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Making the Jump to Self Employment
There has recently been an increase in the amount of technicians joining our forum and talking about making the jump from a 9 to 5 job to becoming self employed. Perhaps the company they were working for is downsizing and they preparing for the worst or they have already been laid off. Whatever the cause I want to make sure that any soon-to-be technicians are prepared for the jump.
Do you have enough money to make the jump?
While I am one of the first people to tell you to follow your dreams, you also need to look at the reality of the situation. It takes time to build up a large enough client base to support your current standard of living. If you haven’t already built up a decent client base from doing a few jobs on the side then you need to look at how much savings you have. I personally believe that you need at least 6 months worth of savings if you want the transition period to be comfortable. You wont be earning 9-5 wages overnight.
If you have any family that relies on you such as a wife and kids then making the jump now may not be the wisest choice. If you were laid off from your job and have no clients on the side then it may be a better idea to work part time elsewhere until you build up your client-base. Your responsibility is to the welfare of your loved ones first first and to follow your dream second.
If you already have a decent client base while you are still at your current job or before you left, then you are halfway there. Rather than a jump in the deep end you are sliding into the shallow end and your chances of success is much greater.
If you have the choice (as in, you weren’t laid off), work on building up your client base after hours until it reaches the point where your 9 to 5 job hampers the growth of your computer business, then your income wont be taking as much as a hit and you have already learned some of the hard lessons this industry has to offer.
Do you want to work on computers?
Did you work on computers at your last job, found you are great at it and thought about starting your own business fixing computers? You need to keep in mind that once you start working for yourself, you aren’t always doing technician work anymore. You are doing marketing, office administration, dealing with customers, answering phone calls, doing accounting and just about every other job that was probably done by someone else at your old job.
Doing the job you love (repairing computers) and actually running a business are two different things. This is one of the major reasons why many new businesses fail as the owner simply gets burnt out doing jobs they don’t love.
Of course, you can always hire someone to do your marketing or accounting once you have some good cash flow coming in, but in the beginning you will most likely have to do it yourself. Also, keep in mind that when you are self employed the amount of hours you worked verses amount of billable hours are two different things. I have personally had days where I worked all day but didn’t make a cent because it was all unbillable hours.
So ask yourself, do you want to work on what you love but not have any freedom? or work on computers and don’t the stuff you don’t like, but have the freedom of being your own man?
Other Considerations
If you were working for another computer repair business such as Firedog, Geeksquad or a “Mom and Pop store” and the clients you consider “your clients” are really your old employers clients then some issues can arise such as:
- You may be under a non-compete agreement with your old employer not to start your own computer repair business.
- They can sue you for stealing their clients so don’t go handing out your business card when your employer sends you out on a repair job.
- Its unethical to do so (even if it is legal) and you better hope the same thing doesn’t happen to you when you start having your own employees.
If this is the case then its probably a good idea to discount all of their clients as your clients and start new.
I don’t want to scare people from following their dreams, but I do want them to make sure they are prepared for it. In the end, I believe starting your own business worth it. My own business has given me the freedom to travel for many months of the year which is very important for me. The job is always interesting because just when you think you have seen everything, something weird happens. It can sometimes be hard (such as me working at 2am last night getting a mission critical system ready by morning) but the pros always outweigh the cons. Its a great business to be in.
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I am going though this process right now.
No more regular paycheck from an employeer. This is the end of my first month in business for myself.. All income generated in the business has gone to starting expenses. I was not ready to make the jump, but in my case, I did not have much choice. The timing was and is not right. Anyway, here I am and I am determined to make it. I do hope that the next month will generate more cash flow and that some of it will find it’s way home.
Thanks Bryce!
Great advice Bryce…another good tid-bit is to spend some time on the forums here, there’s been plenty of reality checks and wake up calls provided by the folks here for new techs to chew on.
Absolutely right on Bryce.
I’d say the money available to support life should be a year at least. AND in the U.S. money for health care. One serious sickness will wipe out a business in the first couple of years.
There is a pretty good book E-Myth that has a lengthy discussion about ‘technicians’ going into business and discovering that the technical thing they love is at best only a third of what they need to be successful.
I’d say that someone who knows management and business but nothing at all about computers has a better chance at success than a technician who has no managerial or business acumen.
That said, there is no better feeling in my life than making a profit in a company I started from nothing but an idea.
Great advice,
Especially about using your own hours for marketing and accounting and non related tech issues.
When I had the business before I know this used to get me frustrated but this time around I have a great tax person and marketing is not so bad to do.
Just be prepared unless you have cash flow like Bryce said you are going to have to get out there and sell yourself.
One thing I did and will continue to do is use events and festivals in my home town. Usually they let you enter a float for free or a small fee.
You have most of the town there and its great exposure. We do a float and pass out flyers and candy to the children.
My recommendation for making the jump; have other streams of income to make up the diff. In other words, temp work, helping others with projects (construction, etc.), whatever. Any way to have other income so that the multiple streams make you feel comfortable with your situation will help.
Phillip,
Best of luck to you man. I am in the process of saving up cash and gaining more of a customer base. Really, REALLY competitive in the town I live in…at least 15 small computer repair businesses in the area… =(
My advice is definetely get a part time job to keep you going at least on life support and fund much needed advertising until your computer business picks up. No life support, you’ll go nuts and never do a repair right…and no advertising, no customers. Make discounts and stuff if they refer you to someone else…send them a rebate check in the mail or something like 25% off or whatnot. Just a thought that has helped friends.
Good luck! :)
The joys of being self-employed! No matter how good a techie you are, it doesn’t necessarily mean that you’ll be a good receptionist / marketer / PR person, but trust me, you’ll learn quickly!
Great post for clearing some thoughts and dreams. Self employment jobs are not as near to easy ones, and surely headaches are bigger then if you working for your boss. Anyway, if you are passionate enough, and really have high aims, then you can make a much better life for yourself, being as independent from others.
I got laid off in December and decided to jump right in with a full time work from home business. I used to work on my fellow employees computers for extra cash so I have them and their referrals plus friends and family are always asking me for more business cards. I have done well with the word of mouth aspect. The fact that I am one of the only businesses in the area that have a website helps tremendously too.
There are good days and bad. Paid days and unpaid ones. I don’t mind the marketing as I am a people person…I love to hear my phone ring. In the end, I get to stay at home with my family and do something I love.. that is awesome.
Great article Bryce. I feel like I spend 2 or 3 hours working on non-billables for every hour I bill out, and it’s something I definitely wasn’t considering when I started things up.
THE most important paragraph of the lot
“If you have any family that relies on you such as a wife and kids then making the jump now may not be the wisest choice. If you were laid off from your job and have no clients on the side then it may be a better idea to work part time elsewhere until you build up your client-base. Your responsibility is to the welfare of your loved ones first first and to follow your dream second.”
Like me i have kids and soon to be married but i have a job while i get my business off the ground and up and running.
Great article A LOT of wise words in there.
If you can save up some money before making the jump it makes things a bit more smooth. I’ve read that you should be able to make it between six months and two years before expecting a big profit, but really it all depends on your expenses and how hard you work at it.
I’m thinking it’s not just a year of salary to sustain the business model… it’s all overhead & operating capital too. Having 6 months of salary may sound like a lot, but starting out… you gotta spread your name aggressively.
Self-employment can be gratifying but it’s a rough road. Starting out, prepare to work 60-70 hours per week and bill for 10-20. You’ve got to deliver the best service possible, which means late nights and weekends fixing computers in order to get them back to customers within 24 hours. You want to build a great reputation right off the bat! You want people talking about how extraordinary your service is. That is the key to success. If you half-ass it you’ll never make it…you’ve got to be the best. Good luck!
Don’t underestimate the amount of money you will need to get you on the road of success.
In the computer tech business three out of four startups go broke in the first two years, one out of two of the remaining don’t survive the third year. Call your chamber of commerce, get the stats and get help from these people before you start out. Chambers of Commerce or Chambers of Trade (or their equivalents) have courses (usually free of charge) for self employed giving you the essentials of business management in 2 or three day courses.
Last, don’t start out on your own without having three essentials :
1) a business plan
2) a good lawyer
3) a good, experienced accountant
don’t rely on yourself only in front of the law.
ok here is what i have done so far
1- i had self experience over 5 years but just to be on safe side knowledge i took comptia a+ network + mcp, mcitp
2- i have 2 websites cost me £7 a month http://www.chesterfieldpcsupport.com , wwwchesterfieldcomputer.com i have all the best offer possible with no high or low prices
3- i went for professional seo company and both my websites appears first page top listing with so many keywords cost me £400
4- i manually submit my website almost all free classifieds ( I PAID 3 SITES ANNUALLY COST ME £250 )Almost 300 websites there isn’t any websites i know that i am not listed. i have many first page ads in several towns, cities, counties near by. some sites allowed me to submit each area and post code
5- i had 80000 leaflets cost me £700 already distributed half of them 40000
6- i have priority ads on city local cost £200
7- i have 1 priority 1 other listing yell.com cost £1600
8- for messing about my ad yell.com gave me 1 free add worth £2000
9 -yell.com also build me pro website worth £500 for free ( this is new promo by them)
10- printed 5000 business cards best quality cost £120
11- printed 250 magnet to stick side of customers computer pc towers almost run out of them cost £90
12- 4 car magnet on each side of my car and my girl friend car cost £60
13- booked yellow pages half column ads buy one get one classification free cost £800 starting 2010
14- second biggest business directory Thompson local half column £500 starting 2010
15- left my leaflets over 40 shops that i know
16- purchased accounting software cost £100 intuit
17- i have stock worth £1000 all necessary parts i need including laptop parts
18- i am aware all essential business tactics and most from this site forums and others. i do my best to keep my customer happy
19- i contacted trusted trader paid £50 for submission starting 2010
20- i contacted all member magazines 2 of them agree to submit my ads annually free
21- i contacted disable people centres and submitted my business ads to their sites
22- had 6 months test trading under the control of business link and job centre ( according to them they can not advice anything for me as i already doing more than they can advice .
23- told everybody i know in this planet so word of mouth can spread also i know all my customers doing for me since they pleased with my services
24- i emailed almost all business in yellow pages cover my area let them know about mu company.
HERE IS RESULT OF ALL MY WORK DONE after 9 months
i get round 8-12 email enquiries a month
approximately 2 – 3 phone call a day usually Monday to Thursday only so about 8 call a week not many weekends or after hours lucky days can turn all in customer
leaflet = ivgot my money back but made nothing extra . i thing it was a good advert for me
yell. com = some days 1-2 enquiries some time 1 week no call but made my money on that nothing on the top
yellow pages = don’t know yet
Thompson local= don’t know yet
Google, yahoo , msn = most from Google 3-4 enquiries a week
300 free classifications = 1 -2 jobs a month
area i cover 25 mile radius about 2 million people
after all in 9 month i made £5000 from this business i know not enough but least iv got my money back and next years marketing budget will be £3000 that almost ready too
i plan to make £2000 more before 12 months up and double the figure end of 24 months . at the end of third year i am planning to have good wages that i can live on
i have other job i relay on. without it i cant survive and i am not planning to leave the job before i reach end of 24 month target
so please guys be realistic and don’t accept to start making money without investing some other vice you will be waiting 4-5 years before you see real money
and remember you have to act like a business man save every penny invest for all necessary and don’t think you will only repair! you will be chasing all business side of it.
at last please look in to my websites and tell me if i am doing anything rong? or if i need to know something that i dont do?
thanx
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