For whatever reason, Finance had more students than the average class. As was typical with Tulsa University, the third-year course might as well have been MBA or doctorate level material. I had a paid internship, laser focused on graduating soon, and this would be the only class I would ever drift through.
One day, the professor broke from the routine of net present value modeling and introduced a guest. The man was pudgy, wearing an old brown suit, and balding with remaining hair long and straggly. It was the Gordon Gekko era of sharp suits with power ties and short, combed-back hair. The character was out of place just as the whole scene was surreal, so I decided to listen intently.
The message was clear: don’t start a business. He recounted his story of two bankruptcies, no time for friends, divorce, not seeing his kids, and losing his dog. The man had the makings of a good country song, but surprisingly the class listened dutifully without comment. Even so, you could feel the attitude of “that won’t be me”.
Even with the chaotic economy, I still hear many technology people say they would like to start their own business some day. Just like most people whimsically talk about writing a book. Business owners in general are a tough breed and kindred spirits. New startups are just fodder for the channel and you should at least go in with your eyes open:
- You’re lucky to keep half of what you make. If your corporation makes just $100K – $335K in net profit, you’ll land in the 39% federal tax bracket. Then, add 6% Oklahoma state income tax. Next, don’t forget about the 22% payroll tax you pay on top of each employee’s salary. Finally, tack on approximately 9% for sales tax.
- Nothing happens until you make a sale. The majority of your time, money, and effort is poured into sales and marketing. People love to buy, but hate to be sold. Most of what you read about sales today is dated gibberish and everyone will gladly take your advertising money, but name recognition doesn’t pay the bills.
- The goal is to sell the business. You have to work on improving the business more than you work in the business. Otherwise, you just have a high risk and expensive hobby to spend your time.
- You aren’t the boss. You answer to the bank and the board. Your schedule is an example for employees and often dictated by customers.
- Technology doesn’t stop. Unlike any other industry, you must learn and apply new concepts each year that would represent a career’s worth of knowledge in another field. Worse yet, technology is the easy stuff with the industry of people not known for inter-personal skills constantly dealing with others and facing some of the most difficult legal and business issues.
My daughter is grown and my wife and I are celebrating a significant anniversary. I’m blessed as the firm is doing well. However, there is no easy day and this post was inspired by yet another tax season and a continuation of IT Consulting Madness.
Jump in. The water is fine. Don’t mind the sharks and maybe you won’t drown.