Local Tech business advice.

Hello, first a quick word about myself. My name is Lucas, I'm 25 years old and live in a small town. I have ran a local tech business named SimTech for the last five years. In the beginning I had a brick-and-mortar shop, but decided to close it down to reduce overhead. I have certainly learned a lot in the last several years, advancing my skill in this field.

I have just recently been screwed over by another local business, whereas I invested $550 of my own money for materials, only billed the company $800. But now they are refusing to pay me. That's 500 was all the extra money I had. I am now broke, and owe the bank.

I generally only do computer repair, that involves hardware and software related problems with laptops and desktop computers. I did use to work on cell phones and tablets, but when China took over the market of replacement screens, it became nonprofitable-as all the screens were pieces of crap.

I have one business under contract for $200 a month to have me on call for six hours. In the beginning there was quite a lot of work every month, but I have since gotten them straightened out where I basically do nothing every single month. I am able to do low-voltage runs, meaning coaxial cable, phone line, and data lines. I can set up entire networks, servers, etc.

In the five years I have been in business, I can confidently say that all the other tech businesses have shut down due to my presence in this town, except for one. The big dog. He's been here going on 20 years now. I have learned, that the local police department pays him $1000 a month to be on call, and that the city pays him $3000 a month to be on call as well.

I am at a standstill with my company, I know that the only way I can truly make a good business is to push for more contracts with other businesses to pay me to be on call. I am just not sure about what to do to make that happen. I am also a tech for the local college, that being my main job in the tech business being on the side. I make on average almost $500 a month with the business. On average with the college I make $1200 a month. My bills for each month usually run about $1700.

I need to make a push in some direction, to make more money I just don't know how. The wife and I recently split up, we have a two-year-old boy together, trying to balance finances and time spent with him is pretty damn difficult. I suppose I came here today, hoping that someone might have experience in this related field, and maybe have some advice how I can make more money with this business.

As it is now, I can't even order parts to make a sale. I will however be back on my feet within the next couple months. With hopefully at least a couple hundred dollars in the bank. Any advice on how I could possibly get say the police department contract? I have thought about going in strong and sitting down with the owner of the competing business in town, telling him he either needed to merge with me in some way, or step aside as I pushed to take over this town. Ha ha, while I do have a few ideas that would push my business to the top, they involve too much money that I just don't have. I am under the impression however if I sit down with him, and can convince him I am a serious threat, then he would probably yield to save his own business.

Again, I really don't know how to make that happen I am young and the game of business, while he's been here for 20 years. So? Are there any entrepreneurs out there, who might have some advice to help me progress? My only real skills are technical, I can't program, I can't design websites, I can't really do graphical design either, I can only work on computers, and do other physical things.

Thank you for taking the time to read this, it's very much appreciated.

 

Well, the good news is that you seem to have a basis for your business (you seem to be able to fill a need for businesses) and have earned some money to prove it. Now you need to duplicate and amplify the success that you have had.

First, I would leave this competitor alone for now (if he's been at this for 20 years, he has heard it all, been there and done that, and probably will not be impressed with you at this stage.) I would also not waste a lot of time on trying to win the political business (town and police) that he has. Navigating the politics of a town or police department can be challenging and they tend to stick with those vendors that they know and trust. Both of these activities will be sinkholes of time for you at this stage and not worth the effort.

Instead, try to get referrals from your current clients, even if you only did a single project for them. Ask them if they are/were satisfied with your work and do they have any colleagues, friends, family or acquaintances that they could recommend you to? You could even add in an incentive for them (perhaps some free work if one of their referrals becomes a customer?) If that does not work, see if you can get someone you know in the local press to get you talking with their business editor about a potential profile of your business. Some good PR could get you a bunch of new customers.

Most important, start demanding a deposit paid by the customer prior to ordering any equipment on their behalf. Try to make the deposit cover your cost of the equipment so you are never out any money. It is pretty standard for an equipment installer to require a 50% deposit upfront with the signing of a contract, by the way.

 

Start by providing a repair services in the neighborhood, eventually words will spread. create flyers and clip it on every car's wiper you passby. on it are your services, url and your contact of course

 

Thank you for the replies.

I definitely understand what you're saying, and I suppose I already knew that. The town I live in is very small, population 5000. However it is a hub. Within one hour in every direction is a much larger city. Five total cities, within a one hour drive from me. I figure there must be over 1000 businesses between those five cities. My original plan was to try and rope in at least five of these businesses, paying me somewhere between $200-$300 a month to be on call. It is my experience, that when the systems are set up correctly, and preventative maintenance has been put in place, that not very much goes wrong. I currently manage about 500 computers, across five branches. My first two weeks at this job, I worked my butt off. And since then there has been very little work in almost a year.

My point being, if I can rope in a business, after a little bit of initial work there is not a lots of work in the future. Bar any emergency, computers obviously die due to multiple reasons. When I first started my business, I have course opened up a brick and mortar immediately. Thinking that was necessary! I made nice business cards, nice brochures, wrote up contracts, put it all in a nice folder, hopped in my car and drove to the first city, and as I drove around I realized I had no idea who would need my service seems like almost everyone right? However most businesses already either have a private tech, or a corporate one.

Any suggestions, on how I can get my foot in the door. Generally it is my experience, that as soon as you talk to a front office person and mention that you are offering some sort of service, you are immediately turned away. I know in my heart, with so many businesses available, that I should definitely be able to rope in at least five. If I can't there is something fundamentally wrong with my business proposal.

I want this so bad - every fiber of my being is screaming to return to full time self-employment. I just don't know how to go about it getting there.

 

My sales team occasionally does PIC's (Personal Introductory Calls) like you have tried. It is hit or miss but if you go a full day at it, you should end up with 4-6 contacts that you left information with and can then follow up. Conversion rates are higher if you can target a business park or business district where companies are situated closely to each other. Be sure to have a professional looking flyer and business card to leave behind.

How about asking your current customers if they can provide a referral or two for you? You could even offer a free month of service if you sign up one of their referrals as a monthly client.

You also could try to get some publicity from local media. Perhaps you could issue a press release from your new company about a security issue or some other IT problem that would be relevant to the editor's readership.

You could also try networking at various business trade conferences or expositions. You don't need to buy exhibit space, just attend and try to talk to the business owners and or operations people also in attendance.

Finally, you could put up flyers or your business card in your local library, local shops, etc., to generate some leads.

 

Hello everyone, I am back again. I have made a few changes in my life and business. The most drastic one of all is putting my two weeks notice in at work. I know generally you want to have money in the bank, and business rolling in. However after asking for the day off a couple of days ago to go to the Dr, and time to work for a few clients, my boss asked me to choose my business or the job.

So I gave my two weeks notice. As it is, I only make enough money to pay the bills with both the job and the business. So by settling for the job only, I would suffer. I believe I have a better chance at paying the bills with the business alone then the job alone.

I have two weeks of work left, a full paycheck at the end of the month, and then 5 weeks to figure out how to pay the bills off just the business. Lol... =/

I have signed an agreement with a remote software company, logmein. It has been pretty useful so far I have already helped many of my local clients remotely opposed to trying to walk them through windows remote assistance or driving out to their home. So I would love to be able to expand this to an online service. I have purchased several classes on internet marketing, and almost all of them seem to be to set up a website to drive people to purchase internet marketing or something similar. Otherwise almost always just a vicious cycle of useless information. I have no real idea of how to market a website. I can make a wordpress or something similar fairly easy, but how can I rope in clients across America - perhaps other countries as well to help them remotely?

I figure I can have them pay me through PayPal prior to the service in order to ensure payment. Anyways any insight how to make that happen? That would be great I think as I always am near my PC, and smart phone is always with me. I can just receive the email, or phone call and sit down, be remoted in within minutes and fix them up for a nominal fee. $20-$40, something like that depending on time.

Thanks again for taking the time to read my rants. Your advice is appreciated.

 

Wow, good luck with this new development.

Even though you can fix most problems virtually now, I would suggest that you still focus your marketing efforts locally/regionally. For example, I use a Geek Squad annual contract to maintain three of my machines at home and they offer dial in tech support but there are times when I want to drop off a laptop at the local Best Buy outlet (where they are located in) so having a repair shop nearby is an advantage to me and other people. Even better, they offer in-home visits (at an additional cost) should I want that type of support.

By focusing your marketing efforts locally, for now, you can leverage this proximity factor in your pitch. Not only can you fix their machines, most times via dial-in (thereby saving you and them time and money), you can offer the additional option of actually visiting their site when needed. That can mean a lot to some folks and will differentiate you from some national/outside the region competitors.

Look to your local Chamber of Commerce and other such membership organizations for networking opportunities to promote your business. Run a small ad in your local daily or weekly newspaper. Post your services on your local Craigslist webpage.

One other tip: start looking for a new job while you try to ramp up the business revenues. It is always good to have a Plan B in the works.

 

Hey JR!
And anyone else who would like to comment.

The larger company in town has offered to buy me out and have me come work for them. Any comments/suggestions on what I should look for, be going for, and how to go about it?

So far I figure my valuation should be based on assets, and income generated through the business for the next 3 years. My client list of at least 100 regulars as well - should be valued outside of income generated too?

I am thinking I should get a piece of the larger company too - otherwise I am selling myself to someone else, rather then working towards something together. Right?

I am not the best at estimations, but I could imagine this company is pulling at least 50k profit a year. After paying his 3 employees, and taking a cut himself. As it is not my company, and I don't know what percentage of their total revenue my knowledge of their customer base is. That's what I can estimate. I right now bring in only 15-20k, 20 could be a stretch depends on the year.

I understand these numbers are probably nothing to some people on here. Hey please teach me in your ways if so. But this is what I am dealing with.
The employees are being paid $9/hr, I have befriended one of them and that's how I know this information.

Personally I don't know how I feel about selling out for say $5-$10k, and going to work for someone for $10/hr. That's why I am thinking if I were to get a say 2% stake in the larger company, then well damn that's only $1,000/year I just did the math. Haha, I am thinking if I were to come in with a stake in the company that gave me a boost in income, every month then I would be happy. However I would probably regret signing a non compete for $5-$10k and in a year or so be dreading working for $10/hr.

Could really use some advice, I believe $10k could make a difference in my life, would be able to invest in other profitable ventures as well as have a stable job, so any advice?

 

Okay, there is a lot to comment on here. First and foremost, a typical purchase price for a service company like yours with little to no assets (you don't own a big factory building and industrial equipment or a fleet of trucks) is 1X annual revenues. In your case, where you do not have a long history of consistent revenues, the valuation may be less as you will be viewed as a riskier acquisition.

The good news is you have gotten the attention of this "big fish" so much so that he would like to buy you out. You must be doing something right!

The bad news is that even if he offers some stock in his company and you are then a minority owner (1% - 49%) of any privately held company, you have virtually no rights and no assurance whatsoever that profits will be shared annually or ever, for that matter. He could simply pay himself a bigger salary and announce that there are no profits being distributed this year and it is entirely legal and how some majority partners operate. And he can fire you any time he wants to unless you have an ironclad contract. Even then, he will make his firing decisions on how to proceed based upon his opinion of how much legal assistance you can afford if he violates the contract.

I would advise against signing a noncompete because this has been your life's career, to date, and you do not want to sign away your ability to make money if and when things go south with this guy.

By the way, there could be other approaches that help him and help you. Perhaps he could use your help on a part-time basis and that would help supplement your income. Such an approach would allow you to get to know the guy, how he does business, etc. You would have to sign an agreement that you would not try to steal any clients that he had you work with and that's fair.

Tread carefully with this deal. And keep in mind that if you do decide to not accept his offer, do it graciously and be professional. You do not want to leave a bad taste in his mouth so that he begins to go out of his way to hurt your existing business. And, who knows, you may want to talk to him again in the future, anyway.