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Thursday, 29 July 2010 |
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Ideas for starting your own IT business
Monday, 21 July 2003
Nobody can tell you exactly what's the best way to start your own business. Here's some ideas to get your creative juices flowing though.
Look for a simple way to improve the way an industry operates
In 1972, Maurice Kanbar met a man at a dinner party whose family owned a chain of cinemas. In those days, all cinemas were 1200 seat affairs in one big room, similar to a theatre. The man complained that TV was killing his industry. They generally got only 120 customers per movie: one-tenth of capacity. Cinemas all over the world were going broke.
While those who dominated the cinema business lamented its decline, Kanbar thought about how to change the industry to suit the new business landscape. He rented a large cinema and converted it into four smaller viewing rooms. Each room showed a different movie. The multiplex was born and the industry has hardly looked back since. It seems like an obvious idea today, but nobody else had thought of it up until that point.
The tech industry is full of similar stories: from Michael Dell reinventing the PC supply chain from his college dorm-room, to eBay being invented in a spare bedroom. Finding a simple way to improve the way an industry operates is a great way to start a business. If you consciously think of how to do this, you'll see opportunities all over the place.
Find a customer before you even begin
The best way to get your business started is to find a customer before you even begin. One way is to offer companies free access to your product in return for feedback.
Probably the best way I ever heard of doing this was undertaken by a young businessman in California. He cold-called CEOs of local large companies and tried to arrange meetings with them. When he did get a meeting, he simply asked what was the biggest problem facing the company at that time. Then he went away and tried to think of creative solutions for that problem.
Recruit experts
Most start-ups don't have money to recruit the expertise they need. A simple way to overcome this is to offer a share in the business. Treat it as a joint venture.
If you need technical, financial, or legal advice, place advertisements on job-boards or even in chat rooms asking for people with those skills who are interested in joining a start-up. With the current downturn in the IT jobs market, you should have no trouble getting technical help. Then offer suitable candidates a share in the business in return for their work and expertise.
Many people with business ideas are too jealous to share them with others. This can be a mistake. Your business may never get started without relevant expertise. A 30% share in a $10m business is worth much more than a 100% share in a non-existent one.
Keep your start-up costs as low as possible
From Microsoft, to Dell, to eBay; most great IT businesses start off with little funding. Try to get your business off the ground with as little monetary input as possible. Your aim is to create money from nothing. If you can do that, you will have the makings of a great business. Look for funds for expansion after you've already proved yourself.
Get profitable quickly
Aim to get profitable as soon as you can. Add up your costs and try to define a sales figure where you will become profitable. This should be your goal during your first months in business.
Learn from others
Next time your in a bookshop, go to the business section and buy a book. Try to learn from others experience what is the best way to approach your business. You could do a lot worse than subscribing (or at least regularly buying) business magazines as well.
Build something you can sell
You should aim to build a business that you can one day sell for a lot of money. In order to do that, you must create a system that can continue operating without your input. Small consultancies or contracting companies are terrible businesses in this respect.
Hopefully this series of articles has motivated you to think about how to become an IT entrepreneur. Australia could certainly do with more of them!
Paul Knapp (editor@brainbox.com.au)
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