Many computer consultants don’t charge a travel fee or surcharge.  Others will charge a flat rate or even an amount based on time or mileage or both!  Let’s break it down a little:

On average it takes 30 minutes to arrive at a client.  On average, it takes 19 miles to arrive at a client.  In my city, this wouldn’t surprise anyone.  Some clients are very close, others are very far.  Either way, in this city, driving is a pain.  Not nearly as bad as, say, Atlanta, but it can be bad at times.

Lets say at a minimum, there are two clients in every day.  This is one hour of time spent on travel, or 38 miles depending how you look at it.  Do you feel like you should not charge for this time?  I know many freelancers who say they do not charge a travel charge just to make their bid look more appealing.

At these rates, that is over $100 per day of lost revenue.  By IRS guidelines, it is a cost to the vehicle alone of $18.43.  If you or your employees spend this hour commuting and you do not bill for this time, you are basically giving up an hour of each day for free.

Pick whatever method you like best (flat rate, per mile, time), but bill for your time.  Or don’t, and miss out on the revenue.  It’s your choice.

-Zachary M. Morvik

If you use Microsoft software products, you no doubt have realize how incredibly expensive they are. Your clients have certainly brought it up a time or two. You, as a computer service professional have access to one of the greatest benefits Microsoft could offer. It’s called the Action Pack!

The Action Pack is a collection, updated quarterly, of almost all of Microsoft’s products. Not all, but most. And multiple licenses. How does ten (10) copies of Windows Vista Business sound? Or Small Business Server? Or ten (10) copies of Office Professional? All this for only $299 USD.

If you aren’t already registered as a Microsoft Partner, you need to go do that here. Once you are a partner, you are eligible to purchase the Action Pack. Here is a list of the benefits you receive:

Isn’t that incredible? Microsoft needs the professionals supporting their products to have working knowledge of everything they have to offer. It will help you promote and cross-promote their various products. It will also save your company thousands of dollars in licensing fees. This is by far one of the best values available to computer service professionals. Take advantage while it is still available!

-Zachary M. Morvik

Are your clients loyal?

This is a good question to ask yourself about each client.  Do you consider them loyal?  Do you have any kind of bond with them?  Any common ground?  Or, do you just fix their computers?  Being a computer consultant means understanding the needs of your clients, how their business operates, oh yea, and also how to fix their computers.

If all you look at is an opportunity to fix someone’s computer, you’re missing the big picture.  Of course you need to be able to take care of their computer systems.  This is a given.  But you really need to be trying to understand how you can help each and every client.  Many of the business strategies each client has will in some way make use of technology.  Are you paying enough attention to see their needs down the road?

Asking questions is probably the single best way to better understand the needs of your clients.  Ask them where they are headed, where they see the company in 2 - 5 years.  What technologies might help them on their way?  They will begin to view your relationship with them as more of a partnership than as a necessary expense.   This is exactly what you want in this business.  There is nothing more powerful.

-Zachary M. Morvik

I have been asked by many whether they should get certified in various aspects of IT or not.  For years I worked at the largest IT training company in the world and constantly interacted with instructors and students.  I then worked for a computer consulting company where I was able to see certified and non-certified staff work in the real world.

I have seen extremely certified people fail miserably in the real world (even instructors) and I have seen non-certified people soar with their logical thought process and communication.  I have also seen certified people do the same.  Whether you get certified or not does not seem to have any correlation as to whether or not you can actually do the job.

What it does provide is credibility and trust when it is needed.  If a customer is looking for someone to service their computer systems and network, they need to be able to trust that company/person.  If they open a phone book they will see hundreds of options, but who do they trust?  This is part of the reason why word of mouth is the strongest methods in marketing a computer service business.  Business owners talk to one another and you can be certain that if you do a great job for them that your name will come up when they are asked who services their computers.

But what about those who don’t ask their peers?  How do they figure out who to trust?  Certifications can go a long way.  If you are listed next to someone else in the phone book and you have a Microsoft certification while the competitor does not, how do you think that looks to the client?  Which one would they pick or at least call first?  If the client uses Microsoft products, and chances are that he/she does, they would of course feel more comfortable knowing that the person servicing their network is Microsoft certified.  It shows a certain level of expertise.  And to someone reading your ad, that might be the one thing they need to feel comfortable that you can do the job.  Think about it.

-Zachary M. Morvik

Documentation is a crucial element of what you do as a computer consultant.  Even if you use a paper based work order system (not something I recommend), you should still keep a carbon copy of the work order in a file for that client.  Obviously, a computer program or database is preferred, but many consultants still use the paper based system so just make sure you at least keep the carbon.

If you ever have the day when you are in litigation with a client/former client for any reason, you will be very happy that you kept this documentation.  At a minimum keep the date/time, who made the appointment, what you did for that client, and end date/time.  I recommend much more than this, but this should get your started.  When I say “what you did for that client” I mean with specifics.  Detail *everything* you did or discussed.

The flip side to this is that during deposition, opposing counsel will try to rip apart what you did by using your documentation against you.  There are ways to deal with this and as long as you keep good records, you’ll be much better off.

Better reasons, other than covering your backside, is client experience.  You can go back and review historical data per client and forecast, plan, and act long before you would if you didn’t have the data.  How many times have you had the same problem on the same server?  Can you answer this question?  You should be able to so start documenting today!

-Zachary M. Morvik

As knowledge of your company spreads, you will likely received Request for Proposals (RFP).  I receive these frequently because of involvement with state/local government organizations.  But medium to large corporations will use them as well.  RFPs can be extremely time consuming so make sure it is worth it before you even get started.

A RFP is a detailed document outlining a service the potential client would like you to perform.  This will include specifics of work to be performed, timelines, deadlines, and more.  It will be many pages in length.  Your company will then respond to each item of requirement in a detailed fashion.

The biggest question is always, should I reply.  I am faced with this same question each and every time.  I “know” that responding to a RFP is likely going to take anywhere from 3 - 10 hours spread over a few days so it comes down to the math.   What is the potential profit of this deal?  Does it exceed my investment of 3 - 10 hours by a multiple of at least five?  If so, then I will respond to the RFP.

There is sometimes a clause that says even if you do not want to respond to this particular RFP, but you might be interested in future RFPs, respond and let them know.  That’s just common sense, but make sure you reply and let them know you would be interested in future RFPs.  You never know when the right one will come along.

-Zachary M. Morvik

Do you use service agreements and contracts in your business? If you do, then you are doing things right!

For those of you not using contracts, you should reconsider. Without these contracts, your customers probably don’t feel 100% peace of mind. Really, in computer consulting, what are they paying you for? They are investing in you to keep their business running smoothly. They are, in essence, paying you for peace of mind.

Real companies…professional companies use contracts. Go try to get a “business” cell phone contract at any carrier and see if they don’t use contracts. If you want to get a deal one multiple lines and possibly bundle in an internet connection or other service, odds are, you are signing a contract.

Contracts help your business because you have a revenue stream you can count on. You have monthly bills and with contracts, you have monthly revenue that you can expect. You then have the luxury of forecasting, future planning, etc. It’s difficult to determine when you can hire your first, or next, employee when you can’t say, with certainty, how much revenue you will have next month or over the next six months.

To a small degree, contracts also help to protect your business. In many contracts is verbiage that indemnifies your business from liability due to losses not directly caused by your personnel. There is insurance for the latter, but if you are working on a clients system and catastrophic failure occurs, you may or may not be liable, depending on the situation, but you are much more protected if you have a contract for that client or project.

Many small startup computer consultants tend to ignore the necessity of contracts. How do you think a company of any size will perceive your organization if you run your business like this? They expect contracts. If you don’t use them, you will look very “small-time” to them. Is that what you want?

-Zachary M. Morvik

How many hours do you bill per week?  That is, if you measure productivity in hours.  There are many different ways to sell services.  You can bundle services into blocks of time or you can sell services on a per job basis.  And of course, you can simply bill per hour.  Regardless of the method (I have tried them all) you need to measure the productivity of yourself and your employees.

My target, in terms of billable hours, is 30-35 hours per week.  The more the merrier, but the goal is at least 30.  There are no bonuses paid unless the average billable hours are at least 30 per week.  It is easy enough to convert this same figure to the other methods of selling service so I won’t do it here.

Many computer service professionals do not charge enough for their time.  While this is a big mistake, it happens all day, everyday.  Others charge adequately.  We are going to just take a happy median average of $100/hr.  If you bill 30 hours per week at $100/hr, that’s $3,000 per week or $150,000 per year assuming the standard American two-week vacation.

Sure, you can make more depending on your pricing structure, how you sell your services, and simply if you work more hours.  If working more hours is your chosen path, you will eventually resent your business and likely end up in a downward spiral.  As you can see, in the services business, you must have employees and you must maximize their billable time.  Start planning as early as possible the how’s and when’s of bringing on your first employee.

-Zachary M. Morvik

How will you obtain new clients? When you talk to a prospect, what will make him or her remember you? If you use direct marketing and cold calling techniques (which are not very effective in this business) what will you send them after initial contact?

Word of mouth seems to be, by far, the best method for obtaining new business in the computer service business. If you find something better, let me know. But, there are many other methods as well. Regardless of which method you choose, you need marketing materials. Presentation is 90% of the prospecting game. You cannot afford to look like a one-man shop at this point. You need some professional grade marketing materials.

You are going to need a logo for your corporation. Very few people are both good at computer services and also good at graphic design. Outsource this task to a qualified graphic artist/designer. You will need business cards. Again, don’t do this at home. Hire a professional. It is not very expensive. Once you have your logo, create company letterhead, fax coversheet, envelopes (outsource this to your printer), labels, and presentation folders. Naturally, you will also be expected to maintain a website. How could you possibly be a computer services company and not have a website and domain name?

Your marketing materials should all compliment each other in both style, color, and wording. Use customer testimonials, references, biographies, articles, client lists, and more in your press kit. The more you can add, the more established you will look.

-Zachary M. Morvik

You need to be able to market your company as much as you market yourself.  I can tell you that the end game is not to market yourself as many would have you believe.  If you market yourself, your business becomes completely dependent on YOU.  You will write contracts and win clients, but part of the requirement will be that YOU do the work.

The inherent flaw in this method is that YOU only have X number of hours in a week.  Your company will feel like your last J.O.B. and you will end up resenting this new J.O.B.  You will become a slave to your new company instead of free.  Being free is the goal right?  I’ll post on this specifically soon.  When you do any kind of marketing, make sure you are marketing the company, and not you.  Always associate yourself with your company so that your company name becomes remembered just as well as your name.

When people think about computer service, you want them to think about the name of your company as quickly as they think about you personally.  Down the road, it will not always be YOU who is servicing their account.  Start thinking that way now!

-Zachary M. Morvik

Did you know that the IRS has a 15.3% Self-Employment Tax?  That’s right!  If you are not incorporated or otherwise a formal business entity, you are subject to self-employment tax.  Graciously, they allow you to deduct 50% of this amount for your adjusted gross income on your tax returns.  But that is still a lot of money.

Now, what about avoiding this tax altogether.  Isn’t that the same as putting more money in your pocket instantly?  It is!  When you incorporate, you are no longer subject to self-employment tax.  For small or startup computer service professionals, a Class C Corporation is much more of a headache than you will want to deal with and, in reality, a Class C corporation is double taxed.  Once for corporate income, and then you again for personal income.

The two entities that I recommend are Limited Liability Corporations (LLC) and S Corporations.  The only “gotcha” for  LLCs is that the IRS still considers you self-employed unless you elect to treat your LLC as a corporation.  You also have to make this choice when applying for your Employer Identification Number (EIN).  This EIN is the equivalent of a Social Security Number for a company.

Both LLCs and S Corps will allow you to avoid the Self-Employment tax.  Both are very simple to setup and will likely save you thousands of dollars over the years.  You will want a competent CPA or bookkeeper to help you setup your corporation or LLC.  There are certain things in business that you just want to make sure are done correctly and this is one of them.  Pay for it.

Both of these also avoid the double tax problem.  Your corporation or LLC will either have a profit or loss at the end of the year.  That profit or loss flows down to your personal tax return.  So, if you have a gain of $20,000 then your personal income just went up by that much.  If you have a $10,000 loss then you just found an extra tax deduction because your personal income is now $10,000 less.

In addition, you receive some additional protection of your personal property if things don’t go very well.   Write-offs, accounting, banking, and more all become much more black and white making everything easier to manage.  Just like a real business should be.  You can then also get a Sales and Use tax number and/or Reseller number so that you can purchase equipment/items tax-free and then charge sales tax when you sell the item to a client/customer.  This too will help your bottom line.

If you’ve been operating as a sole-proprietor or independent contractor, then stop it now.  You’re missing out on benefits that you really need to be taking advantage of.  Running a corporation is very easy regardless of what others say so go now and incorporate!

-Zachary M. Morvik