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

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

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

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

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

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

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

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

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

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