Starting a business based on your services
Posted By: Steve MacLellan (blk-137-86-42.eastlink.ca)
Date: Friday, 18 February 2011, at 6:38 a.m.
I was reading a post on another forum about a fellow who lost his client and didn't know what to do. My first thought was, "What? Did he only have one client?" Apparently so...
He's not the only person that has made this mistake. A lot of people try to get started into a business where they are offering their services, but by the nature of the work, they can only take on one client at a time. This is a recipe for disaster.
I've been approached a few times to take on jobs building web applications that would require a lot of work. The pay was good, but it would take up all of my time. Let's look at an example.
Suppose I took on a job to build a custom CMS. The job paid $10,000 and I estimated it would take one month from start to finish. Of course things never work out this way. Let's say it actually took 6 weeks, but because I had agreed to a price, I wouldn't receive any extra pay. Now let's assume it took me another month after the completion of this job to find another client. Forgetting about the income tax that would be due on this money, you can see how an adequate month's wages can get stretched to two months or more. The next thing you know, the money is gone, and you've still got bills to pay.
So, anyone starting into a business where they will be offering services needs to setup their business structure where they will have a number of clients, even if it means taking on smaller jobs per client. That way if 2-3 of your clients disappear for a couple of months, it doesn't really matter, because you have work coming in from other clients.
Another mistake I see people making, who are new to business, is charging too little for their services. They are thinking like an employee, rather than a business owner. When you a busy, you have to have people help out, and you have to be able to afford to pay them. And running a business means there are lots of hours of work that you don't directly get paid for. You have to take phone calls, answer emails, research solutions, keep books and invoicing, plus numerous other tasks that are going to take a big bite out of your productivity. But, these things still have to be done.
Hopefully, if anyone new to business should find this post, it will give them something to consider.
- Starting a business based on your services
Steve MacLellan (blk-137-86-42.eastlink.ca) -- Friday, 18 February 2011, at 6:38 a.m.