Creating an IT business from scratch
I have always been interested in the question of how companies and organizations are created, how those self-organization centers are formed, on which employees and resources are besieged from a completely non-saturated “solution” of the external environment.
Five years of economic education did not give me an answer to these questions, but now I know how to build a classical humanitarian course of study for anything, even leadership, even levitation by the power of thought: in the first lecture, we will look at issues, tasks and the relevance of the discipline, on the second, the history of issues, on the third, we will move on to the philosophical aspect of levitation, then we will consider the moral, ethical and legal aspects of human flights without aids, ideas about levitation in world culture and occult practices, The facts and evidence of levitation in religious and occult texts, chronicles and the press from ancient times to the present day, levitation in works of art, will touch upon modern scientific view of the problem of levitation, levitation as a physical phenomenon, to complete the course lectures on the passed material, as a result, students will write a summary and will pass an oral examination on the tickets. We will put a couple of questions to the state exam. If an educational institution is elite, we invite to a lecture famous experts on this issue, authors of books on the issue, or even famous occult practitioners who will tell about their experience of levitation and show newsreels. At the seminar lesson we will conduct a business game "the use of levitation for the purpose of enrichment."
After 5 years of such training, I knew many variations, uses and names for the formula for the sum of the geometric progression of the members, which was called the compound interest formula, and capitalization, and the discount rate, but the question of starting a business from scratch that remained to me remained unanswered, except for such registration of a legal entity or writing an impracticable business plan.
')
In the fourth year, I decided to act on my own: instead of searching for a place of internship, I registered a legal entity and wrote out a certificate of internship myself. As a business plan, I decided to use my own course project for organizing a web development studio and within a few months I started it to kindle a stove in the country, although in that capacity it was not very good.
Strictly speaking, a business plan is needed only to cut off the most senseless and unrealistic projects that cannot exist even in the refined conditions of a mathematical model. In the real world, it is still possible to somehow predict the number of system blocks collected by one employee. With completed software projects it is not so easy. But the number of orders in the created small business is simply impossible to predict.
The only more or less existing law is the law of inertia: no matter how attractive your offer is, at first there will be no orders at all, at the same time, no matter how terribly your business functions, the flow of orders will not stop in an instant. Moreover, it is valid even for businesses without a “long tail”, where each client makes a single order and no longer needs your product. Hence the frequent misconception: “Our competitors are terrible, if we open up, all their customers will come to us.” They will not, at least not immediately. Therefore, when opening a new business, have a source of livelihood and financing of business expenses for at least the coming year.
It is most reliable to design a start-up business so that, at least for the first time, semi-fixed costs are minimal, and your time is spent in proportion to the number of orders. Then there will still be a chance to hold out long enough until the business starts to pay off. The main killers of business start-ups are office rentals and full-time salaried staff, avoid them for as long as you can.
In the first few years I executed orders myself, in my free time. Then, on large projects, began to attract friends with piecework. All this was terribly tedious and did not bring any profit. Looking back, I wonder how I had the patience to do this for so long.
I was lucky to stumble upon a completely free niche in which I had absolutely no competitors. True, there were no customers there either - there are no miracles, but over time they began to appear without any advertising costs, cold calls, tenders, kickbacks and other terrible things that many companies have to deal with. Of course, I played the status of an official partner for this product (also far from free), as well as the reputation of one of the best Russian-speaking experts on it, which was formed as a side effect of attempts to popularize Moodle in Russia. I think these are the key factors of the fact that I did not have to "roll up the shop" many years ago.
At some point we managed to accumulate on the account "as much as 500 thousand" and it seemed to me that it was time to get an office and staff. My optimism diminished when 100 thousand was spent on office equipment alone, but nevertheless, I hired two programmers and a secretary and rented an office near the house. The following year and a half were terrifying, especially the first 6 months. I myself wonder how I managed to avoid a heart attack. Each month could be the last, but by some miracle at the last moment it was possible to find money to pay salaries, rent and taxes.
I worked day and night, and the employees were idle, because most of the tasks were easier to do than to explain how to do them. Small business requires universal people, and they are too expensive to work in a small business. Therefore, the founder maintains primary accounting and document flow, communicates with clients, prepares contracts, invoices and acts, searches and communicates with suppliers, pulls a computer network in the office, answers calls, acts as a first and second line of technical support, resolves conflict situations, designs applications for customers, solves issues with passes and security of the landlord, and employees improve their skills and perform rare tasks that can be isolated from the rest of the turnover. In the worst cases, they start to sit in social networks, play games and study sites with job opportunities, counting how long they have “sat out” the experience in order to meet their requirements.
I understood perfectly well that this could not continue, that it was necessary to train personnel and delegate, and that this was more my fault as a manager than any circumstances, but the solution to the problem was constantly postponed due to my workload. It was a vicious circle, which I decided to break only when we lost a valuable client. One of the most valuable since the company was founded. He was tired of putting up with the constant delays caused by the fact that I personally processed each application before transferring it to the performer.
To exclude me from the application processing cycle, CRM and an internal forum were introduced where the engineer could ask me a question if he did not know what to answer to the client's application. With-time, this allowed me to unload at least standard questions and begin to control the timing of processing applications. The deadlines were terrible and we managed to cope with this problem only by hiring an assistant, whose task was to review the overdue requests on a daily basis and remind the performer about them. No automated lists and reminders functioned, only the “living word”.
The secretary had to dismiss as superfluous - her qualifications, cognitive abilities and life position did not allow her to be used otherwise than to say hello on the phone and switch calls to me. She didn’t get very good at answering letters with a copy-paste of phrases and fragments - as a rule, she simply sent the whole example of an answer without any corrections that the client wouldn’t ask.
Instead, she hired an assistant, whose duties were to free me from all the work that programmers could not entrust. Finding the right candidate took almost a year. But right after its hiring, the company “came to life” - promising projects began to move, customers began to appear more actively, and staff recruitment and training accelerated. It's amazing how many things get inhibited when the leader is in constant “time trouble”.
Due to this, our office has a mini-kitchen, horizontal bar and bars, fresh flowers, roller blinds, an aquarium, a collection of elite teas and even free meals for employees. Someday we will have subscriptions to a fitness club and medical insurance in a decent clinic, but so far away. Someone thinks that this is too much, for fast food it may be so, but in IT staff is the main asset of the company.
As it was possible to find out empirically, stable work of the company is possible with sufficient rhythm of processing orders. For this, the monthly turnover must be at least an order of magnitude larger than a single order. If you complete a single order for a whole year, and then look for the next one - do not dream about any stability: customers will not wait until you are free, and when you are free you will not be able to quickly find a new order. For this reason, we had to refuse to participate in tenders and orders that require extensive design: we are just too small to do this. This can afford large companies, and our company will simply be bent, if I allow myself 2 months to be engaged only in writing project documentation for one order.
Instead, we switched to the methodology of extreme programming: the execution of the order begins immediately, after setting the task and minimal design, without the detailed design required for budgeting. The client is maximally involved in the execution of his order - sees daily reports on the spending of hours and the results obtained, receives weekly micro-releases for familiarization with the developed functionality. And in large projects we participate in subcontracting companies that have full-time tender specialists, project managers, system analysts, technical writers and other tools to convince the client of the expediency and reliability of costs. Although in fact, no one has yet invented anything more effective in laying down the cost margin for the preliminary evaluation of a software project in the budget of a multiple (sometimes by orders of magnitude).
During the entire existence of the company, we have never attracted investments, have not taken loans and do not plan to do this in the future. In general, not every company is ready to use investments for their own benefit and profit for the investor. There must be a solid foundation, infrastructure, people, product, and a scalable production cycle, so that you can master the money, and not just lower it to running costs. For example, only now we have a situation when it is clear what to do with additional money for the development of the company. It used to happen that even the profit was simply kept on the account, since there was nothing to spend on it.
By taking someone else's money, you reduce your authority and increase responsibility, perhaps by sacrificing the right to freely accept exactly the only decision that will lead your business to success in exchange for the opportunity to rent an office and hire staff more than you need.
And, finally, the advice to budding entrepreneurs, who would have helped me a lot 8 years ago: “Do not do this!”
Five years of economic education did not give me an answer to these questions, but now I know how to build a classical humanitarian course of study for anything, even leadership, even levitation by the power of thought: in the first lecture, we will look at issues, tasks and the relevance of the discipline, on the second, the history of issues, on the third, we will move on to the philosophical aspect of levitation, then we will consider the moral, ethical and legal aspects of human flights without aids, ideas about levitation in world culture and occult practices, The facts and evidence of levitation in religious and occult texts, chronicles and the press from ancient times to the present day, levitation in works of art, will touch upon modern scientific view of the problem of levitation, levitation as a physical phenomenon, to complete the course lectures on the passed material, as a result, students will write a summary and will pass an oral examination on the tickets. We will put a couple of questions to the state exam. If an educational institution is elite, we invite to a lecture famous experts on this issue, authors of books on the issue, or even famous occult practitioners who will tell about their experience of levitation and show newsreels. At the seminar lesson we will conduct a business game "the use of levitation for the purpose of enrichment."
After 5 years of such training, I knew many variations, uses and names for the formula for the sum of the geometric progression of the members, which was called the compound interest formula, and capitalization, and the discount rate, but the question of starting a business from scratch that remained to me remained unanswered, except for such registration of a legal entity or writing an impracticable business plan.
')
In the fourth year, I decided to act on my own: instead of searching for a place of internship, I registered a legal entity and wrote out a certificate of internship myself. As a business plan, I decided to use my own course project for organizing a web development studio and within a few months I started it to kindle a stove in the country, although in that capacity it was not very good.
Strictly speaking, a business plan is needed only to cut off the most senseless and unrealistic projects that cannot exist even in the refined conditions of a mathematical model. In the real world, it is still possible to somehow predict the number of system blocks collected by one employee. With completed software projects it is not so easy. But the number of orders in the created small business is simply impossible to predict.
The only more or less existing law is the law of inertia: no matter how attractive your offer is, at first there will be no orders at all, at the same time, no matter how terribly your business functions, the flow of orders will not stop in an instant. Moreover, it is valid even for businesses without a “long tail”, where each client makes a single order and no longer needs your product. Hence the frequent misconception: “Our competitors are terrible, if we open up, all their customers will come to us.” They will not, at least not immediately. Therefore, when opening a new business, have a source of livelihood and financing of business expenses for at least the coming year.
It is most reliable to design a start-up business so that, at least for the first time, semi-fixed costs are minimal, and your time is spent in proportion to the number of orders. Then there will still be a chance to hold out long enough until the business starts to pay off. The main killers of business start-ups are office rentals and full-time salaried staff, avoid them for as long as you can.
In the first few years I executed orders myself, in my free time. Then, on large projects, began to attract friends with piecework. All this was terribly tedious and did not bring any profit. Looking back, I wonder how I had the patience to do this for so long.
I was lucky to stumble upon a completely free niche in which I had absolutely no competitors. True, there were no customers there either - there are no miracles, but over time they began to appear without any advertising costs, cold calls, tenders, kickbacks and other terrible things that many companies have to deal with. Of course, I played the status of an official partner for this product (also far from free), as well as the reputation of one of the best Russian-speaking experts on it, which was formed as a side effect of attempts to popularize Moodle in Russia. I think these are the key factors of the fact that I did not have to "roll up the shop" many years ago.
At some point we managed to accumulate on the account "as much as 500 thousand" and it seemed to me that it was time to get an office and staff. My optimism diminished when 100 thousand was spent on office equipment alone, but nevertheless, I hired two programmers and a secretary and rented an office near the house. The following year and a half were terrifying, especially the first 6 months. I myself wonder how I managed to avoid a heart attack. Each month could be the last, but by some miracle at the last moment it was possible to find money to pay salaries, rent and taxes.
I worked day and night, and the employees were idle, because most of the tasks were easier to do than to explain how to do them. Small business requires universal people, and they are too expensive to work in a small business. Therefore, the founder maintains primary accounting and document flow, communicates with clients, prepares contracts, invoices and acts, searches and communicates with suppliers, pulls a computer network in the office, answers calls, acts as a first and second line of technical support, resolves conflict situations, designs applications for customers, solves issues with passes and security of the landlord, and employees improve their skills and perform rare tasks that can be isolated from the rest of the turnover. In the worst cases, they start to sit in social networks, play games and study sites with job opportunities, counting how long they have “sat out” the experience in order to meet their requirements.
I understood perfectly well that this could not continue, that it was necessary to train personnel and delegate, and that this was more my fault as a manager than any circumstances, but the solution to the problem was constantly postponed due to my workload. It was a vicious circle, which I decided to break only when we lost a valuable client. One of the most valuable since the company was founded. He was tired of putting up with the constant delays caused by the fact that I personally processed each application before transferring it to the performer.
To exclude me from the application processing cycle, CRM and an internal forum were introduced where the engineer could ask me a question if he did not know what to answer to the client's application. With-time, this allowed me to unload at least standard questions and begin to control the timing of processing applications. The deadlines were terrible and we managed to cope with this problem only by hiring an assistant, whose task was to review the overdue requests on a daily basis and remind the performer about them. No automated lists and reminders functioned, only the “living word”.
The secretary had to dismiss as superfluous - her qualifications, cognitive abilities and life position did not allow her to be used otherwise than to say hello on the phone and switch calls to me. She didn’t get very good at answering letters with a copy-paste of phrases and fragments - as a rule, she simply sent the whole example of an answer without any corrections that the client wouldn’t ask.
Instead, she hired an assistant, whose duties were to free me from all the work that programmers could not entrust. Finding the right candidate took almost a year. But right after its hiring, the company “came to life” - promising projects began to move, customers began to appear more actively, and staff recruitment and training accelerated. It's amazing how many things get inhibited when the leader is in constant “time trouble”.
Due to this, our office has a mini-kitchen, horizontal bar and bars, fresh flowers, roller blinds, an aquarium, a collection of elite teas and even free meals for employees. Someday we will have subscriptions to a fitness club and medical insurance in a decent clinic, but so far away. Someone thinks that this is too much, for fast food it may be so, but in IT staff is the main asset of the company.
As it was possible to find out empirically, stable work of the company is possible with sufficient rhythm of processing orders. For this, the monthly turnover must be at least an order of magnitude larger than a single order. If you complete a single order for a whole year, and then look for the next one - do not dream about any stability: customers will not wait until you are free, and when you are free you will not be able to quickly find a new order. For this reason, we had to refuse to participate in tenders and orders that require extensive design: we are just too small to do this. This can afford large companies, and our company will simply be bent, if I allow myself 2 months to be engaged only in writing project documentation for one order.
Instead, we switched to the methodology of extreme programming: the execution of the order begins immediately, after setting the task and minimal design, without the detailed design required for budgeting. The client is maximally involved in the execution of his order - sees daily reports on the spending of hours and the results obtained, receives weekly micro-releases for familiarization with the developed functionality. And in large projects we participate in subcontracting companies that have full-time tender specialists, project managers, system analysts, technical writers and other tools to convince the client of the expediency and reliability of costs. Although in fact, no one has yet invented anything more effective in laying down the cost margin for the preliminary evaluation of a software project in the budget of a multiple (sometimes by orders of magnitude).
During the entire existence of the company, we have never attracted investments, have not taken loans and do not plan to do this in the future. In general, not every company is ready to use investments for their own benefit and profit for the investor. There must be a solid foundation, infrastructure, people, product, and a scalable production cycle, so that you can master the money, and not just lower it to running costs. For example, only now we have a situation when it is clear what to do with additional money for the development of the company. It used to happen that even the profit was simply kept on the account, since there was nothing to spend on it.
By taking someone else's money, you reduce your authority and increase responsibility, perhaps by sacrificing the right to freely accept exactly the only decision that will lead your business to success in exchange for the opportunity to rent an office and hire staff more than you need.
And, finally, the advice to budding entrepreneurs, who would have helped me a lot 8 years ago: “Do not do this!”
Source: https://habr.com/ru/post/188804/
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