Small Biz Tech Talk ™

When you are thinking about how to start a computer consulting business, how do you decide whether or not to buy a franchise?  There are some strong pros and cons with franchises, and you need to carefully consider them.

Pros of How to Start a Computer Consulting Business as a Franchise

1.    You get the perks of being part of a larger company.

2.    You get a built-in peer support network.

3.    You get a lot of tools and resources.

4.    You get people to match problems.  

The Cons of a Franchise

There is an opposite side of the coin too when it comes to deciding how to start your computer consulting business and starting it as a franchise.  The biggest problem is that you have to make a pretty large capital investment in order to get going.  You will also be giving up a percentage of your revenue or profit every month as a royalty to the franchiser.  You will also have some restrictions on what you can and cannot do with your business.  

Computer Consulting is about Time More than Money

When you are figuring out how to start a computer consulting business, you have to think about the fact that just starting a non-franchise business or any business at all is a lot more of a time investment than a capital investment.  You might spend anywhere from three to six months (or even more!) developing your contact and prospect lists and getting enough projects in your sales funnel to get to a 50-60 percent utilization rate (20-24 billable hours weekly).  

Revenue?

When you decide how to start a computer consulting business, even when you are going to all your local networking events, on sales calls and really active in the process of starting, you will have to wait probably up to six months before you start to see significant cash flow.  If you want to get to a point where you can hire more staff members and sales people, the process might take years.  

You need capital in order to pay your business expenses.  Make sure to keep your overhead low so you don’t have unnecessary stress.  Think carefully when you decide how to start a computer consulting business for yourself and consider whether or not a franchise is really the best option.

Blogged By:  Joshua Feinberg

The simple answer is, “NO.”

You will end up spending a great deal of money if you get involved in consulting contracts with national service organizations and a lot of time getting certified and learning necessary platforms and technologies.

The truth is, hardware repair is a commodity and a very low-margin business.  And as hardware and software pieces are becoming more “disposable,” replaceable and repairable, it is getting to be more of a commodity and not a unique service.  That is just one of the big reasons consulting contracts with national service organizations are a bad idea. 

Replaceable Computers

An example is a $600 consumer-grade PC.  Who will spend money to repair a $600 PC not under warranty?  Or, similarly, who will spend money to repair an old $400 laser printer?  Small businesses will probably not be willing to spend the money you are worth or the money for consulting contracts on these types of services. 

There Are Low Labor Allowances for National Service Organizations Looking for Consulting Contracts

Because many national service organizations will be dealing with warranty repairs of pretty inexpensive hardware, they will probably not give up much money for the repair of a $1200 notebook.  Big hardware vendors are also fairly cash strapped and on the verge of going out of business (unless they are Dell, HP or IBM). 

Profit Margins and Repairs Under Consulting Contracts

What can you expect to make on a repair?  The answer is probably not more than about $200 and possibly closer to $50.  You’d do better finding small businesses in your area that need high-level professional services on an on-going basis.

Consulting Contracts with National Service Organizations Are Not Money Makers

When you act as a subcontractor for a national service provider, you can never run a profitable business.  You can’t be in eight different offices each day or do what you want and just be in one or two rewarding places per day.  You want to be able to bill out at $100 or $150 per hour and not just making $65 total to replace an entire system board, even if it takes hours.

Repairing and troubleshooting and providing consulting contracts for national service organizations is not rewarding work and will reduce you to a commodity.  You can’t confuse this type of repair work with high-end consulting contracts.

Added By:  Computer Consulting 101 Professional Kit

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

When you work in IT consulting you need to have some client options.  If you want to go larger than the sweet spot businesses in IT consulting, you can get into large small businesses.

What Are Large Small Businesses?

Large small businesses have between five and 100 seats, 50 and 100 computers and usually 50 – 200 employees.  The annual revenue of a large small business is typically from $5 - $20 million.  You will probably find a lot of publicly run corporations at this level.

Large small businesses will have two or more dedicated servers.  You will typically find an in-house IT manager that has been hired to do generalist tasks.

Professionals on Staff

Large small businesses will have more than a technician, coordinator or guru.  They will have a dedicated IT consulting professional with skills very similar to yours.  The IT manager will sometimes be vendor certified and might know a couple different operating systems, database platforms or be or be in touch with a software developer.  

No matter what the situation, large small businesses will have staff with IT consulting skills that make them professionals and are typically in charge of all the generalist work.  If you want to provide IT consulting to large small businesses, you will need to be a true specialist.

Blogged By:  Computer Consulting 101 Professional Kit

In order to find the best clients for your small business computer consulting firm, you need to be basing your search on the number of PCs they have and their annual revenue.  Your ideal clients will have 10-50 PCs and make between $1 million and $10 million in annual revenue; these numbers are what define the sweet spot of small business computer consulting.  (If you are outside of the U.S., you can convert the dollar amounts to your currency to determine your ideal clients.)

Be Careful with the High End of the Sweet Spot

When you start dealing with small business computer consulting targets with more than 50 PCs or more than $10 million in annual sales, you will typically find real IT people on payroll and thus competition for your services.  Your client will start to add up services invoices and figure out if they can do a cheaper job in house.    

Your Small Business Computer Consulting Clients Should Have Real Servers

The sweet spot will be big enough to have “real,” dedicated servers.  If businesses need a real server, they will need lots of professional services to manage it and will likely not be able to handle this management without the help of an outsourced IT department.  

Find Companies with Multiple Locations

Sometimes a sweet spot small business computer consulting client will only have one location.  But other times, it will have a main office and some other offices.  Branch offices give your small business computer consulting firm additional opportunities for support because they will need the ability to share data in real time and increase communication between offices.

The Main Idea about the Sweet Spot

Qualify your small business computer consulting clients carefully to find out if they fit the criteria for the sweet spot, and pave the way to increased opportunities for your firm.

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

Micro small businesses with less than 10 PCs very frequently use peer-to-peer networks for file sharing and printers.  Small business computer consultants want to steer clear of this situation and stick to businesses that have a dedicated server built around Microsoft Windows 98 or ME to keep costs low.  

Peer-to-Peer Networks Don’t Work with Small Business Consultants

A business-grade desktop OS on a dedicated business-class PC is not used that often, but it is a good compromise between low-budget solutions and more expensive solutions.  However, small business consultants and peer-to-peer networks don’t mix very well unless an upgrade is possible in the near future.  

The Issue with Peer-to-Peer Networks

Peer-to-peer networks are typically chosen to reduce costs, so companies that use them typically cannot afford to hire small business consultants or else don’t believe in the benefits of spending the money on a true professional.

A lot of times, peer-to-peer networks also come with IT issues including lack of software licensing, neglect of data security, virus protection and backup.

The Main Point About Small Business Consulting

Even though there are many issues for those working with peer-to-peer networks, many companies might be sick of unreliable server and business performance and ready to hire small business consultants, which can be a great opportunity.

Blogged By:  Computer Consulting 101 Professional Kit

In small business computer consulting, the micro small business market is hard to target.  Those with less than 10 PCs can provide $50 to $75 per hour or at most $75 to $90 per hour in small business computer consulting work.  

Remember in small business computer consulting, when there are 1-10 computers, there are also just 1-10 employees, and that their revenue is at most $1 million per year.  They probably do not have a dedicated server yet either.  

Your Competition

In the micro small business environment, there is a lot of competition for a small business computer consulting firm.  And this competition is usually willing to work for less than $50 per hour, and sometimes in the case of volunteers this type of business can get, zero dollars per hour.  This environment is a challenge for small business computer consulting professionals.  

The competition is characterized by the following qualities:

1.    They agree to help micro-small businesses with computer problems just once in a while because they have day jobs.

2.    The response time of these computer consulting professionals is very high and not the same as the response time your small business computer consulting firm can provide.  

3.    The small business involved with this type of computer helper will have to wait a week or more in some cases to deal with a down server.  But because support is cheap and often free, or can be obtained for the price of donuts, coffee, pizza or beer, you face serious competition even as a professional computer consultant.  

The Main Point About Small Business Computer Consulting

A major reason you will have low-cost competition in regards to micro small businesses as a small business computer consulting professional is because of the low annual revenue of that type of business.  Many micro small business owners will not be ready yet to see the strategic importance of hiring a professional consultant at top rates.

Added By:  Joshua Feinberg

Clients of your computer consulting firm will have similar characteristics.  There are specific signs you can look for when searching for appropriate prospects for your computer consulting business amidst your leads.

There are certain signs from your sweet spot computer consulting clients that will become important to you.  Businesses that will fall within your sweet spot will have at least a seven-figure annual sales amount and ten to 25 employees.

Good and Bad Signs for Prospects of Computer Consulting

Certain industries are a better fit for IT services than others.  You can recognize right away by looking at important factors which businesses will most likely hire your computer consulting firm to perform services for $1,000 to $2,000 per month.

A good sign for prospects is if they are already working with another solution provider within the community but are unhappy with the service.  You know in this case the prospect is willing to pay for professional computer consulting services and looking for a new provider.  

A bad sign for prospects is if they are already working with a moonlighter or a friend or family member providing free volunteer support.  This probably means they are not willing to pay for high-level professional IT services.  Any price you give this type of prospect is going to be too high.

Where to Find Sweet Spot Clients

Sweet spot clients that are willing and able to spend $1,000 to $2,000 each month on your computer consulting services will have relationships with other trusted community advisors such as accountants and attorneys.  They will also work with niched tech providers.  When clients start to refer you to contacts these relationships will work in your favor.  

Learning to see the key characteristics of sweet spot computer consulting clients will save you time and help turn your prospects quickly into customers and clients.

Added By:  Computer Consulting 101

Any computer consulting business is dependent upon sweet spot clients.  Those that don’t want to entrust their computer support needs to volunteers or friends will rely on computer consulting professionals.  But where can you find sweet spot clients – those willing to spend $1,000 to $2,000 per month on outsourced computer consulting services?

Evaluating Computer Consulting Sweet Spot Clients

You need to evaluate each client and ask some questions.  Is the computer consulting client big enough to need a real server, real firewall and real backup solution?  Does the client need to focus on security, power protection, virus protection and other types of support?  Does the client need a real professional computer consulting expert for IT needs such as network support and LAN-WAN support?

Sweet Spot Computer Consulting Clients Can’t Afford Volunteers
 
The customers you’re looking for will not be able to work with only friends, family members and volunteers when working on fulfilling IT needs.  As their company grows, they will also need more than a moonlighter because they will have more PCs and more revenue at risk if something breaks.  These are the type of clients you want for your computer consulting business.

Computer Consulting:  Who Can Pay?

Small businesses to target in the sweet spot are those that can afford to spend $1,000 or even $2,000 per month on computer consulting support.  For this amount, they will get the following items from you:  an on-site visit a couple half-days per month; phone calls for emergency support; remote IT support.  You will become an outsourced IT solution and get calls about a variety of IT-related items.

The Profile of a Sweet Spot Computer Consulting Client

A sweet spot computer consulting client will have more than a peer-to-peer network and be large enough for downtime to be incredibly expensive and painful.  These type of clients will be ready to employ your services as a computer consulting professional.

Blogged By:  Joshua Feinberg

IT consulting firm i3Solutions announced last Friday it would be spinning off a software company, Octant in order to specifically handle its Proposal Management software package.  The software from the Sterling, VA-based IT consulting firm is called Enterprise Proposal Management Suite and helps those looking to develop proposals and manage business opportunities.  Octant will of course be using the support of i3Solutions and its channel partners to fully get off the ground.

IT consulting firm i3Solutions specializes in strategic consulting, development of applicaitons, integration of systems and also graphic design and has been in business since 1997.  The company released its original software, Proposal Generator and Proposal Management System in 2003 and decided to create Octant in response to a growing demand for its products within the business community.  

The new software company will help change ideas about what IT consulting can do for customers and how products manufacturers and IT consulting companies can work together to bring total solutions to businesses.  

i3Solutions will work on marketing, development and many other elements of the newly-formed Octant.  The goal, according to the CEO of the new company Scot Johnson, is to build a reputation for being the best provider of enterprise proposal management software.

Because proposal management is necessary for almost all businesses, Johnson states that Octant will be able to get a good foot into the market and further the success of IT consulting services.  The software developed by i3Solutions and Octant is based on the need for quicker communications between customers and businesses.

Blogged By:  Computer Consulting Kit

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.

Computer software training is something you can start profiting from today.  Many new computer consultants fail to capitalize on this opportunity though.  The reason is they think it takes too long to develop a curriculum for computer software training.  

Luckily, you won’t have that problem because the following is the first of a two part list of topics you can incorporate into your computer software training.

5 End User Computer Software Training Topics*

• Network Logon - Start with the basics to ensure that each user knows their company’s logon procedures. Highlight any password requirements, such as case sensitivity or automatic password expirations.

• The Windows Desktop - Explain the purpose of the Windows Desktop and how Shortcuts can be used to quickly launch commonly used programs, folders and files. Show how to create and remove Desktop shortcuts.

• The Start Menu - Give a quick tour of the Program groups that are most relevant to your clients’ needs. Point out how the Documents folder keeps track of the last 15 files opened — preventing “lost file panic” and saving many help desk calls.

• Windows Explorer - Provide an overview of local drive letters and your clients’ standard network drive letter conventions for shared folders. Demonstrate how to use “Search” and “Find File” functions to locate missing files. Offer examples of how to turn on View All Details and sort on various file attributes, such as filename, size, and file type, within a folder.

• Printers - Review the location of shared network printers, usage restrictions and default assignments. Show how to change the default printer in the Printers folder, as well as how to change the selection through the File, Print menu command.

*NOTE:  depending on the desktop OS and applications in use, you may need to make some very minor tweaks to these topics.

Bottom Line on Computer Software Training
By using this simple checklist you can help your clients plan their end user computer software training.  This increases your perceived usefulness to the company and it is an excellent source of revenue.  

In this article, you’ve been introduced to Computer Software Training. To learn more about how you can improve your knowledge about Computer Software Training, 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. 

Utilization is one of the key factors in profitability.  When you use your time efficiently, you have more time available for the activities that generate profit.  

A key time drain is administrative work.  The more time you spend on these tasks the lower your utilization rate will be.  We have found that by creating a boilerplate for common administrative and customer service tasks, we have increased our utilization significantly.

Top 2 Utilization Tips For Boilerplates

• Create a boilerplate for your email signature.  

This way you can include your website address and a short sales message with each email.  By not having to type this information over and over again, you save lots of time, which has a large impact on overall utilization.  Plus, if you don’t use a boilerplate you will be tempted to leave out this information and miss a valuable marketing opportunity.

• Create boilerplate email responses.

Time is money and automation of anything will make a huge difference in your utilization rate.  Here are some common customer and contractor points of contact you can create boilerplates for in order to improve your utilization:

• Prospect profile form
• Qualification tool
• Credit application
• Product purchase authorization
• Order confirmation
• Client scheduling form or letter
• Contractor scheduling form or letter
• Schedule confirmation
• Change order
• Request for proposal
• Request for quote
• Work order

Creating a boilerplate doesn’t mean you should just blast these letters or forms out without reading them.  You will need to do some customization to each.  You get significant increases in utilization from the fact that 90 to 95 percent of the work is done already.  

If you find yourself typing the same email more than once or twice to a prospect, client or a subcontractor, go back and strip out any of their specific information and create a boilerplate with the letter and email signature.  Then start reusing this form over and over again to improve your utilization.

Bottom Line on Utilization
Boilerplates allow you to complete 90 to 95 percent of the work before hand.  This leaves you with only needing a few minutes to add in custom touches to your most common customer service communications.  Take some time to create boilerplates and watch your utilization improve.  

In this article, you’ve been introduced to Utilization. To learn more about how you can improve your knowledge about Utilization, 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. 

Profitability is what will determine if your business succeeds or fails.  There are a variety of ways to maximize your utilization rate and your profitability. We’ve talked about many of them already, and here is a summary.

Profitability Factors

• Operate in the sweet spot.  These are the people that need your regular IT support and they are willing to pay for premium service.

• Maximize your marketing efficiency by tracking every hour and every dollar that you spend.  Evaluate what’s working and what’s not working. Profitability is built on good marketing.  

• Follow-up with people.  Many times you will get work because you’re in the right place at the right time.  

• Form strategic business relationships.  In terms of profitability, we can’t overemphasize this enough.  Look to trusted business advisors and niche technology providers in your area.  

• Implement a $1,000.00 a month minimum on a service agreement.  Your profitability will increase immensely because these contracts will typically amount to much more than $1000.

• Diversify your clients.  You may enjoy profitability with only two or three clients, but what happens when one of those clients decides to bring the tasks in-house? What happens when one of those clients gets bought out?  Where does that leave you?

• Track and forecast your utilization rates.  Look at both your actual rate and your goal rates.  Maximum profitability goes hand in hand with maximum utilization.

• Monitor your sales funnel.  This is a utilization issue that, when well managed will contribute to your overall profitability.

Bottom Line on Profitability
Profitability is of utmost importance.  The eight factors listed above are all key to maximizing it.  You need to ensure you are following and/or implementing each in order to maintain and sustain long term profitability.

In this article, you’ve been introduced to Profitability. To learn more about how you can improve your knowledge about Profitability, 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. 

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.

IT services outsourcing is what you need to do when, not if, your prospects ask for products and services that you are not able to deliver.  Many new business owners think they need to know everything.  They fear not being able to offer every service under the sun.  

The great thing about the computer industry is that there are plenty of people you can use for IT services outsourcing. When you first start up, your concentration needs to be on getting business.  You need to spend time networking and relationship marketing.  

In order to have the time to do this you need to rely on IT services outsourcing - there just simply is not enough time for you to learn everything you will be asked to deliver.

Rather than lose the relationship, you want to be able to offer your prospects the services they need.  To do this you essentially have two alternatives for IT services outsourcing:

Work out referral relationships with other niche technology providers in your area  
Set up partnerships and subcontractor relationships

The quickest and easiest way to set up your IT services outsourcing is to set up partnerships or subcontractor relationships.  This is a fast and efficient way to deal with the issue.  

Of course, if you continue to get lots of requests for the same type of IT services, then you should probably consider getting the skills to offer it in-house.  When there is a large enough need then the time and money invested make good sense. Until that time though, IT services outsourcing is your best option.

Bottom Line on IT Services Outsourcing
Like it or not you can’t know everything.  When prospects ask for services you don’t offer, rather than lose the relationship, look to IT services outsourcing instead.  Build referral relationships with other niche IT service providers or set up subcontractor or partnership arrangements.  By doing this you maintain your client and leave yourself open to the possibility of offering the service yourself down the road.

In this article, you’ve been introduced to IT Services Outsourcing. To learn more about how you can improve your knowledge about IT Services Outsourcing, 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.

Payment terms are the one thing that even your best customers will abuse if you let them.  When you set your payment terms you need to look out for yourself.  You don’t want to get into the habit of extending credit and giving discounts when they are not warranted. Here are some tips and tricks to get the most mileage out of your payment terms.

Setting Payment Terms

• Another term for payment terms is stolen discounts.  When you have payment terms like net 30, people assume you’re giving them credit.   Use net seven or net ten instead.  
• Avoid saying payment on receipt. How do you know when they receive it? It’s very ambiguous.
• Always put a specific payment due date on your invoice.  
• When payments go past due, then you have to deal with the issue of collecting your money.  Some tips to use when faced with this situation include:
• When a customer is slow at paying, pull your own reigns back and delay their appointments for another week.  Typically the invoice clears pretty quickly, especially if there’s an emergency.
• Pick up the phone, phone calls work better than faxes or letters. You are likely to get the news you want to hear when they have to talk to you.  
• Even better than phone calls are personal visits.
• Don’t let late payments get beyond two terms.  If they were supposed to pay in 14 days and it is now 28 days, you need to move in quickly to recoup your money.  

The Bottom Line of Payment Terms
The best offensive if often a good defensive.  When you think about setting your payments terms, make decisions that are in your best interests.  Collect money up front whenever possible and do not allow invoices to go long over due.  The more credit you extend to your customers the more likely you are to lose.  Keep your payment terms tight and get the money you are owed into your bank account quickly.

In this article, you’ve been introduced to payment terms. To learn more about how you can improve your knowledge about payment terms, 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.