Quick background: I started BrentOzar.com as a blog over a decade ago, and today it’s a successful consulting company that gets tens of thousands of spam comments per day. I failed at a few other side projects before that. This post is a brain dump for IT people who are thinking about starting their own thing.
Most of the people who start businesses do it for the love of what they do, not because they want to go into finance, sales, and management.
Most founders (myself included) have no idea what they’re getting into.
That doesn’t mean they’ll fail, though, because passion and hard work can get results. This is why founders say that ideas are worthless – anybody can have an idea, and it doesn’t matter if a million people steal yours. Execution is everything.
Many people who profess to know a lot about business – their business or yours – are bullshitting you. Get good at critical thinking, and use it when you read your own business plans or product ideas.
Most of your suppliers and customers are faking it just like you are. (Again, that doesn’t mean they’ll fail.) The key is looking at their knowledge and their passion and their work ethic together as a complete picture. The more pieces they have, the more likely they are help you.
Competition
Be friends with everyone in your market. Being a jerk to your competitors doesn’t make you more likely to win. Your customers would rather see you on great terms with your competition – well, right up to that whole price-fixing thing. That goes a little too far.
Build your own Gartner Magic Quadrant report for your competitors. Your savvy customers can name half a dozen of your competitors – shouldn’t you be able to?
Companies that do the same task aren’t necessarily competitors. You don’t make money for doing a task – you make money because someone wants to pay you to make a pain stop. Competitors are companies that – regardless of what tasks they’re performing or products they’re selling – relieve the same pain for the same people.
The more vague your product or service description, the more competitors you have. “We can do anything to help!” = “We’re the same as everybody on Fiverr.”
Some of your customers have never heard of your real competition. Never talk about your competitors until your clients ask, and even then, don’t do it. Talk about your unique awesome selling points in a way that your competitors can’t address or impeach. Your knowledge of your competitors is only to help you know yourself better.
Every time you lose a sale, ask why, and to who. Don’t be afraid – you’ve already lost the sale. Most of the time, the prospect will actually tell you. It doesn’t mean you have to do anything about it, though.
Understand what products your customers buy from other mature, large suppliers that don’t compete with you. Look at the dominant competitors in that market, and learn how they got into that good place. Learn what you can from their tactics, because they’ve figured out how to market to your customers.
Rules are usually there to help your already-established competitors.
Employees and Money
Find people who would make you feel stupid if they weren’t so doggone nice about it. Make them your partners, employees, customers, and suppliers. The first few times you’re tempted to second-guess them, remind yourself of why you’re in a relationship with them – they probably just don’t have the time to explain the basics to you. Let the results surprise you.
Your employees are talking about you when you’re not around. What they say is up to you.
Sooner or later, employees are going to leave you just like you left other companies. Between the time you hire them and the time you part ways, make great memories together.
Pay cash. If you spend ten minutes worrying about how you’re going to pay the loan, that’s ten minutes you’re not focused on your employees, customers, products, and family. If you can’t pay cash, it’s not the right buy for you yet. (I’m writing this for knowledge workers, not factory builders.)
Employees cost six months of their salary. If you can’t pay that cash, you can still hire them, but be exceedingly clear with them about the risk. Not your risk, you vain jerk – theirs. Employees are taking risks too, and you want to make sure they’re excited to take the right risks for their financial situation.
Every month, read your Profit & Loss statement and your Balance Sheet.
If your financial success depends on every customer paying/staying/growing and every vendor delivering, you’re going to fail.
Time Management
There is never enough time to do the right thing by everyone.
Start by doing the right thing by yourself and your loved ones. For that, carve out recurring weekly non-negotiable time. Everything else is a messy, ugly free-for-all, and it never gets better.
There will always be people who want to talk to you one-on-one for free. They want to convince you to give up your cash or your knowledge. The most powerful line in this situation compliments them instead of focusing on yourself: “I know your time is valuable, so let’s cut right to the point: what do you need from me?”
Read book summaries. Most books are one-page blog posts trying to make a profit.
Partners
The first time you start something, you’ll be overly focused on keeping all of the equity for yourself. You’ll likely fail because one is the loneliest number. If you’re not accountable to anyone else, you’ll do crosswords instead of building the business.
The right partners make you work smarter and harder.
You don’t really know partners until you’ve failed at something together, and you probably don’t even know yourself until then either. Protect everybody with a great legal agreement.
Failure
Come up with a single metric that defines whether you’re gaining or losing. Later, you can add metrics, but start with one.
You’re probably going to fail. Repeatedly. (I did.) That just gives you more knowledge on how to succeed next time.
Have a success plan and a failure plan, both triggered by thresholds of your metric over time (like zero customers gained over three months). When you enter into contracts or corporate partnerships, define the metric, success plan, and failure plan too. Think of it like a prenup, except it’s much more important here than in marriage because there’s no default rules on who gets what when companies break up.
The quicker you can move on to your next accomplishment or attempt, the better. Floundering is for fish.
12 Comments. Leave new
You wrote, “Read book summaries. Most books are one-page blog posts trying to make a profit”
There’s a corollary there. I’ve noticed that most blog posts are tweets.
(Taking it to it’s logical extreme, most tweets are a single emoji.)
It’s true. I’m on http://emoj.li/ too, heh.
You alluded to this a bit but “understanding accounting and taxes” is very important. Sure, it’s boring. But why make tons of money in your business only to give the taxman a third of it because you didn’t bother to set up an S-Corp, which for most consulting businesses legally saves tons in taxes? And you shouldn’t rely on your accountant to warn you about these things since many don’t understand it either.
Dave – yes, absolutely, every business should have a good attorney that can explain things like that.
As always Brent you nailed it.
A very good post with a great deal of distilled wisdom, which provokes much thought.
Now where can I get me one o’dem fancy bathrobes?
Andy – thanks! To get one of the bathrobes, you just have to get hired. 😉
Great great read. Forwarded to my partners.
“Every month, read your Profit & Loss statement and your Balance Sheet.”
Don’t forget your cash-flow statement! That’s the one that usually tanks a company. Receivables don’t pay rent.
Absolutely, that’s a great point!
Great insights my friend. Hang in there, you have what most don’t – tenacity and adaptability.
I also love how you address failure. It is important to not fear failure (contrary to what is taught in school), but to I brace it. I’ve failed A LOT and continue to fail regularly. However, I learn from m mistakes, rebuild failed systems which allowed for the mistakes, improve measurables so can detect that condition sooner next time and react appropriately. It’s much like growing at doing technical DBA work: remaining as a ‘professional beginner’ is not a good course for most. Yet, when technical people who constantly strive to improve their skills in technology, sometimes (often maybe) fail to analyze and then improve their new business. it’s a bit baffling, yet strangely understandable. It’s like a force that needs resisting. Strangely, the key to success in my opinion is getting really good a failing.
For your technical readers who are contemplating becoming a consultant: just understand that being a consultant requires skill upgrades (achievement!). Just by acknowledging a whole pie slice of missing yet-to-obtain skills (business, strategy, leadership, culture, marketing, sales, management, customer service and on and on), and then spending time regularly to improve those skills goes a long way. I treat it like The Sims with those achievement and health meters. Break down the skills and begin working on achievements to get them all to at least average.
It’ll take time, but hyper focusing on tech skills is needed at first to become a great Sr DBA, but to venture into business, learning needs to shift from tech skills (keeping those up though), to business skills. I’ve seen great DBAs not get hired as a consultant because they thought and behaved like an employee. If also seen terrible DBAs land a consulting gig because they had some of the ‘business’ skills discussed earlier, but then got fired because they couldn’t back their talk up technically. So both are needed, and to preserve a good reputation, lead with strong technical skills.
I LOVE this topic, so I should buy you a beer and chat more about it next time we bump into each other on the speaking circuit.
Jim – thanks sir! Yeah, you’re totally right – it’s such a different set of skills than the technical piece. You really want to start acting like a consultant when you’re still a full time employee, and that’ll help you understand whether consulting can work for you. Actually, that’s a good topic for a blog post, come to think of it.
That is a great idea for a blog post; I’d love to read it!
I don’t know if it’s the best way, but what I try to do is: in every aspect of life and at every stage, I need to stretch towards my goal. We do this (I think) by thinking, which leads to feeling, which leads to acting like the next stage. I believe that this drives personal growth. I measure myself in this regard by: when I finally reach the next level, people think “why the announcement; I thought he already was a ____”. Lol. Careful with what you fill that blank in with!
For example, if someone at a Sr. DBA level would think, feel and act like a consultant (IF their goal is to consult) then when the first consulting gig is landed everyone around them says: “I thought they already were a consultant!”. Same for MVP. I think that when Microsoft announces the award for someone new, the community should generally think “I thought she was already an MVP”. This means thinking, feeling and acting like an MVP to full capacity long before the award. Again, I’m not sure I have this right, but this is how I try to press and grow as much as I can.
[…] the business. In the event that an employee didn’t have revenue associated for a few months, we still wanted to be able to pay their salary. (That goal ended up coming in handy, and I’m really thankful – if it wasn’t for […]