© 2010–2011 Rex Jaeschke. All rights reserved.

[If you have not already done so, I strongly suggest that before reading this essay, you read, "Talk is Cheap. Write it Down" (February 2011), and then, "Planning for Success" (May 2011).]

I started my own computer consulting business in July 1984, and it's been successful ever since. As far back as I can remember, I've wanted to be self-employed, and once I got permanent residency here in the US, I put my plan into action. I started my business, bought a townhouse, and my son was born, all within a couple of months. There's nothing like a little pressure to get the adrenaline flowing!

In recent years, I've been mentoring students at an alternative high school. For one or more of a number of reasons, the students there don't quite fit into mainstream schools, which is why they are at that school. The good news is that they all want to be at that school. More than a few of them think of themselves as mavericks, and they dream about running their own business. Whenever I get a chance to talk to them about that possibility, I cover many of the points in this essay.

Following the main sections below, are short notes in list form. I leave it as a reader exercise to research each one in the context of the business being planned.

The Dream vs. the Reality

Yes, you can get all the rewards, but you get to take all the risks and responsibilities as well. There really is no such thing as a free lunch! So, while the idea of driving around in a souped-up convertible company car and flying Business Class might seem wonderful, sooner or later you have to have a defensible plan to make a profit (well at least to not lose money). Assuming that you want to enjoy your work, will people actually pay you to do what you enjoy?

Goals – What is it you really want to do?

To be sure, I didn't have a detailed written plan when I went into business. However, I put in a lot of time and effort thinking about it in the year before. I planned to be a computer consultant, but I recognized early on that I really needed to distinguish myself from the thousands of other people having that same title on their business cards. The big question was, "Why would someone engage me over someone else? Just what was my angle?" In truth, I was prepared to do whatever it took to pay the rent, and I certainly had a lot of skills. What I really needed was a specialty I could claim that would make me attractive. After identifying a short list of candidate topics, I selected one and rode that wave to the top.

Right from the start, I had two very important rules:

1. Never ever ever hire anyone – From my short, but very hectic, corporate career I learned that I simply didn't like to manage people. I can work with people, but that's a whole different scenario.
2. Take as much time off as I could afford – You can't buy time. So rather than work fulltime and retire at 65 (hopefully) with some money, but not necessarily with great health and any urge to travel, I wanted more than the usual time off as I went. [I came to the US from a culture that provided everyone with 4–6 weeks of vacation per year, and where people worked a 37.5-hour week with flexible working hours.]

I have never regretted either rule, and, in fact, I've re-endorsed them both many times over. If I got a contract that was more than I could handle, I gave it to a larger player and subcontracted back a manageable part. And with regard to time off, I started with three months off in my first year, spread out over the year. [Except for three years in recent times—when I deliberately took on fulltime projects—I've taken off between three and six months each year.]

As far as I can remember, I've never heard an American say that they wanted to remain a 1-person company forever. The all-American goal seems to be that one is only a 1-person company until one figures out how to be a mega-corporation. But the evidence is well documented: Most small businesses fail in their first five years, and the kind of person who can run a small business is not at all like the one needed to run a medium-sized or large one.

A couple of years after I started my business, I took a break during which I analyzed my success. That's when I moved from being a brute-force success to a smart success. That is, by figuring out what made my business successful, I got smarter about planning. Either I could make more money for the same effort, or I could work less time for the same money. And I did some of each.

Many people have a narrow focus; they see only one path to their goal(s). They often place a lot of constraints on themselves. Are they able to travel out of town overnight? Are they willing and able to work long hours, weekends, or public holidays? Are they really prepared to "do whatever it takes within reason"? In my case, I figured that it would be hard enough to get potential customers to my door, so I didn't want to turn any away unnecessarily. As a result, I was prepared to be—and I remain today—very flexible.

Although I started out actually designing software systems and writing the programs to implement them, to help start my business, I began writing for publication with first one, and then a second magazine. Not only did this generate some cash flow, I got to keep all the rights to the intellectual property, I had a reason to learn and keep up with evolving technologies, and I had something to add to my resume. I was also getting directly to those who might want my services, and I could give potential clients copies of my published work. That led to my developing seminars using my published materials (some of which became books) and to the lucrative training business. With seminars, instead of charging per hour of work, you charge per person attending. The next step was starting the first of two publications, which led to editing and publishing. Now it's very rare that a client will hire one to learn on the job, so I had to find a way to do that myself. My solution was to get involved in national and international standards groups for my profession.

Twenty-seven years later, my business card still says "Computer Consultant", but my focus has evolved considerably, primarily because of my flexibility and the fact that about every three months I review my situation. Where am I now and where do I want to be in six, 12, or 24 months?

In reality, my consulting led to learning about topics on which I got paid to write. For topics I researched for writing, those skills could be sold as a consultant, as could those I learned when teaching seminars in a variety of environments. And my standards involvement overlapped and reinforced all the other parts of my business.

In truth, how could I know with certainty 27 years ago where I wanted to end up? Most of the technologies I work on now didn't exist back then.

And while having goals is important, so too are having non-goals. In my case, I had no interest in building an empire. Now that doesn't mean that I couldn't run one; it just means that that doing so is not one of my goals.

Selling Services vs. Building/Selling Products

It takes time and expense to provide a service. To provide the same service to more clients, you need to extend your hours and/or hire others to help you.

It also takes time and expense to build a product, and unless you are in a lucrative custom-made situation, you'll need to hire others to help you. (They need not necessarily be employees, however; they could be subcontractors.) Then there are the inventory-related issues of storage, insurance, cost, shipping, and tracking, and excess and out-dated inventory, along with sales tax collection.

In my case, I figured out a way to reuse some of my deliverables, namely, my intellectual property. I got paid to write it for publication. I re-used it as seminar materials, and I published it in book form. None of these activities required help or a physical inventory, which is worth keeping in mind as many economies move from manufacturing to service-based models.

Business Organization

There are a number of options for your business classification, including sole proprietorship, partnership, and various kinds of corporation. Each has its pros and cons. In my case, I decided to trade under my own name and to make that name my brand. After all, I was selling myself, not a product.

I've never been swayed by the argument that for a 1-person business like mine incorporating provides more legal protection. In these litigious United States, a determined plaintiff is just as likely to come after the individual owner(s) as he is to come after the company.

Are You in Business or Just Pretending?

If you don't have a business card, you won't convince me that you are in business, and you might not convince anyone else either.

Your business name should be important to you as a brand and you will want to promote it. As such, chose it carefully, protect it legally, and register it as an internet domain. Then put your website at that domain (of course, you'll have a website!), as in www.YourBusinessName.com, with your email address as YourName@YourBusinessName.com.

If you claim to be in business, then why not look like you are in business!

Conclusion    

Each of us comes to a business with a set of skills and we'd like to think that we're at or near the top of the heap in our particular field. And maybe we are. However, to run any business successfully, especially one that has employees, you should be prepared to be a little bit of each of the following: a lawyer, a salesman, an accountant, a bookkeeper, a tax expert, an office manager, a negotiator, a promoter, a crisis manager, a psychologist, a psychiatrist, a marriage counselor, a motivator, and a sage. And when you've finished all those tasks, you might even get time to do the things you liked and were really good at to begin with!

From a book of quotes I once read, comes the following: "No matter what your circumstance you should always believe that you work for yourself". It is highly unlikely that anyone cares about you as much as you should care about yourself. And, frankly, why should they?

A Summary of Things to Consider

1. The Dream vs. the Reality
   1. You get all the rewards
   2. You get to take all the risks and responsibilities
   3. Will people actually pay you to do what you enjoy?
2. Goals – What is it you really want to do?
   1. Consulting, writing, speaking, making a product (multiple paths to some goals)
   2. General guidelines are good, but don't be too rigid
   3. What are your constraints?
      1. Are you able to travel overnight away from home
      2. Parenting duties
      3. Hours on working days
      4. Availability on weekends and public holidays
3. Services vs. Product
   1. Services:
      1. Time and expenses
      2. More services requires more people
   2. Product:
      1. Manufacture requires more people (employees vs. subcontractors)
      2. Inventory (storage, insurance, cost, shipping, tracking), excess, out-dated
      3. Sales tax
4. Business Considerations
   1. Organization
      1. Sole proprietorship
      2. Partnership
      3. Subchapter S corporation
      4. Other corporation
      5. Non-profit
      6. Woman/Minority-owned or small business certification
   2. Who is your backup person?
   3. State/county business license (maybe need from multiple states)
   4. Insurance
      1. Liability
      2. Errors and Omissions
      3. Disability
      4. Medical/Hospital/Dental
   5. Taxes
      1. Both employer and employee social security contributions
      2. State income (quarterly estimated)
      3. Federal income (quarterly estimated)
      4. State sales tax
5. Business Presence
   1. Website
   2. Email address
   3. Business cards
   4. Stationery (real and/or for Fax cover pages)
6. Marketing and Promotion
   1. Advertising (print, web, direct mail, cold calls, …)
   2. Joining trade groups, associations
   3. Speaking at events, free mini-seminars
   4. Writing articles in target-audience publications
   5. Giving away time/products and getting publicity
   6. Going after government contracts
7. Setting up an Office
   1. Space – in-home office vs. professional office space (Do you really have the discipline to work at home?)
   2. Telephone
   3. Fax
   4. Hi-speed internet connection with reliable up-time
   5. Computer
      1. Desktop, laptop, both?
      2. Wifi capability
   6. Printer (color vs. black and white)
   7. Computer file backup (frequency, on-site vs. off-site copies)
   8. Shredder
   9. Fire safe (documents and on-site backup media)
8. Billing, Payments, and Cash Flow
   1. Accepting payment by cash, check, credit card, electronic transfer
   2. Issuing invoices
   3. Issuing receipts
   4. Sales tax collection
   5. How many days to pay?
   6. Penalty for late payment
   7. Travel time (local vs. out-of-area)
   8. Need cash flow to cover 30–90-day net payments
9. Record Keeping
   1. Financial software
      1. Banking
      2. Invoices
      3. Accounts receivable
      4. Accounts payable
      5. Tax preparation
      6. Expense tracking
   2. Contact list/lead manager
   3. Electronic calendar with alarms
10. Rates
    1. Charging by the hour, day, or job
    2. Are expenses included?
    3. Things to factor in
       1. No paid vacation
       2. No paid public holidays
       3. No paid sick leave
       4. No employer-provided health insurance
       5. No employer-provided contributions to a retirement plan
       6. Administration, banking, record keeping, backup, marketing and so on all take non-billable time
    4. What does your competition charge?
    5. Are you a generalist or a specialist?
    6. Pro-bono vs. full rate; should you ever discount your time?
11. Professional Services
    1. Legal
    2. Accounting
    3. Payroll
    4. Taxes
    5. Safe-deposit box at a bank
12. Agreements and Contracts
    1. Written vs. unwritten expectations
    2. Explicit vs. implicit guarantees
13. Keeping Current: Clients don't hire contractors to learn
    1. Books and videos
    2. Training (in-person and self-paced)
    3. Certification/endorsement

© 2011 Rex Jaeschke. All rights reserved.

For some years, I've been saying, "Success comes from planning, not from hoping or wishing". Yes, you can plan for success, although I must say that this seems to be news to many people. More often than not, many people I have observed try something halfheartedly or in a disorganized fashion, and then when they fail, they rationalize that "it simply was not meant to be". Not only is that wasteful, it's nonsense! Ignoring external factors, most people are exactly where they deserve to be; those who plan for success most often are successful, and those that don't most often are not. It's that simple.

How then does one plan for success? This essay is my attempt to answer that question. I start by introducing the basics steps of the process as I have determined them, and then I illustrate them using a scenario. Although the names of the protagonists and some of the details have been changed, the problem and solution are real.

Note that the approach I document relies heavily on one writing things down at every step of the process. As such, you would do well to read first my essay "Talk is Cheap. Write it Down" from February 2011. If you can't master the steps outlined in that essay, you certainly aren't planning for success.

Introduction

I'm a big fan of making lists, so let's begin with one that contains in order the main questions/steps in planning for success:

1. What is the problem?
2. Who is impacted by this problem and its resolution?
3. What constraints exist?
4. What is the solution?
5. What are the costs of solving this problem?
6. Who will implement the solution?
7. How did it go?

Now unless you are very experienced at problem solving, you would do well to follow these steps for even seemingly simple problems. If you cut too many corners too early in the development of your skills, you likely will not achieve the desired results.

It is important to understand the meaning of the term problem as used in this context. According to my dictionary (American Heritage), when used as a noun, problem is:

1. A question to be considered, solved, or answered.
2. A situation, matter, or person that presents perplexity or difficulty.

To many people, the word problem has negative connotations, as in "He's a real problem." and "She always was a problem child". Such usage is not applicable to this essay.

As I stated in my first blog post ("Hi Ho, Hi Ho, it's Off to Blog We Go", December 2009"), regarding emotion, I am a Vulcan. As you follow the steps above, be careful to temper your emotions with a generous dose of reality, especially when it comes to wants versus needs.

A Case Study

Several years ago, Robyn rented a 2-bedroom apartment, and to help cover expenses she sublet the 2^nd bedroom to Julia. They shared the cost of the landline telephone, the high-speed internet connection, and the cable television service. Recently, Robyn announced that she was getting married and that her husband would move in with her. As Robyn and her husband would be a 2-income family and they desired privacy, they wanted the place to themselves. Julia would have to find somewhere else to live.

Julia had recently gotten a sizeable pay raise, and she wanted a place of her own. She did the math and determined that by going without a few luxuries and by keeping to a sensible budget, she could manage to rent a 1-bedroom apartment on her own.

Step 1: What is the Problem?

Define the problem by first thinking it through, then verbalizing it, and then putting it in writing. Make sure it is the real problem, not just the most quickly or perceived problem.

I cannot emphasize enough the underlined sentence above. Over the years, I have seen some very elegant, efficient, and cost-effective solutions; however, they solved the wrong problem! People in a hurry or without sufficient discipline quite often think that the first thing they see must be the real problem; however, that is often not the case.

For Julia to get her own place, she would have many issues to consider. However, for the purposes of this discussion, we'll limit them to just a few. The problem as she defined it was, "Regarding telephone, high-speed internet connection, and television services, what is the most cost-effective solution for my current needs?"

Let's revisit the issue of defining the real problem and the potential for "running off the rails" by making an emotionally charged decision. Many of us are being bombarded constantly with advertising promoting mobile phone options, super high-speed internet connections, and whiz-bang subscription TV choices. If we want to keep up with the "in crowd" or we have way too much money, we might write the problem as, "Which package is the best that gives me all these features?" In Julia's case, the problem statement contains "most cost-effective solution" and "current needs". Until she considers her current needs and constraints, she can't begin to answer her question.

Step 2: Who is Impacted by this Problem and its Resolution?

Ask, "Who is impacted by this problem and the actions taken? Who should be notified? Is there likely to be any backlash from any other party?"

Apart from others being able to reach Julia by phone and email, no one else is impacted by the problem or any solution.

Step 3: What Constraints Exist?

Consider if there are minimum or maximum time limits, or whether a solution is needed by a specific date. Is cost a factor? What other issues impact the solution?

Some sort of telephone service needs to be in place by the time Julia moves into her new apartment. If she chose a mobile solution, that service could start prior to move-in.

Although Julia enjoys renting videos occasionally, watching TV is low on her list of priorities. Her main recreational activity is reading.

It would be useful for high-speed internet service to be in place by move-in, but this is not necessary,

Julia is an elementary school teacher. As such, she cannot be interrupted during the workday by personal phone calls. Thus far, her landline at home has been adequate, and she projects that one just like it will suffice for some time yet. Her internet needs are minimal; primarily they involve web browsing and private email (which she is prohibited from doing via her work computer). With her local supermarket renting DVDs for $1/night, she has no interest in downloading videos over the internet.

Cost is certainly a factor. Looking at nice-to-have features is okay, but she needs to separate wants from needs. However, she'd like to be able to add features to her service as she can justify and afford them.

Ultimately, Julia determined that her needs were as follows:

• A landline with a 50 local calls per month package. (Long-distance calls would be done via a discount calling card. International calls would be done via Skype-Out at 2 cents/minute.) She didn't need Caller ID, call waiting, or any of the myriad optional features.
• A broadband internet connection that permitted email with small attachments, and web browsing without large file downloads.
• No subscription TV service; she would buy and use an indoor antenna to access the numerous free channels available in her area.

Step 4: What is the Solution?

Identify the final decision(s) and state the actual steps needed for a complete, timely, and successful solution to the problem.

Here are the steps that Julia determined she needed to take:

1. Draw a table containing rows for each of the features available with phone and internet services, with one column for each supplier.
2. Contact each service supplier and record their information in the table, adding new rows, as new features become known. If features from one supplier don't exactly match those from another, try to weight them, so comparisons can be made logically rather than emotionally.
3. Choose one supplier for both services or different suppliers for each service.
4. For internet service, hook up the modem/router and install any required software.
5. For phone service, set up a Skype account, sign-up to Skype-Out, and set up a Skype-to-Go local number for access by regular phone. Configure Skype-to-Go speed-dial numbers via the computer.
6. For TV service, hook up the antenna and configure the TV tuner to the channels available.
7. Configure the DVD player to both play and record, and configure the VHS player to play.

Step 5: What are the Costs of Solving this Problem?

Consider the costs in time/money/resources.

Apart from actually paying for the new services, the main cost was the time it took to obtain and compare the prices and services from different vendors. There was also the cost of an indoor TV antenna.

[In Step 7, we'll see that recording to DVD resulted in an unexpected cost.]

Step 6: Who Will Implement the Solution?

Consider who will take the action, and, if need outside help, identify whom.

Julia did the research herself. A friend helped her select and buy the antenna, and installed the internet and video equipment. She was able to set up Skype-Out and a Skype-to-Go local number herself. [Note that having a friend help can involve risk. Is that friend able to see the issues from the other's perspective or are they introducing their own bias to the solution of the problem?]

Step 7: How Did it Go?

Afterwards, do a postmortem as to what did or did not work and add any necessary improvements to the general plan. Did it succeed because of the plan; was it accidental, or influenced by outside forces?

How do you know you succeeded? After having spent time and money, but not necessarily having a defensible plan, many people rationalize that their solution "must be okay", even when it really might not be!

In Julia's case, the best phone deal included unlimited local and long-distance calls in the US for a reasonable fixed price. It also included DSL internet access, whose performance was adequate. (While it wouldn't support high-speed video streaming, that was not a requirement.)

Although more than 35 digital TV channels were available over the air in the neighborhood, inside, the reception for many turned out to be poor or non-existent. Julia's apartment was on the second floor of a 4-floor building with large trees front and back. It was hard to get a good signal with an indoor antenna. That said the few channels she watched regularly generally were available.

Recording TV programs to DVD required an unexpected cost, of some $300. The tuner in the TV was just for the TV, and like pretty much all digital TVs, her TV had no capability to output a signal to a recorder. (This task is usually handled by a cable or satellite box.) As such, Julia had to buy a new DVD unit that had a built-in digital tuner. This let her record one program to disk even while watching a different program live. The unit she bought was a combo DVD/VHS.

The bottom line was that the implementation was a success, and, except for the cost of the new DVD unit, it went exactly as planned. In fact, Julia would recover the complete cost of her new 40" digital TV, antenna, DVD/VHS unit, and 3-handset wireless phone system with the savings she'd make by not having subscription TV for the next 12–15-month period.

Additional Rules for Success

Once at short notice, I was asked to give some guidelines on being successful. Here's what I came up with:

1. It is much easier to be different than it is to be better. (Think outside the box. Don't compete head-on; look for an angle.)
2. Always think that you work for yourself even if you really work for someone else.
3. Invest in yourself. (If you don't take an interest in yourself, why should anyone else?)
4. Do you really want to manage people? Be honest now.
5. Opportunities are all around us; they simply need to be recognized. They can even be created!
6. Good written and spoken communications are extremely valuable. (No matter how good your ideas might be, if you can't express them they'll languish.)
7. Be true to yourself first, and then to your friends/family and employer/clients.
8. Treat every first meeting as the beginning of a potentially long-term relationship.
9. Don't be afraid to volunteer. (Being an organizer of an activity puts you at the center of that activity even if you are brand new to the group.)
10. Getting noticed could result in more opportunities, so don't be afraid to "blow your own horn" a bit.

Conclusion

There is an old adage, "Success breeds success". I've seen that happen and I've experienced it firsthand many times. If you plan for success, then except for faulty planning or factors beyond your control, why shouldn't you be successful? After all, you are as good as the next person, maybe even better. Right? Now go forth and succeed, and remember, if you tell yourself that you can't do something, don't be surprised if that becomes a self-fulfilling prophecy!