[Sussex] Business startup

[Mark Harrison (Groups)]

Andrew Guard wrote:

>Well I have been thinking about starting up a IT business for some time.
>As some of you are already operating a IT business, I thought it would be
>a good idea to get your advise and key in to your knowledge.
>
>First it has nothing to do with advising or selling IT hardware, so fear
>not;).  I will not go in to much detail at the moment but it a IT media
>business.
>
>I just think it would be useful to find out your personal experiences and
>the pit fulls of starting up and ruining a business in our area.
>
I trust that the "ruining" was a typo rather than a dig :-)

I've got experience of starting up three companies to do different 
things in the last few years, with mixed success:

- Mark Harrison ltd. acts both as a "demi-holding company" for the 
others, and as a vehicle for personal projects, such as my CDs and their 
associated "informational" website and my IT consultancy.

- Harrison / Denyer ltd. is the company that we set up last year for 
Home Automation consultancy (following 8 years of doing this as a hobby 
and 2 years of running an OpenSource project in this space.)

- Knight / Harrison ltd. is the company that we also set up for last 
year selling proprietary software in a very specialised market 
(interest-rate derivates pricing for hedge funds.)

What you may notice is that the latter two companies have my name and 
the name of someone else, which leads me to an important point -  
relationships and partnerships have been significantly more important to 
growth and commercial success than simply technical ability. My initial 
consultancy job came with my previous employer who wanted to make use of 
me for a couple of days a week for a few months to give a cleaner 
"handover" than they would have got if I'd simply left at the end of my 
notice period.

Secondly, marketing and sales is a lot harder than most people who've 
never tried it before realise. It's very, very, timeconsuming to try to 
get "ins" with people. This is largely what (Silas) Denyer does for 
Harrison / Denyer - phones people and makes them feel like we would be 
good people to do work for them. Actually doing the work is normally 
relatively straightforward, since most technical problems actually have 
solutions, and applying experience and knowledge to find those solutions 
is what all techies are good at.

Thirdly, cashflow is king. I was in a position to launch MHL at the 
beginning of 2003 in the _hope_ that I would get work, but not actually 
_need_ to earn anything for the first 6 months. Even though I got 
consultancy work immediately (lined up before I actually left salaried 
employment), it was the end of the first month before I was in a 
position to raise an invoice, and the end of the second month before 
that invoice got paid.

Fourthly, "MSI" is what most entrepeneurs are talking about these days - 
MSI is "multiple streams of income", and refers to the fact that the 
goal is to create security not through having a single income stream 
(trade time for money in the form of salary or consultancy), but build 
up a portfolio of income streams in parallel, so that if one area dries 
up for a while, others are able to take up the slack. The "streams" 
normally referred to are

- "work income" (you put in X hours, you get paid £Y, end of deal.)
- "investment income" (you put in £X, you get paid £Y / month for a long 
period forward)
- "royalty income" (you create product X, you get paid Y% of its sales 
for as long as there are sales)
- "commission income" (you sell, or help sell, product X, and receive Y% 
of the that sale for as long as you help make sales)

It's the last one that it gradually becoming more interesting as 
Internet communities develop. At the moment, I only make about £85 / 
month out of affiliate sales through my "informational" website, but 
that figures growing faster than the rest....

... which is the problem - it takes a good time to build up from a few 
tens of pounds a month to a few thousand, which is why I need a mix of 
income streams each at different stages in their life-cycles.

Hope this helps....

Mark