"How'd They Do It" Successful Business Owner Interview
As a person who loves small business and entrepreneurship, having the opportunity to listen to a successful business owner’s story was exciting for me. I have been interviewing small business owner’s that I am connected with for the purpose of learning more about their business and what they did to find success. They are real people earning a living doing what is right for them.
My name is Federico Pena. I am the Founder and Owner of IT ROI Solutions. I've been working in computer systems for the last 10 years, mainly in the service management, project management area and focusing mainly on Computer Associates products.
I started consulting for a company based out of Victoria BC. I started working with two Computer Associate products for change management and issue management. Then once I started getting into the Clarity (enterprise portfolio management) product line basically there was no looking back. There was no other products Clarity was such a hit and such a success that we were just busy doing only Clarity.
After my training, I worked for a company based out of Atlanta, Georgia. I worked for them for a couple of years where I actually improved my Clarity skills. I also managed to get a connection in the field and that's when I decided to open up my own business. Now the main focus of my business is Clarity. We originally wanted to just have a consulting business and provide some toolsets for the Clarity product that would make us stand out in front of or differentiate us from other clients.
In the last couple of months we do more sales of tools and of course there's services around the sale of the tool because these are fairly complicated toolsets. But financially the sales have improved and gone above and beyond what our services sales are.
Tell me about when you actually started the company.
I actually opened the company in August 2009. At that time, I was working for this consulting company out of Georgia where most of the work that we were doing were repeat clients that were coming back to me anyways. It got to a point where my repeat clients were kind of drawing up a little bit and we didn't have a lot of billable work for this company. So I opted to try and see what it would be like to see if I could get my own clients. After about 45 minutes of trying I got three contracts.
How did you get your first customers?? Using old contacts and clients?
I didn't actually go back to my old customers and resources. I did some research on a lot of companies that were looking for this type of work and I opted to give them a call direct and as opposed to what I use to do before which was funnel the work to the consulting company that I was working. I opted to open up my own company and funnel it to myself.
I sort of got the first contract, to be honest with you, then the rest just landed on my lap. It got to the point where I had four. At one point when I first started I had four contracts at the same time when I had no choice but to hire someone to help me. Within two weeks of opening up my company I had two employees.
Tell me more about getting your first contracts.
I probably approached 40 possible contracts in a week. I landed one and like I said within three or four days I landed a couple of more. Out of the 40 calls that I made I landed like 12 of them. Like I said I was happy with just the one because the first one I got was like a three-month contract. And the third and then the fourth and then I ended up getting a contract for a year as well. It wasn't even a call it was all email. Not once did I make a phone call.
Email? How did you get their email?
Yeah. I looked in different places. I looked in job search sites for companies that were looking for my specific skill set. Because this specific skill set that we have is not very common it's easy to pitch them on other ideas as opposed to just by telling them “Look, you're not going to find an employee so contracting is your next best bet.”
How did you choose the niche and your target market?
That's what my expertise is.
Then you decided to create a product as well?
A lot of the work that I've been doing was integration with this product and we'd hand build them. And of course it's time consuming, every time you hand build integration you're looking at four, six, eight weeks of work. And the rates for this type of work are very expensive. So I said “You know what I keep building these and building them and every time it's six or eight weeks. I want to come up with a solution that's repeatable right. I just want to click, drag and drop and hit save and be done in two hours.
I actually originally partnered up with the company in Atlanta to build this product and I hired a very senior Java developer and he gave us a prototype within a couple of months. I implemented the prototype for the client's site and it worked really well. Then we had a change of interest between the company that I'd partnered up with so I just opted to buy his portion of it out and I kept it growing. Now grown to a product, a huge product that is basically the cornerstone of our business. That's what really differentiates us from the competition.
At first I have to admit it was a lot of work. I probably worked 110 hours a week for the first six months.
That brings me to another point; a lot of people think that as a business owner you get to make your own rules. In part I agree but I think behind the scenes a lot more goes on. For example how many hours are you working?
thing is it's funny that you say that. You do make your own rules but really your clients make your rules for you. If a client needs something delivered for tomorrow, I mean that's more important than any bosses work right. Because a boss you can always say “Listen, I'm sick, you don't like it I'm sorry.” But when you're the boss and you have to deliver this to the client or you look bad, because it's such a small community, looking bad once is probably the limit.
I would say initially I worked 120 hours a week. My wife got a little frustrated with me so I tried to cut that down. Last year I probably worked like 80 hours week and this year I'm better I'm probably only working 65 hours a week.
What made you run for that long and that hard in the beginning?
Well the whole thing is the concern of cash flow. We're in a business that takes a long time to get paid. It's usually a 90-day turnaround after delivery. And you have a lot of expenses to incur, you got travel expenses, you have a lot of different expense and you're looking at the bank account and you're seeing it dwindle down to nothing. Sure you have accounts receivable and you know the company's making money but you still have to pay rent right. It makes you work a lot harder, hire less people, and try and keep most of the money let's say “in house” so you can continue to grow.
I think the biggest problem, like I said, was a cash flow situation. If it wasn't for a cash flow it'd be great you can just hire people to help you do stuff right. I think the other thing is not really when you're first starting you don't really know what you're doing or what you want to do or your business focus. So you spin wheels a lot.
Did you end up having to get financing?
Let's go back to where do you spend most of your time in a typical day?
Boy. Unfortunately I still do consulting 40 hours a week. I'm still doing client work. I've hired a business development manager and he does the managing of the staff let's say, but he still requires managing. There's things that are, not necessarily above their heads, but something that I might be the only person that would know how to do it or know about it. I probably spend at least 10 or 15 hours a week just helping out with problems of the company and that's just staffing issues. The rest of the time I spend a lot of time doing demos and trying to get work. And of course working with my marketing department they always have a million questions because they don't know your business from a hole in the ground. I get frustrated and they get frustrated too because I don't have time to deal with them, they need me to deal with them, so it gets somewhat complicated. And then there’s accounting and invoices and contracts and SOWs and you name it.
How many hours a day do you spend on operational or office things?
I'm going to be honest with you I don't really know. I wake up usually at 4:30 in the morning I'm in front of my computer by 5:00. And I am done around 7:00 or 8:00 at night.
That's when you get up and say “I need to have dinner or that's it I'm putting things away.”
Yeah usually I'm actually forcing myself to get out of the house at that time. Because otherwise I'll work until midnight.
Where have you been most successful?
Boy. I think I'm just – I'm lucky because most of the people that are in our field are what is qualified as the people that we have in our companies. Anytime we go on site we shine. We get a lot of repeat business that way. We also double-check everything before it goes to the client. We make sure that everything meets a certain standard. We don’t just leave it up to the consultant to send it in.
What do you wish somebody had told you when you were starting out?
I wish they would have told me how much work it was going to be.
What does success look like?
I'm not sure. Boy and I've asked myself this question before. It changes every day. If you were to ask me a year ago the number was completely different from what it is today.
So success for you is a higher level of revenue.
Yeah and a better quality of life, because it's making a lot of money but if you're working 24/7 it's not worth it.
Where are you on a work/life balance scale of 1 to 10?
Like a three. All work no play.
What do you think about that?
I'm trying to change that. And this year it's actually improved I've been home for actually five months now or four months. It's funny I say I've hardly traveled this year I've only traveled about 60,000 miles.
Did you or do you have a business plan?
I'm making one now.
What financing, if any, did your or do you have?
I had my own money saved basically and that's what I used. I sold my stocks. I had to because of the long turnaround time. But yeah not huge amounts but $40,000 or $50,00.
Talk about your morning routine, you say you wake up at 5:00 but tell me just a little bit more.
I get up, I have conference calls in the morning, first thing in the morning and then I get online with my marketing guy and my business development guy, we go through what the plan is for the day. We resolve issues or try to resolve issues. And then I'll grab something to eat and then I'll have to work.
Is there anything else, anything that you want to share or offer?
Just to let you know it's huge amount of initial work. Like you say people underestimate the fact that being your own boss isn't necessarily that easy. Because you go from being your own boss to having a million bosses. And like I said your clients are your bosses.
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