Sole Traders - Growing from a one man band

[Simmy]

I’ve just realised this is a fairly long post, so thanks to everyone who takes the time to read it all

This is mainly aimed at those who started out on their own and have since successfully grown and taken on employees. First though, a bit of background about what I have tried so far.

I've just about recovered from a few bad years where I tried to grow the business and took on a friend as a fellow director. It failed for a number of reasons, mainly;

• I underestimated the finances necessary to sustain an office and extra person.
• We both lacked experience with higher end equipment which would allow us to work with larger companies.
• We continued to do a lot of residential work - whilst these were our bread and butter jobs, they took up so much time that they prevented us from developing.
• We lacked the funding to be stable as we tried to grow. Financially it was a strain from the offset.

I am now back to working for myself. I learnt a lot from the experience but my enthusiasm and motivation took a huge knock and although I'm not ready to try again just yet, I know if I want to be successful I need to consider expanding again in the future.

Now that I am back to working by myself, I’m going through the same problems I faced before I tried to grow. Mainly, I don't have the man power to do all of the work that comes my way, or provide IT services for larger companies as if I'm sick/on holiday then there is no one to cover me. I’m mostly running around like a headless chicken doing the odd 1-2 hour job here or there. There’s no continuity or stability other than my contract work. A few of the companies I do provide work for mention how difficult I am to get hold of and how long it takes me to reply. This is a huge warning sign and shows that I need to streamline the way I work on my own, especially if I'm to a) keep these clients happy and b) eventually find my feet again and try to expand.

I have decided to give up my office and work from home again. I have enough contract work to provide me with a regular, modest income. I get enough ad-hoc work to fill the gaps. Although I am going to cut out new residential work altogether (I will continue to provide residential services for my regular customers who I know pay promptly and I get on well with) and most importantly I’m going to increase my prices.

I started my company from the day I graduated from university, over 9 years ago. I’m getting to the stage where I’m starting to panic and wonder if it was worthwhile or whether I would have been better off just working for someone else.

This has got me thinking about whether I continue the way I am and perhaps try to expand in a year or so. In that time, I will spend time studying and getting experience with VMWare/Server 2008+2012/Exchange/Networking. At least if I decide to close down the company in the future, or it goes belly up, I'll have some knowledge and experience when applying for jobs so I don't start right at the bottom.

I guess my main question is, to those of you who have expanded from a one man bad, what was your strategy and how did you achieve it? Did you get a loan to cover the increased costs? Did you take on someone with a basic grasp of IT and train them up or did you take on someone with more knowledge than yourself who could help to train you up?

On the flip side, how many of you are happy to stay working as a one man band?

I recently started applying for jobs and after my first interview was offered a good position with a managed service provider. But I turned it down for a couple of reasons. Mainly that I have recently secured a large contract (2 days per month). That combined with getting rid of the office (saving ~£450-550 per month) has meant I will be in a very comfortable position compared to the last 3-4 years. This has given me a second wind to give it another try but I need to convince myself that I can make it work this time round. Any input/advice appreciated

 

[aweston]

Hi there Simmy. I know what you are going through. I went from living on the street to developing a company of 8 employees and still growing. I started this company with $5 in my pocket and an idea. I'll do my best to give you some quick pointers to get you going in the right direction.

First off, the reasons that you gave for failure aren't really the reasons that it didn't work. So do learn from them, but let them go. The past is the past, there's nothing you can do to change it and it's not serving you hanging on to them. It's only perpetuating the cycle.

Second, you're doomed to fail as of right now. There are two choices, either accept failure or change your context/mind set. To be successful you have only one context "Success is the only option" and regrettably I'm not seeing that in your post. I see a whole lot of fear and trepidation. You know what happens when a soldier gets on the battlefield and he becomes afraid? He dies. So address that one first.

You didn't fail. It's only failure if you don't get back up on your feet. Your plan was not a good plan, simple as that. It's time to create a new plan. You're not a businessman, you're a geek. That's a challenge that you're going to need to overcome, and a very difficult one at that. Most can't make the transition. Since you don't know how to be a businessman, you need to enrol the help of successful businessmen to help you develop your plan. Then tweak and tune it until you see success. Thomas Edison had 10,000 bad plans until he developed the right plan that delivered a working incandescent light bulb. Henry Ford didn't know a thing about building cars and had very little formal education. When called on it he simply agreed and pointed out that he had 100 people available at the push of a button when he needed the answers.

Next, when you find those advisors that you trust, drop your mask. You're doing a lot of "fudging" the truth with us right now and it's not very well concealed. Be prepared to be brutally honest with your team. Share every single detail and then shut up. Let them talk while you listen. Be quick to develop that plan, but be slow to change it. Unsuccessful people are slow to develop a plan and quick to change it. Act fast and act now.

So.. Change your context, burn your ships, develop a plan quickly and act on it with fervency.

For the first year and a half I ate almost nothing but Kraft Dinner. You must be prepared to make a lot of sacrifices. Your day is now an 18 hour day. No extras, just focus on the task at hand.

You're not going to acquire top tier help off the hop. It's just not possible being relatively unknown, working out of your house and not paying top dollar. So, get yourself an assistant. Behind every successful businessman is a good woman. Choose wisely.

There's a start.

 

[Cambridge PC Support]

I started this company with nothing more than half a memory stick and a dodgy USB cable.....er sorry, lost the plot there for a second......

I've been a one-man band working from home for the last ten years and it's only in the last few years that I've been able to entirely support myself from my business income. Looking back, I wouldn't change a thing.

95% of my customers are residential and the rest are very small businesses. I've no interest whatsoever in making the huge leap to office space and/or employees/partners. Mostly because of the huge overhead, the hassle and because of trust issues.

Just out of interest, what sort of rates do you charge? If you don't want to say the figure itself, is it higher than your competition?

I personally don't worry about my rates, I'm the 2nd highest in Cambridge, but I know what I'm doing and am confident that I charge fairly.

 

[Simmy]

Hi there Simmy. I know what you are going through. I went from living on the street to developing a company of 8 employees and still growing. I started this company with $5 in my pocket and an idea. I'll do my best to give you some quick pointers to get you going in the right direction.

First off, the reasons that you gave for failure aren't really the reasons that it didn't work. So do learn from them, but let them go. The past is the past, there's nothing you can do to change it and it's not serving you hanging on to them. It's only perpetuating the cycle.

Second, you're doomed to fail as of right now. There are two choices, either accept failure or change your context/mind set. To be successful you have only one context "Success is the only option" and regrettably I'm not seeing that in your post. I see a whole lot of fear and trepidation. You know what happens when a soldier gets on the battlefield and he becomes afraid? He dies. So address that one first.

You didn't fail. It's only failure if you don't get back up on your feet. Your plan was not a good plan, simple as that. It's time to create a new plan. You're not a businessman, you're a geek. That's a challenge that you're going to need to overcome, and a very difficult one at that. Most can't make the transition. Since you don't know how to be a businessman, you need to enrol the help of successful businessmen to help you develop your plan. Then tweak and tune it until you see success. Thomas Edison had 10,000 bad plans until he developed the right plan that delivered a working incandescent light bulb. Henry Ford didn't know a thing about building cars and had very little formal education. When called on it he simply agreed and pointed out that he had 100 people available at the push of a button when he needed the answers.

Next, when you find those advisors that you trust, drop your mask. You're doing a lot of "fudging" the truth with us right now and it's not very well concealed. Be prepared to be brutally honest with your team. Share every single detail and then shut up. Let them talk while you listen. Be quick to develop that plan, but be slow to change it. Unsuccessful people are slow to develop a plan and quick to change it. Act fast and act now.

So.. Change your context, burn your ships, develop a plan quickly and act on it with fervency.

For the first year and a half I ate almost nothing but Kraft Dinner. You must be prepared to make a lot of sacrifices. Your day is now an 18 hour day. No extras, just focus on the task at hand.

You're not going to acquire top tier help off the hop. It's just not possible being relatively unknown, working out of your house and not paying top dollar. So, get yourself an assistant. Behind every successful businessman is a good woman. Choose wisely.

There's a start.

Thanks for the feedback. It's certainly an impressive achievement to go from nothing to 8 employees. Can you share your experiences of how you got to that point? To employ a competent 2nd line support technician will cost around £25,000 + Tax/NI/Pension etc so nearly £30,000 in all. How did you make the jump to this when you took on your first employee?

I couldn't agree more about needing a positive mindset. Once I set my mind to it, I will give it everything I've got, as I did when I first started out. But I need to convince myself that it's possible and figure out a game plan to make it happen before I commit myself.

 

[Simmy]

I started this company with nothing more than half a memory stick and a dodgy USB cable.....er sorry, lost the plot there for a second......

I've been a one-man band working from home for the last ten years and it's only in the last few years that I've been able to entirely support myself from my business income. Looking back, I wouldn't change a thing.

95% of my customers are residential and the rest are very small businesses. I've no interest whatsoever in making the huge leap to office space and/or employees/partners. Mostly because of the huge overhead, the hassle and because of trust issues.

Just out of interest, what sort of rates do you charge? If you don't want to say the figure itself, is it higher than your competition?

I personally don't worry about my rates, I'm the 2nd highest in Cambridge, but I know what I'm doing and am confident that I charge fairly.

The trust issue is a big one for me too. That's why I took on a friend of mine instead of a random employee.

Do you have clients come to your home? That's one thing I put an end to ~5 years ago, when someone turned up at my house at 10pm on a Sunday evening!

The reason I mentioned upping my rates is because one of the managers at the job I was offered said they had looked at my website and that I wasn't charging anywhere near enough (for reference, I charge £45 an hour). I realise I can't charge any more for residential work because people simply won't go for it, but businesses will likely pay more.

 

[Cambridge PC Support]

The trust issue is a big one for me too. That's why I took on a friend of mine instead of a random employee.

Do you have clients come to your home? That's one thing I put an end to ~5 years ago, when someone turned up at my house at 10pm on a Sunday evening!

The reason I mentioned upping my rates is because one of the managers at the job I was offered said they had looked at my website and that I wasn't charging anywhere near enough (for reference, I charge £45 an hour). I realise I can't charge any more for residential work because people simply won't go for it, but businesses will likely pay more.

I might have the very occasional drop-off/collect, but otherwise I'm fix-in-home or collect/deliver.

Have you tried upping your rates? Might be worth trying for a week or two for new clients and see how it goes. £45 is kinda low, I charge £60 for resi and £80 for business. Is that £45 with VAT on top?

 

[OCWI]

I went from a basement operation and $10k of CC debt to a full retail four employee shop in four years.

Its hard, its EXTREMELY scary - but its doable. Trust me I did ALOT of failing in that process. Just gotta keep trying.

Keep trying - youll get it. The problem is you need to make a choice, and you need to make it now.

The choice is are you doing this (the rest of your life - good times and bad) or are you not? If you even have to think about that go get a wage job and do it quick. This stuff takes commitment and it takes commitment while ALOT of people are telling you your doing it wrong.

 

[OCWI]

Also, good luck - I know what your going through and it sucks. If it was easy, everyone would be doing it.

 

[callthatgirl]

Just last night I was talking to the old man about where I wanted to be with CTG. After recovering from a year of "falling from grace" as some have called it, I have recovered nicely. It did take a year to do a complete turn around, but overall I'm thrilled with how the business is running RIGHT NOW.

So the question is, do I take it to the next level? Again, not the level I had failed with before, but the new level I know I can manage better. Or can I?

The conversation was like this,
Me: "I really am liking how this is all going right now, I am making enough profit and am not so exhausted at night and on weekends. I barely have anything to manage outside of what I do, no headaches, no drama"

boyfriend "then don't grow"

Me: "but this is the thing, I want to grow, I want more more more and bla bla bla bla, but I think I need to spend more time enjoying what I have right now, then figure it out later on"

boyfriend "Sounds good"

if you get what I'm saying here, is that I like things as they are, some day I will figure out if I can manage more and if I want more. As the lead controller, I have to figure out ways to insure that the growth is done right. Training, procedures, managed expectations, etc.

btw...this all came because I decided to turn down a $6,000 contract today. I wasn't up for the drama.

So I recommend laying it all out on paper. Pro's cons, what you have now, what you need to make profit and figure out how to keep it all managable. Then decide if you want to make more profit and how you can manage that. You said you were ok right now too, so maybe it's all ok if you stay as is?

 

[Markverhyden]

Simmy, running a business is all about risk management. Does not matter what type of business it is.

I started with a lot of debt and the first objective was to get rid of that. So if you have any that needs to be on your radar. You don't have to run on cash. Just need to get rid of that unnecessary financial overhead. Working from home will certainly help.

The next thing, actually really should be the first thing, is make a business plan. Nothing fancy. To be successful you need to have something meaningful to work from. Be very honest about all of your skills and capabilities. A business plan includes things like projected cash flows, expenses, man hours, etc, etc.

So you need to have a bottom line defined. And it's not just about the money. It's also about the resources needed to to achieve that revenue. Traditionally in US business schools they say to put together three business plan scenarios.

As I first mentioned it's about risk management. In my situation I've been a one man band since I started in '07. But I realized, as I'm sure everyone here knows, one person can only generate so much revenue. I resisted trying to get more help as I was worried about service quality. But I cannot grow without more help.

So what I have done is start "testing" some other techs by accepting jobs that need more than one person. Strictly under a contractor/subcontractor type relationship. These are not ongoing support MSP type of things. But gives me a chance to get to see them in action.

My objective is to start working on larger customers where I can use them to cover as fill in when I am busy. I know, just like you and everyone else does, response time is critical. Generally I make a point to respond within a hour or two of a call for support. That way I can do a basic triage of the situation and then decide how to allocate resources.

 

[yankeez]

Be prepared to acknowledge that any employee you hire will someday compete with you. I moved from the basement, to a downtown shop and back home. No regrets. I went from a profit margin of 85% in home, to 55% in the shop and now after moving back home I'm now at 75%.

I make less, keep more....and really, isn't that what it's all about?

I'm on the road over 100 miles a day, I service 80% of home customers with a few platforms thrown in and a few businesses. Life is good in Iowa.

 

[lsi]

I think it all depends on what your goals and responsibilities are. Things were good when I was a one-man band and the overhead was so low. I did that for awhile and then all at once I got sick and couldn't work for a week, had a family reunion, and then a family emergency that took me away from work. I was suddenly hurting and all of my customers were upset and it was pretty eye-opening how vulnerable my business was trying to cover my back with subcontractors and other backup providers in the area. At the time I had 2 young kids and I could see that being a one-man band was preventing me from being as involved with my kids activities as I wanted to be. Now I have 4 young kids and there would be no way that I could do the work myself so in essence I didn't have a choice - had to grow. It's been a rough road and I've definitely made some mistakes on the way. My biggest regret right now is that I have a business loan with a bunch of debt racked up but that business loan has been invaluable in floating things against slow times and buying equipment to resell. I envy those of you out there with no debt though.

 

[Simmy]

I might have the very occasional drop-off/collect, but otherwise I'm fix-in-home or collect/deliver.

Have you tried upping your rates? Might be worth trying for a week or two for new clients and see how it goes. £45 is kinda low, I charge £60 for resi and £80 for business. Is that £45 with VAT on top?

Nope, I'm not VAT registered. I'm surprised residential clients go for £60.

Definitely food for thought though. I will be making changes over the next week or so and a price increase is definitely on the cards.

 

[Martyn]

Nope, I'm not VAT registered. I'm surprised residential clients go for £60.

Definitely food for thought though. I will be making changes over the next week or so and a price increase is definitely on the cards.

Definitely worth thinking about. You could always cap the residential and say £60 but capped at £x per problem(say £90) so they know they have a maximum they could pay.

 

[Simmy]

I went from a basement operation and $10k of CC debt to a full retail four employee shop in four years.

Its hard, its EXTREMELY scary - but its doable. Trust me I did ALOT of failing in that process. Just gotta keep trying.

Keep trying - youll get it. The problem is you need to make a choice, and you need to make it now.

The choice is are you doing this (the rest of your life - good times and bad) or are you not? If you even have to think about that go get a wage job and do it quick. This stuff takes commitment and it takes commitment while ALOT of people are telling you your doing it wrong.

It's always good to hear the success stories and I hope your business continues to grow

I'm slowly gathering the motivation to go for it, but I need a business plan to convince me I guess.

 

[Simmy]

Just last night I was talking to the old man about where I wanted to be with CTG. After recovering from a year of "falling from grace" as some have called it, I have recovered nicely. It did take a year to do a complete turn around, but overall I'm thrilled with how the business is running RIGHT NOW.

So the question is, do I take it to the next level? Again, not the level I had failed with before, but the new level I know I can manage better. Or can I?

The conversation was like this,
Me: "I really am liking how this is all going right now, I am making enough profit and am not so exhausted at night and on weekends. I barely have anything to manage outside of what I do, no headaches, no drama"

boyfriend "then don't grow"

Me: "but this is the thing, I want to grow, I want more more more and bla bla bla bla, but I think I need to spend more time enjoying what I have right now, then figure it out later on"

boyfriend "Sounds good"

if you get what I'm saying here, is that I like things as they are, some day I will figure out if I can manage more and if I want more. As the lead controller, I have to figure out ways to insure that the growth is done right. Training, procedures, managed expectations, etc.

btw...this all came because I decided to turn down a $6,000 contract today. I wasn't up for the drama.

So I recommend laying it all out on paper. Pro's cons, what you have now, what you need to make profit and figure out how to keep it all managable. Then decide if you want to make more profit and how you can manage that. You said you were ok right now too, so maybe it's all ok if you stay as is?

A very good point. It's too easy to forget to enjoy work when it's going well and get caught up in future plans.

I wouldn't mind the chance to turn down a $6k contract though

 

[aweston]

Thanks for the feedback. It's certainly an impressive achievement to go from nothing to 8 employees. Can you share your experiences of how you got to that point? To employ a competent 2nd line support technician will cost around £25,000 + Tax/NI/Pension etc so nearly £30,000 in all. How did you make the jump to this when you took on your first employee?

I couldn't agree more about needing a positive mindset. Once I set my mind to it, I will give it everything I've got, as I did when I first started out. But I need to convince myself that it's possible and figure out a game plan to make it happen before I commit myself.

There are a lot of experiences, way too many to list. You tell me what you want to know and I'll do my best to tell you how it showed up in my life and what I did (or didn't do) about it.

I carved out a budget of my most basic needs. I had absolutely no credit, so everything was built on the last dollar earned. I stripped out everything that wasn't an absolute necessity. Don't forget, I was used to living on absolutely nothing so it wasn't a big stretch. At one point earlier in life I was only eating what I caught out of the lake that day. As a result very early on I took the approach of paying myself last and paying others first. Now, I've heard arguments both for and against, but one thing I learned much later in life in this:

If you pay yourself on what you know, you will fail. If you pay yourself on what you deliver, or have other people deliver for you, you will be successful.

If you're not delivering, you don't get paid. Pay yourself on results. Even without knowing this simple truth at the time I decided that the only way to get the results I truly wanted was to build up a team. With absolutely no financial backing, I paid myself last.

I knew when it came time to hire a tech. I ended up with more work than I could handle by myself, pretty much every day. I was working 16 hour days, seven days a week for a year and a half straight, just fixing and selling computers. Thus my first full time technician was hired.

Very early on I learned something else. The power of the words "f*** it". I'm not going to lie to you. This journey is fraught with risk. Nothing but risk. If you don't have big brass balls, you're not going to make it. You can't spend a lot of time weighing out the pros and cons, drawing up numbers, running computer simulations, debating the what-ifs. I had to trust my instincts and literally make decisions on the fly. But I had no fear. I had nothing to lose. I mean really, how much further down could I possibly go? While you procrastinate, and that's all you're doing, someone else will step up and do it. The time is now.

Here's something else: Trust. If you don't trust your staff, don't get staff. It's that simple. If you go in with the mindset that your staff will compete with you you're doomed before you even start. You MUST empower them with the ability to make decisions and to be able to run all, or at least a portion, of your business. Two key aspects of a good leader are being able to lead by consent and to be able to delegate. If you constantly doubt your employees you can't do either.

 

[aweston]

A very good point. It's too easy to forget to enjoy work when it's going well and get caught up in future plans.

That would be called complacency, and it will destroy you and any chance you have of success. You must always be planning ahead.

I wouldn't mind the chance to turn down a $6k contract though

The only reason you would turn down a $6k contract is because you didn't plan and you're complacent (or fabulously wealthy). Sugar coat it any way you like, you won't become successful because your mindset and intent are all wrong. You've now put the message out there that you can't handle the work and you've hung yourself.

 

[SprinterTech-WI]

I started this company 5 yrs ago the day I turned 18, I was a sophomore in college and decided that if I was to do this IT stuff on the side I should have a business..... 5 years later (at the end of this month) I now have 3 retail stores a CEG division and am up to 8 employees all full time. It's not easy... I make huge screwups all the time believe me you make mistakes, but you learn from them and hopefully in the end it meets your goals and you can grow into a successful company.

Good luck, and no risk = no reward.

 

[aweston]

I now have 3 retail stores a CEG division and am up to 8 employees all full time.

That's really awesome. Good for you!

Good luck, and no risk = no reward.

Amen.