Suspicious of the “One-Stop” Tech Shop

I don’t know if this is just a small-town phenomenon, but I notice a fair number of “one-stop” tech businesses popping up in Central Cali. You might know the kind of place I’m talking about. They do custom computers. AND they sell games. AND they do tech support. AND they do PC repair. AND they do network admin. AND they do web design. AND they do web hosting. AND they do custom software. AND they’re an ISP. Etcetera.

The question I have is, is it even possible for this kind of place to do all of those things well?

See, I have this gut feeling that in order for a company to do something really well, the whole company needs to be optimized for it. I am inclined to trust companies with a clear focus on one discipline. Certainly, some disciplines have enough overlap that it makes sense to offer both services (network support and web hosting, perhaps), but in general a lot of this stuff isn’t even in the same field.

If you do networking, great, do networking. But don’t try to say you’re in the web design business just because you hired one web guy and gave him a desk in the back room next to the big basket of server parts. If you do custom software, great. But don’t try to suddenly say you’re in the custom hardware business just because you hired one PC tech and gave him a little workbench in the storage room. I mean, you can, but people like me will really wonder about you.

Once you have a working business that deals in one discipline, you can’t simply add a completely different discipline to your menu of services and expect to provide a high level of expertise. Being successful in a given discipline requires that you have the infrastructure and culture appropriate to do so.

And don’t tell me you are a “full service computer business”. Computer business? It’s 2006. Saying you’re in the “computer” business is like saying you’re in “industry” in the 1800s – it’s so broad as to be meaningless.

Is it just me? Is my inherent distrust of one-stops irrational? I mean, they must be getting customers or they’d not be in business for very long. Is this just another case of “the client can’t tell good from bad unless it breaks in spectacular fashion”? Or is my own view that no one small company can possibly do 5 different computer-related disciplines well just a misinformed prejudice on my part?

Monday Consulting Questions: Getting Personal

I got a decent response to the first Consulting Q & A last Monday, so here we go with round 2.

Q. You are an overly-opinionated blowhard who writes things that are obvious.
A. That’s not a question, but OK. I AM highly opinionated. Whether or not I am a blowhard depends upon whether or not you agree with the aforementioned opinions. I’ve said on multiple occasions that I don’t write about anything we don’t – as a profession – know; I write about things we don’t – as a profession – do. It pains me to see the profession suffer because people can’t muster the discipline to do the things we know will make the profession better, and most of my writing is driven by that pain.

Q. Why haven’t you launched a product yet?
A. Well, it’s not for lack of desire. In truth, my original plan was to do consulting in order to get a revenue to pay for steering Cogeian Systems toward product development. But the reality is that the custom side of the business has grown so much, it’s all I can do to just manage the projects and keep everyone busy performing the work. I’m still learning to manage multiple projects at one time and I write code sometimes, although I’m trying to get away from that. It’s all been terribly disruptive to my original plan and although the revenue is excellent, at a certain point I’m simply going to have to put my foot down and accept less consulting revenue in order to free up the time and manpower to do a product. I guess the basic problem is that I just can’t turn down money.

Q. How do you handle maintenance contracts for custom work?
A. We don’t. In a software or web shop, projects tend to fall into two categories:

  1. Build something new.
  2. Fix something that is broken.

For projects of type 1, a lot of my colleagues suggest that I should set up a maintenance contract to ensure x amount of recurring revenue per month. The price of the contract varies; usually it amounts to 20% of the project cost, per year. But I don’t do this. I may be leaving money on the table, but it occurs to me that I only want to bill for work that my company does. So the official line is, Cogeian Systems performs maintenance on an hourly basis. That’s it; boring old time-and-materials billing.

For projects of type 2 – which we get a lot of because we specialize to some degree in fixing broken apps – the fundamental issues are more complicated because the code base ends up being a mishmash of old, under-performing code and newer, better-performing code. But ultimately, I decided to again stick with T&M billing. If it’s broken, we will fix it. If it is working, good for you, Mr. Client – I hope you keep it running long enough to earn a return on your investment. But I’m not going to charge you a monthly fee on the off chance that it’s going to break and you might need me. Just call when it breaks and we’ll fix it. Simple.

Monday Consulting Questions: The Kick-Off

Although I don’t tend to refer to my company as a consulting business, other people do. And in truth a lot of what we do IS consulting. But I, being a software developer, always tend to think of Cogeian Systems primarily as a custom dev shop (I am working hard to turn us into a product shop; more on that another day).

Labels aside, the day-to-day business of running a small dev shop/consultancy can be very tricky. I get a lot of eMailed questions asking me how I do this, what I think about that, what I would do in situation X, and so on. I usually answer these eMails right away, but it occurred to me that by restricting the Q&A to eMail, a lot of people are missing out on what could be useful information. So, I’ve decided to do a weekly Q&A post. Every Monday I’ll post up three questions that have been posed to me at some point, and answer them. Here we go. . .

Q. What the hell does your company name mean, and how is it pronounced?
A. The fact that this question comes up so often is proof positive that I completely botched the naming of my company. I’ve got to be frank here, naming is important and I fear I’ve screwed up in this regard. I literally hear this question every day.

Although it sounds like one of those meaningless word names that are so popular today, my company name actually has a basis in a real word. The name Cogeian is derived from the word “cogent”, which means an intellectually compelling or powerful argument. So, with the “-ian” suffix attached to it, I imagine that it means “one who makes compelling points”. I pronounce it “ko-jee-ehn”.

I have to admit I was being an SAT-word-nerd when I came up with the name, but I’ve had it long enough that I’m not sure if I should change it or not. Are we losing business because people try to find the URL but can’t spell it? I don’t know. Are we losing out on business because people who might want to call are put off by the idea of mispronouncing the name and feeling embarrassed? I don’t know. If there are any naming consultants out there who want to talk to me about it, feel free to drop a line.

Q. How do you find clients?
A.This is probably the #2 question I get asked. It seems that client acquisition continues to be a problem for solo and small consultancies. I notice that my own client acquisition experiences tend to fall into three more-or-less equal categories. About a third of my new clients some from keeping my eyes open to random opportunity – things that pop up in a conversation with a stranger on a plane, a message board, a chance encounter in the library or at a barbecue. You have to be open to new people and situations in order for opportunities to present themselves. Another third of new clients come as the organic result of making friends with people in the business community and eventually working together on a project. And the final third of my new clients come from word-of-mouth referrals.

To be honest, I’m making a very good living and keeping my dev team busy with very little marketing effort. 100% of Cogeian’s clients give us repeat business, which is a big help. And when taking on a new client, I try to vet them carefully myself, to make sure they’re not one of the 11 bad types that we don’t want.

Q. If you had to start your business over, what would you do different?
A. Not sure with regard to the little, highly-granular things. But I can think of a few broad-stroke things that I’d do differently if I could. Not being able to plan my business launch was a big problem – I launched Cogeian Systems during the bust, when nobody was hiring devs. So, allow me to reframe the question as “what would you have done if you could have had everything your way?”. Ah, that’s a much easier question to answer:

  1. I’d have started saving money a year ahead of time.
  2. I’d have started networking more aggressively about 6 months out.
  3. I’d have started freelancing as a side venture, but on a very limited basis. Not enough to impact my day job, but just enough to aid me in 1 and 2, above.
  4. I’d have gotten counseling from marketing professionals before launch.
  5. I’d have gotten counseling from a lawyer before launch.
  6. I’d have consulted an accountant before launch.

The #1 complaint I have about the way I’ve operated my business is that I’ve learned everything about running a business late and in-process. Now, given the circumstances of Cogeian Systems’ birth, this is understandable and I don’t beat myself up about it too much. Still, it bothers me, and in some ways the business is still feeling the ripple effect of the rough launch.

I’ve often been told that it is impressive that I’ve managed to build up my firm to its current level given my less-than-decent launch circumstances. I don’t think I’ve done anythign differently than all the other smart, motivated developers who suddenly found themselves out of work and needing to survive. Still, I choose to take it as a compliment. I just hope it’s not a way of saying that nobody expected much from me. 😉

More Q&A next Monday.

On Selling The Business

I caught this gem over on the SpoiltChild blog and found it interesting. To summarize, a client offered to buy Alan’s design consultancy. After much soul-searching, Alan realizes that whatever the business might be worth today, the long-term value must also be respected. So, he asked for a big number, was refused, and went back to quietly running his profitable business. I say it was a good move. Nobody will ever pay what a small consultancy is really worth, because the bulk of the value is not immediately evident. It’s certainly not on the books.

I’ve had a few clients offer to buy Cogeian from me, but it always involved at least me and maybe 1 or 2 of my team coming aboard the acquirer as "consultants". Now, like Alan, I see a rosy future for this little company of mine. Hell, the present is fairly well rosy, so I imagine it’s all good form here so long as I keep doing what I’m doing. Anyway, on the occasions that I’ve had offers, I make a wild pitch, much like Alan did.

There’s certainly nothing wrong with quoting an aggressive price. I find it useful for both fending off unwanted acquisition inquiries and unwanted prospects.

It looks like Alan is doing well with his various web offerings; more power to him. Not selling was the right thing to do.

Reading List: Eric Sink on the Business of Software

I’m currently about halfway into Eric Sink’s book. So far, so good. I remember most of this from his MSDN column, but it sure is nice to have it sitting on my desk or in my briefcase. In fact, it’s going to be my official Road Book when I fly to the East Coast this Friday. Eric’s got this business nailed down, there’s no doubt. Plus, he’s very good at communicating non-geek concepts to geeks, seeing as he had to learn all this stuff himself (and sometimes the hard way). So if you haven’t read it, I definitely suggest you pick up a copy. Note that this is not a paid solicitation, it’s just my opinion.

The reading is definitely piling up. Here’s what I have on deck, waiting to be read:

  • Purple Cow
  • The Effective Executive
  • The Ultimate Sales Letter (revised edition)
  • Never Eat Alone
  • Professional ASP.NET 2.0
  • Outfoxing the Small Business Owner
  • DOM Scripting

This is just what I have stacked up at the office. I think I have a couple of unread books tucked away in my bedroom, too. Arrgh.