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Monday, June 12, 2006

Are Consulting Contracts with National Service Organizations Smart?

Simply put, consulting contracts with national service organizations are a really bad idea. You will most likely spend a great deal of time and money with certifications and learning platforms and technologies, but hardware repair is just a commodity and does not have a large margin of growth. As hardware items become cheaper and easier to replace than repair, consulting contracts with national service organizations become less useful.

REPLACEABLE COMPUTERS

Computers depreciate at a rapid rate, and consumers would often rather replace a PC that is now significantly less valuable than when first purchased with a better, newer model than spend money to fix the old one. For example, a $600 consumer-grade PC out of warranty or a $400 laser printer are not often worth the money and effort to repair, and many small businesses would rather simply buy a new machine than go to the trouble of fixing the old one for either the same price or just a small amount less.

CONSULTING CONTRACTS AND LOW LABOR ALLOWANCES

National service organizations will most likely be facing warranty repairs on inexpensive hardware, and they therefore have a small amount of labor allowances, particularly on items such as $1,200 notebooks. Many larger hardware vendors are in such need of money that they are always dealing with the prospect of going out of business. Dell, HP and IBM are really the only major hardware providers that are still financially healthy.

PROFIT MARGINS ON CONSULTING CONTRACTS AND REPAIRS

A repair will probably only bring in $150 to $200 at the most, so you would be better looking for small businesses in the area that need more sophisticated professional services regularly.

LACK OF PROFIT IN CONSULTING CONTRACTS WITH NATIONAL SERVICE PROVIDERS

If you act as a subcontractor for a national service provider, you will always struggle to run your computer consulting business. With more sophisticated, long term contracts, you will be in one or two offices per day rather than two, and you will be billing more in the short and long term. You will be paid for your time no matter how long it takes you to complete the project.

In short, consulting contracts with national service providers are a bad move for someone looking at long term success and should not be a part of a conscientious business plan.

Added By: Computer Consulting Kit