Owning my own business

[benlinkknilneb]

Hi all,

As I work on my final year of a BS in Computer Science, I'm looking ahead to the future. I know that I'd like to own my own business, sort of a programming contract business where a person/company could hire me to write applications/build database systems/etc for them. I currently have a decent-paying job doing programming work in a manufacturing environment (mostly statistical/data analysis apps). I'm wondering what advice those of you who currently do this kind of thing would have for someone just getting ready to start out. I don't have a lot of financial freedom, so I will need to keep a steady job until my own business gets on track. What would you suggest? Or, what do you wish you had known when you were starting up?

I look forward to a stimulating and informative discussion!


Ben

"If thine enemy offend thee, give his child a drum." - Anonymous

 

[CajunCenturion]

Some thoughts to help get the ball rolling,

First thing is to make sure that your existing employer does not have a problem with you moonlighting. Some will, some won't, and some will be only concerned about non-compete situations. But ina ny event, be above board with your employer.

Then continue to build up your clientelle and contacts until such time as you have sufficient workload to justify stepping out on your own. You may then also be able to continue to support your current employer, changing from an employee to a contractor.

In the meantime, check with your local jurisdictional bodies with respect to occupational license and filing fees, company registrations, and the other legal T's to cross when creating a company.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[chucknln]

I note with interest your involvement with manufacturing statics. I am both a database programmer and a certified ISO 9001 internal auditor. Some time ago I put a project on the back burner regarding an unmet need with regard to the statistical analysis requirement defined in the ISO 9001 standard.

Do you have an interest in working on a project to create a new tool, which would be attractive to companies, which are currently using or emulating ISO 9001? Without disclosing trade secrets, this product is involved with the process of deciding,which complaints or incidents require the full root cause analysis followed by corrective action.

I began to develop this product when I was CRM Process manager at Appro, which was a tier two supplier to Cisco.

 

[chiph]

benlinkknilneb -
You didn't say where you're from, but something you may want to look for in the local bookstore is a series of books titled &quot;Starting & Operating your own business in <insert your state here>&quot;. It covers what you need to know about the various forms of a business (sole proprietorship, LLC, corporation, etc), taxes, payroll, and some of the basic legal requirements.

Chip H.


If you want to get the best response to a question, please check out FAQ222-2244 first

 

[benlinkknilneb]

Hi chucknln,

Our company is currently on the ISO 14001 (did I get that right?) standard. My work is mostly for internal purposes; I am actually listed as a member of the QA department. My statistical work was very rudimentary (nothing more complicated than basic correlations), but the company did not previously have even a basic reporting mechanism. As for my interests, I just love writing programs. I certainly have more experience in statistical work, but as long as I'm designing or coding, I'm happy. The purpose of this thread was more to learn about the intricacies of starting my own business, though. Any advisors out there?

Ben

&quot;If thine enemy offend thee, give his child a drum.&quot; - Anonymous

 

[SpiderBear6]

One think to remember benlinkknilneb. Owning your own business may sound like fun - you are your own boss, you set your hours, etc. But I can tell you that it is a lot of work and work doesn't stop when you get home. You may own the business but that also means you have to run the business and look after the business, unless of course you sucker some poor sap in and pay them cr@p money and get them to look after the books of the company. But don't let me stop you... live your dream.

 

[SpiderBear6]

*cough* sorry, &quot;One thing to remember...&quot; - a bit of Mondayitis.

 

[GwydionM]

I did a spell as a Freelancer, and found I wasn't right for it. Whatever economists claim, success in business has a lot to do with having the right personality. I myself would make a very nice anti-example, the sort of person who is going to be credited with less than they can actually do.

Look at the sort of people who flourish in small business. Is that you? If it isn't, then don't try it.

Other big defects are (a) no training, (b) no protection if managers decide to blaim the outsider for their own errors (c) no security (d) bad pension situation (e) tax hassles.

When costing, allow for the costs of a good accountant (bad accountants are worse that usless, and doing it yourself if wasteful if your main skill is programming). Also factor in contributions for a decent pension. In the USA, medical care is also a factor, I think.

Note that people writing books about small businesses are natural boosters. There might be a niche for one or two books telling 'How to fail in business and end up in debt', but such books won't find many buyers.

Most of them will ask 'have you got what it takes'. Which is a specific set of qualities, distinct from human worth. Most famous scientists and accademics would have been utter failures in small business -- a few did make it, but that's no more common than a scientist who is a brilliant golfer. Whereas a lot of successful business people seem utter twits unless you tune into the particular qualities which make for business success.

I don't claim to be an expert on personality. But my superficial reading is that you're an excellent human being who should stick to paid employment.

 

[benlinkknilneb]

Interesting points of view, guys.

ThunderBear6's comment about work coming home with me really struck home. I already believe that people in the US work too much; I guess I got the (mistaken?) notion that setting up my own shop with my own hours would help to alleviate some of that. I'm not looking to make millions and take over the world; I just want to provide a comfortable life for my family without dying of a heart attack while I'm too young to enjoy it.

GwydionM, your input regarding personality is certainly something to consider as well.

Anyone else out there have a differing opinion? I'd certainly be interested in hearing about the other side of the coin as well!

Ben

&quot;If thine enemy offend thee, give his child a drum.&quot; - Anonymous

 

[CajunCenturion]

--> &quot;as long as I'm designing or coding, I'm happy&quot;.

I think this is key statement. I feel much the same as you. It is, after all, what we've been trained to, it's what we enjoy, and it's what we do best. Building a running a company will require that you invest your time in many things including, organization, accounting, management, and certainly not least, sales. You may find that none of these tasks will provide you the same satisfaction that you get when designing and coding. On the other hand, you may found other rewards which are equally satisfying. No-one can say what is best for you, and so the best advice I would offer is to trust your instincts.

Another key aspect to keep in mind, and which is consistent with you goal to provide a comfortable life for your family, is that they too should be part of the discussion. I would encourage you to insure that both you and your wife are in total agreement on whatever course of action you choose as the impact on her should not be underestimated.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[Gatorajc]

I think the point CajunCenturion brings up is great. You have to be prepared to deal with the other parts of a business.

Thats where most IT people fail when starting their own business. They love to code, network, install, etc but can't or won't do the other parts such as networking(not computers but people), marketing, and the dreaded sales, which is the most important part.

Seeing this I started my own business taking care of the things people hate to do. Turned out to be pretty fun.

Which brings me to another point. What do you define work as? True, you will be doing a lot more at home but is that really work? I guess the if you go by the Merriam Webster definition, it is.

Main Entry: 1work
Pronunciation: 'w&rk
Function: noun

1 : activity in which one exerts strength or faculties to do or perform something: a : sustained physical or mental effort to overcome obstacles and achieve an objective or result b : the labor, task, or duty that is one's accustomed means of livelihood c : a specific task, duty, function, or assignment often being a part or phase of some larger activity.

But what I do for my business I do not consider work.

That may not make sense and I didnt to me until you really start to enjoy what you do.



AJ


If at first you do not succeed, cheat!

 

[jimoo]

I could give you a 1,000 pieces of advice. Here are a few I will stick with.

1. When first starting out, try to get money from multiple sources (types of work) so when one is slow, the others bring something in. Example, teach a class.

2. Taxes, Taxes, Taxes. As a sole business person you are required to pay both sides of the unemployment tax (may vary from state to state). In Michigan, that is 7.5 percent (15 percent total). The ironic part is, you're not eligible to drawl unemployment if the business fails. Then you have federal tax (let's say 30 percent). State tax (let's say 4.5 percent), FICA & Medicare, City Taxes, etc. It doesn't take long to realize you are in a 60 percent tax braket.

3. Write-off, Write-off, Write-off. Track everything. Every dinner out, travel, home/office purchase, repairs to home, utilities, etc. More than likely, you will use part of your home as a business. If you put fertilizer on your lawn, and you use your house as a business, you can write part of the cost off. Afterall, you want your clients to see a nice yard. In order to reduce the burden caused by item 2, you must write-off.

4. Get a good tax advisor to ensure you don't go to crazy with item 3. Remember, there are only 2 debts you can go to jail for and one of them is taxes (care to guess the other?)

5. Find a Statement of Work (contract) and have each client sign off on each project. List the work, hourly rate or cost, esimated time, etc. Have an out-clause so if you estimate it at 10 hours, and then find out it is really going to take 40, you can come back to the client with that new information and they will have the option of accepting the new hours or voiding the contract. You should have a statement saying you will be paid for this initial analysis.

6. If you are seeking financing or investors, you will need to develop a strong business plan.

7. Don’t take business decisions personally.

8. Mend bad relationships quickly.


Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com

 

[dilettante]

You're a brave, brave man, jimoo. Good luck to you and your organization.

I think your list makes some excellent points.

I'd guess the answer to your question in item (4.) is child support, but that's just a WAG.

I have to agree with the other posters who say temperament is very important. Someone who loves his head-down time and gets satisfaction from a well-crafted product may find the distractions of running a business difficult to tolerate.

 

[guestgulkan]

I think there is a distinct difference between owning a business and running a business.

For example : you may be a brilliant coder - but you may not be the right 'person' to be the CEO and front the company as well.
In this case finding an appropriate partner might be the best approach - but this is not without it's dangers.
It worked for Apple in the beginning at least( I'm sure Steve Jobs never lifted a screwdriver in his life - likewise Steve Wozniak did what he did best, the technical wizzy bits)

 

[jimoo]

dilettante

Good points. Yes, I also agree temperament is important. This was kind of a tough one to give advice on. It is kind of like your child asking for driving tips. Gee - I can give you many of them, but where do I start (buckle up, don't speed, pay attention...)

As a group, I think the tips have been very good.

Correct on item (4) and thank goodness I am not speaking from personal experience.


Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com

 

[chiph]

A point about item 6:

6. If you are seeking financing or investors, you will need to develop a strong business plan.

My experience has led me to believe that investors do not fund a business plan, but rather they fund people they believe will be successful. Look at eBay -- their business plan essentially said &quot;garage sale on the web&quot;. Sounds cheesy, and yet they're very successful.

If you plan on going the venture-capital route, I suggest you read this book:

http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?userid=2TPQDLRYBQ&isbn=0609609505&itm=1

Chip H.


If you want to get the best response to a question, please check out FAQ222-2244 first

 

[benlinkknilneb]

Thanks to all for your input, especially jimoo for bringing up the tax concerns and guestgulkan for the suggestion of a partner. Actually I've already got a partner, so it was good to hear that we were on the right road there. Thanks for the link to the book, chiph; I don't think our sights are set quite that high right now, but I'll certainly check it out as this takes better shape. We're still just kinda forming our ideas right now, it's nice to get the view from the other side.

Ben

&quot;If thine enemy offend thee, give his child a drum.&quot; - Anonymous

 

[jimoo]

I once had a took a business law class and the professor said to come and see if you wanted to start a partnership. I ask him, &quot;What is it?&quot; He stated a swift kick in the butt.

He went on to say how many business fail because the other partner's spending, lack of effort, divorces, deaths, alcoholism, etc., etc., etc...

If you enter into a partnership be sure to have a very good partnership agreement and a lawyer (representing both) wouldn't hurt either.



Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com