Do YOU fall into this ultra-common trap?
The trap you ask?
Working for minimum wage.
I'm serious.
Now, bear in mind I'm not talking about flipping burgers down at the local fast food joint. I'm not talking about pumping gas.
But what I AM talking about is working for WAY, WAY under your computer consulting firm's true market value.
For example, in most major metro markets in the U.S., computer consultants, that work with sweet spot small businesses, are able to bill out in the neighborhood of $100+ per hour.
Yet, every once in a while, we hear of a true tragedy...
It usually goes something like this...
A newbie is working 60 hours a week and only grossing a paltry $1,200 per week for this breakneck pace.
When we probe a little deeper, we usually discover a few things.
a) No understanding of the difference between "gross billing" and net (of expenses, taxes, etc.)
The newbie is usually under the mistaken notion that $60,000 year in gross billing (50 weeks/year x $1,200/week) is enough to sustain a computer consulting business. This may be some cold water in your face, but in almost all cases it's NOT! Not even close.
After taxes, overhead, and marketing expenses, you'd be lucky if you could afford to "pay" yourself a $400/week salary... basically $10/hour IT minimum wage.
You may as well call your company a non-profit at that point. Actually, you're probably a LOT worse off. Because even non-profit agencies pay their IT staff more.
b) No understanding of how others around the country and in their local marketplace conduct business.
In other words, why in your right mind would you bill your firm out at $40/hour... when your competitors, with nearly identical skills and similar clients, are billing two to three times that amount?!?
c) No understanding of how to target market, to effectively locate prospective clients that have a need and budget for premium, professional IT services.
Mix (a) + (b) + (c) and you have a true recipe for tragic business disaster...
In other words, a truly half-baked business model that will fail. It's only a matter of time.
Fortunately, all of the above IS preventable.
Your computer consulting firm is not supposed to be a non-profit agency. You must be able to reap a profit... and be able to pay yourself (and your staff) competitive wages. If you can't,
something REALLY major is wrong.
Best,
- Joshua
Joshua Feinberg, co-founder ComputerConsulting101.com
http://www.computerconsultingkit.com/
