How to start an IT consultancy
There's a lot more to IT support than turning it off and on again. Here's how to make your offering stand out in a crowded market
If you're thinking of becoming an IT consultant, these topics are key to consider:
What is an IT consultancy and who is it suited to?
So, you want to be the superhero service provider who bursts into offices to save the day? Or rather fix people's computers? IT consultancy is a popular option for those looking to start their own business. If you have the know-how and the techy smarts, you can offer an invaluable service to almost every business out there. After all, who doesn't need IT support these days?
That cuts both ways, though. It is a crowded market, and these days IT consultants offer everything from run of the mill IT support, helpdesk and onsite services, to server monitoring, disaster recovery, security and offsite backup. From the get-go, you need to work out exactly what your offer is, and how you can convince your clients that your business is the true superman of IT support.
To set up an IT consultancy, you really need to know your stuff. You'll be up against people who live, breathe and dream ICT, and you'll need to be on their level. Saying that, if IT is your passion and you're a pro on the inner workings of PCs, the sine qua non of servers and the set-up of networks, then don't worry too much if the letters after your name don't have anything to do with third level or vocational qualifications.
Roger and Paul Timms of Maindec, an established third party IT services and support provider that's been going strong for some 30-odd years, believe that you shouldn't worry about qualifications. Roger started the business 32 years ago, and he was not at all qualified in terms of having gone to university.
“Don't let a lack of qualifications hold you back too much. It takes a little bit more than qualifications,” Roger says: “It's good to be one of the ‘Alan Sugar brigade'!”
You've got to have the entrepreneurial spirit. You've got to be committed. And most importantly, you should have a good idea of the area of the marketplace you want to attack. When Roger started out, the market was very buoyant: IT was new, and there was a lot of pioneering going on. There were a lot of opportunities. Now, it's very competitive and the market is quite crowded. So make your IT offering stand out.
Creating your business plan and researching the IT consultancy market
“It's very important to find your niche,” Roger advises. “And just be in a position very positively to sell that to people. If you know what you're good at, you've got to sell it.”
Take the time to scope out your competitors. By doing the research first, you can identify gaps in the market, and be in a good position to differentiate your offering. What needs are not being met? How could you do things better? Once you have a clear idea of what your offering will be, and you're sure you have a market for it, you'll be in a position to develop your business plan around this.
As an IT consultancy, you can be so much more than the IT guy who comes in to the office twice-monthly. But when starting out, avoid trying to do too many things. “If there's something you know you want to do, don't be afraid of sticking to it,” Paul of Maindec advises. “Don't switch about too much, and don't jump on the bandwagon of new fashions. If you start going down one path, stay focused on that. Stick to what you're confident with. Don't be distracted.”
IT Consultancy ideas
First step in planning: decide on your speciality. Here are some starting points:
In addition to a basic helpdesk and field-visit package, why not complement existing in-house IT teams by offering user training and support? Actively identify user training requirements. You might provide IT infrastructure audits and reviews as well as designing services and putting them in place. Your expertise can be sold as a value-added deal.
The security pro
As well as offering a helpdesk, you could be the firewall to end all firewalls. If you can demonstrate that your service can minimise potential security threats, you'll be every business' best friend.
The remote in control
Your field engineers could have a much wider reach if they facilitated remote working for the networked generation. Your company might specialise in remote access methodologies for key workers.
The real-time king
Be the helpdesk with psychic powers. You could promise to fix the IT headache before it affects your clients. Offer monitoring and maybe even provide a time promise: “Our engineers will resolve your issue in 50 minutes or….”? You could even offer clients updates and real-time tracking of live support issues over an extranet.
Plan to do what you're good at first, then build up a client base. Other things will follow. As Roger of Maindec says: “IT hardware support is the basic offering. What generally happens is once you start offering one thing, your clients like what they get and they ask for more. You end up having to provide more. If you're good, then you'll be able to carve a niche for yourself.”
Once you've got your niche, do your needs analysis…and plug all the gaps!
What are the rules and regulations for an IT consultancy business?
There are a lot of rules and regulations you should be familiar with in IT. When you do your needs analysis, you will know how to divvy up your funds as a start-up. You might spend on marketing or on infrastructure – but first and foremost, you should invest in yourself.
Knowledge is key: it's all about reputation. If you're dealing with online security, for instance, there are data and privacy issues you must look into. And if you're dealing with hardware, you have to be aware of the environmental implications. Retailers will give you support with their hardware, and provide you with information regarding software licensing and IP issues. But it's up to you to know what questions to ask.
In terms of industry knowledge, Paul Timms of Maindec suggests you read up on ITIL, which is the ‘go-to' for IT service management companies. It's the information industry's data library, offering qualifications and advice on best practice and process mapping: basically, different ways of doing business in IT. It is, according to its website, the ‘most widely adopted approach for IT service management in the world'. According to Paul, going into IT consultancy with a knowledge of this will be very helpful.
If you're a director, then it's always worth taking a directorship course. That way, you'll be aware of your legal obligations and you won't want to fall into any traps. From a business point of view, it's worth considering the IOD, according to Roger of Maindec. They have a very good knowledge base for businesses: you have to pay some money, but they do offer a great deal in return.
“People don't often grasp the gravity of what it is to be a company director,” Roger says. “The legal obligations are on your head. It's all well and good being in control, but if you go and do something silly, you don't want to be in court fighting your corner without a leg to stand upon.”
There are many courses available all over the country. You don't need to be a member of the IOD, but you do need to have an awareness of your obligations.
In terms of industry bodies that can help you, there are many that cater for IT professionals. “Because IT is such a broad umbrella, there are lots out there,” says Paul. “If you were going to do something like network support, for instance, there'd be a support group for that. A lot of stuff these days is online. Following social media technology keeps you very up to date.”
You'll find a list of helpful links to industry bodies and advice under the ‘Useful Contacts' heading of this article.
How much can you earn running your own IT consultancy business?
Sorry to break it to you: IT consultancy is incredibly competitive. There are thousands and thousands of IT consultancies out there. If you think you've got a good idea, someone else will be doing it too. And not just one person, probably hundreds! This has a direct bearing on how much you can charge for your service and potential earnings.
The key to success is differentiating your offering in the marketplace. Paul Timms of Maindec explains: “We've differentiated ourselves by standing for things that we believe in. We've got a customer base that buy into that. We're lucky enough to have a bit of heritage now, and that goes a long way. But if you're a start-up, you have to be very clever and think hard about how you're differentiating your offering.”
There are many ways you can do this. There are three main paths: you can be the best; you can be the biggest provider (for that you've got to have very deep pockets); or you can start off by trying to undercut people already in that marketplace. Now if you start out trying to undercut your competitors, not only does it mean you'll end up with not very good margins at all, you'll also devalue your offering and put your start-up in real danger. So it's really a good idea to go out there and try to establish yourself as the best.
“Convince your customers that there really is nobody better than you,” Paul advises. “Get customers to buy into that. Sell on value: you may not be the cheapest, but you're getting the best value.” If people like you, and you build up a base of respect and trust, then you'll do well: build up a reputation in the first instance. Particularly as a start-up, that's what you need to focus on. Once you've established your group of loyal customers, they'll be very happy to refer you. And you'll build up a client base that way.
In terms of business costs, like any start-up you'll need to manage your money very, very carefully. When you're starting up, don't invest in anything you don't absolutely need. Can you borrow customers' desk space, for instance? You may not need to have your own office to start off with. Do you need to have that expensive phone, PC, laptop? There are cheaper ways of doing anything. It's getting that economy from the start.
Be firm with your business model. It does take a while: you have to be patient. Hopefully have enough resources to carry you through! Getting a hold of funding these days isn't easy: you've either got to rely on your own resources or you've got to find someone out there to back you. Once you manage to get out there and sell your service, hopefully you'll be able to establish your customer base and move from strength to strength.
IT consultancy marketing tips and useful contacts
Go for simple marketing: the best thing to do is to set up a good website. Don't be too clever with it: just put the facts up there. And generate some good word of mouth. Make sure you employ highly trained staff too, because the basis of your business is not the smoke and mirrors of advertising – it's the quality of your service. “Keep it simple,” advises Paul Timms of Maindec. “More important than marketing is reputation. It's worth getting in good staff from the outset so that you don't get yourself in trouble!”
The power of the human touch cannot be underestimated. You may be an IT consultancy, but first and foremost you're in the service industry. Your website may be slick, your service may be top notch, but you need to build up relationships with your clients from day one.
Paul Timms of Maindec explains: “More than ever, people go to find what they want on the internet. People Google everything. But certainly when we started up in business, the first few years were built on relationships. And I would advise any start-up business starting out today to at least have a few key customers that you can really trust to give you honest feedback.”
After all, it's all well and good trying to provide a service. But if you're trying to provide a service that nobody wants, or that's not competitive, then you shouldn't bother: any customer who can give you that feedback is really helpful. And once customers like the service you provide, they will be happy to refer you. So make it easy for them! If your focus is on customer satisfaction, then show how you are delivering value.