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3 Things to Consider Before Starting an IT Business

3 Things to Consider Before Starting an IT Business

Tuesday, November 07, 2017/Categories: it-consulting

Are you the first person your friends call when they have computer woes? If so, you might have considered opening your own IT business. You could do what you love while getting paid for it. Win-win!

But there's a lot more to running a business than simply knowing your way around tech. Before you quit your day job to start your own IT business, consider these three things.

1. Realize You May Not Be Able to Go Fulltime Right Away

Before you dive into entrepreneurship, test the waters by doing some freelance week. Or maybe you already are.

"As an IT guy, you are ALWAYS moonlighting, normally without a purpose, just to make extra money, like Uber drivers," says Laith Pahlawan, partner and CEO of  Orange Crew.

Use the success (or lack thereof) of your freelancing career to gauge if this is something you could do fulltime. For example, do you have a few steady clients who also send you referrals, or do you have to beat the bushes to find customers? If you don't think you have enough work to cover your bills, you may not be ready. However, sometimes all it takes is one big client to convince you that you're ready to quit your job and make the leap.

"I didn’t really moonlight," says Raffi Jamgotchian, founder and CTO of (@triadanet). "I was working fulltime for what became client number one before what would become our second client reached out."

For some people, the decision on when to go for it isn't because the timing feels right, but out of necessity.

"I found myself without a job after the dot-com bust," says Pahlawan. "There were no jobs available, and I always thought that I could start my own business. I had a couple of dollars in the bank, so I thought, why not?"

While there is no one "right" time or way to launch a business, try to do what makes sense for you. If you have the luxury of moonlighting for a while to build your client base, do it. But if life throws you a curveball with an unexpected job loss, don't be afraid to dive right in.

For tips on wooing clients, check out "Want More IT Consulting Jobs? 4 Tips for Impressing Potential Clients."

2. Know Your Value – And Price Your Services Accordingly

One of the biggest challenges new IT business owners face is trying to figure out how to price their services. That's because there are several variables each business owner needs to account for, including:

  • Where the business is located.
  • Years of experience in the IT industry.
  • The size of the clients.
  • What other IT companies in the area are charging.

It can take some trial and error to figure out your sweet spot for pricing.

"At first, I didn’t have a clue about what to charge," says Jamgotchian. "I basically took what my salary was and split it in two, and then built my services into that."

After winging it initially, Jamgotchian ultimately took a more educated approach to setting his prices.

"I joined a trade association that connected me with a large number of other IT services companies in and out of the area. The collaboration helped us form what our pricing would look like. Eventually we worked with some consultants and training firms that helped us figure that all out."

One pitfall to avoid is setting your prices too low. It may help you land business initially, but it won't be profitable for your company to undersell your services for long. In addition, you might not attract the best caliber of clients.

"I started out thinking that I need to come in cheap so people would hire me," says Pahlawan. "I soon found out that cheap clients are the worst to deal with. Good clients that valued my service were happy to pay the extra money."

The takeaway: The type of clients you ultimately want will be willing to pay you what you're worth, so don't undersell yourself.

3. Think about Your Marketing Strategy

Finally, before you start your business, plan how you're going to promote your new company. Reaching out to friends and family is a good way to start, but it will only take you so far. To continue to grow your business, you need a marketing strategy. Otherwise, your business might get off to a slow start, as Jamgotchian can testify.

"I wish I started doing more sales and marketing proactively from the beginning rather than waiting for work to show up," says Jamgotchian.

In addition to starting your marketing efforts early, it's important to know that is likely going to take some trial and error before you find the best method for promoting your business.

"So far I have had no success in gaining interest through advertising and sales," says Pahlwawan. "The only clients we have are those that came through word of mouth."

Pahlwawan also suggests that if you aren't prepared to put in the work of marketing your business, you may not be ready to launch a company.

"If you don’t know how to sell or don’t understand marketing, stay home," warns Pahlwawan.

If you are struggling with how to market your business, there are other avenues you might consider trying:

  • Join a professional networking group, like Business Networking International (BNI), or your local Chamber of Commerce.
  • Attend networking events.
  • Team up with a vendor offering complementary services.

For more tips on marketing your business and landing clients, check out "Help Your Dream Clients Find You: The Power of Online Marketing" and "6 Proven Strategies to Win More Clients for Your Tech Business."

About the Contributors

Raffi Jamgotchian is the founder and CTO of Triada Networks, a cyber security and IT services provider that has catered to boutique investment firms such as hedge funds, private equity, and CLOs since 2008. Raffi has over 20 years of combined enterprise and small business cyber security and IT services experience.

 

 

Laith Pahlawan is a partner and the CEO of Orange Crew, an IT services company serving Southern California. Laith has a BS from UoPX in Business Administration, a diploma from Seneca College in Electronics Engineering, MCSE, and is a Microsoft small business specialist. For the last 15 years, Laith has been working on creating a stable, scalable, self-sustaining IT service business.

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