121 What are Some Tips on Going into Business for Yourself?

What are some things I should do when I start a business? What things should I avoid? How do I successfully start a business? These are the questions we are going to answer in today's episode of Dev Questions.

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SPEAKER_00 0:00

Welcome to the Dev Questions Podcast with Tim Corey. Join us each episode as we tackle the questions you are asking about a career in software development, understanding the industry, and new technology. If you're just starting out or you want to grow stronger as a developer, this is the place to get your questions answered. Now, here's your host, expert developer and online educator, Tim Corey.

SPEAKER_02 0:25

What are some tips for going into business for yourself? What should I do and what should I avoid? This is the question we're going to answer on today's episode of DevQuestions. And if you have a question that you'd like to get answered, go to suggestions.iamtimcorey.com and enter your suggestion there. Hopefully you'll see your question answered on a future episode of DevQuestions. So let's talk about what are some tips for going into business for yourself. Whether you are becoming a consultant as a software developer, or maybe you are, you know, creating small websites for people, or maybe you're doing some other kind of service or building apps or whatever it is, what are some tips for going into business for yourself? Number one, and I've probably violated half of these, so let's talk about that. Number one is avoid fake work. This is an easy one to fall into. And it's one that I have done in the past because it makes you feel like you're doing real things. It makes you feel like you have tangible results. For example, designing a business card. Don't stress out about it. Don't spend time on it, don't spend money on it. You can create a cheap business card from a template. Because the reality is people don't use business cards that often anymore, and they don't care. Okay? You could I've seen people that have designed business cards that cost multiple dollars per card. They look interesting and cool, and you know what? I'm gonna throw away. Or I'm gonna put it in a drawer somewhere and say, yeah, it's kind of cool, and whatever. You just need you can create a white card with black text that's in Times New Roman that has your name, your email address, and your phone number. You're good. Maybe your company name if you have one. But whatever it is, don't spend time on fake work. Another one is website design. You can stress about, oh, let's let's build my own website. Try to avoid that. Well, I'm a software developer, I can create my own. Yeah, you could don't. You know, and then you start getting into well, what are all the pages I can add and how can I design this? Forget that. Go to any web host like Square or any others where they create the Squarespace, I forget. But um, the web host where you create kind of a drag and drop template-y type website, just do that. And create a single page site if you can. One page that has all your information, you can kind of scroll between the different parts. That's it. Because you want to keep things simple, you want to make it quick, you should be done your business card design, you should be done your website in probably a couple of hours total. You do not want to spend days or weeks or months creating these things. You also should spend very little money on these. You should not be spending $50, $100, $200, $500 on this. And don't forget, your time is money. So don't focus on fake work, avoid fake work. Think through is this work really necessary at this level for what I'm doing? If you're spending lots of time on something, can you eliminate it? Can you do an 80% as good version that's very quick? Then do that. Number two, avoid upfront expenses. Too often people think that starting a business means spending lots of money. It does not. In fact, at some point I'll probably do some business content around how I started my business. Right now, I have beside myself three full-time employees. I have a dedicated building, I have a fairly substantial, at least for me, business around creating content for you. But I did not start that with loans. I had not start that with heavy investment for myself or others. I had not start that with investors or anything else. In fact, my big investment for starting this was a $15 mic. That's what I started with. And you might say, a $15 mic, that's not nearly good enough quality. Yeah, it was, it worked. That's all I needed. Now, I did have a computer already, and I did have a version of Camtasia that I won from a user group. Shout out to user groups. So you could count that, and if you did, that would mean my total investment was about $1,065. But I already had the computer and I used it for my personal stuff. So there wasn't a lot of investment in my startup. Since then, I have taken zero loans, I have taken zero investments, I've gotten zero grants, I have done nothing but take the money that I earned and put it back in the business. So when I started, I didn't build expensive things. I took the money that I had that came from the business and put it back into the business, and not all of it. I took some of it and lived on that. And at first it was side jobs and a side job, and then it became my full-time job, and it became a job for multiple people. But along the way, I always said, if I'm making $10,000 a year, I can't spend more than $10,000. And in fact, I have to spend a lot less than that. So you need to think through not getting down the road of spending huge amounts of money up front. I heard an example that I think is a great example. If you want to start a business and you decide, you know what, forget this technology stuff. I'm going to create a business where I work outside. Well, create a little pressure washing business. Well, how would you do that? Well, you could either create flyers that you print in your home printer that aren't that great, or you could even take a sidewalk chalk in some places. I'm not sure about this, but take some sidewalk chalk and write your advertisements, or just knock door a door or meet people somewhere and say, Hey, can I pressure wash your driveway? Can I pressure wash your trash cans? Can I pressure wash your, you know, your walkway, whatever it is? And you ask people, hey, can I do this? Or give them flyers? And then when you schedule, schedule on a weekend, one or two days. And then you go to your local rental center and rent a pressure washer. You already have orders. You now take the money you'll get from those orders and use it to rent the pressure washer. Pressure wash on those two days and turn a profit. Take that profit and use it to do it again if you have to. And take the money you already have in hand and use that to rent the pressure washer again. And at some point, you'll have enough money to buy a pressure washer. And you start to build up over time. Now, if you own a pressure washer, you can do it on multiple days, not just one or two days in the weekend. And you start to see how you can invest more and more and more. Before you know it, you can have a franchise with vehicles and water tanks and custom pressure washers and all the rest with zero investment. Do you see how that works? Where when you're starting off, you can't do everything. You can't have the fancy van. You can't have your own water, you have to use their water. You can't have the fancy pressure washer. You have to use the rental. You can't do it on every day. You can only do a few. But if you do it right, you take it slow, over time you can build up to that. It's the same way with whatever business you're thinking about. Don't start your business thinking, I have to buy a vehicle for the business. I have to buy a brand new set of computers or laptops or whatever it is. Start small. How can you start small? Okay. So avoid upfront expenses. Number three, this is one again that I didn't get right at first. Hire an accountant. And you may say, well, Tim, you just said avoid upfront expenses. I know I did. And if you can get by with it at first, then maybe, but really, as soon as you start making income for your business, the first thing you need to invest in is an accountant. You may say, Tim, I don't have that kind of money. Well, you can have a small accountant, me, you're just doing a little bit with the accountant. My accountant for the first, I believe it was the first year that I worked with them, I think it was $200 for all the tax work. Now I'm at a point now where I'm just paying, I think I'm paying like $2,000 a year. Something like that. It's not a huge amount. Even though I have payroll and I have, you know, all the rest of the tax stuff that goes into it, a business and all that stuff. I don't even know. But I do know I have an accountant that takes care of it for me. That takes a huge stress off my business and it protects me. You want that protection of not coming to the place where you're short on tax money. Because when the way I do taxes, I pay quarterly now. But even then, there comes a time where my accountant says, okay, here's how much money you need to send the federal government. And that number keeps getting bigger and bigger and bigger. But if I don't plan for it, I don't have that money sitting around. So if you work with an accountant, maybe a bookkeeper too at some point, but an accountant at least, you can work through how do I prepare for this? What things do I need to do? Ask those questions, and they will work with you on saying, okay, set aside this amount of money every month. That way you come in a tax time, and like again, for me it's four times a year. You come into that point where you write a check, and it may hurt to write the check because that feels like your money, but it's the government's, and you're prepared for it, so it's not a huge deal. You're ready for it. So that accountant is huge. If you have a business that is making money, you should have an accountant. Okay. Number four, charge more. I don't know how many times I have seen people, including myself, who have charged too little. You need to know how much money you have to make. Figure out here's what you your minimum salary for the year should be. And then figure out what you want your salary to be. Because the minimum is it shouldn't be what you're aiming for. You should be aiming for above that. And don't forget to put in some rainy day fun stuff. So you that minimum needs to cover even rainy day stuff. But figure out that minimum number is and your actual number. And then what you want to do is aim above that. So I have a friend who is doing starting into the field of consultation. He's starting into creating a consultancy where he um consults with people. And so we were talking, and he's, I said, What are you gonna charge hourly? And the first number that came out of his mouth was $150 an hour. And before he stopped talking, before I said anything else, he was down to $50 an hour. He talked himself down to it. He knew what the number was he really should be asking for. But then he also started saying, but no one will pay that. And so may I charge $100 and work up to it. But, you know, to get people in the door at first, may I charge $50. And all of a sudden, he has cut his income in a third. You might say, well, that's an outrageously large amount of money. Let's do the math on this. So if he had 40 hours a week, $150 an hour would be about $300,000 a year. But as a consultant, you almost never make 40 hours a week every week for the whole year. You just don't. My personal rule of thumb is plan for about 10 hours a week. Yeah, cut that in fourth. So now he's down to $75,000 a year. That's decent. He could probably live on that. That's probably a good rate for him, including some rainy day funds, maybe a little more. But if he cuts his rate to $50 an hour, now he's down to making $25,000 a year. That's not enough. That's not enough for what he needs to do. You might say, well, Tim, he's gonna make up for it in volume. That's not how that works. It does not work that way. So he needs to keep his rate at $150, not start dropping it automatically. So charge more. You are not just saying, well, if I worked for you full-time, I would get $20 an hour. So why don't I charge you $20 an hour? That does not make sense. Because a full-time employee is in theory guaranteed a paycheck. Okay. As a full-time employee, pretty much you're gonna work with that company until you decide not to. Now, yes, layoffs happen, yes, uh, cutbacks happen, whatever. But in general, that's what the salary kind of communicates, is you're kind of locked in here for the full-time work. Also, you get benefits usually at a full-time employee, and you get vacation time that's usually paid. And you also have, again, 40 hours a week that's locked in, not just 10. As a consultant, you don't have any of those things. You don't have any assurances you'll be there tomorrow. You don't have any benefits, you don't have any paid vacation or sick time, you don't have any retirement, you don't have any health care from them, you don't have any guarantee of a set amount of hours per week, even if they put in a contract. We'll talk about it in a minute. But as an as a contractor, you have to assign a value to those things by basically saying you have to pay for this. As an employer, it is more convenient for me to hire a contractor than it is a full-time employee. As a contractor, I can say, you know what, I think we're done. As a full-time employee, I could say it too, but it's a lot harder to do. So therefore, as a contractor yourself, if that's what you're gonna do, then you need to think through if it's easier for you, you have to pay for that ease. So therefore, my rate has to go up. So plan for that, okay? So charge more. And then the next point, number five, don't discount without value back. People often think that discounts just need to happen. You know, hey, my rate's $100, but tell you what, I'll give you $50 an hour. Why? Why would you say that? Well, I want to get you in the door. Well, guess what? When a person starts paying $50 an hour, how likely is it that they're gonna be happy going to your regular rate of $100 an hour or $150? They're not. They're gonna say, I've been paying $50 an hour, why would I pay you more for the same work? So don't just discount because you're gonna shoot yourself in the foot. But then when they say, I want a discount, say, What are you gonna give me? Okay, so for instance, if people said to me, Hey, I want a discount on your hourly rate, no problem, I can give you a discount, but we're gonna have to lock in a certain number of hours. And for me, one of the things I did was I said, and you're gonna pay up front because I'm gonna lock in those hours no matter what. That's non-refundable. So they gave me something, peace of mind. They locked me in for a set number of hours. That's bringing a little more guarantee into my life. So I'm gonna pay for that guarantee by giving you a small discount, not cut my rate in half. I'll give you a 10% discount. Okay, something like that. But I'm not gonna give you a huge discount. Okay, so don't just discount without getting something back of equal value. Okay, think of it as a negotiation. When you negotiate, you don't just say, Oh yeah, you know what, you can have more stuff. Oh, you can have more stuff. Why would you do that? That's not a negotiation. That's in some ways a robbery. Okay. When a person wants to negotiate and they say, I want this, you say then I want this. Okay. So that's how you have to think about lowering your rate is something I'm giving to you. So if I lower my rate, I'm giving you that. So what are you gonna give me in return? All right. Next up, number six, understand your business. And this is one that is hard to do. You have to learn it over time, you have to grow into it, and there's going to be some taking advice from others. But over time, you need to understand your own business, understand your business model, understand your market, understand your customers, understand your value proposition. You need to understand these things and know where you fit. Because there will be people who want to give you advice, and they're well-meaning people, and they will give you bad advice. Okay? You need to know when to say that doesn't work for me. And the way I do that is to know your business. And if you don't know if that advice is bad or not, test it in a small area. Don't test it everywhere. Don't just change your business because people say to. You need to understand. And so test in a small area. Here's an example. For years, I have had people tell me that I should sell my courses for less money. They say if you sell your courses for less money, you will have more people buy the courses, therefore, you will actually make more profits because your courses are cheaper. I tested this theory with one course. They also had said, hey, you know what? Udemy is a great place to put courses. Put them there instead of I am Tim Corey. Because if you put them there, more people will see them, they'll advertise them, and you'll have even more sales. So I tried it. I put my course, uh, one course on Udemy, and it was top of its category. It was very high rated, it had, you know, all the accolades. It got put in the front page, all the rest. And I estimate that I lost about $30,000. So why would I do that with all my courses? But if I listened to people and said, oh, you know, that sounds right. I'm gonna do that. I'm gonna change my business and put all my courses there. I'd be broke. I really would. You know why? Because it wouldn't support three employees, it wouldn't support all the free stuff that I do. It just wouldn't. And in fact, I moved that course off of Udemy and put it on my site and put it back to the pricing that I normally do, and it sells great. Because that's not what my business model works with. So you have to know your business because people come to you. I have people all the time that come to me and say, I had one the other week whereas he was pretty apt, or he or she was pretty adamant about you need to do this. Your course prices are way too high. If you cut your courses prices by a like by two-thirds, then you would have six times the sales, you'd have twice as many profits. That's not how any of that works. And I know my business, I know because I have actual numbers to back it up. And so by knowing your business, you can be more confident in what advice you take. There's a lot of business advice out there that I do the exact opposite of. And you know what? We've succeeded doing it. So just because you get advice doesn't mean you have to take it, but you have to know your business in order to know what advice is good and what advice isn't good. All right. So those are the six things that I think through when it when it comes to starting a business or operating a business. Some tips to improve your success rate. All right. Thanks for listening. And as always, I am Tim Corey.

SPEAKER_01 22:52

Thank you for joining us for this episode of Dev Questions. Tim is committed to making it easier for you to become a developer. If you would like to help make more content like this possible, please like, subscribe, rate, and share Dev Questions. You can also send your questions to questions at IamtimCorey.com. Until next time, remember, you are too smart and your time too valuable to waste it making all the mistakes Tim did. When you're ready to learn to think and code like a professional developer, head over to imtimcore.com and enroll in a course.