Schrag’s Ten Commandments for SoloITs

Schrag’s Ten Commandments for SoloITs

I prepared this list of do’s and don’ts for my conference call with Karl Palachuk on June 18, 2008. (Listen to the call.) I made a list of ten just so I could give it a snappy title. I could have trimmed it to seven or eight, or I could have thought of a few more. So don’t take this as an absolute list.

A “SoloIT” — a term I just coined (or maybe unknowingly stole) as I sat down to write this — is a one-employee information technology consulting company. I have run/been a SoloIT since 2000, and here is some advice I would give to others in my position.

1. Thou art the driver of thine own car

I got the business-as-car metaphor from a business coach a few years ago. As I was describing some frustrations I was having with some of my client relationships, he told me to think of my business as a car, and he asked me who was driving it: me or my clients? It turned out that I had let my clients determine the direction of my business. I had to get them out of the driver’s seat and take control of the wheel.

This could play out for you many different ways. Maybe it means dumping some clients. Or focusing on a particular technology or industry that you enjoy. Or changing the terms of your contracts. Or starting to charge for things you currently do for free. Or not working at all on evenings and weekends. The point is that it’s your business. You alone decide how it works.

This also means that you should take everything I and other consultants advise you to do with a jar of salt. What works for me may very well not work for you.

2. Thy business is a legal entity

Make your company an honest-to-goodness business, not a way to earn some extra cash on the side or under the table. You don’t necessarily have to incorporate. I ran my business for several years as a sole proprietorship (which has a specific definition in U.S. tax law). But you do have to follow all the rules with regard to income taxes, corporate taxes and filing fees, permits, and whatever else the relevant governmental authorities require. Make sure your business is properly insured, including errors and omissions coverage. Put a retirement plan in place. Get advice from knowledgeable attorneys and accountants about what steps you need to take.

3. Thou shalt never walk alone

No matter how few clients you have and how much flexibility there seems to be in your schedule, sooner or later you’re going to need backup as a result of a technical emergency, injury, illness, or a well-earned vacation. Simply hoping that nothing will happen while you’re unavailable is irresponsible. At the very least, you need to find another IT consultant or firm in the area who can cover for you in an emergency. Over time you may decide to create more formal partnerships. For example, I currently outsource help desk and NOC functions. The next two commandments go hand-in-hand with this one.

4. Thou shalt not treat thy peers as competitors

If you can’t follow this commandment, you’re going to have a hard time with the previous one. You’re also not going to have as much fun, because your peers are going to be the closest thing you have to co-workers. If you live and work in any but the smallest of markets, there is plenty of business to go around, so don’t worry about revealing your “secrets” (there really aren’t any in this business) or having someone steal your clients. You will probably find the opposite — that other local consultants can be one of your best sources of new business. Get active in the local, national, and international communities of IT consultants. You are guaranteed to learn things and you might even pick up a few friends along the way.

5. Document thy systems

When you’re first starting out and have only a few clients that you see regularly, you may come to believe that you can keep all the details of all their systems in your head. Not so. You must have the key details of the systems recorded somewhere. It doesn’t have to be fancy. For the first several years of my business, my documentation consisted of a single Microsoft Word document, with page and section breaks in between clients for ease of navigation. I think it grew to over 200 pages and over 2 MB. It worked for me, and it was easy to pass on to whoever was covering for me while I was on vacation. I’ve since outgrown it for various reasons, but the point is that you have to have something. You don’t want to be spending time reconstructing information or procedures that you used to know, and you definitely don’t want to be billing your clients for this time. That’s bad form.

It’s essential that someone close to you — your vacation coverage, your spouse, your attorney, whoever — can access your documentation in case of your sudden demise or incapacitation. People really do get hit by buses. Don’t think it can’t possibly happen to you.

6. Thou shalt not bite off more than thou can chew

I cannot tell you how many times I’ve heard a prospect say “we had a guy who was really good, but he got too busy and stopped returning our phone calls” or “we have a guy who’s really nice, but we’re not really sure he knows what he’s doing.” Do not become that guy.

Don’t take on too many clients. That doesn’t necessarily mean you can’t take on any new clients if you’re already very busy, but it does mean that you might have to drop an existing so-so client in order to take on a new great client. I don’t know how many clients is too many. You have to figure that out for yourself.

Don’t try to do things you’re not qualified to do, unless the cost of failure is near zero. Clients are not going to be disappointed in you if you say “this is beyond my area of expertise; we’re going to need to call in a specialist for this.” They will appreciate that you are putting their success over your own revenue generation. If you see an opportunity to learn something on the fly, and you think it’s worth learning because it’s something you want to do repeatedly, tell your clients that it’s new for you and they can expect a steeper than usual learning curve. You might (but don’t necessarily have to) offer them a discount if you’re learning on the job.

Watch out for situations that threaten to eat you alive. Maybe you’re not busy now, but what’s going to happen when a project goes south and consumes all of your waking hours for two straight weeks? There are going to be times when you have to be willing to pull the plug on projects that just aren’t working. Sometimes you will lose money on these projects. Sometimes your clients will. It happens. Deal with it. Stop trying to fix things and find a different solution.

7. Thou shalt not pinch pennies

The old “takes money to make money” adage is true. Yes, every dollar you spend on your business is a dollar you can’t spend on yourself, your family, your favorite charities, etc. But that’s also true for your clients. Do you advise them to take the 90-day warranty instead of the three-year warranty so they can spend that extra $245 on a nice dinner? Of course not.

Invest in good quality tools — hardware, software, and services. Attend national conferences. Bring in extra help when needed, even if you can’t get the client to pay for it.

At the same time, have some common sense. Don’t spend thousands and thousands of dollars on every single tool or consulting program that promises to revolutionize your business.

8. Be honest (brutally, painfully honest)

Hiding facts, shading the truth, and outright lying often come back to bite you. Honesty rarely does. Be honest in your dealings with clients, prospects, partners, vendors, and yourself.

9. Track thy time and fear not to bill for it

It may be possible to be a SoloIT without billing by the hour, but it’s not easy. And what’s wrong with the billable hour, anyway? The vast, vast majority of your clients’ employees are paid by the hour (although they may only “bill” their employers in 40-hour or 52-week chunks). You don’t have to (and probably shouldn’t) rely on the billable hour for 100% of your revenue, but to the extent that you do bill hourly, you cannot be successful without accurately tracking your time. Unfortunately, as technology has improved this has become more difficult. I used to have to make a site visit for just about everything I did. I carried a piece of paper and a pen in my pocket and I wrote down the time I arrived on site and the time I left. Now I do a lot of work at home and frequently find myself doing four or five different things at once. I don’t have a perfect solution for keeping time now, and as a result I know I’m not earning as much as I should.

Remember that not billing for your time hurts twice. Not only are you forgoing current revenue, but when it comes time to review your services and rates with your clients and you make a realistic projection of how much time you’re going to spend in the coming year, your clients may find the projected cost increase rather shocking.

10. Always be learning

This commandment is a bit of a throwaway, because it should be obvious to any service professional, not just SoloITs. Sadly, I have encountered many SoloITs who are trying to solve today’s problems with yesterday’s technologies. I can imagine two scenarios that cause this. Maybe they are working so hard and so many hours that they don’t have the time or energy to learn about and try new products. People in this group need to refer back to commandment #6. Or maybe they think that since they can find some solution to all problems using what they already know, it doesn’t pay to take the time to learn what the best solution to those problems would be. These people are technicians, not consultants, and they are doing a disservice to their clients and their profession.

 

I have one final piece of advice, which doesn’t rise to the level of a commandment but which I feel the need to pass on based on my own recent experiences. Don’t sign into Facebook during business hours. It’s a HUGE time-suck!