Money Mindset

Money Mindset discusses the experiences and opinions of a middle-aged professional on the topic of money, including: financial planners, investment experiences, part-time income sources, real estate investment and private sales, web site income opportunities, changing professions, home office organization, money education for kids, and many other subjects I have experienced first hand or even just thought about.

Monday, February 13, 2006

Starting Your Own Business -

Ever since I was young, I always sort of assumed I would someday have my own business. I remember going with my parents to a relative's house that had just been built, and seeing their new 3 car garage with new cars in it.

My Dad said, "You can't afford this kind of lifestyle when you're working for someone else." I think that was the moment when I implicitly decided I would have to have my own business. This was one of the few times I remember someone trying to give me career advice that I actually believed. Most times since then, when people have said things like, "You need to do a Master's degree immediately following undergrad, or you'll never do it at all...", I sub-conciously set out to prove them wrong.

I guess I must have let the dream slide a bit, because in university I chose to do more technical courses than management courses when I had the chance. Computers were just too much fun to give up for artsy courses like "Organizational Behaviour".

But shortly after graduating, I decided that I needed to prepare for being "management". I saw too many unprepared technical people being put into management positions they weren't ready for. So, after 3 years of fulltime work, I "retired" and went back to school for a Masters in Business Administration. This actually disproved the advice I had been given; that I'd never do it if I didn't do it immediately after undergrad.

Anyway, after finishing my MBA, I still had no distinct idea of what kind of business I would own myself. I kept working my way up in management of small software companies.

The day I figured it out was when I attended a Product Management course and saw a guy with an independent consulting company who charged $1000 per person for a 2 day seminar. There were about 50 people in his average class, which he ran twice a month rotating through several cities, plus on site seminars for $10,000 each. Let's see, nice hotels, work 5-10 days a month, earn $100K per month (minus hotels, airfare and conference room costs). Now I'm glad I took that MBA course!

I haven't got there yet, but I am still working on building the content for seminars.

During the next 6 years, I couldn't help but realize that all the time and effort I was spending as an employee was helping someone else become successful and wealthy. On top of that, I found it harder and harder to buy in to the visions of senior management when I often had doubts about their strategy or tactics. Mostly, I didn't feel my skills were being used as effectively as they could have been. I was drying out on the vine. I had very little control over my own destiny.

I felt that the simplest way to start building my own business was as a consultant in the areas of technology that I knew. This would also allow me to quickly build up experience with multiple clients and technology challenges.

I just started by looking at the list of partners on my employer's Web page. Then, I looked at the partners' partners, until I got a good view of what kinds of companies might need consultants with my knowledge. It didn't take long to narrow down a few candidates in the local region near where I lived.

Next, I prepared a short introductory telephone script and called the president of each one (they were relatively small companies, with fairly accessible executives).

I set a 3 month minimum limit on my first contract opportunity. Either that, or a full-time position for a while just to get familiar with consulting. It took 2 years of constant calls and emails before I got an offer. In fact, it never rains, it pours. I got two full-time offers and a 3 month contract offer that would probably have renewal possibilities. That's what I did.

Immediately, the excitement of running my own company took over. I did whatever I could to show I was thorough and giving good value to the client. Then, word began to spread among client contacts to the point where I am confident of being able to sustain demand.

I have no regrets after 2 years of independent consulting. The most significant advice I can give, in hindsight, is to:

  1. Have a long list of potential clients to call on;
  2. Have enough of a cash buffer (whether it's in savings or a line of credit) for those "long receievables cycles" (they do happen) and downtime between contracts;
  3. Try to pay yourself on a regular, fixed budget;
  4. Get an accountant you trust, and don't haggle over his hourly rate. Just make sure he is professional and has integrity (and uses tax software - my first accountant did tax returns by hand!);
  5. Listen to your accountant's tax advice but don't expect him to be your big picture financial planner. They are most valuable in planning for taxes;
  6. Get a financial planner who can help with your retirement plan (check the yellow pages)

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