with cloud services.


Should You Sell Cloud Services?

Cloud Services

Is the cloud right for your customers? The answer is probably. Is every cloud solution right for every business? Duh, of course, it isn’t—or we wouldn’t be asking the question (I learned that in some class at some point).


But cloud computing is all the rage in business because buying servers and paying for the support and backup of servers is often more expensive in the long run than paying a cloud provider for all that and just using the utility they provide.


Helping a customer find the right solution given their unique business need and personality is important. There are a lot of different ways to look at cloud-based tools. This might mean deploying something like one of the following (or a hybrid between them):


CrashPlan lets you back up files to a cloud—and maybe to an onsite server, or a server at your office. Dropbox, Google Drive, Office 365, or Box.com allow you to actually move files to a cloud environment.


Move physical or on-premises servers to a cloud environment so customers get an improved and redundant pipe to the Internet that would not be cost-­ effective to have at their office.


Implement various tools such as Salesforce.com: The Customer Success Platform To Grow Your Business, which acts as SaaS and therefore reduces the need for servers, whether physical, virtual, or in the cloud.


How large are your files? Large image or media files can be too big to work on from a remote location. Anyone that knows designers or video editors knows they’re going to be miserable sitting around for half an hour waiting for each of their projects to open each morning.


Find out how long it takes to open each type of file a given customer uses before migrating these files to the cloud. You might end up being better off syncing them to an on-premises server or finding an alternative workflow.


Do you have compliance issues? Many environments have legal, medical, governmental, banking, or other compliance requirements. Each cloud environment will have its own set of standards that it meets.


From Safe Harbor (in the EU) to SOC2 to HIPAA, to simply checking a box that a customer has on a security audit document, there are lots of compliance issues that come up. Verify that any solution you find or sell meets with each customer’s requirement before you start working with them to integrate it.


Does your business logic have specific requirements to address? Business requirements often include Customer Relationship Management (CRM), accounting software, Professional Services Automation (PSA), tools for various types of businesses, and other options, all interconnected.


Make sure tools do what a customer needs, including small tasks. Often this is best handled by observing them work and making notes about how they interact with legacy tools.


Does a given tool need to interact with other tools? In an app-based world, very few tools do everything that a customer needs.


Instead of spending hundreds of thousands of dollars on a single tool that sucks at doing everything it takes on, customers often prefer tools that are simple to use and quick to learn. But make sure they can connect to other tools when needed, in order to keep from tedious double-entry.


Do you need to easily move your data to and from the cloud solution? Many cloud solutions only provide the ability to add data to the environment but make it challenging to export data.


Before you stick a customer with a solution that might not be great for them (for whatever reason), make sure they can get their data out once it’s in a given tool.


What’s the cost? Read the fine print. If a customer needs to programmatically interact with data, they might have to pay for a premium account type. There are usually grids that layout features and options for things like API access or “pro features.”


When costing a solution for customers, make sure you understand those levels and costs or they might get stuck paying triple what you quote them and hating you (you’d likely hate yourself too).


Do you have the appropriate network for this? If customers rely on the Internet to access files, databases, contacts, and other mission-critical assets, you’re going to want to make sure that connection to the outside world simply can’t go down, or employees will be sitting idle when (not if) it happens.


Redundant, fast connections to the Internet are absolutely necessary and pale in comparison to the cost of humans sitting around not able to work.


Ultimately, a cloud solution probably will actually be right for most every customer. It might require a tad bit of research to get to the correct solution that fits within each unique customer’s requirements and budget.


But if you have the initiative to move on-premises solutions to the cloud, or move to a given SaaS-based solution, doing so is entirely possible given the expansive landscape of cloud providers.


Now that you’ve been armed with a few questions to ask as you go through service-by-service on such an initiative, enjoy the process—and enjoy hopefully taking this chance to work with customers to reinvent how they go about doing all the wonderful things they do.


If successful and you truly capture and improve their workflows, you will have a customer for life!


If You Do Sell Cloud


There are a number of vendors that offer services from which your customers can benefit. Most of these also offer a reseller or referral account type. Google Apps, Microsoft, Box, and Dropbox are file-sharing services that allow you to resell or affiliate accounts.


And those can mean a steady extra income and ancillary benefits that make it easier to support customers. You might not even want to capture the added revenue stream but may do so in order to charge your customers less for services while also getting access to exclusive options.


Here are some things to evaluate when looking at new cloud services (or at least new to your portfolio).

  • Can the customer contact the provider directly?
  • Do you, as an affiliate, get elevated levels of support?
  • Do affiliates get additional training?
  • Can you manage multiple customers from a single dashboard?
  • Can customers create a delegated administrative account for you without incurring the additional cost?
  • What percentage of what they pay the vendor is your “commission?”
  • Can the customer pay for service annually, if needed?
  • If the customer stops working with you, how easy is it for them to transition their service to another vendor?


These are all important questions and you’re likely to have many more. The priority of each response will be based on the types of customers and the types of data or services. I recommend creating a spreadsheet that allows you to pick vendors you want to work with, so you aren’t blind-­sided. Be deliberate in your selection. 


Splitting your time working on a lot of different tools can be frustrating. While it might seem enticing to work with as many vendors as possible in order to provide as much coverage as possible to customers, keep in mind that centralizing around a good, better, and best approach, or even a single vendor, allows you to focus.


You can get really good at building solutions around that vendor, potentially getting leads from vendors, and having fewer tools to try to access in the event a customer has issues.


The fact that you’re selling a solution can change your approach. For example, if you’re selling Dropbox then you might not even bring up Box. com or Office 365 in conversations.


Just make sure that the experience to each customer is great and that they’re not sacrificing a streamlined workflow so you can make an extra buck.




Service Level Agreement (SLA):

If you can’t get to your data, what good is it? An SLA is a promise to meet certain service levels. A really good SLA includes a five nines uptime, or 99.999% of the time your stuff will be available.


Keep in mind that 99% of the time means your data could be offline for days (3.65 of them in fact) and the vendor still meets their uptime requirements.


Also, look for what penalties are incurred if the vendor does not meet the SLA; if there are no penalties, then why actually have an SLA?


Backup: Backup is often the last aspect of security many thinks of. However, if the data is lost, then you might as well have kept it on paper instead. Backup requires a lot of space and takes time and often very expensive equipment. In fact, not having to back up our own servers is often one of the main reasons many want to move systems from our offices to the cloud.


So make sure that you understand how long your cloud provider retains your data, how long it takes to restore that data in the event of a failure, and what process is required for that to happen. Also, see if you can have your own backup of their data.


A Security Scan: You can run your own scan, for free, and see if you get blocked from accessing the product or if you uncover your own vulnerabilities that the vendor didn’t yet know about.


A couple of caveats here, don’t scan really large vendors (like Dropbox or Google)—this is mostly pertinent if your vendor is giving you a dedicated server in their Cloud infrastructure.


In today’s fast-paced business climate, new services seem to come online with large and small companies all the time. This might be a quick list-making app, or it might be a huge new tool that runs the entire organization. You don’t need to wear a tin foil hat, but you should take a few basic security precautions that keep you from being negligent.


I recommend taking a list like this and turning it into an actual checklist and auditing every app you have to verify that each one meets the requirements you come up with. That’s not wearing a tin foil hat; it’s just good business.


Referrals vs. Selling

Referrals vs. Selling

There’s an old adage in the IT industry that “no one ever got fired for buying Cisco” or, even earlier, “no one ever got fired for buying IBM.” Be careful about selling anything you haven’t heard of.


There is security in selling a big name like Salesforce and there is a risk in recommending a smaller company or specialty service that might go out of business.


Never let the commission sway your judgment. Start with what the right solutions are for your customers and then work backward into a relationship that helps you manage multiple customers and provide added value to customers by using the same services repeatedly (and honing skills with that service).


This is easiest when there is a clear market leader in each vertical market you work in. Especially when you have a critical mass of customers in those markets to become an expert in the workflows for those markets.


These are known as market segments. If you are working with a customer that needs one of these leaders and the solution can’t be learned quickly, then consider taking the chance to find another company you can trade referrals for if a customer needs a solution they work with.


This will keep you from looking bad and potentially be even more lucrative for you (doing what’s best for customers is always more lucrative in the long run).


Providing Hardware and Software

Providing Hardware

Cloud solutions don’t do everything. Customers might still need various software that can only be ordered through a vendor or through a reseller. Additionally, customers need computers and mobile devices.


If you’re in the Apple consulting world, those are going to come from Apple. Rather than try to sell Apple hardware, especially in the beginning, build a good relationship with a local Apple Retail Store to help customers get their hardware and make sure that when they do that device are DEP-­compatible.


Apple also sells other hardware that works well with the Apple platform. Everything from USB drives to printers to cases, Apple will charge a little more for the products, but you and your customers know that Apple blesses the hardware.


So what might you sell to customers? You can sell all those same things! Or you can let the business representatives at the Apple Store take care of that.


Here are some reasons you might choose to sell hardware:

  • You can get customers at a cheaper price.
  • You need to make sure they get the right equipment for large projects.
  • You can get better support if you’re selling the hardware.
  • You can get the equipment faster.
  • You can get more professional or more highly customized hardware.
  • But selling hardware can come with some negative aspects as well.


These include:

If anything goes wrong, the customer is angry at you.

  • The customer might find a better price and get annoyed at you.
  • You have to float the money for the product for whatever period your terms are for a given customer.


Ordering and sourcing hardware can be time-­consuming, especially if you have to register each deal with a vendor in order to get the best price. Ultimately, I recommend experimenting with selling things to customers if you’re going to move to do consulting full-time.


Even if you don’t make this a huge part of your business, learning what is involved in reselling and how channels work will enable you to manage other vendors better on behalf of your customers.


Providing Infrastructure Services

Remember when we mentioned phone services earlier in this blog? If you have customers that actually need help at their offices, here are some things to consider in order to round out your services offering:


Monitoring Services:

A monitoring service can alert you when there’s a problem on a computer or network appliance. A solution like Watchman Monitoring will monitor Macs (and common third-party tools loaded on Macs) and let you know when various ailments are either happening or about to happen.


For example, if a hard drive is failing, you’ll get an alert, hopefully allowing you to fix the problem before a user at a customer site notices a problem.


Network appliances can be monitored either through a tool for the type of appliances your customer has or through a centralized tool (of which there are many). This is priceless, both in terms of happy customers and safe customers, and pays for itself, whether you eat the cost or pass it on to customers.


Internet Services:


Earlier, we mentioned selling Internet services. If you do, consider selling two lines to each customer: one that is a primary with a high SLA and a second that is residential-class, but often much faster. Many routers will support sharing the load to two

lines. Having two means the customer is up if one fails but also means that the customer gets faster speeds for not a lot of extra money.


Wireless Access Points (WAPs):

Customers need wireless in their offices. The Internet service that you provide them might come with wireless bundled in, but that often doesn’t meet security requirements or unified management.


Tools like Meraki allow a reseller to manage multiple customers using a single portal. Other tools like SonicWall or Cisco provide much more scalability while also providing a ton of enterprise-class features.



Switches allow you to connect all those Ethernet devices that some people apparently still have. When selling these, consider which can segment networks with Virtual LANs (or VLANs), which work well with Apple devices, and which provide the amount of throughput that customers need.



For smaller customers, you really want converged networking, which is to say multi-purpose appliances. For example, a five-person company might be able to use a Linksys as a WAP, a switch, and a router. As customers get larger, they may outgrow older equipment.


I like keeping it around in case of a failure, but it’s worth mentioning that with any networking equipment, keep tabs on when a customer might be outgrowing what you can do for them cost-effectively—or where you might want your company to get better at a given technology, and so offer some services at a discount while you do so.


Peripherals: Yup, some people still print. Some need cameras, webcams, multi-function devices, etc. This is where you need to start drawing the line for what you sell and what you don’t.


Drives, mass storage devices (RAIDs and Drobo), and other peripherals are easy to justify, but camera filters or iPad cases start to get a little off-mission.


Phone Services: The last thing I’ll mention is the phones. Many small businesses have their employees using their personal phones (or company-provided iPhones) as their work phones.


At a minimum, most customers with a brick and mortar office need at least one landline. As they grow, they may choose to use a Voice Over IP (VoIP) solution, or phone system.


Try to keep this app-driven, in the cloud, and without actual hardware as much as possible if you’re going to try to sell it. If those start to become challenging, then consider a referral partner who deals with big, traditional phone systems and/or video conferencing.


Cabling: All consultants need a good cabling referral partner. But few should run cable themselves.


Ultimately, you don’t need to be everything to all customers. If a customer needs something you don’t understand how to do, you have an option: find a referral partner or provide it to the customer.


If it’s too far out of your skillset, this is usually an easy decision. But if it’s kinda’ within your skillset, then make sure to be cognizant of how far it might take you from your true focus. But above all keep an eye on the bank account, as you’ll typically need to veer a little bit off course in order to find lasting success.




I have never seen anyone with a degree in accounting start a Managed Services Provider. I’m sure it happens, but most providers I’ve met had to (or will have to) learn some basics about accounting along the way.


That’s going to be true for a lot of different things when you start a business on a shoestring budget. And it’s good because when you hire full-time staff to do various roles, you’ll better know how to manage them!


But you likely can’t afford to hire a full-time accountant in the beginning. So at first, you can use a tool like Mint or Quicken to do basic, simple accounting.


When you grow into MYOB, Quickbooks, or one of the more mature tools, you’ll need some help. And keep in mind that you have the same types of options when hiring accounting help that your customers have when hiring consultants, so treat hiring help as a great learning experience! And wait as long as you can to hire a full-time accountant.


The Concepts

To be a successful small business owner, you don’t need to be an accounting expert; you outsource that. But you do need a solid grasp of basic accounting concepts.


As a small business owner, you need more than an intuitive feel for the performance of your business. And understanding a few basic Accounting 101 concepts goes a long way toward keeping the goals for your company in alignment with your performance. Here are a few concepts to get you started:


The balance sheet: A great place to start when evaluating the performance of an organization is learning how to decipher a balance sheet. At a minimum, you should understand assets and liabilities and how they relate to one another.


Assets are what you own, which includes contracts you haven’t taken payment on.


Liabilities are debts, as well as goods and services that you have taken payment for that you must contractually deliver.


A basic equation to calculate the worth of your company is to take your assets and subtract your liabilities, with what’s left is your equity. Putting this on paper results in a balance sheet.


This provides you with a quick overview of your organization. Lots of cash on hand and little debt means a strong balance sheet. High debt and low cash mean a weak balance sheet. The balance sheet drives long-term decisions on where to invest your resources.


The P&L: The Profit and Loss statement provides a good idea of how you’re doing at any given point in time. The P&L indicates the cost of sales, margins on each product, and costs that impact margins.


Those costs include inventory, shipping, manufacturing, etc. The more granular these become, the more data-driven you can get with establishing the cost of products. Every P&L includes net income. The net income is a statement about the profit you made; you know, the reward for your investment!


The cash flow statement: For small business owners, cash is king. Cash is a cushion for when, not if, your business suffers a setback. Cash should cover the operational costs of running a business for a period of time (each organization has a different outlook on how long that might be).


The key to understanding cash flow is the statement of cash flows. Consider the statement of cash flows as the connection between a balance sheet and income statement.


The statement of cash flows explains how your net income transformed into net cash over a given amount of time. The statement of cash flows divides activities into three categories: operations, investment, and financing.


Initially, organizations have cash from ongoing operations, but as you grow, you’ll also manage cash from investment and operations. And usually, pay taxes on at least some of that cash and take deductions from those investments and operations.




As a small business owner, you need to understand taxes. If your business is making money, you have to pay the taxman. Most organizations need to minimize their tax burden as much as possible.


And that’s where your knowledge of accounting can really pay off—you’ll understand the tax advantages of different legal structures (e.g., a corporation vs. a sole proprietorship) and the potential tax savings that are available to small business owners.


Pro forma projections: Accounting is a story of the past and the present. The pro forma is a projection of future performance based on past performance. Pro forma projections enable you to project how your business will do in the future. Projections are critical, as they allow you to make informed decisions about staffing, delivery, and the value of lines of business.


CAGR: Compound Annual Growth Rate (CAGR) measures growth over different periods. For example, you know you want to start a company with an initial investment and then grow it to a specific value to sell, assuming the investment compounds over time.


COGS: Costs of Goods Sold (COGS) represents the direct costs attributable to the production of what you sell, including the cost of the materials and labor used in creating goods, costs of distributing goods, and sales costs.


EBITDA: Earnings Before Interest, Taxes, Depreciationand Amortization (EBITDA) is one indicator of a financial performance that indicates the earning potential of a business. EBITDA doesn’t include the cost of capital and the tax impact. If you’ve taken on funding, this is a common metric to look at.


Revenue: Usually listed as sales on an income statement, revenue is the money you receive during a given period, including discounts and returns (or, in services, disputed hours or managed services Service Level Agreement, or SLA violation discounts). Revenue is gross income.


Recurring revenue: Recurring revenue is the revenue that is highly likely to continue, and thus predictable, and something you can actually plan and build a business around.


Net Income: Top line revenue minus costs.


Revenue Recognition: This is when you can actually spend the money you made. You recognize service dollars when you deliver those services. Managed Services revenue is usually recognized at the end of each monthly term, and hourly or daily services are usually recognized when you receive approval (e.g., a signature on a work order) that the services were delivered.


Gross Margin: Gross margin is sales revenue minus COGS, divided by total sales revenue, or the percentage you get to keep after covering all of the direct costs attributable to the goods and services work product you provide to your customers.


Buying Accounting Software


I usually recommend two factors when deciding what kind of accounting software (or Software as a Service [SaaS]) you should use. The first is your accountant. If they like working with a specific software package, such as Quickbooks, then you should probably use that.


You don’t want to be exporting your chart of accounts into some weird file and then banging your head against the wall trying to help them import that file every time you go and see them. Instead, either find an accountant that uses the software you want to use natively or use the software the accountant you find likes to use.


Wait, did I say find an accountant that uses your software? Why would I say that? Because the second major factor in selecting a software package is integration with your Professional Services Automation (PSA) solution.


If the PSA can communicate directly with the accounting software then as you grow, you will have a very easy, very slick way of invoicing customers based on ticket entry.


We’ll get into selecting PSA solutions later in this blog. But for now, keep in mind that the accounting software solution that you select will later need to be integrated with some automation software.


For example, if you use a PSA that integrates with ZenDesk, and it happens to not be Quickbooks, but your accountant wants Quickbooks and will only work with Quickbooks, then you’ll have a little bit of a challenge. Hopefully, you can export from one solution to another if absolutely necessary.


If not, you will have to choose between various forms of automation or accountants. Keep in mind, that if you are left with manually keying invoice information in, that’s not the worst thing (especially not early on), as manually keying in information provides you checks and balances before sending a customer an invoice.


Of course, when manually keying in information, you can make a mistake, so double-­ check your entry. Nothing runs the risk of causing trust issues more than billing someone incorrectly.


Accepting Payments


Being profitable is the difference between a business and a hobby. And a key aspect of being profitable is: the initial ways you accept money can easily limit the type of business you’re able to take on, and so accepting payment in any way that customers can pay (that can then go toward your rent or mortgage) is a great idea.


I would use three primary factors when selecting a tool.


Does the service integrate properly (and automatically) with your accounting platform of choice? An easy way to find a good tool is to start with your accounting platform and look at those that integrate with it.


Does the service give you the most favorable rates? If you can choose between multiple services, you might want to make sure you’re using the one that keeps the least amount of your hard-earned money.


Does the service change your tax nexus? Believe it or not, different sites and services (and even customers) can impact your taxes. Consult with your tax preparer (and yes, you need a tax preparer) to verify any nexus rules you might be governed by (especially if you do business between states or work in a border city).


The main solutions used to accept payments include Square, Quickbooks, and Stripe. There are tons of others, and I have no opinion about which is better than the others. I’ve used them all, and they all act as a game-changer over traditional big landline-driven machines.


Now that you can accept payments, it’s time to talk about when you can spend the money you were just paid.


Accrual-Based Accounting

If you take anything away from this blog, it’s this. If you have customers that prepay you for services in a contract, then you MUST use accrual-­ based accounting. Most businesses begin leveraging cash-based accounting, which is to say, that money they are paid is the money they have sitting in their general ledger and they treat that money as cash.


Later, organizations end up with multiple charts of accounts and only accrue or recognize revenue once the services are delivered. Why? Because you’ll eventually bankrupt a growing company if you don’t.


Basically, you can’t spend the money until you deliver the services. The earlier you start doing that, the better off you’ll be. I find many organizations don’t start doing this until they get a big scare or hire an accountant.


That big scare is often in scenarios where all of the revenue derived from a contract is spent and you have to recapitalize the company in order to just complete projects you’ve sold.


When this happens, you can easily end up with the value of the company going negative even though you just did some of the best work of your life. This is when a little extra cash flow helps, but the only way to actually solve this problem is to avoid recognizing income when you haven’t actually earned it.


Hiring an Accountant


You don’t have to deal with too much of this stuff. You can and probably should immediately hire someone to help you get your blogs in order.


I find that a good accountant will not only get what you’ve done in the past in order but set up a better system for the future. And your first accountant is likely to also act as a financial advisor of sorts. Later, those roles will be different.


When you hire an accountant, look for someone that doesn’t let you just do what you want. This means you need to listen. Yes, you are your own boss. But they’re your boss too, as are your employees and your customers.


The bookkeeping functions of a small business are not the same as an accountant, financial advisor, or tax preparer. You need someone (and at first it is likely to be you) to enter receipts, enter receivables, write the checks for payables, reconcile bank statements, reconcile credit card statements, and maybe deposit checks.


As you grow, the accounts receivable and accounts payable often split into two people.


A few things to remember here:

From the second you hang your shingle out and start accepting a Stripe payment, have a tax preparer you trust.


Identify the tool that is key to automating your business. This is important because it needs to integrate into your accounting apparatus.


If your accounting system is Quickbooks and your Bookkeeper and tax preparer both use Quickbooks, then you might not be able to move to a new Managed Services Automation (MSA) package if that package doesn’t integrate with Quickbooks.


Unless you need that MSA so bad you replace your tax preparation service or find a way to migrate data at every quarter, check in with them.


Build a good check and balance. You need someone to keep you honest, with spending, forecasting, and taxes. You need to keep others honest with your money. And you need to have them check things you don’t even know need to get checked, like a forecast of available funds at each payroll run. And you need to practice a little “trust but verify.”


Categorize receipts immediately. And bring in everything at tax time. Your tax preparer will sort out what you can and can’t actually claim. This includes services, travel, subscriptions, and the cost of your office (which at first might be a part of your home office).


If you get financial advice about a business arrangement, think long and hard before proceeding against that advice. I’m not sure how many times I’ve screwed this up. Nor am I sure how many times I will in the future.

Don’t ever, ever, ever write your own accounting software.


Keep all of your records forever.

Overall, I can’t tell you how to structure your business’ finances. But maybe some of this blog helps to frame things the way you need them framed. You should hire someone you can trust—probably someone you aren’t related to. And you should get additional services from other vendors every now and then.


Doing Taxes


You will be paying your taxes quarterly; otherwise, you will incur penalties from the IRS. Don’t let yourself end up with thousands or tens of thousands of dollars in penalties just because you thought you still worked for a company.


Once you exceed a certain amount (your mileage may vary here, so check with a tax professional), then you’ll need to file quarterly taxes and pay your government a little at regular intervals.


I would never put anything about politics in writing—Conservative, Liberal, Libertarian, Communist, etc. And none of that matters anyway. If there’s a law that you have to pay taxes, you have to. You use their roads, send your kids to their schools, benefit from the crime they keep out of your office, so you need to pay your share.


Actually, that doesn’t matter either. If you don’t pay your taxes and do so properly, you can go to jail in pretty much any country in the world. So do them early and often.


I can’t tell you how to actually do your taxes; that’s different for every business, city, state, and country. But I can tell you that you should probably create a pass-through entity if you’re just getting started.


Hire a professional tax accountant immediately so you can start making your quarterly tax payments to the IRS (if you’re based in the United States), so you don’t have to pay steep penalties for not having done so.



While not strictly accounting, insurance is part of the financial equation for any organization. Your accountant should be able to point you to a good organization that can sell you corporate insurance.


Don’t go out there and do work without insurance. It’s critical to help protect you as a person as well as the company you have created. One accidental erasing of a hard drive, dropping a laptop with critical information on it, or incorrectly securing a computer can leave you liable for who-knows-what.


Picking a policy at first doesn’t have to be all that difficult. Find a good agent, then review what packages they have and pick one that fits your business model. Referrals are best when looking for an agent, but searching for “errors and omissions insurance coverage” (E&O) or “professional liability insurance” is likely to net a ton of potential sources for a policy.


In the beginning, your policy can be modest. Growth usually means that your policy will have to get bigger. Each new customer brings with them the risk of potentially requiring more insurance than you already have. As new customers come with additional E&O coverage, you can look at the cost to acquire an upgraded policy.


Here’s the most important thing about E&O. You will want a “Terms of Service” or some agreement with customers that governs how you work with them. In that agreement, you will want to cap any damages they can pursue you to be equal to the amount of money you have in your E&O policy.


This protects you from the potential gap that you would have to pay in the event that you were sued and didn’t have enough coverage to pay out the amount in a suit, which would then come out of your or your business’ pocket.


Cash Flow

Cash Flow

Finally, let’s talk about cash flow. You should always have enough cash to pay your staff and other expenses for 6 months. Otherwise, don’t hire staff. In some countries, not having enough cash flow to run the organization for a period of time is a criminal offense. Don’t forget to consider rent, HR, taxes, legal, etc. in this equation.


Now, what happens when you have more than 6 months of operating capital? If you have enough to run the place for 10 years, then you aren’t properly deploying your capital.


If you want to stay a small company then you should be investing that money. This isn’t investment advice, but if you are living (or running the company) in a way that provides positive cash flow for a while then you should find financial advice.


And that advice might be to grow the company or according to the cost of cash at the time, to leverage debt to grow the company. Or if according to what you want out of life and the company and everything, then your investment advisor might tell you to do something different with it. But don’t keep it in a checking account!



Knowing the basics of accounting is an important skill. One of the most important hires you’ll make is an accountant. And there’s a strong likelihood that you’ll need at least two. As you grow maybe an accounts receivable and/or accounts payable person on staff. But you need to know enough to properly manage them all.


Whatever you do, don’t go your own way. Listen to their advice. Maybe seek a second opinion at times, but never think you know more than Generally Acceptable Account Practices (GAAP) and try to make up your own accounting rules.


You can also outsource a Chief Financial Officer to help you best understand how to manage your tax professional and your day-to-day accounting team. Make sure to stay on top of quarterly tax payments (obviously your mileage may vary here, according to your country).


Finally, learning about accounting and finance is learning about business. Managing costs, managing receivables, managing cash flow, managing revenue recognition, etc., these are what makes for a savvy business owner. You may get to the point where you don’t want to do much of it anymore.


And that may indicate that you’ve outgrown your comfort zone. But once you have enough income to hire a second person, it’s time to start learning a lot about business, even if you only have time to listen to some of the blogs in the Further Reading section of this blog, or others that are similar.


Engaging Customers for Referral Business


Your customers are the most cost-effective way to find new customers. It turns out that doing good work pays off. But every industry is different.


You can’t always just be vulnerable and ask a customer to refer you to other organizations that might be able to get value from your services. Here are a few delicate strategies you can use to get referrals:


 Ask: If you have a good relationship with a customer, then you could, at the end of an engagement or through an e-mail, just ask them to refer you to other customers. It’s tough to do so without seeming desperate or really cheesy. But it’s possible.


 Leave-behinds: I’ve had customers pass on the marketing materials, but they can’t do that if you don’t leave them with something. Asking if you can leave a few one-sheets with a customer that they could then pass on to someone is another way to increase business from leaves.


 Compensate for referrals: If there will be some kind of compensation, the most ethical thing is to compensate the company at which your contacts of customers work. This is a slippery slope and, in some industries, will immediately create distrust (or even be illegal due to various regulations). Proceed with caution.


 Put a link in the customer’s web interface: If you give your customer a way to look at services online, also give them a little button to refer customers. This is one of the easiest and most passive ways to get referrals.


Next, it’s time to turn your attention to the kind of external partners you’d like to engage with. In the next section, we’ll look at finding the right kind of partner, which includes finding people to provide complementary services, subcontract, and potentially just refer to business (unilaterally or bilaterally).


Finding the Right Partner

Finding the Right Partner

I’ve gotten e-mails from hundreds, if not thousands, of companies that wanted to partner with organizations I’ve been a part of. Some represent great deals for me or the organization I was representing at the time.


Others were a bit of a stretch. And the ones that seemed like the best deal at first, turned out to be terrible when we dug into their business.


Keep your specific customers at the front of your mind when selecting a good partner. Ask yourself questions like the following:

  • Will my customers get along well with this person or company?
  • What goods and services do my customers need?
  • When (not if) they have problems with this other vendor, how will I end up getting involved?
  • Can the vendor actually deliver the services they say they can?
  • Are the costs aligned?
  • Will the vendor or I end up accidentally assuming the other’s role in the customer’s company?
  • Should this be a subcontracting arrangement, a bilateral formal business referral, or just someone that I point to?


The most common type of business arrangement for many Apple consultancies is to help a customer find someone to help with their Windows devices. I see this specific one a lot. Maybe just for the two accounting computers, or maybe for the majority of systems that are Windows-based.


Let’s face it, traditionally, the people that manage Windows systems are just a little different from the typical customer who uses Macs. Find someone you can trust (or three) with your type of customers.


Structuring a Partnership

In most cases, if there’s no compensation, I would recommend having three partners for each product or service you need to connect customers to. You can then point to that (e.g., on a web page of your site) and say something like, “I recommend that you contact these three and see who you like dealing with and think matches your business the most.”


You don’t want to compete with a partner. For example, a router manufacturer might sell directly but deliver no services. If you want to deliver services but not sell their equipment then you might have found a perfect partner if they need someone to bring in that can perform labor, especially for complicated products.


But if you want to sell the routers as well, make sure you find out whether or not they sell directly to customers so that you can best understand what might happen if they compete with you on a given deal.


The management at most vendors will want to have a healthy relationship with you. But account teams that cover your geography might want to make a commission on selling products.


When evaluating partners, also find out whether or not each partner will sell directly once you’ve registered a deal and, if so, whether or not you can lock in better pricing than their account teams can offer provided you register the deal before their internal staff does.


Who makes a good partner? Obviously, one of the most important aspects of finding a good partner is that your customers don’t fire you for making the recommendation, either because the partner stole the customer from you or because they did work that was bad enough for the customer to associate you with that work.


If you pick a bad partner, you risk losing a customer. Trust from a customer is built over time. If your customers have bad experiences with a partner, there is a good chance they may lose trust in you.


One way to limit the liability this creates is to not accept money. Instead, you can engage in a bilateral referral agreement. This doesn’t always work but is usually referred to as quid pro quo.


Quid Pro Quo

When you find a new partner, they’re going to be motivated to send leads to you more if you sell a lot of their product. This relationship can take a few months to mature, so if you are going to build a good relationship then each party should have something to gain: quid pro quo. For example, I once inked a partnership with a new company to resell their routers.


It just so happens that within the first month, I sent about a dozen customers to them. Their response was to send a bunch back my way. These were net-­ new customers with a bunch of Apple devices that weren’t being managed.


The quid pro quo can take on different manifestations based on the type of relationship. I once had a company that was referring to a lot of business to me, and I just didn’t have any business to refer back. Set up a commission plan to compensate them for the referrals.


Another asked for a commission structure that I just couldn’t give them, effectively ending the relationship (although leads kept trickling in from them from account teams that knew I was a trusted vendor).


Given that all relationships are different, be realistic with your expectations of how much product you might sell and set expectations early. And ask for the same from them. This will allow you to build some goals for the relationship and make plans.


Converting partnerships into customers is important when growing your business. However, make sure not to expect anything and to increase your risk in a relationship along with the incremental rewards that drive you to do so.


It benefits all software, hardware, and services companies to engage in partners that then rely on the success of their business for their own success. So look for ways to make all of these relationships beneficial for everyone involved.


Being partners allows you to stay nimble; but sometimes, you’ll see too much potential for a simple partnership and want to move into a subcontracting arrangement instead.


Subcontracting vs. Partnering

Partnering is great and, if done right, will help you provide the best services to customers for the best prices. But there are times when you will decide to keep work on your paper.


There are a lot of companies that have contracts. And they want to keep all of their expenses on one Purchase Order (PO) in order to streamline accounting operations. You might also decide to subcontract types of work to provide a more comprehensive offering to customers.


Before you subcontract, make sure to have a contract and have all subcontractors sign that contract. Work out rates that are fair and reasonably priced. You should make a 50% or greater margin in order to sustain commissions, taxes, finance handling fees, etc.


If you can’t and you still choose to subcontract, then you’ll likely end up with the ancillary services being provided as a loss leader or gaining market share by providing one throat to choke to customers.


If you’re making that kind of margin, couldn’t the subcontractor do that work directly with customers? Yes. But then they would have to go find customers, process payments, pay taxes, not take payment for 60 to 90 days, and all that other fun stuff. You take on plenty of liability.


If you decide to subcontract work, make sure you have at least two vendors who can subcontract a given project. Maybe you are asked to do a project and you have a network of vendors who you can hire to do the work.


Make sure to have at least two in a subcontracting agreement. Otherwise, if one goes out of business or decides not to subcontract any longer, you’ll be left with a potentially negative-margin business.


Once you have a network of subcontractors, then it’s time to figure out the logistics. Sites like Expensify, Ebay, Stripe, etc. can be used to automate paying subcontractors. If you can work into your PSA or accounting system an automated routing to keep track of project expenses, all the better!


Additionally, you’ll want project and ticket notes entered into your systems, so decide up front how you want contractors to enter their time into your time tracking systems (and an option for low volumes of work is to e-mail you those tickets and you can paste them in).


Other, smaller aspects of subcontracting arrangements to cover:

Decide up front if you want to provide access to an e-mail address from your organization, if you want subcontractors to wear branded attire, and if you want them to acknowledge that they don’t work for you directly.


How will you handle billing disputes when (not if) they happen? Don’t stiff your subcontractors just because your client doesn’t like the service, but know that prolonged exposure can backfire, especially if the subcontractor isn’t using the same systems you use.


How will you handle requests to engage with the subcontractor directly? Are subcontractors allowed to work with customers after your project is over or does that need to flow through your company forever?


Is there a time after the last project done as a subcontractor that the subcontractor should wait before directly engaging with customers?


All of these attributes to the relationship should be discussed up front with a written follow-up (e.g., via e-mail). The more formal an arrangement, the harder it might be to get through paperwork but setting good expectations from the beginning will lead you to a more successful long-term relationship.


If you’re the subcontractor, then make sure you understand all of these attributes to the relationship as well.


Dealing with Problems with Partners

Once you’ve done all this great work on developing partners, you want to protect that relationship and grow the business. You can’t do that if you lose trust with the customer. Which means you need to make sure that you’re doing your best work when you’re working on a referral.


No matter how hard you work, sometimes things go weird with customers. When it does, I usually default to doing whatever is right. Do what’s right so customers aren’t complaining to a partner about your business. Nothing will sour a relationship faster than angry customers.


And you don’t know some seemingly simple issue will cause a customer to reach out to a partner no matter how good you are. A great way to get in front of this is to build out an escalation path with customers before the leads start flowing to you.


Another easy way to ruin a relationship with a partner is by taking business away. Partners often occupy adjacencies.


If you do, then make sure you know exactly which services overlap with those provided by partners who refer business to you and make sure that you don’t actually take business from your partners; especially those who refer business to you. Instead, say great things about them and promote them to customers.


Don’t say anything negative about the referral partner nor their product. If that organization makes software and or hardware that’s problematic, offer to get in touch with a vendor rather than simply saying they have issues that are causing additional services.


If a customer does not trust the products you help fix, then they aren’t likely to continue using those products, which will be an issue ultimately resolved by them not using either.



The best kind of referral comes from a customer. Your customers provide a legitimate rating of your services. No amount of advertising, marketing, public relations, or money spent on referrals from other companies will ever provide you with a more valuable lead generation engine in terms of close rate, quality of customer once closed, etc. But you can’t rely on referrals forever.


Once you get to a certain point, you need to find partners. If a partner seems too good to be true, they won’t seem that way for long.


But when a good partner comes along, and there’s bilateral value for each organization, you’ve struck gold. So make sure to take care of your partners and that you’re always open and honest about the relationship you have with them.


Not only because a consistent theme in this blog is transparency and honesty (key components of character), but because if you aren’t then they will eventually come to hate you, and you don’t want other companies souring potential customers in the market.


The Joy of Being a Sole Proprietor

I tried to talk you out of starting a company in the previous section. If you’re still reading, you went ahead and decided to do it anyway. Or maybe you did it after reading that, or maybe you did it 30 years ago.


The next phase is to get enough clients to make how much money you want to make.


It’s not that hard to become a consultant. The job can coexist with other jobs, provides flexibility, and you don’t have to worry about other people. If you want to take a day off, just reschedule your appointments.


You can limit the amount of time you work so you can focus on your family and other pursuits. I know a lot of people who have been sole proprietors for decades and not only love the gig but make enough money at it so that they lead a comfortable lifestyle.


Staying Sane

Still, there are some tips that I can provide to help keep you sane. Some things to keep in mind as a sole proprietor:


It’s usually all about boutique service. There are a lot of really cheap options out there. And some of them are just as good as you. No offense. Same with me. But there’s a level of service you can provide that makes you worth every penny. Don’t skimp on providing those extra little things to customers that only boutique shops can.


Being a sole proprietor allows you to focus on relationships with key customers. Life is too short to work with crappy people. If you choose to grow, you’ll have to. But at this size, unless you plan on growing and replacing yourself with others at your customers’ customer, work with who you want to, not whoever calls.


Don’t compete on price. If you start a company and are jumping at every project, then trying to do so cheaper than anyone else will run you ragged. Most customers who select vendors based on price have a certain expectation of how they can treat those vendors.


Again, life is too short for all that. I’m not saying to explore every opportunity that comes to you, but think about this: would it be better to bill 2 hours at $200 per hour or 8 hours at $50 per hour?


Keep it simple. A lot of what we cover in this blog is about scaling your operation—things to consider when you’re building a firm. And many of these systems work great for solo practitioners as well.


But build systems to fit your size. You’ll definitely want tools that make it easy for you to track things. But as an example, you won’t need a tool like Marketo to message customers.


Practice the 80/20 rule. Twenty percent of your customers likely account for 80 percent of your business. Make sure to feed those customers with as much TLC as you can. And don’t be afraid to let some of them go, even if they were hard to get.


Outsource or refer everything you can. The longer you can delay hiring for accounting, dispatch, etc., the easier your life will be. Before you start hiring for these tasks, ask if you can just have a part-time person come in and do it or hire a service.


Take care of yourself. I can remember when customers called at 4 AM and I jumped out of bed to go help them. Triple-time was nice, but if you find you do that a lot, you can increase those after-hour rates to try and reduce those kinds of calls.


Set a schedule. If you’re new to working for yourself, it’s easy to let your personal life eke into your professional life or to let your professional life start to consume all the time, leaving no time for a personal life.


Set a schedule to go to the gym before you start work, then be onsite for your first customer at 9 AM, or whatever works for you. And set aside time for family and friends. You know, so they don’t forget you exist.


Deal with billing disputes swiftly. If a customer goes past terms, then they’ve probably forgotten, are having financial challenges, or are disputing the work that was done.


Whatever the case, if you let accounts receivable pile up, you won’t stay in business long. Get to the source of any delinquent accounts quickly, and understand that it’s often that the customer is too busy to dispute an invoice.


Take cash-on-delivery for as long as you can. This will keep your blogs streamlined.


Get tax help immediately. I’ve seen dozens of solo practitioners go out of business in their first year because they hadn’t planned on quarterly tax payments.


Sponsor the community. Do you know those calendars with ads for the local high school PTA group or entries in church newsletters? Sponsoring your local community is not only a great way to meet potential customers but a passive and easy way to get your brand in front of others.


Don’t grow beyond sole proprietorship unless you are committed to the endeavor. You might have the business to warrant expansion, but it’s not worth screwing over the people that choose to work for you if your heart is not in it.


The first customers are always the hardest to recruit. These usually come from your circle of friends. And since you don’t yet fully know your value, you are likely to undercharge them.


As you pick up more customers, you’ll end up increasing those rates, and that might cause some attrition. That’s fine, provided you’re still making enough to make the gig worthwhile.


Be Deliberate

It’s never too early to be deliberate. Find your niche and actively seek out customers that help you win in that niche. Over the years, I have known consultants that specialized in Point-of-Sale (PoS) systems for Mac and iOS, and I’ll never be as good at doing what they do, so I refer business to them.


The same is true for accounting systems, digital signage, and specific technologies. This also helps differentiate you from potential customers.


If you want to play in those spaces, then you’ll have an easier time recruiting customers that you can retain long-term.


While you’re building your initial base, you’ll likely end up taking on customers that aren’t a part of your core. Maybe you are learning while you go or just doing a specific type of work so you can afford more ramen noodles next week.


Whatever the case, it’s best to be transparent with the customers about what kind of relationship you have with them. The same is true in life.


Think about what you want out of this. Is it to be flexible? To have a part-time job that puts you closer to retirement? To be in control of your own destiny? One of the great things about being a consultant is that you have instant gratification a lot of the time.


But the tradeoffs are that you’re doing all the work and that work comes in fits and starts. The more you understand your own intention, the more you can adapt and use the slow times properly.