Small Biz Tech Talk ™

One of the most important parts of becoming an IT consultant is making sure you know which type of small business clients you want to attract.

How can you find the prospective clients that will most benefit from your services long-term?

Look for companies that are big enough to need your services on a regular basis. So these potential clients are candidates for signing on-going service contracts, that bring you the steady revenue that will be the foundation of your business. Doing this successfully, as you are becoming an IT consultant, means you absolutely need to know the major qualifying questions inside out and backwards, like the back of your hand.

1. Geographically Desirable? Because most small business clients need a lot of hand-holding, potential clients need to be located nearby to you. Look for prospects located within a 30 – 60-minute drive from your location. If you live in a large urban area, for example, your service area may shrink considerably, as there will be a high concentration of viable prospects very nearby. Also think about proximity as you attend networking events and develop your marketing campaigns.
2. Big Enough, But Not Too Big? Think Goldilocks: not too big, not too small. As you are becoming an IT consultant, target clients that have 10-75 workstations. At this size, the prospect is big enough to need a real, dedicated server … but not so big that the prospect needs a full-time, in-house IT department. Another way to think about this is that the prospect will likely have $1 million – $10 million in annual sales, or your local currency equivalent. Know this type of information about your potential clients, so you can develop much more powerful, affordable, and cost-effective marketing strategies.
3. A Platform You Can Support? Before you get too far into the sales process, be sure to properly qualify prospective clients based on their installed platform of OS’s and NOS’s. For example, if your specialty is Windows-family OS’s/NOS’s and a prospect is 100% standardized on Mac’s, you should refer that prospect elsewhere.
4. Serious About IT? If you come across a small business prospect for your IT consulting business that doesn’t have a dedicated server, because they’re messing around with peer-to-peer ad-hoc networking, you probably want to run the other way. Before you spend too much time on a potential client, make sure the prospective client is really ready for your solutions.

In this short article, we talked about 4 simple, but very powerful qualifying criteria for prospective clients. By consistently asking these questions, you can more proactively manage the selling process and utilize your limited time more effectively. Learn more about becoming an IT consultant and attracting steady, high-paying clients now at http://www.BecomingAnITConsultant.com

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Are you looking at a computer business for sale and wondering if you should buy it?
 
Before you invest a large amount of capital to buy an existing computer business, you should consider the many benefits of starting your own computer business from scratch. Not only will the initial start-up costs be much lower, but you may also find a great deal more freedom in managing the growth and direction of your computer business.
 
The following 4 pieces of advice can help you decide whether to buy a computer business for sale, or go in your own direction.

   1. Running a Computer Business Requires a Lot of Time. Whether you buy an existing computer business for sale, or start your own company, you will have to invest significant time and energy into building it up. You will have to go to a lot of meetings and shake a lot of hands in networking situations. You will have to make follow-up phone calls. You will have to plan display ads, direct mailings and targeted marketing campaigns. But more importantly, you need to be prepared to call on potential clients and establish real relationships. Because of the amount of time required to start any computer business, you need to be realistic about what it will take to get yours going.

   2. Buying a Computer Business for Sale Requires a Lot of Start-Up Capital. Buying an existing business can be very capital intensive. To buy even a small, thriving computer business, you could spend anywhere from a few hundred thousand dollars to a few million dollars. Expect to invest some multiple of past annual sales. The capital investment of buying a computer business for sale is one of the biggest reasons you need to be very careful and take your time before jumping into it.

   3. There Are No Guarantees with Buying a Computer Business for Sale. Just because you are buying an existing computer business that already has clients does not mean you don’t have to do any work on networking, marketing and building relationships. You will need to maintain trust among existing clients and build your own relationships with them as the new owner. You will also have to continue to keep your sales funnel full with targeted marketing campaigns, valuable networking opportunities and other relationship-building efforts.

   4. Know What it Costs to Start Your Own Computer Business. Before you buy a computer business for sale, you should know the start-up costs involved in starting your own computer business from scratch. You can start your own computer business for generally as little as a few thousand dollars. What will you need? You need a business phone number, voice mail, a cell phone, business cards, legal licensing registrations, and insurance. And you will want to meet with an attorney and an accountant, so you be prepared to invest in professional services to get your company started. A major benefit of starting your own computer business is that in most cases, you can get started working out of your home office. While the time investment will be similar,  you will have far fewer start-up costs when building a computer business from scratch, than if you buy a computer business for sale.
 
In this short article, we discussed 4 tips to help you decide whether or not to buy a computer business for sale, so you know your options and exactly what is in store for you. Learn more about how you can get great, steady, high-paying clients for your computer business now at the attached link. 
 
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Not every type of business is right for every IT consultant, but many choose to buy into an IT franchise. You have several options when you decide to start a technology business and an IT franchise is just one of those options.

The two main choices most consultants face is whether to buy into an IT franchise or become an independent IT consultant.
 
Which choice is right for you depends on whether you want to build your business completely by yourself or take a few shortcuts. But just because you have some shortcuts doesn’t mean everything is done for you. So if you’re buying into an IT franchise, you need to be prepared to up the ante in a lot of ways.

The following 3 tips can help you think clearly when you are choosing which type of IT business is right for you.

   1. Think about Your Personality Traits… Not Just Your Technical Skills. You certainly need some technical skills and a general love of computers to be successful in an IT services business. But you also need to be able to work well with people and be able to build strong relationships. Gauge your abilities in the following two areas of personality: being assertive; thinking with a head for business. You need to be assertive, but not overly obnoxious if you want to start any type of business. You also need to be able to stick up for yourself without being too aggressive with prospects, customers, clients and potential partners. When it comes to thinking in business terms, you need to put your business goals ahead of being perceived as nice. Most likely, you will not be able to always be the nice guy or gal, whether you start an IT franchise or some other type of IT business. Always think about what is important to succeeding long term and put your business financial needs over your desire to work with cutting-edge technology. Your clients pay the bills. So you have to work well with them and sometimes even put your need for technical skills career gratification aside to build relationships for the long-term.

   2. Starting an IT Franchise is a Business of Sweat Equity. No matter which type of business you start, you will have several months during the start-up phase of really hard work with little to perhaps modest financial gain. An IT franchise doesn’t come with a guaranteed client list. You need to be out pounding the pavement, shaking hands and getting your name out there. You also need to be diligent about following up on all of your leads, sales calls, and pending proposals. This will all be happening before anyone pays you a dime. Just because you are buying an IT franchise with some set rules, and best practices, does not mean your problems will go away overnight. Be realistic about pros and cons and what will work best for you before you decide which type of IT business to start.

   3. Remember that No Two IT Business Owners Are the Same. Just because buying an IT franchise is the right decision for some doesn’t mean it’s the right decision for you. Think carefully about your goals and dreams you have for your IT business along with your skills, available time and financial capital. Then you can decide how you will start your IT business, with an IT franchise or something different.
 
In this article we discussed 3 IT franchise tips to help you decide which type of IT business to start. Learn more about how you can get great, steady, high-paying clients for your IT franchise at the attached link. 
 
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Are you looking to start a consulting business?  Do you wonder if you will be expected to know everything that could possibly go wrong with your clients’ problems and potential problems?  

The fact is, you don’t need to know absolutely everything in order to start a consulting business.  And the notion that you would even be able to know everything when it comes to technology is very unrealistic.  The following 3 pieces of advice can help you learn which skills and what type of knowledge you need to have to start a consulting business the right way.

   1. Understand the Balance Between Technical Skills and People Skills.  In order to successfully start a consulting business, you need to be really well organized, friendly and someone that enjoys helping other people.  Focus on being resourceful and not just a technical genius.  When you try too hard to be a technical genius as you build your client base, you can hold yourself back.  Computer consulting is about communicating with people and building real relationships.  If you have strong technical skills but still need some help working a room, you can get better at socializing, networking, and schmoozing with practice.

   2. Find Out If You Have the Right Skills.  How do you know if you have the right technical skills and business skills to start a consulting business?  First of all, don’t let lack of certifications hold you back.  Advanced technical certifications are not important to the average non-technical small business owner or manager.  You can do very well without ever selling to companies with an IT director.  Focus on your ability to build strong relationships and solve real business problems with sophisticated IT solutions.  You will do just fine without racking up a lot of certifications that will probably be overkill when it comes to working with most small businesses.

   3. Remember that Small Business Owners Want Total Business Solutions and Complete Accountability.  Typical small business owners and managers are not looking for just credentials or technical skills.  They are buying you and your business expertise.  They are buying your comprehensive business solutions and the security of engaging with a consulting business that knows how to work with other companies like theirs.     

In this brief article we talked about 3 tips that can help you as you start a consulting business.  To learn more about how you can get great, steady, high-paying clients, sign up for free tips on how to Start a Consulting Business now at the attached link.
 
 
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A lot of people involved in information technology consulting truly believe they can’t really get started until they’ve managed to get 20 certifications or more.  They seem to think they won’t be considered legitimate in the world of information technology consulting unless they are highly decorated.  This couldn’t be further than the truth for the following reasons:

1.     Small businesses are typically not using the latest technology.  Most businesses are not even going to know what your certifications mean let alone care if you have that many because they will be pretty behind – often about two years – when it comes to technology.  

2.    A lot of technology for small businesses is pretty outdated.  When you work in information technology consulting with small businesses, you’ll usually be working with a lot of things that need updating … but chances are, you won’t be able to update it all because they just don’t make small business technology that is cutting edge.  

3.    There are other skills that are much more important to information technology consulting than technology savvy.  If other people come to you for computer advice, if people ask you to help them with their gadgets and you generally are known for knowing your stuff and being a real resource, your certifications aren’t going to mean a thing.  

4.    Information technology consulting skills are very variable.  Even if you have very junior (or very senior!) skills when it comes to computer skills, there will be a place for you in small business information technology consulting.  

Added By:  Computer Consulting 101 Professional Kit

In order to have a successful IT consulting career, you need to have a variety of technical skills.  But even more important than technical skills is business savvy.

Just Say “No”

As you start your IT consulting business, you will get a lot of strange service requests.  People will waste your time with proposals that make no sense and will not have the money to pay you.  Learn to say, “No!” to these people, or you will find yourself struggling.    

Banking and Merchant Accounts

Setting up a business bank account is necessary.  If you want to resell products, a merchant account will be needed so you can take credit cards as part of your IT consulting business.  

Managing Money

You need to get paid well and fast.  You will need to know how to calculate expenses, balance a checkbook, deal with credit and collections and handle a billing and invoicing system.  

Tracking Prospects and Clients

You have to pay close attention to your IT consulting clients and prospects.  Set up databases to track them with off-the-shelf products.  

Delegation is Key

Even if you are going to run your own IT consulting business for a long time, you need to do some skill delegation.  At some point, you will probably work with some business partners, contractors and you will definitely be dealing with vendors.  Know when to pass off work to other IT consulting professionals.  

Submitted By:  Computer Consulting 101 Professional Kit

If you are thinking about a career in computer consulting, you are probably currently working in a PC support position in a company either large or small.  What do you need to know to handle computer consulting startup?

There are hundreds of people starting their own computer consulting businesses today, and all of them have decided they both need and really want to go out on their own.  You shouldn’t invest lots of time getting IT and business training and spending a lot of money on computer consulting startup unless you know you really want to get started.  

Why Computer Consulting?

People have differing reasons for getting into the computer consulting field.  Your reason for getting involved might be gaining more control over your own career, the satisfaction of creating your own business from scratch or a dissatisfaction with your current job.  

Take Action!

To get started with computer consulting, get a piece of paper and write “The Top Five Reasons Why I Have To, Need To and Want to Become a Computer Consultant.”  Listing these will help you get a handle on your passion for computer consulting.  

A Deadline is Key

Once you’ve decided to get involved in computer consulting by listing your own personal reasons, you need to outline specific steps that will help you achieve your goals.  Before you create a plan, set a deadline for getting it all done.  Get calendar out and decide to make your computer consulting business happen by writing the specific date down on your paper.  Print it out or rip it out of your notebook and put it on a bulletin board next to your desk so you look at it every day.  

Added By:  Computer Consulting Kit

If you are a computer consultant starting your own business, there are some tips you should follow to make sure you are building a stable business that will last long term.

Know How to Bill, Know What You Should Charge

If you don’t know how to bill and the specific rates you should be charging, you will end up losing a lot of money as a computer consultant.  If you don’t set billing and pricing up right from the beginning, prospects will not comprehend or believe in your value.  A computer consultant that sets up low rates and does not have structured billing procedures is declaring that he/she is an amateur.  If you bring low-paying clients into your fold early on, you may find yourself starting all over from scratch later.  

The Importance of IT Audits

If you can do IT audits right as a computer consultant, they can really benefit your business.  You will get paid to write proposals and do needs assessment.  If you can’t do these tasks, you will end up doing a great deal of exploring without getting paid.  The ability to do IT audits means you can get paid for initial consultations.  

Local Partnerships

Partnerships are necessary to grow your business as a computer consultant.  They will bring you great clients, and not having them will probably mean you lose clients to local competitors.

Go Beyond Client Expectations

If you want to get paid a lot as a small business computer consultant, your clients are going to expect great things from you.  Your clients will have a different idea of what is perfect than you will.  Thus, you need to figure out how to exceed their expectations and meet their greatest needs.  

Utilization Rates and Profitability

As a computer consultant, you must make the most of your work week as possible, which means more billable hours.  Eliminate the draining non-revenue-generating tasks and activities.  Deliver small business computer consultant services to build your stable business and get clients that will last a lifetime.

Added By:  Joshua Feinberg

When you are starting a small business computer consulting company you need to be aware that small businesses with 10 to 50 PC’s are going to have more than one office.  Prospects this large are typically accustomed to using professional computer consulting experts and are willing to pay for support.

Small Business Computer Consulting:  Is There an In-House IT Department?

If a prospect has an in-house IT staff you need to know what they are thinking of having you do for the company.  If the prospect wants a deep specialty or if it is a strange outsourcing situation, you need to know.  

Small Business Computer Consulting:  Research Prospects

Finding prospects for your small business computer consulting company is as seasy as Googling towns using area, ZIP and postal codes.  Also try telephone prefixes when conducting a search.  Typically the best prospects will also belong to local or regional chamber of commerce organizations or similar organizations.  You can join these organizations to meet people or attend as someone’s guest.  

Small Business Computer Consulting:  The Location of Your Prospects  

Your prospects will typically be found at B2B events, so market your small business computer consulting firm by going to these events.  Target clients for your computer consulting firm will be covered in business sections of local papers and publications, so subscribe to these or read them in the library or on-line to increase your chances of finding the best prospects.

Small Business Computer Consulting

Narrowing your focus to the best small business computer consulting prospects in your area is as simple as networking at local events and reading about businesses in local publications.

Blogged By:  Joshua Feinberg

Joshua Feinberg, author of the Computer Consulting 101 Professional Kit was recently interviewed by Deborah Rothberg in eWEEK

The Contracting Life: Caveats to Cashing In (link to Yahoo! News syndication feed)

In the article, under the heading "You Must Know How to Manage the Fiscal End of Your Work", Feinberg talks about the right and wrong ways to calculate hourly billing rates.

And Feinberg describes two very simple formulas that computer consultants can use to calculate an hourly billing rate that takes into account their

1. Sales and Marketing expenses
2. Taxes, Insurance, and Administrative overhead
3. Technical Salary requirements

The West Palm Beach, Florida-based consultant and Computer Consulting 101 Professional Kit author also discusses one of the most business-threatening mistakes that new computer consultants make when first getting started in the business.

see link above for full article

Business billing and collection can be very smooth if you have a great policy in place and you follow it consistently.  As a computer consultant, if you have difficultly getting paid, you can often trace back the problem to your practices of business billing and collection.  Here are some tips to follow when outlining your policy for business billing and collection.

Business Billing and Collection Tips

• The first invoice or first project with a new client is like a proving ground. You’re proving yourself as a reliable and knowledgeable vendor and the client is proving they can follow your business billing and collection policy.

• Bill every week without fail for the previous week’s work.

• Send out past due notices at the same time. Get yourself a “past due” rubber stamp from the stationary store.

• If an invoice goes more than a week late, make a phone call and ask them if everything is okay on the invoice and the work you performed.

• Always use a specific due date as opposed to due in a certain number of days.

• Insist on getting paid.  Even if your clients fall on hard financial times, you cannot afford to be their banker.

• Become familiar with your aged receivables.  This is a valuable cash flow tool that will help you manage your business billing and collection.

• Get thick-skinned when dealing with business billing and collection.  If you can’t do it, you have to hire someone who can, like a bookkeeper or virtual assistant.  

Business billing and collection is too important to the health and viability of your business from a long term perspective to let it fall through the cracks.  The harsh reality is there are a lot of small businesses out there that will hire your firm and never have the ability or even the intention of paying your company at all.

Bottom Line on Business Billing and Collection
If you don’t follow these basic business billing and collection practices, you are going to get stuck on bills. It’s inevitable. Be aware that even if you DO do everything mentioned, you’re still going to get stuck from time to time.  The idea is that by developing and adhering to solid business billing and collection practices, you can lessen about 90% of your risk.

In this article, you’ve been introduced to Business Billing and Collection. To learn more about how you can improve your knowledge about Business Billing and Collection, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Billable hours, as we talked about last time, is an important element of your overall profitability.  We left off with the concept of triple billing where you are left with only one third of your total revenue for salary payment.

When you start putting together a billing rate you need to make sure that given a reasonable number of billable hours, you have enough to pay yourself of someone else a decent salary.   At a $75 per hour billing rate and 30 billable hours per week, you have to consider:

• "What kind of technical person will I be able to find who has the high end technical skills  needed by my sweet spot small business clients if my technical salary budget is only $37,500 a year?"

• With that rate level and billable hours based on 75% utilization, "What kind of polished B to B sales person are you going to be able to find if you can only offer a base salary of $27,500 a year?"  Remember, you lose $10,000 from your sales budget for things like direct mail, attending organization and networking meetings, sponsoring events, doing seminars, etc…

Finding good staff with high skills for such low salaries is like Fantasy Island for most new small business computer consultants. That’s why the rate you set must factor in billable hours and the triple billing concept.

Let’s run the numbers with a rate of $100 an hour.   

• One third ($50,000) will take care of taxes, insurance and overhead items.
• Another $50,000 will pay a technical staff salary – yours or someone else’s.
• The last third is plowed into sales and marketing.  $10,000 of that goes for marketing expenses and now you can afford a base salary of $40,000 for your sales account executive.

The difference between $75 an hour and $100 an hour is significant.  The billable hours stay the same as does the utilization but all of a sudden you are working with acceptable salary figures. A range of anywhere from $100 to $125 per hour provides you with the revenue base you need.  Going beyond the $125 is not recommended though, because you’ll price yourself out of the sweet spot market.

Bottom Line on Billable Hours
Billable hours and your billing rate are key to your business success.  Make sure that when you set your billing rate you take into account a realistic view of the number of hours billable per week.  An hourly rate may seem great at first glance but when you crunch the numbers you have to be able to make enough to account for the triple billing phenomenon.  
 
In this article, you’ve been introduced to Billable Hours. To learn more about how you can improve your knowledge about Billable Hours, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Billable hours are what determines your utilization rate. Your utilization rate determines your gross revenue.  These three things will ultimately determine how much you can pay yourself and future staff.  This two part article identifies the issues you need to consider in terms of the relationship between salary, utilization, and billable hours.  

The percentage of your total hours worked that are actual billable hours is your utilization rate.  When you know your utilization rate you can begin to set a sustainable hourly rate.

In general, you can expect your billable hours to be, at a maximum, 75% of your total hours worked.  Now don’t get too excited about that 75% utilization rate because not all the revenue generated from your billable hours goes to the bottom line.  

At $75 per hour, which sounds like a darn good hourly rate, 2,000 working hours per year is more like 1,500 billable hours a year.  This translates to $112,500 a year in consulting revenue, which sounds awesome.  You think you’ll work from home and keep your overhead low and enjoy a huge income.  Right? Wrong.

When you look only at billable hours and your hourly rate you overlook your future needs as your business grows.  Scalability is the issue.  Think about a consumer grade PC. Think about a tiny server with a minimal amount of RAM. Think about a server that maxes out at 512 MBs of RAM. What happens when you add more applications and you want to grow? You need more capacity.  It’s the same with your business.

As you get busy with more sweet spot clients, you’re going to need to bring in help. Even if you plan your business on just being yourself indefinitely and you’re thinking, ‘I’m not planning on ever hiring employees,’ you still need to understand what comes next.  

It’s called triple billing.  The basic premise is that the revenue from your billable hours, is divided into three. 

• One third goes to sales management:  commissions, referral fees, “schmoozing” time, sales follow-ups, sales calls, etc…

• The second third of your billable hour revenue goes to administrative and management items:   taxes, insurance, fringe benefits, R&D, training certification, and all the other overhead.

• That leaves one third for your salary and the salary you are able to pay contractors or staff.  

So a $75 per hour rate at 1,500 billable hours works out to $37,500 for salary payment.  Not so lucrative a prospect anymore when put in a realistic perspective.

Bottom Line on Billable Hours
The number of billable hours available to you will largely determine your overall revenue.  You need to take your calculations much further than that though, in order to figure out what type of hourly rate you should charge in order to pay yourself, and others, a decent yearly salary.

In this article, you’ve been introduced to Billable Hours. To learn more about how you can improve your knowledge about Billable Hours, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Small business development is what you need to concentrate on when you first start out as an IT consultant.  There are a myriad of things that can get you off track, but, if you watch out for them, you will be able to remain focused on small business development.

Here is a list of the most common ways small business development gets derailed:

• Avoid spending too much time on technology training.  You’re probably six to 18 months ahead of what small businesses in your area need. They’re not early adopters, they’re late adopters. Put your small business development needs ahead of your need to feel like you’re keeping up.

• Avoid spending too much time reading technology magazines.  If you’re like most new consultants you probably spend hours a month in this reading black hole. Take all this time and apply it to your small business development instead.

• Avoid channel programs.  Do not get seduced by an aggressive sales person twisting your arm to join a channel program. Don’t get seduced by tech gadgets that don’t fill an immediate need with your paying clients. When you spend money on these things it takes away precious resources needed for small business development.

• Avoid “freebie mooching sessions” disguised as sales calls. Make sure when you go on a sales call that you are not there for endless hours of brain-picking that leads nowhere. You need to know exactly which kinds of prospects to focus on at all times. This will drive your qualification process and will help you with your long term small business development.

• Network smart.  You need to know what kind of prospects you should be talking to at networking events.  Find out what they do, what their company is like, do they have and use computers, and how many computers they have.  These are the four key questions that will determine, very quickly, whether you’re talking to someone who’s got a future or whether you’re completely wasting your time.

Bottom Line on Small Business Development
The basic rule when starting out in IT consulting is this:  Remember that you are not in the technology business. Yes you are an IT tech firm but in the early stages of your business, you are in the client acquisition business.  Do not allow other activities or time wasters distract you from your small business development goals.

In this article, you’ve been introduced to Small Business Development. To learn more about how you can improve your knowledge about Small Business Development, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Full time employment is generally the goal of most people who start computer consulting companies.  Many of the one-on-one consulting sessions I do involve evaluating a business and telling the person how close he or she is to moving to full time employment with the consulting company.

A lot of moonlighting computer consultants are initially so enamored with the idea of getting some self-employed income that they forget to remember that eventually they need this income to be at least equivalent to their current full time employment. 

Sadly, a lot of them are never going to make it because of one simple shortcoming: they’re not planning ahead for how and when the transition is going to take place. They’re hoping to move the business to full time employment but they’re not planning for it.

There are two very common mistakes these people make.  Here is an explanation of each and how to avoid them:

• First, you should not be messing around with anything but steady clients.  To get full time employment from your business you can’t afford to deal with the one-shot cherry pickers that you hear from once in a blue moon.  You need steady commitments in order to get yourself to full time employment as a consultant. 

Your ideal client as a moonlighter looking to make the transition to full time employment as a consultant, is the $1,000 a month business who needs you for one or two evenings a month, maybe one or two Saturdays or Sundays, and some light phone support in between visits.

• The second common mistake we see that hampers people from getting to full time employment with their consulting is giving away their services. Do not under any circumstances price yourself below the market rate in order to get clients.

Many newbies charge ridiculously unsustainable rates for their services.  First, you can’t sustain those rates if you hope to transition to full time employment and second, you aren’t perceived as a professional when you charge ridiculously low rates.

Bottom Line on Full Time Employment
In order to transition to full time employment from your consulting you need to plan ahead.  It won’t just happen unless you make an effort to do so. Moving from a moonlighter to full time employment as a computer consultant requires a good client base and a good revenue base.  Don’t sell yourself short by keeping poor quality clients or by charging low end rates.

In this article, you’ve been introduced to Full Time Employment. To learn more about how you can improve your knowledge about Full Time Employment, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Target businesses for your computer consulting company are typically small businesses.  These are what we call the sweet spot small businesses.  Your target business has generally outgrown their peer to peer network and they have one or more dedicated servers.

That’s a very key fork in the road for the kind of business target you are looking for as a client.  Once they get to the point where they have a dedicated server, they need professional help along with it. They can’t limp along with low budget economy, no-frills options.

The typical target business in your sweet spot will have 10 to 50 computers and 10 to 100 employees. Revenues for your target businesses should be anywhere from $1 million to $10 million in annual revenue – sometimes as high as $20 million.

Beyond the sweet spot small businesses, many new computer consultants are curious about  other types of target businesses there are and what their needs are.  

Medium-Size Small Businesses
If you want to move into medium-size small businesses and make them your target business you need to get into really deep networking skills. Here you start looking at things like enterprise-oriented platforms like Computer Associates, IBM, Linux, Oracle, Sun Solaris – you really need to specialize.

Large Small Businesses
Large-small businesses have 50 to 100 computers and 50 to 200 employees and are doing anywhere from $5 million to $20 million in annual revenue. The big distinction of these larger small businesses is they usually have at least two dedicated servers and you start to see an in-house IT manager who handles most of the generalist work. Because they’re handling the generalist work, they don’t need virtual IT or an outsourced IT department. This is why they are not your target business.

Very Large Small Businesses
Next are the very large small businesses. To appeal to this set as your target business you need to drill very deep in two or three core networking skill sets and be a strong specialist. Here there will be an in-house IT department that will handle almost all of the generalist work. The only things they’re going to outsource are deep specialties.

Bottom Line on Target Businesses
The best place to focus on for your target business is the sweet spot small business client who is too big for economy service but too small for their own IT manager.  With this type of target business you will be able to find your specialty and market yourself accordingly.

In this article, you’ve been introduced to Target Businesses. To learn more about how you can improve your knowledge about Target Businesses, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.

Hourly rates of your competitors, both the high and low range, will help you decide where to position yourself in the mix.  As we talked about last time, if you put your hourly rate too  low, clients will assume your work is worth that rate.  You want to attract clients who know you are worth a high hourly rate and who are willing to pay that rate for your services.

In order to attract these sweet spot clients you need to determine where the upper echelon of network consultants sets their hourly rates.  Unfortunately, finding out this class of hourly rate is not so straightforward.  

Hourly rate of high margin/service contract IT Consultants
Finding the hourly rates of the IT consultants you want to compete with is much more difficult. These competitors are unlikely to publish their rates in public places.  What’s even trickier is some of them don’t even stick to their own hourly rates.  They adjust their hourly rates to the client based on price sensitivity.  

To find out the hourly rates of this group:

• Ask your business partners that may have worked with other IT consultants in the past
• Ask accountants, management consultants, or attorneys what they think the going rate for LAN support is
• Ask your contacts that are deeply niched non-competing technology providers what they charge
• Inquire with the Chamber of Commerce and economic development offices  
• Ask around at user group meetings and networking events
• Ask for previous IT service invoices from new small business accounts
• Look in CRN and VAR Business – occasionally they will have articles that mention these kinds of things

The Bottom Line on Hourly Rates
Finding out the hourly rates that your competitors are charging is important.  You want to make sure you are setting your hourly rate in the top range.  This way you can ensure you attract the type of clients who will sustain your profitability long-term.  It’s not always easy to find out these rates, but taking the time to do so is well worth your while.  

In this article, you’ve been introduced to hourly rates. To learn more about how you can improve your knowledge of hourly rates, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business. 

Hourly rates of your competitors are good to know. In order to put together a competitive hourly rate you should be familiar with what other IT consultants are charging.  This means knows what both IT consultants in the low-margin sector are charging, as well as the hourly rates of those consultants that are targeting the same sweet spot clients as you.

This first half of our discussion will focus on the finding hourly rate of the IT consultants you don’t necessarily want to compete with.  The consultants who charge really low rates, attract price sensitive clients, and leave themselves no margin to take time to focus on business development issues.  

Hourly rates of low margin/high volume IT Consultants
The reason you need to this group’s hourly rate is not because you want to emulate it, but because you want to distance yourself from it.  If you set your hourly rate in this range then, advertently or not, you are positioning yourself as their competitors.  You will low ball yourself out of being able to attract the sweet clients you want.

To find out the hourly rates of this group:

• Go to Web sites (Try Googling your city, state, province, etc… and type in something like Redmond, Washington network consultants or Austin, Texas PC repair)
• Look around in consumer-focused advertising  – fliers, leaflets, coupon packs, newspaper display ads, etc…

These hourly rates will tell you what your market’s definition of being way, way, way too cheap is.  You don’t want to be anywhere near these providers because their clients are extremely price-sensitive and that’s not where your biggest opportunities are.

The Bottom Line on Hourly Rates
Finding out the hourly rates that your competitors are charging is important.  You need to know the range where your hourly rate should and should not be set. You don’t want to set an hourly rate that competes with low margin competitors because you’ll end up attracting highly price sensitive clients – you don’t want that.  

In this article, you’ve been introduced to hourly rates. To learn more about how you can improve your knowledge of hourly rates, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business. 

Pricing strategy is like walking a tightrope:  price too low and you lose money that is rightfully yours; price too high and you lose business.  Without knowing how to bill and what to charge, you risk looking like an amateur to the prospects that you desire most as clients.  And it can take years to recover from a poor pricing strategy.

There are three common ways to determine the pricing strategy for an IT service business: 

1. Price-fixed
2. Per PC or per server basis
3. By the hour

1.  Price Fixed Pricing Strategy
In order to offer a fixed pricing strategy you need to know the exact scope of what you’re doing.  You also need very tightly defined parameters so that you don’t end up doing work that is beyond the original scope.

2.  Per PC or Per Server Pricing Strategy
This type of pricing strategy is pretty much the same as price-fixed, except you need to have a handle on unit costs.  You need to know what’s going to change as you add or remove a PC or add or remove a server, and how it scales up the project.  A per PC or server pricing strategy does give you more flexibility if the scope of the project starts to include more boxes.  Some IT service businesses choose to combine the price fixed and the per PC or server pricing strategies.

3.  By the Hour Pricing Strategy
Another name for this pricing strategy is "time and materials" pricing.  This is the most commonly used pricing strategy in the IT service industry.  You set an hourly rate and you may choose to add a markup on the materials you provide.  This is the most flexible pricing strategy and the one where you are most protected when the scope of the project goes beyond your original estimate.

Bottom Line on Pricing Strategy
There are three main categories of pricing strategy.  Before deciding on the best pricing strategy for you and your business, you should consider the pros and cons of each.  The way you price your services has a significant effect on your business’ profitability and longevity – take your pricing strategy seriously, right from the start.

In this article, you’ve been introduced to Pricing Strategy. To learn more about how you can improve your knowledge about Pricing Strategy, just click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.