Running a successful web development business

1. Running a successful web development business Russell Searle 20 Jan 2013

2. Introduction • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing and expanding

3. What is success? My version of success • No boss • Business 100% based on free open source products • Work when we choose for clients we choose • Work from home or anywhere in the world • Kids’ educations paid for • Kids moved out • Own our house • Investments • No debt

4. Planning and getting started • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing and expanding

5. Hurdles • Not everyone is suited to running a business • Do you care more about security or freedom? • Freelancer or business? • Freelancers interested in the work itself => resist hiring • Business focus on managed teams => hire best people • High failure rate • Potentially very serious consequences • #1 cause of failure: bad management • #2 cause of failure: undercapitalised • Must have business development and management skills • Either have them already or … • Be committed to developing them

6. Market research Research your market and competition • Business volumes • Market rates • Margins • Market segments • Industry segments • …etc

7. Develop your strategy • SWOT • Vision • Focus • Specialisations • Value proposition • Measurable, time-bound goals • Action plan • Contingencies • Reserves

8. Support services • Accountant • Lawyer or maybe legal documents resource • Local business peers or business network • Small business support services • e.g. Business Victoria, AGIMO, MMV • Advisors / mentors • Technical resources to complement your skills • Graphics designers and artists • Photographers • Marketing support • Web developers

9. Set up your business #1 • Choose a safe, smart business name • Use ASIC company search • Register your business name • Business structure • Best options: sole trader or single-director company • Limited Liability Company (LLC, Pty Ltd company) • Avoid partnerships, specially with relatives and friends • Register with the Australian tax Office • Register for ABN and GST • Register ACN for an LLC

10. Set up your business #2 • Bank account • Consider insurance • Professional indemnity • Public liability • Home and contents • Life insurance • Customer contracts • Employee/contractor contracts, if required • Consider intellectual propertyrisks • Capital and operating funds

11. Start your engines #1 • Reach out to contacts and prospects • Your network will provide > 80% of your business • Organise your calendar • Build your website and your points of presence • Implement a CRM • Put serious work into your lead generation and sales skills • Budget > 10% of your work week to business development • Get used to the discipline of ongoing pipeline management

12. Start your engines #2 • Work your business • Treat it like a job, you are the boss and you should view your work performance as a boss would • Do unpleasant, boring tasks on a timetable • Use the UI grid (urgent-important) to manage your time. • Cash flow is king. Profitability is the state of grace. • If your business does not achieve a minimum 10% profit on top of all direct expenses within your planning horizon, you would be better off in a job

13. Key success factors

14. Getting established • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business

15. Consult and collaborate • Clients don’t want drills, they want holes • Judge yourself by your results, not your efforts • Outputs matter, not inputs • Don’t build web sites! • Work with your customers to produce IT facilities that solve their business problems or grow their business • Be a good, successful business person • Model ability and credibility so you can contribute to their business • Look for problems and solutions • Put in your best efforts and ideas to improve their business • Communicate • Assume nothing: ask questions and listen to the answers • Report clearly and often, in English and in optimal detail • Get understanding, agreement and approval • Never make promises you can’t keep

16. Business processes • Time recording and billing • Daily accounting • Customer relationship management • Team project management tools • Benchmarking • Blogging and social media

17. Important relationships • Family • Business partners • Staff • Contractors and freelancers • Advisors • Network

18. Selling your services • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business

19. Marketing foundation • Your purpose (vision, mission) • Your pitch (position statement, slogan, tagline, USP) • Your focus (specialisations, target markets) • Your ideal customer profile • Industries • Turnover • Head count • Operations • Maturity • Problems and pains

20. Marketing plan • Purpose (purpose and pitch) • Market profile (focus and customer profile) • Competitors • Marketing strategy • Channels and methods • Pricing and selling • Project delivery • Measurement • Project performance • Profitability

21. Marketing channels Free • Your client base • Your peers and network • Interest groups • Events • Your website • Social media • Forums and blogs • Search engine marketing Paid • Sponsorship • Advertising • Mainstream media • Affiliate programs • Joint marketing • Co-branding

22. Selling skills • Your success has much more to do with your selling ability than your technical skills • Selling really means providing value to customers • Get over yourself • Be good at it • Not possible to cover selling skills in this workshop • Find and use a professional IT selling resource, e.g. • IBM PartnerWorld University (IBM business partners only) • Budget > 10% of your work week to business development

23. Running your business • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business

24. Customer service • Love the clients you have • Repeat business • Lowest cost source of business • Case studies, testimonials • Referrals, word of mouth • Reference sites • Keep communicating, stay in touch • See consult and collaborate, key success factors

25. Managing projects • Track and measure activity and progress • Can’t improve without benchmarks • Can’t benchmark without recording activity • Use shared tools • Online project management system • Online PSA (professional services application) • PSA should also handle time sheets and billing • Blend waterfall and agile methodologies • Cannot ‘quote’ for an agile project • Waterfall project structure around agile work packages

26. Customise SDLC Customise project method for scope and context

27. Managing production • Software production management • Manage a continuous stream of software projects • Various sizes, multiple clients • Balance a changing mix of skills and resources • Within shifting demand • See Software production management article

28. Complaints • Complaints are opportunities in disguise • A customer whose complaint you have rectified is much more likely to recommend you • Take responsibility, but not necessarily blame • Be open, constructive, proactive • Clarify and agree requirements • Fix and confirm • Follow up

29. Difficult customers • Solutions are not architected, they are shaped • Most customers can’t express what they want, but they can help you shape a prototype • But some clients are not worth having • Won’t pay (ask for a deposit) • Ignorant and unwilling to learn • Arrogant • Unrealistic expectations • Unresponsive • Assumers: ‘I assumed I was going to get x, y or z’

30. Growing your business • Introduction • Planning and getting started • Getting established • Selling your services • Running your business • Growing your business

31. Larger clients Good • Long term relationship • Higher rates • More realistic budgets • More professional • Smarter people • Bigger projects • More interesting work Bad • More demanding • More stakeholders • More overheads • More politics • More reporting • More risk • Tougher

32. Pitching to larger clients • Initially aim for smaller, low-risk projects • Sales cycle typically 9 – 18 months • Extensive, professional proposal required • RFTs are hard work, but can be won • Need formal legal structure and solid financials • Need prof indemnity/liability insurance

33. Evolve your business • Account management • Project management • Production management • Quality assurance • Technical range and capacity • Formalise maintenance support • Formalise tech standards and code reuse • Specialise market focus and internal roles • The purpose of a business is to be sold

34. Profitability for freelancers How to eliminate tax return shock • Set your income goal for the year • Set your annual budget • Calculate your marginal tax rate • Add 2% to the rate • Put that percentage of every invoice into a separate provision account