Advice on my business strategy

[aiotech]

Ok, I am going to layout my business strategy and would like some feedback. My business partner and I both work in the field of IT. We both have been working in the field for 6 years. We both have been doing projects on the side for people for a nice amount of time. We decided to partner up and turn it into a business. So we already have customers. We kinda started the business backwards. We had customers before having a plan or structure. We are going through the process of creating the business plan, marketing plan, and our business structure (getting accountants, creating policies etc.) We have registered a LLC and created a company as a DBA under an LLC we started.

We have two parts to our business Web hosting and technology consulting with a focus on web design, networking, security, install/support of business software, and general support. Our plan is to take the first year to focus on getting the structure in place and continuing to work with our current customers to work out the bugs in how we run the business. The second year we will start our marketing and we want to grow the web hosting side of the business over five years. We really want to grow this side first because our web hosting accounts are consistent/reoccurring revenue.

We have outsourced our sales reps/customer service, and general level 1 technical support. This allows us to continue working full time while growing the business. Our plan is to grow and use this income so we can leave our full time positions and work only for our business. Once we are running our business full time we will begin marketing our technology consulting services and that side of the business. This side will provide greater profit but requires us to work at customers sites. Once that is going well we will explore raising capitol (business loan) and possibly bringing in employees or just seeing were the business can go in the future. Does this sound like a realistic plan?

 

[aarenot]

Started my own business this year. Both of you put aside 6 months worth of personal bills money, and do not expect to take any pay for the first 6 months.
Work as many side jobs together as you can without quitting your day jobs. One of you quit first, work 6 months for free, then if the business has enough income to support the first guy, the second guy quits his day job, and works for free for 6 months.
6 months pay as starting capital is not much to put into a business to get started providing two full time incomes for the investors.

 

[aiotech]

Thanks for the advice aarenot. Are you starting to see profit or at least able to pay yourself? Also are you saying growing the hosting side to provide income is not a good way to go?

The first step to getting the things you want out of life is this: Decide what you want. Quote by "Ben Stein

 

[kmcferrin]

It seems to me that the hosting side is easy enough. There's very little work involved, and it's a regular income stream. That part could easily be a side business for anyone who has a day job. The downside is that it's a fairly competitive market. Prices for hosting are low, and margins are very thin. In order to compete, most hosting companies deal in volume. So being a startup you may have generating enough business to pay your way. But there's no reason why you wouldn't want to continue working it.

As you pointed out, there's a lot more money (and margin) in the consulting side of your business. On the downside, it's harder to find and keep business. I don't see why, from a business standpoint, you wouldn't continue to develop both in parallel. But I would work on putting together enough savings to go 6 months-1 year without pay, then make the jump. I'm not saying that you should expect to not get paid for the entire first year, but pay could be sporadic or less than you're used to until you've built up a solid customer base.

 

[aiotech]

kmcferrin thanks for the advice. Yes hosting is a very competitive market. Our goal is only to make enough revenue from it to supplement our incomes. It does sound like a good idea to save up at least 6 months of each of our incomes then make the leap. Thanks again.

The first step to getting the things you want out of life is this: Decide what you want. Quote by "Ben Stein

 

[aarenot]

I install, and service Avaya business communications systems in the market of North America. I specialize in the Avaya IP Office/IP Telephony as my preferred profit center, and there are a number of gaps in the qualified implementors work force so I have done ok. Some national communications companies subcontract out installs to experienced techs in the field as they do not always have the trained force in house.
I also had many contacts that came looking for me the day I left my previous employers roster because of the relationships I had with them. Former project managers, operations managers, customers, friends have rung me up offering me work. So much in fact I have had to turn business away, and subcontracted in some help.
That said, the IPO although my prefered profit center is not my only profit center. I have also branhed out into structured cabling for voice, data, video, security, and am looking into installing the security system hardware, and programming it. I have also hired out to train some workers for a national communications companies field workers. I have only taken expenses so far not any pay, but I have also purchased close to 10K in equipment/tools for my business from revenues.
The only thing I would say you should not try to limit/control is the number of profit centers you utilize to bring in revenue. Pursue like oxygen to breathe anything which you feel you can do WELL to provide your customer with a superior product.
Take your self seriously, and your business seriously. To tell you how seriously I take my business, I have a philosophy about my work which I will share with you. I feel that because of this philosophy no matter what happens financially I will succeed. I work my business, and everything I do as if the customer I was working for is GOD, and I will have to answer to him one day for it. My intent is not to win business simply by being the lowest bidder, but will attempt to provide the best value for the dollar I can.