So you want to start a business?
So you want to start a business?
Paul Fenwick Perl Training Australia [PTA] pjf@perltraining.com.au
Jacinta Richardson Perl Training Australia [PTA] jarich@perltraining.com.au
Abstract
The clock­radio bleets loudly, and you close your eyes and try not to think about going to work. Despite every assurance that a particular machine contained no valuable information whatsoever, and did not need to be on the backup schedule, it's now dead; and it's your job to recover the only copy of the now vital reports contained therein. You've been working unpaid overtime for months now, management have been ignoring your pleas for extra technical staff, and all the projects that really matter are now behind due to everyday fire­fighting. On top of that, the so­called coffee at work is undrinkable. Don't you just wish that you could quit that lousy job and start your own business, working on the things that you actually enjoy doing? A dose of reality for anyone thinking of striking out on their own in the world of computer consultancy Keywords
Business, consulting, money, start­up, social engineering. Introduction
The world of small business is a foreign one to many people. Why do some individuals choose to forego the security and comforts of a regular job, and instead strike out on their own? This paper aims to describe what the owner of a small technical consultancy may expect. While it aims primarily to provide food for thought to anyone thinking of starting a business, it should also provide insight to anyone who may be dealing with small businesses. This paper is a summary of my personal experiences, and is not intended as legal or financial advice. It does not take into account your individual circumstances. You should seek appropriate independent advice before starting any business. This paper only discusses a particular type of business — a technically­oriented micro­business. A micro­
business consists of only a handful of employees, possibly only a single individual, and has different challenges and advantages to a larger business. A micro­business can be started with a relatively small amount of capital. Starting my own business
I started my first real business when I was studying Computer Science at university, although I did not consider it a true business at the time. In my spare time I worked as a sole trader performing bespoke (custom­made) programming for other businesses, including web­hosting and consulting firms. My rates were cheap, but as a student with little other income I was happy. After I graduated I landed myself a job at the University, and then later moved to a "real job" in private industry. My "real job" was as a highly paid software developer, but I discovered that I had very little time for the activities I actually enjoyed. Even worse, my hours and travelling were such that for 4 months of each year I Open Source Developers' Conference 2005 ­ 111
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left the house while it was dark and returned when it was dark. I missed sunlight, and the freedoms afforded to me as a student. In time I was moved to a position where I had management responsibilities, although I had no management experience. I was not having fun. I applied for a nine­day fortnight at work, and my request was rejected; apparently I was too valuable to be working any less hours, and was offered a pay­rise instead. I looked at consultants I knew being paid $100/hr, and did a few calculations in my head. A few years earlier I was very happy earning $50,000/yr, a fortune compared to my days as a University student. If I worked only 10 hours a week (a mere 2 hours per day!) at $100/hr, I could enjoy the same amount of money, but have considerably more time. And time is what I valued most of all. So I left my job and started a consultancy business with a number of friends. It went reasonably well, although being composed of so many people there was a large administrative overhead. For the first six months I took things easy. I wanted a holiday, so I took one, and my savings slowly dwindled because of it. After a while I realised that I really wanted to be teaching, and the most enjoyable subject I could imagine teaching was the Perl programming language. Another business in Melbourne that offered a wide range of services had run Perl classes a few years prior. The business itself had since been wound up, but they had left their notes available under an open­publication license, and this immediately provided a starting foundation. Hundreds of hours were spent working on the course­notes to bring them up to speed. This, along with writing a completely new course on Object Oriented Perl, was full­time work for myself and my partner for a number of months. We were extremely pleased with the new and revised notes, and even had a customer (the University department that I had previously worked for, and who held me in high regard). Unfortunately while the course materials and customer prospects were looking bright, the situation inside the consultancy business was not. I discovered that I held strongly different opinions to many of the other individuals who made up the business collective, and it rapidly became clear that we had very different views about how any training aspects of the business should be run. Suffering from "irreconcilable business opinions" between long­standing friends is not a pleasant experience, and certainly not one that I would recommend to anyone. Eventually I left the consultancy and started my own business, "Perl Training Australia" [PTA]. It was an immediate success, showing a profit in the first quarter and showing healthy amounts of growth ever since. During the first two years of Perl Training Australia's existence, the majority of work was not actually training, but instead software development and system administration. I had a wide network of contacts from my sole­trader University days. This existing network was instrumental in providing business and further contacts which allowed us to grow, but didn't include many businesses interested in our training services. Software development and system administration kept me too busy to find the time to do the co­ordination required to arrange training. It wasn't until I hired an employee that the training side of things really took off. Now, four years on, the bulk of Perl Training Australia's income comes from training and long­term projects. While I'm still working more than two hours per day, I've achieved most of the freedom and lifestyle that I desire, as well as a comfortable income. Starting your business
Starting a business is a risky, expensive, and stressful experience, and is not recommended for the general public. However if you are considering starting a business, then you should think seriously about your business goals. While it's easy to find examples of businesses that have been successful, it is not always apparent that the success has required considerable time and effort. I had to spend four years working like a dog in order to achieve my goal of increased personal freedom. 112 ­ Open Source Developers' Conference 2005
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The rest of this paper focuses on factors that can influence your decision to start a business, and how to overcome some of the difficulties you may encounter during the first few years of operation. Money matters
It's a very rare and lucky business that turns a profit from day one. Most businesses have significant start­up costs, including design, printing, equipment, telecommunications, legal and advertising. During the start­up phase a business will typically have very little income — there simply hasn't been sufficient time to build up a large patronage. As such, it's important to be financially prepared. As a new business owner, it helps to know your own financial position extremely well. How much does your lifestyle cost? How long can you afford to live off your savings? How easy will it be for you to return to a regular job if starting your new business fails? Even if you intend to use the services of an accountant or book­keeper when running your business, you should strongly consider spending some time doing personal accounting before you start your business. This will not only provide you with an excellent ideal of your financial situation, but also provide valuable skills for when your business starts. Many businesses fail because they discover too­late that they cannot pay their bills, and often this could have been avoided by careful financial planning and management. When your business is operating, it should be kept in mind that your income will often be highly variable. Clients and projects will come and go, and you will encounter unexpected peaks and troughs for income and expenses. Setting your own hours
One of the great lures of starting a small business is the ability to set one's own hours. While it cannot be denied that a small consultancy does provide a great deal of flexibility, the amount of extra work required should not be underestimated. Considerable time can be spent examining legal and taxation matters, printing and chasing invoices, managing clients and suppliers, and completing what seems to be an endless yet important stream of paperwork. Anyone thinking of starting a business should be prepared for an increased workload and a lower income, at least for the first couple of years. Even the idea of setting one's own hours is a fallacy, a great deal of work will be driven by time­intensive customers, who will regularly call and expect responses during business hours, and very often in evenings and weekends as well. Staying organised
Time management can be difficult in any job, but can be particularly so in a small business due to the wide range of demands that have to be met. I would advise that time management systems be put in place as soon as possible, as it is all too easy to fall into the vicious circle of not having enough time to solve your time management problems. One of the most important time­management systems is a task or job­tracking tool. A simple "to­do" list is rarely sufficient, as one potentially needs to track work to be done for multiple clients, as well as internal plans and developments. Luckily there are some good technical solutions to these problems. A ticket­tracking tool such as Request Tracker [RT] can provide considerable benefits in time management and planning. It provides clients with a way to submit and manage work. It provides mechanisms to assign tasks to individual staff members, and to provide a record of conversations and work performed. It can be used to announce upcoming deadlines, manage priorities, and track time. I use a customised program to generate both timesheets and invoices from data stored in RT. Open Source Developers' Conference 2005 ­ 113
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For all its benefits, a tool like RT still isn't very useful unless it is properly used. An ideal system has clients who submit tasks to the job­tracking system, rather than to individuals directly, and staff members who record their work and details of phone conversations into tickets. This can require both perseverance and personal discipline. Contacts
If your business is to succeed, you will need a way for people to find out about your services. There are a few ways to advertise your business, but to do so effectively you really need to think about who you're trying to reach, and why. As many successful job­seekers will know, sometimes it's not so much a matter of what you know, but who you know. You can be the best system administrator in the world, but will never even hear of some jobs because they not advertised, or because the business would prefer to hire someone they trust, or someone who comes with the recommendation of others whom they trust. At this point, you need contacts. Contacts can come from a diverse range of people. Friends, family, and the people you meet at user­groups and conferences are obvious candidates. However, there's a lot of overlap between scuba divers and IT professionals, so it doesn't hurt to talk about your job if you go diving regularly. The people on the bus are probably going to work, and their work probably has a computer. Better talk to them as well. Almost any human being is potentially a useful contact, and it rarely hurts for others to have your business card, and a chat about what wonderful things can be done with GeekOS, and how you just happen to be an expert. While it helps to be a compulsive social networker, you don't have to be one. Just become more socially active with your professional peers. Go to user­group meetings, attend your local SAGE chapter, hang out on more technical mailing lists. Meet people, answer questions, give presentations, give and take advice. Make a name for yourself. Start doing this now, before you think about starting a business. By the time you do get around to starting a business, plenty of people will know who you are and what you can do. When you broadcast that you're starting a business, that you're available to do work, they'll listen. Word­of­mouth advertising drives much of the consulting and IT services world, and you'll need as much of it as you can get. Social engineering
With all this talk of contacts, it's probably becoming clear that running a successful business requires more than just the core products or services that you're trying to sell. You'll need to be able to communicate effectively. In this case, that doesn't mean just being able to explain things clearly, it means being able to make other people feel and believe what you want them to. And you'll have to do it in an honest, ethical fashion. Welcome to the world of social engineering. Good social engineering is about the making the most of your interactions with others. It applies equally well to business negotiations as to buying a litre of milk at the corner store, or ordering a meal at a restaurant. A social interaction doesn't need to bring about immediate gains either; much time is spent generating "goodwill", which can provide considerable gains in the future. The most basic rule of social engineering is simple, and has been expressed in one way or another throughout most of recorded history. Yet many people either do not know the rule, or do not care to use it: Make others feel good about themselves. When you make other people feel good about themselves, most will respond very simply and predictably: they go out of their way to help. You seem like such a nice person, and you're always so kind, unlike those 114 ­ Open Source Developers' Conference 2005
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other ungrateful customers they do business with. Of course they'll prioritise your request; you truly understand the skill and professionalism with which they do their job. I am always amazed at how many individuals use social engineering against themselves, and I'll illustrate with a classic example. Let's pretend that you've been involved with a dispute with your bank, and they've erroneously charged a particular fee twice. You call your bank's telephone support number, and are kept on hold for an incredibly long time. By this stage most people will be in a foul mood, and certainly will not be a high­point in the day of the customer service representative who takes their call. Do not be one of these people. When your call is answered, be friendly and polite to the person helping you. Their job sucks, they have nothing but angry people calling all day, and you want your call to be stand out and be different. Learn their name and use it, people love the sound of their own name. Explain your problems reasonably, say how you've always been so impressed by the bank's telephone support staff, and how you're sure the matter can't be that difficult to resolve. By this time, any operator with even a shred of their soul remaining is going to be experiencing a conflict. You've been so nice, treated them like a real human being, and placed your faith in their ability to solve your problem. Their job requires that calls be handled as quickly as possible, and that fee disputes be recorded and then referred onwards to some other department. However the moment they stop talking to you, a mean and grumpy person will be on the phone. You've provided every possible reason for them to personally attend to your problem and ensure it's resolved. This has cost you nothing more than a friendly tone of voice, some short term memory, and a few kind words. But it shouldn't stop there. If your customer service representative has shown even an average level of skill and helpfulness, ask to speak to their manager. While you may not be happy with the bank double­charging you, you have been most impressed with their customer service, and wish to personally provide some good words. At this point you have the status of a minor miracle! Customers with problems are rarely polite, and they never want actually praise a bank employee. By the end of the conversation, your case will be firmly in the head of your customer service representative, and will also be known by their manager. You will also have the name of one contact at the bank, as well as the name of their manager, and possibly direct phone­numbers for both. All the staff you've communicated with will be on your side, and will be happy to assist with both current and future problems. You've just used social engineering to solve a problem, and make new contacts. There are plenty of good books on social engineering, the most widely known of which is "How to Win Friends and Influence People" [CARN], which is still in publication almost seventy years after its first release in 1936. Employees
A small business often starts with a single individual. A single individual represents a very agile business, decisions can be made and executed swiftly, and overheads are small. However a successful business can easily exceed the skills and capacity of a single individual, and at this point business­owners will often think of getting someone to help. Unfortunately, hiring a new employee into a small business is a much more difficult undertaking than hiring into a large business. New employees come with significant overheads, not least of which is they need to be introduced to how the business operates, and how they can best perform their particular tasks. If you have a team of 20 people, then this responsibility can be shared between many team members. However in a small business of only a single individual, there's only one person who can take this load. An inexperienced small business will try to hire new employees when their workload is large, however this is the worst time to be taking on new staff. Existing staff members simply won't have the time to supervise and Open Source Developers' Conference 2005 ­ 115
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assist the new employee. The new staff member will feel frustrated at not being able to perform their job, and existing staff members will be stressed and frustrated because the new member isn't helping. This often results in a disgruntled new employee leaving prematurely, with a large expenditure of time and salary being spent on what was an overall productivity loss. Due to the strain of new employees on small businesses, one ends up with an almost paradoxical result. New staff members should be hired during quiet times, when it appears there is insufficient work for them to perform. This provides you with the time to cover all the necessary training while you still have time. However, hiring a new employee during a quiet period does require enough planning and foresight to ensure that sufficient work will be available once the new employee is brought up to speed. Small business shock
Retaining employees in a small business can be a challenging task. The staff of a small business wear an incredible number of hats in addition to their primary role: manager, accountant, sales representative, labourer, client liaison, and secretary. One moment a staff member may be negotiating a lucrative deal with a client, and the next they can be heading out of the office to deposit cheques and post the mail. Employees from large organisations are often used to performing a single role. They're a software developer, or a system administrator. They're not used to also being asked to deal with clients, handle the book­keeping, bring in the mail, pay the bills, make the coffee, and chase late invoices. Employees in large organisations often don't require the same time­management skills as employees in small organisations. Excepting crunch time, when everyone works together to get some major project out the door and everyone is sympathetic regarding bad tempers and odd behaviours, it's typically okay for an employee in a large organisation to slack off occasionally. Large organisations generally don't complain about a slightly late arrival, a longer than usual lunch, or an early departure, unless you do it too often. Spending a morning reading the news, organising a (non­work) party and surfing your comics list is okay, so long as you get your work done as well. Employees in small organisations may not have these luxuries. Any employee in a small organisation represents a proportionally larger cost to the employer. Late arrivals, long lunches and early departures are more noticeable as are hours spent in non­work activities. As such employees may feel they are in a never­
ending crunch time with an ever growing list of responsibilities. Plus they need to keep themselves well organised to ensure that none of their tasks slip. The result of all this work is what I refer to as "Small Business Shock". Even if an employee has been informed of all their responsibilities beforehand, they can still feel overworked and overwhelmed. This can result in them feeling cheated as they feel that their new work is not at all what was promised to them. One possible solution to small business shock is to hire new graduates or other employees who do not have firm expectations of how a business operates. How to keep employees
If you do find an individual who can perform all these tasks, then you have discovered a great asset. Being able to run a small business effectively requires almost superhuman talent, and so you should try to do everything possible to keep any such individual in your employ. Unfortunately, a person with all the skills to run a small business will probably realise that they could start their own business, rather than working for someone else. They're also rapidly gaining experience, which means that more highly­paid jobs will be available to them. Holding on to such a valuable person can be a difficult task, regardless of whether your business is large or small. As a small business, your one great strength is your agility. Find out what your employees like, and spoil 116 ­ Open Source Developers' Conference 2005
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them. Supplying free pizza and drinks on a Friday night is a relatively small price to pay for a happy and productive work­force. Provide your employees with a good work environment, and encourage perks like coffee machines, nerf guns, after­hours network games, oil burners, or whatever it takes to keep everyone happy. Most importantly, give your employees recognition. Praise them in public, tell everyone about how valuable they are, and most importantly tell your employees face­to­face how much you appreciate them. People like to be noticed, and a little recognition can make a big difference. Outsourcing
An alternative to employing people is to outsource excess work. This allows you the convenience of not having to pay an employee when work is scarce with the advantage of having assistance when the workload is high. In addition, outsourcers are often happy to work off­site and thus do not require additional computer equipment or office space. On the other hand, finding an appropriate person to outsource to can be a challenge in itself. You need someone who you can be certain will be reliable, efficient, friendly to your customers and, importantly, available when you need their assistance. Friends who are willing to "moonlight" are often not sufficient if they need to deal with clients who are only available during work hours. Should you find someone who you get along well with, is suitably qualified and who is willing to accept a variable workload from you: you have found gold. Treat them well, buy them dinners and shower them with praise whenever you can. A good relationship with such people can make it so much easier to smooth out the inevitable floods and droughts of work that occur even if you already have employees. Clients
Clients are an essential part of any business. Most of your day­to­day work will involve clients in some way — after all, they're the ones who provide your income. There are almost as many different types of clients are there are businesses. However providers in the system administration or software engineering fields tend to find themselves with a small number of clients who have large requirements. Ongoing commitments are common. When a business first starts, almost any work is good work. You'll have lots of spare capacity and not much work to fill it. Chances are that you're also uncertain about how much your services are worth and your ability to market them. It's almost certain that your first clients will be from other small and medium businesses. They usually have limited budgets, and are looking for a cheaper or more personalised alternative to big­name providers. Fixed price quotes
It's not unusual to find clients who want fixed­price quotes for their work. This is regardless of whether you're a carpenter or a software engineer, the client wants to know how much it will cost up­front, and understandably so. Unfortunately, this represents a serious dilemma for your business. The work is often poorly described, and clients are apt to oversimplify the situation. Clients also afford different levels of accessibility, some will take a very long time to respond to questions or requests, meaning that your few hours of work may become three times that figure as you discuss access to the resources that you need. Clients often move the goal­posts part­way through the project, usually without realising it. This is rarely an intentional action on behalf of the client, they may have had many assumptions about the project but Open Source Developers' Conference 2005 ­ 117
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communicated them poorly. However it can result in a very awkward situation for both parties: the client expects more work to be performed, but the consultant feels the client is trying to get that extra work for nothing. Similar situations can occur when the client has a unique operating environment or hardware which was not specified. There does exist one excellent solution to fixed price quotes, and that is to prepare a detailed requirements specification beforehand. This specification should detail all the work that needs to be performed, the details of any systems that are involved, a set of acceptance criteria, and any other information relevant to the project. A well­planned requirements specification is a significant undertaking, as it aims to map out as much of the project (including any potential stumbling blocks) in advance. However requirements specifications come with their own unique problems. As building a requirements specification represents a serious commitment of time and resources, any business will need to find a way to recover these costs, giving careful consideration that the specification and accompanying quote may not be accepted. Recovering the costs of requirement specifications can generally be done in one of two ways: integrating costs into the quote, or charging up­front. Integrating the costs of a requirement specification into a quote seems like a reasonable idea at first. If the client accepts the quote, then the increased price will cover the expenses incurred during preparation. Unfortunately, this places the original business at a distinct disadvantage. The client can take the completed requirements specification to other businesses for a quote, and these other businesses do not need to recover the costs of building the specification. So not only does the original business wear the risk of their quote not being accepted, they also need to make their quote competitive with businesses who have lower costs. The other option is to charge for the requirements specification up­front. This can be a difficult case to argue for a client looking for a fixed­price quote, but it does come with significant advantages for both sides. If the client pays for a specification, they can take that to other businesses and receive a range of quotes. This does not disadvantage the preparing business, as they have already been paid for their work. It's also almost universally true that a well­scoped project will work better and be less­likely to encounter blow­outs in time or costs than an unplanned project. If a client is unwilling to entertain the idea of paying for a specification to be drawn up, but still desires a fixed­price quote, then the only remaining option is to assume the worst in all areas, and either decline the work, or provide a quotation that is large enough to cover all possible mishaps along the way. Needy clients
A small consultancy business will usually have a number of clients, but some will take significantly more time and effort than others. These needy clients tend to be highly interruptive, calling frequently with questions or problems, and will seem to have an almost endless list of small tasks that need to be done. Needy clients aren't bad, in fact they represent a significant income stream, but they do require special handling. One of the problems with needy clients is they are very interruptive, and very fond of using the telephone. In a given day a single needy client may call up to a dozen times, and even though each given call may only be a few minutes in length, having one's work interrupted every thirty minutes can be profoundly detrimental to productivity. Needy clients represent unique challenges to both work­flow and billing. For a business that charges on an hourly basis, a two minute phone­call is hardly worth entering into the billing system. However the loss of productivity due to that call can be significant. Needy clients tend to be awful at using e­mail and ticketing systems; by their very nature they want immediate responses to their queries. One potential solution to needy and interruptive clients is to have a minimum cost per­call. If a client knows they're going to spend at least 15­minutes worth of money when making a call, they're more likely to wait 118 ­ Open Source Developers' Conference 2005
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until they have a number of issues to discuss at once. The problem here is that one may not wish to charge per­call costs for all regular clients, as this can significantly impact the amount of work they request, or cause them not to report in problems or difficulties that may have a significant impact in the future. Ideal clients
For a small technical consulting business, there are some clients that can be considered ideal. In my experience these businesses are highly technical in nature, and already possess a large amount of talent. Their reasons for going to an external consultancy can be varied, but is usually to gain specialist services, or to cover a short­term glut of work or staff­shortage. Ideal clients usually have an excellent idea of the scope of work that needs to be covered, and as such are comfortable in requesting a large block of a consultant's time. They provide good specifications, and good support for the development process. Due to their organised and technical nature, these ideal clients can be difficult to find, and work from them is usually spaced widely apart. However it is well worth cultivating a strong relationship with these clients, as they tend to be more enjoyable to work with, and provide a more time­effective income stream than other clients. "Not a bank" — intermediary clients
Sometimes your clients will be intermediary clients who are subcontracting work to you. These can be quite valuable as you gain access to their client base and they allow you to avoid work you don't like and instead work on things that you do like. Some intermediary clients insist that all communications go through them and others are happy for you to contact the end­client directly when required. This kind of client arises in both bespoke development work and system administration services. Good intermediary clients will offer significant value to both yourself and the end client. They provide first level support for questions that arise and often collate issues into one usually coherent email to you, shielding you from numerous telephone calls in the process. They scope out projects for you and do the leg work of providing mockups and system design where appropriate. A problem which can arise with intermediary clients is the "we're not a bank" issue. Some intermediary clients will expect you to wait until their clients have paid them before they pay you. This can lead to awkward situations when your client's client is slow to pay or does not pay at all. The best way to deal with intermediary clients is to define your mutual responsibilities up­front. If they wish to only pay you when they receive payment and you disagree with that practice then perhaps they would be better off finding an alternate supplier. Alternately if you're happy to be a little flexible in order to win their business you may be able to come up with a suitable arrangement. Work­flow: interrupt vs batch­processing
There are a wide range of work practices, but most can be classified somewhere on a spectrum from short­
term, immediate needs work, to long­term, planned work. We'll take an analogy from the computer industry and call these work styles "interrupt­driven" and "batch­processed". Interrupt­driven work is driven entirely by interruptions. The phone rings, you answer it, you deal with whatever issues that call represents. A machine falls over, you repair or recover it. The kettle boils and you make a cup of tea. All of these represent work done in response to interrupts, all these types of work need to be done immediately, or close to it. Batch­processed work usually focuses on longer­term goals. Developing a large system, designing a web­site, writing a conference paper, or installing and configuring a spam­filtering service. All these tasks require a Open Source Developers' Conference 2005 ­ 119
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relatively large amount of time, but (excepting deadlines) they do not need to be done immediately. It's practically impossible to have a business that's based entirely around one of these two work­flow extremes. However it's very interesting to examine what occurs for an individual who has to deal with both. Interrupt­driven work, with its immediate and pressing needs, will usually take precedence over longer­term, batch­processed work. Interruptions also cause a disproportionately large amount of disruption to long­term work: not only does the interrupt need to be dealt with, but additional time must be spent re­forming long­
term trains of thought. One can consider this as time spent "context­switching", and it's effectively wasted time. Put very simply, an individual tends to work most effectively when concentrating entirely on batch­processed work, or when they spend their entire time working on interrupt­driven work. A mixture of the two results in a lot of switching back­and­forth between projects, and conflicts over what work takes priority. This is why large businesses will have individuals dedicated to support (interrupt­based) and other individuals dedicated to development and planning (batch­processed), rather than having everyone do a mixture of each. Small businesses don't have many staff, so juggling work and time management is a challenge. It is important to consider whether you wish to focus on interrupt­driven or batch­processed work. Interrupt­driven work is by far more plentiful, although batch­processed work tends to be more flexible and more personally rewarding. Dealing with suppliers
Be nice to your suppliers. Sound happy to talk to them, remember their names (write them down somewhere) and praise them for doing their job and providing you with what you need. Smile when you see them and ask about their health and how business is going. Pay your invoices on time or, if your payment is late, call them and apologise (without excuses) for the delay. Treating your suppliers well will encourage them to go out of their way to assist you. Need something printed with an insanely short turn around time? No trouble at all for such a nice client, would you like that delivered as well? Ordering in something which is currently out of stock? No problem, as they hassle their suppliers to make sure it comes in fast enough for you. Work hard to be memorable (in a good way) to your suppliers and they will return the favour by going out of their way to help you. The key to making money
A business, or a job, is a means of converting time into money. An individual spends time at their job, and receives money in return. The higher one's wages, the more efficiently time can be converted into money. As such, it's no surprise that when small businesses start, they often focus around an individual doing work in return for pay. Charging an hourly rate for work is a poor business model, because your income is limited by your personal time. Time is a very finite resource, and you don't want to spend your life having to turn time into money. The key to making a large amount of money is to have a business plan where income is not heavily dependent upon the owner's time. This can still allow for consultancy, but most of that work should be performed by employees. Developing and selling a "product" is a common business model, and of course there are no end of hosting businesses and ISPs that receive a recurring, passive income from their clients. 120 ­ Open Source Developers' Conference 2005
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Some of the most lucrative businesses start with a large amount of investment of capital to develop and market a product. These come with significant risk, and are beyond the scope of this paper. Nevertheless, if you can find a mostly passive, recurring source of income for your business you are well on your way to early retirement. Conclusion
Perhaps today is the first time you've ever thought about starting your own business. Perhaps after this paper you may be thinking that its an awful lot of work — it is. Running your own business is hard work, but it's also rewarding. It gives you opportunities you may not get in regular employment such as more choice in what hours to work, what work to do, and power to shape your long term future. If you like having a regular income and job security, and if you don't want to be responsible for forward planning, business paperwork and tough financial decisions, then starting your own business may not be for you. On the other hand, if you are eager to strike out on your own, and already have a sound financial position and plenty of contacts, then I hope this paper has proved useful. Before you take the big step of quitting your real job and starting a business, you may wish to: •
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Work on expanding your contacts, you can never have too many. Join user groups and relevant industry bodies, attend meetings, speak at conferences and network regularly. Work on establishing your financial position. Determine how much you spend each month and what your minimum comfortable expenditure is. Do you have sufficient funds for business start up and still leave you with a big enough buffer to get you through the first 3 months? Think about who your target market is and what you want to offer. Consider which contacts may be able to help you get started. Consult with your financial, legal and other important advisors/agents about what is appropriate for your particular situation. Most state governments offer useful information on line regarding starting a business [BUSI]. Starting and managing a business can be one of the most rewarding, challenging, and exciting endeavours that anyone can undertake. While it involves a great deal of hard work, the results of a successful business are well worth it. References
[PTA] Perl Training Australia (http://perltraining.com.au/). [RT] Request Tracker (http://www.bestpractical.com/rt) is a free and open source ticketing system written by Best Practical Solutions LLC. [CARN] Carnegie, Dale; How to Win Friends and Influence People, Simon and Schuster, New York, 1936. Numerous reprints exist from various publishers. [BUSI] Business portals in Australia are state or territory specific, and can be found at http://www.business.[state].gov.au, where [state] is one of vic, nsw, nt, qld, act, sa, or wa. The Tasmanian business portal follows a completely different naming scheme, and can be found at http://www.development.tas.gov.au/startbus.html. Open Source Developers' Conference 2005 ­ 121