Starting your own business
After their successfull live radioshow at PHPBNL14 Stefan Koopmanschap and Joshua Thijssen had the idea to follow up with a series of podcasts by the DWA. Today, we present our very first podcast pilot, created by Stefan Koopmanschap who is interviewing Michelangelo van Dam on “How to start your own business”.
Hello and welcome to this pilot episode of the DWA podcast. My name is Stefan
Koopmanschap and I’m sitting here together with Michelango. Hi Michelango.
So we’re sitting here at the PHPTek conference, so right before we dive into what we are going to talk about, how did you like the conference?
I really enjoyed this conference. It’s one of the major conferences in the US, and I never want to miss out an event here, because you get to meet a lot of people. New people, old friends, you learn a whole bunch of stuff. The events after the conference are awesome. I mean, we were at the hackathon, people were still heavily hacking away after midnight. That’s the amount of passion you will find overhere. So that’s why I’m here.
So let’s move on to the actual topic of this podcast. For those of you who don’t know DWA or Dutch Web Alliance, is an alliance of software people, web related people that run their own business so a very good topic for our first podcast would be starting a business. I will be asking Michelangelo some questions and Michelangelo hopefully will give us some really good information about starting your own business. So Michelangelo, first of all, why would anyone start their own business?
Why would anyone start their own business? That’s a very good question. Most of the time, as a developer or as a professional, you get to a level that you reach seniority in your company and the only way that you can break out is to either become management or you need to find new opportunities somewhere else. In my case, I was a little bit tired of people telling me what to do and not really care about how I did perform and how well I did my job as long as they got the money in the end and that really frustrated me. And it was basically my wife that said: ok, now you got to stop this and start working for yourself.
So that was the first thing that I did, I had my knowledge in development, I was a senior consultant for the last company I worked for and I had all the skill sets. The only thing was: how do I start my own business. So the first thing you do is to go to the local commerce entity in your town you ask them questions, ok, what do I need to do, to get a business up and going. They will provide you with all kinds of information, brochures, flyers, books-even that, explain every detail about what type of company you want to start, what are the requirements, the legal requirements. What kind of educational degrees you need to have and all that. And from that point on, ok I want to have this kind of company, you register the company, you provide it with a name, you get a registration number for that, you pay the fee and you’re in business.
Right, so that’s it. You used the chamber of commerce to get more information. When I started thinking about starting my own business I actually consulted you, because for some reason I trust you more than the chamber of commerce, but was the information you got from the chamber of commerce good enough for you?
Not really because my biggest problem was, I just want to focus on doing what I do best, which is development. And when I looked at all the types, potential types of businesses that I could use, there where a lot of legal requirements, a lot of additional obligatory processes you need to go through I really wasn’t fan of.
There was a session held by the chamber of commerce where you had the opportunity to talk to other business people and some lawyers that were also there to discuss the types of companies you could use and they will provide you information about ok, you want to do this or you want to do that because this is the reason behind it. So I had lots of this kind of intermediate sessions and along with the documentation provided by the chamber of commerce, I was able to decide, ok, I go this way and not be bothered by it.
Ok, so, you started your own business, and then what? What are the most important things you should do when starting your own business?
The most important thing of starting your business is to find customers because if you don’t get any money coming in then there is no real use for a business. That is the major thing.
Because I’d already built some reputation while I was working for a company, it was sort of easy for me to find new customers. I already had like people saying: if you ever work for yourself, give me a call because that would be very interesting for us. So I did call these people and the first customers there where the small gigs you worked on and as you grew inside that role of running your own business, you get to see, ok: there is this monthly cycle where you need to be reporting your income, you need to collect all your statements, all your coupons, receipts and all that and just collect them and the first quarter of my business, because I have a accountancy degree, I decided to do my own taxes and all that, and it didn’t work out, because between when I graduated which was way back in the late nineties, and when I started my company in 2004, a lot of things changed legal wise and also procedural wise and all that, so right after my first quarter I jumped ship and said, ok, I need to have backup. And that was probably the best thing I could have done. Because now all I have to do is to collect my stuff and hand it over to my accountant and he will take care that all my tax filings have been done, that I paid the VAT in advance and all that, so I don’t really have to worry about anything anymore.
Ok, basically what you are saying is focus on the stuff you do well, and let everything else be handled by someone else.
Yeah, if you can, outsource it to other people, because your profession is development, that is what you know best. An accountant, his job is to do accountancy, he knows that job very well. The reason why people hire you is because you know your stuff very well, so why don’t you go seek an accountant, a lawyer and all those for all the additional stuff that you have absolutely no clue about.
Excellent, Excellent, that’s a very good tip. So now we talked about the things people should do when they start their own business. Are there things people should not do, that they should try to prevent?
Well, I’ve seen of people that said: ok, I’m gonna start my own business, because I will make a ton of money in a very short time. That’s not your expectation. When you start a business you need to have a long-term focus. You cannot assume that, ok I’m starting this business and all of sudden the money flows in. No, it’s going to be hard work, because you need to chase your own customers, you need to follow up on your customers, you need to make sure that your customers are happy when you provide them services. There’s a lot more to it than just doing your thing.
So the things you should not do is lie to customers. If you cannot make a deadline, be honest about that. They will respect your honesty and if you provide them directly with, ok, this is what I can do within the approved time frame, and this is what I can do in a later time frame, you provide them directly an alternative, they will appreciate that more.
Don’t be afraid to say no to customers. I mean, the biggest mistake that everyone does when they start a business is say, yes I can do this, yes I can do this, yes I can do this, and all of a sudden they are working 80 to 100 hours a week and have absolutely no time for family or friends or leisure because they couldn’t say no to customers.
As you run your business you will come to a point in time that you have enough work to do and you need to say no to customers and the best thing would be to provide like ok, I cannot do this for you but I know this guy that can do it for you, so you need to be able to reach out to business in the same field that you’re working on.
Ok, so it’s ok to say no, but if you can help them some way…
Yeah, if you can. That is my philosophy, I’m not able to help you, but won’t let you stand there in the cold. I want to help you getting the job done even if it’s not me that provides the service.
So that may even help you as well in the future because they will call you again because you might know someone.
Exactly, it’s all about long term vision. If you say no and you don’t provide alternatives, than that person will never be in touch with you again. What you need to do in any situation, even if it’s a very very bad situation that you need to walk way from, always leave with the door wide open. Because the tech industry by itself is a very small world. The manager that you talked to for company A that treated you really bad, might be working in a few months at company B that will call you for a very big contract. If you are making a fuss about conditions and whatever and you part from each other basically fighting, that manager at the other company will remember that, and you will loose that contract.
So always, in any kind of situation, leave the door wide open, for any kind of possibilities. And if you do this correctly you might have to walk away from a customer, and in other situations, that customer, two years, three years later, will contact you again, because you had the professionalism to leave the door wide open.
Right, Yes. So this is already one of the challenges that you will face, how to communicate with people even though it’s hard. Are there any challenges that you know, you’ve been running your company for quite a while, are there any challenges that you’ve met and how did you solve those?
Well, the biggest problem is getting your money. You provide your services, you provide good services, people are happy, you send them invoices and you need to wait until those invoices get paid. And you have a standard practice of ok, you need to pay this invoice in 14 days, 15 days, a month, maybe two months, and after 90 days you still don’t get that money. Don’t be afraid to say, ok I’m gonna call this customer and say: Listen, I’ve provided you these services and I’ve sent you this invoice. It might have got lost in all the other mailings that they receive. This can happen. Don’t be afraid to call them up and say: Hey, did you forget about me.
If they are still not responding, what you do is sent like a formal letter either through email or by snail mail, saying ok, this is your statement of open invoices, I would like to have these paid before we continue our services with your company. And if they still don’t reply to that, or they still don’t pay, then you sent them a formal complaint, and have it sent through courier so at least you have like proof that they actually received it, they need to sign off for that. And with that formal complaint you immediately apply a 12 percent rule.
The 12 percent rule is basically like, hey, I mean, I’ve done all I can to inform you about your late payment and you still don’t care about me. Now I’m going to charge like 12 percent on top of whatever open invoice there was just to remind you that I also have bills to pay.
Exactly, so that’s basically interest on the period that they didn’t pay that they should’ve paid.
Yeah, Cause if I don’t get the money, I need to go to my bank and loan the money and nowadays those short-term loans are very expensive so the 12 percent is basically the interest that you have to pay to the bank just to get that money.
Ok, so in the time that you’ve been running your business, have you ever had lawsuits over unpaid invoices?
No, no, i had one customer that went bankrupt, which had like an open statement for a couple of thousand euros. When your customer goes bankrupt, there’s a small chance that you will get some money, not all, but just a small amount, but basically after every major debt collector has passed, there’s nothing left for you, so we write it off.
Is there anything you can do to prevent stuff like this?
Yeah there are insurance’s, that you can have like ok, I have a company that is not paying and went bankrupt. You ask for the curator to provide you proof of the bankruptcy. You get like a formal statement also from the chamber of commerce of the bankruptcy. With that you go your insurance and say: Ok, this company went out of business these are the invoices that were still open, if you have an additional insurance for this kind of situations, your insurance company will pay up for the lost part.
Ok, ok, that’s clear. So now we have talked about some of the challenges and for some people the next topic might actually be a challenge, for most people I think, at least the people I know it’s not actually really a challenge, it’s more like a fun thing to do. What I want to talk about is how can you basically brand yourself. How can you build your image of you being the right type of person for the cool project you want to do. So how does that work? How do you do that?
Yeah, the thing is that I like to blog a lot, so on a personal level I blog about all kinds of stuff that are very interesting for the industry I’m working in, so that provides me a personal branding. And, starting your own business can make use of that personal branding to ride the wave the same way that you have to successes within the community. And if you build up that brand for you personally, and you do this in combination with your brand awareness of your company you can immediately benefit from it, because people will recognize you. Developers at companies will at least recognize your name because they have read an article or a couple of articles from you. If you provide like a podcast, webinars, you give book reviews, those are the things that put your name out there, and because your name is out there, it immediately connects with your business.
For instance, what people said to me, is that whenever there is a conference, they see my company logo at the conference. That’s because I try to do a lot of community sponsorships for conferences. It’s a low budget way for me to put my logo, my company logo, my brand out on every conference poster, email, whatever form of communication tool they use and I get that people will recognize it as a very important brand, so me being a very small company I’m standing between Microsoft and Github and all those other big names but I’m there, and that’s for me the most important part. And when you talk to people, the new people that I met here at PHP|Tek, they knew me not because they have spoken with me, but they knew my because everybody else has spoken about me.
So that’s an awkward moment where people say, yeah that person said I need to talk to you about this and this and this. So, for me my business completely relies on worth-on-mouth kind of advertisement. So I don’t invest a lot in putting adwords out or putting advertisement in magazines.
If you’re not that fortunate to be like an already established name within a certain type of industry, you need to go back and look at, ok, what are my options. I can use adwords, but most of the people I know aren’t seeing the effect of those adwords directly on sales. You can advertise in magazines, I mean, if you’re doing PHP development, you go to PHP magazine, there is a python magazine if you’re doing python. There is a ruby magazine for rubyist and so on. So every industry has it’s own type of magazine, or industry information brochure that’s been sent out to everyone that’s in that particular industry. And your most important thing is place your name out there, you need to put your brand, your logo, your business as a recognition item there.
So when people look at an apple with a piece out of it, everyone knows it’s Apple computers in Cupertino because that brand is omnipresent.
Yeah, ok. So aside from that, do you also, would you consider, contributing to open source projects or speaking at conferences is that also part of your branding?
Yes, of course. I mean, every time I’m doing a presentation at a conference, the first slide will be my business logo and at the end it will be my business account as a reference. So it is, you get to speak at a conference, use that opportunity to get your name out. If you speak at usergroup sessions, yes, get your name out. If you work on open source projects there are two things you can do. If it’s an open source project, you can do it under your own name, or you can do it under your business name, it all depends on how you want to have your business tied to that contribution. Also, I prefer to contribute under my personal name, I don’t want my business to be like, riding on the support of me contributing to open source projects. I’d rather have my business be part of that community because we sponsor usergroup session, we sponsor the conferences. That is how I want to have my brand out. Me, my personal interest is, I’m doing this because I want it to do, contribute and be part of that eco-system.
Ok. So I’m guessing you work on a lot of big projects. Do you work together, do you collaborate with other developers, other developers running their own business?
Yes, I mean that is also why I joined the Dutch Web Alliance, because especially in web application development, there is more than enough pie for everyone. For every job, for every senior developer or self-employed business owner, there are probably 7-8 positions out there, maybe even more, so there is more than enough work. And sometimes you want to collaborate just because the project you want to work on is so big you cannot just cope by yourself. You need additional people. Like I already said, it’s a very small world, doesn’t matter if you’re on an island or living in a dense city. You will always get in touch with the same people. No matter how you turn it. And in my believe, working together with these people gives you the benefit, because whenever you end it with the project and you need someone with a specialism on search engines, or on frameworks or on whatever kind of situation that you have, for you it’s only a call away because by the time that you end up in that situation you probably have the person’s phone number on the speed dial and all you have to do is call: hey I’m at this project and I need an expertise on this or this or this, are you able to help me out.
So how do you find people you can work together with?
Well, basically through the Dutch Web Alliance you already have a support group of business owners and professionals that already have proven themselves within the market, so you can rely on these people also when you work at other projects you work with other consultants you see how they operate you know what their capabilities are, and in that case you say: ok, I’m gonna call this guy the next time because it was fun working with this person.
Right ok, that’s very cool. So Dutch Web Alliance. This is, obviously this podcast is for Dutch Web Alliance, so most probably people know a bit about it, but could you maybe describe what the Dutch Web Alliance is and what the benefits are of being part of this?
The Dutch Web Alliance is an alliance of business owners: professionals that have created a business for themselves in order to provide their services to companies. Being part of the Dutch Web Alliance has the advantage because you get to know everyone, you know what their skillsets is, you know what their expertise is, and it gives you the opportunity to create a coalition with other professionals if you are hunting down these big projects. Or if you are working at a customer and all of a sudden there is an additional amount of work and you need to fill up that gap, it’s only a call away. That’s the big advantage of being part of the Dutch Web Alliance. Another big advantage is that through the Dutch Web Alliance, you will get to know other people’s vision on running business. So you’ll get to, get also feedback on, hey, it’s not just on a professional level for the industry that you’re working at, but also I got this situation in my business and you tell about this and then you say, I had this too and this is how I solved it, and solved it this way, I think your approach was better. So you learn from each other also to become better at running your business. So you have like two advantages in one package and that’s the reason why I love the Dutch Web Alliance.
Ok cool. So the Dutch Web Alliance is a group of people. So maybe there is somebody listening right now that is interested in joining Dutch Web Alliance, how would they go about doing that?
Well, the easiest way is that they would go to the DutchWebAlliance.nl website, and there is a contact form and use the contact form to inform the group about hey, I’m interested to become a member of the Dutch Web Alliance because you’ve been running a business. So provide a little of bit of background information so we at least know who you are and what you do and how long you’ve run your business. And then there is a internal voting system that will say, ok this person can come aboard or not.
So, becoming a member is not easy, because you have to prove yourself. So would it be easier if you already knew someone that is a member?
Knowing someone who is already a member does have the advantage yes, but because we do not know everyone that is out there. And it can be that you are a very good professional but we didn’t know you run your own business. We know you by name and we see your blogpost and we see your code on github and all that and see your projects everywhere, but we didn’t know that you run your own business. So it could be that you contact us, and that we say: oh, but I know this guy. So it is, like I said, it is a very small world, so sooner or later, you get to know most of the people that are working in that particular industry. So the chances are that if you’re already have created a name for yourself running your own business is probably something we don’t know that you did, but you as a person are probably one of those people very interested in working with.
Well, thank you very much Michelangelo.
Thank you for the opportunity to speak.
So I’m going to close this off. Thank you for listening this pilot episode. Please do leave feedback, we do want to know whether you liked it or not. Which parts you liked, which parts you didn’t like and also what topics you like us to cover if we’re going to do this more often.
Thank you bye bye!