Turning Your Former Employer into a Client
You could be sitting on a gold mine if you are contemplating leaving your present employer and starring your own business. That potential gold mine is right under your seat, so to speak your current employer. Small business experts agree that emerging entrepreneurs who wish to start offering goods and services in the industry where they are currently employed should look to their present employer as their first stop when seeking clients.
“I would advise anybody, the first call you make should be on your former employer,” says Ralph Gilliland, former manufacturing business executive, now a Service Corps of Retired Executives (SCORE) counselor based in Chicago.
“That’s completely above board and generally speaking, unless you left on bad terms, they are going to want to buy from you or want to use your services. They know you understand what their business needs. And you are probably going to be able to do it cheaper for them working as an outside, independent contractor than as an employee.”
And converting employees to independent contractors is a growing business trend, observes National Association for the Self Employed (NASE) “Shop Talk Hotline” consultant Gene Fairbrother. “It’s a good financial move for them. It goes right along with telecommuting,” Converting employees to independent contractors means the employer no longer is concerned with the costs of office space, computers, benefits, utilities, tax issues and administration. All in all, it can make for a pretty good case for converting w telecommuting and a great rationale for the budding entrepreneur to get started.
Things to Consider
So what should you do first when considering approaching your employer as a customer? The experts advise mat you do your homework. Look at the pros and cons of the situation, says SCORE counselor Tom Woodworth of North Olmstead, Ohio. The advantages to the employer are clear. “First, the former employer would certainly have a clear understanding of the skills, strengths, and weaknesses of the former employee,” Woodworth says.
“Second, the former employer would also be confident that the former employee would know the details of the industry such as market conditions, product or service offerings, competition and customers.”
Woodworth also advises would-be entrepreneurs to do a cost analysis, considering advantages and disadvantages on both sides. Can you provide a comparable service or product at the same price or less than the current source? Once you have figured out how much you are going to charge, will that price cover your own costs as an entrepreneur? Once you have settled the cost question, can you make a case for it in your presentation?
Knowing the prospect’s needs certainly helped Kenneth Wilson. Wilson is president and CEO of Wilco Information Management, Inc., an IT consulting and training firm in Warrensville Heights, Ohio. In business since 1984, Wilson always aspired to be his own boss and began his career with this goal in mind. He worked for Blue Cross/Blue Shield, Eaton Corporation and Cleveland State University with titles such as programmer, programmer analyst and senior analyst. He then spent time working for a startup consulting firm before going out on his own.
He approached Eaton two years after starting his business. “I found out that a lot of the same people were there who had worked with me,” Wilson says. At that time Eaton was revising its business model. “They wanted more flexibility … so they went to a contractor model,” Wilson says. “They reduced their full-time staff and then the majority of the information technology programming and so forth they contracted out. So I caught them at a good time.”
It was indeed a very good time. When he made his pitch, Eaton’s executives were already aware that Wilson knew the company and its needs. “They’ve been a client of ours for twelve years now,” he says.
All of our experts agree that if you are going to offer goods and services in the same industry, your best opportunity for research is within your immediate reach. That research should then be part of your overall planning for your new venture.
“When you get the idea, don’t just run out the door,” Fairbrother says. “It takes some planning.”
As an entrepreneur who has served many of his former employers as a consultant, Fairbrother says planning to approach a former employer should be done in the same way you would cold call any potential customer.
“Remember, you’re going to have to go before someone in the company and do a presentation,” he says. “If you can’t act like a business owner, you won’t get the job or opportunity. Learn how to run and structure your business.” Next, you have to find out what your potential customer’s needs are, define the key players, get a champion and test the waters. That’s where being on the inside gives you an advantage.
Being on the inside really helped Ted Jordan, principal of The Jordan Team Computing, LLC, which specializes in Linux and Unix training, disaster recovery service and network security, and computer sales and service. An entrepreneur at heart, Jordan always kept some sort of side business going even as he worked for corporations such as General Motors (GM) and Silicon Graphics, Inc. (SGI).
Jordan left GM to go to SGI where he learned his craft and saved his money. In 1996, he made a move to a virtual reality startup business in which he used Silicon Graphics computers after SGI merged with Cray Research. “When I went to the startup, I told [SGI] exactly where I was going,” Jordan says. “They knew the company I was going with and the guys who were starting it up.” The company became an SGI re-seller, which fit into SGI’s emerging corporate practice of closer relationships with re-sellers.
But the market was not ready for virtual reality. For a short time after his experience with the startup, Jordan went back to work for a company in Cleveland. About two years later, more eager than ever to begin his own business, Jordan chose his quit date. “Earlier that year I started contacting people I knew at Silicon Graphics, telling them ‘I’m going out on my own’ and [asking] ‘Do you guys need any help with training or design?’ ” he says.
A former mentor had become a corporate training manager and gave Jordan a chance. So for his first contract, Jordan was chosen to train users on IRIX (an IX-based operating system exclusive to SGI computers) around the world.
And if you are seriously contemplating a move like this, don’t forget the ethical issues. Fairbrother cautions emerging entrepreneurs about access to and the dissemination of confidential information.
“You don’t want to go nosing around and get proprietary information and then go in and make a presentation [and] have your prospective client say, ‘How did you get that information?’ Now you have put yourself in a distrustful situation. And the company will say, ‘I don’t think we want somebody like you around,'” Fairbrother says. He advises the use of strictly common knowledge when making your presentation.
Creating lasting and positive relationships is the biggest key to creating future business with a former employer. Jylla Moore-Foster is president and CEO of Crystal Stairs, Inc., of Chicago, a company that provides executive and technical coaching and training. On her own for four years, Foster formerly worked 22 years, both domestically and globally, for IBM in areas that include sales, marketing, support, operations and channels. IBM is now one of her best clients.
Foster left IBM when she ceased to get opportunities that led to personal growth. Although she left the company without a formal plan, she advises others to be a bit more diligent when deciding to make a leap. “For those who are looking to do that today, I urge them to cautiously plan as far in advance as possible so they can orchestrate a lot of the learning and nurture the relationships inside,” Moore-Foster says.
“One of the things I think was extremely critical for me surrounds the relationships I had inside of IBM as well as those I had built externally,” she says. She advises would-be entrepreneurs to not “burn bridges” and “reach out to those who valued your relationships while inside. Also appreciate and understand, once you communicate what you are now focused on, the value of the continued relationship you can develop.”
Black IT Professional 2004
Photo Credit: www.greenbookblog.org
The New Entrepreneur in the Global Economy
The concept of a new global economy has been bantered about like the coming of the Messiah. With the advent of new technologies that increase both customers and competition, talk in the business arena today is less about preparing for this new environment and more about navigating through it. Entrepreneurship is a mainstay of the American culture and the foundation of our economy. While that is not news, carving out a path in an economy changed by technology creates new challenges for entrepreneurs. Being successful today means understanding the environment and the rules of the game.
Entrepreneurship in the New Economy
Entrepreneurship is responsible for about one-third of the difference between economic growth in the United States and other nations. In the U.S. about 600,000 to 800,000 businesses are started each year. About 5 to 15 percent of America’s approximately six million businesses create the majority of new jobs. “I think there is a greater appreciation of the importance of entrepreneurship,” says Charles Burkett, Jr., director of Minority Assistance/Innovest, Presenter/Coordinator for Enterprise Development, Inc. (EDI), part of the Weatherhead School of Business at Case Western Reserve University in Cleveland, Ohio. EDI is one of 90 university-based entrepreneurial programs in the country.
“The willingness to take risks and do things in a different way in search of an advantage or growth opportunities is really what makes the climate different,” he observes. “With rapid changes in technology there’s more of a recognition that smaller organizations can be more nimble than large organizations.”
According to figures from the U.S. Small Business Administration (SBA), 95 percent of all radical innovations are attributable to small businesses. Small businesses have created some of the 20th century’s most revolutionary industries: the airplane, the heart valve, the helicopter, the high capacity computer, soft contact lenses and prefabricated housing. “Today is probably one of the most unique business environments entrepreneurs will ever face,” says Robert Hisrich, Ph.D., Chair of Entrepreneurial Studies at the Weatherhead School. Hisrich, who holds the Mixon Chair of Entrepreneurial Studies, teaches in the school’s MBA and Ph.D. programs. His best-selling book “Entrepreneurship,” (McGraw-Hill) has been translated into nine languages. “In terms of capital markets, there is more capital available for investing in start-ups, as well as ventures in the growth process,” says Hisrich. “And yet because of the problems and losses people incurred from financing in the dot.com companies, there’s more caution than ever before. This situation requires that entrepreneurs today have very solid business plans that show sales and profits will occur in a timely manner once the investment is received.”
New Economy Market Factors
Entrepreneurs starting out in the new economy have a number of factors to consider. The value of a company is measured by its intangible assets, like people and ideas. People who can deliver smart ideas are becoming invaluable, changing employment and management methods. Real-time adaptation to changes in the marketplace is crucial, as growth is accelerated by rapidly spreading product awareness. Today, it’s simpler and more profitable to customize information products to suit consumer demand. Additionally, the processes for marketing, sales, and fulfillment are merging.
“I started back in 1975 in this industry,” says Tom Harrington, president and CEO of Thomas Harrington and Associates, a Midwestern insurance and financial services firm. “Technology was just beginning to make an impact in the industry. Today’s technology has put me in a position where I am in front of a lot more people than I could have been in 1975. I can service them a lot more efficiently, including simple requests like a person wanting to make a withdrawal from an annuity. In 1975 that was an eight to 10-week turn around process. Today, I can do it in 48 hours.”
“Embrace the technology,” Harrington advises new entrepreneurs. “Become a part of a network or join an incubator to help your business grow, because it’s tough. And it’s a little bit tougher today if you are not prepared to embrace technology.
The Dot.com Debacle
The NASDAQ crash of 2000 made both aspiring entrepreneurs and potential investors cautious. Many dot.com failures were due to poor planning, coupled with enormous start-up costs. Add to that millions of Web sites trying to sell to a Web-ready customer base of less than 20 percent of the potential market, and you have a recipe for disaster.
“Basically, what they did was underestimate the power of the adoption curve,” says Demo Solaru, president and CEO of MCGiX. The Beachwood, Ohio-based application services provider caters to the social services industry and was the first of its kind in the nation. “The Internet is here to stay. Buying and selling over the Internet will probably be more commonplace 10 years from now. We will have more of an adjustment by the bricks and mortar and more of a balance with information. So if I want shoes in a certain size and style, I look it up on the Internet to see what store has them. Or I reserve it, and when I get there they attend to me quicker. It will become the kind of balance that we are really seeking from this tool.
“So if you’re coming out,” he advises new entrepreneurs, “do a careful survey of where people are with your kind of service, what are they going to buy, the kind of delivery they prefer, how much are they willing to pay?”
Where to Go from Here
So where do you look for solid opportunities in today’s economy? Says Hisrich, “If I were starting a business today, one of the areas I would definitely look at is this new outsourcing phenomenon because you have ready-made customers. That, plus the capital today, makes it a great opportunity to start firms because of this need by the investors for recognition of sales and profits in a timely manner. The outsourcing market is one that would give them more comfort that you can achieve those sales and profits.”
Hisrich suggests keeping abreast of changes in governmental regulations. One of his students started a successful industrial safety supply company after OSHA mandated first aid kits on the manufacturing floor. Hisrich also advises monitoring competitor activities and distribution systems. “Oftimes changes in distribution systems or new product launches offer new opportunities,” he says.
“The best way to find opportunities is to find problems that haven’t been solved yet,” says Michael Horvath, Ph.D. Horvath is associate professor of Business Administration at the Amos Tuck School of Business at Dartmouth College. “Find some real pain your customers are having that only you can provide a solution to. It’s always good to start with what you know best in an area.”
Horvath teaches in the Minority Business Executive Program and Advanced Minority Executive Program (MBEP/AMBEP) for small businesses, and in the school’s Strategic Minority Business Growth (SMBG) program for larger businesses. He taught economics for six years at Stanford University and was cofounder of KANA Software Company.
Hisrich predicts that the next economic boom with enormous entrepreneurial potential will be in the areas of biotechnology, telecommunications, and travel and leisure. Horvath suggests health care services, and Internet business support sen1ices. Others see potential in family- related goods and services, particularly for minorities, like children’s wear and childcare services.
Whatever the field, Horvath advises against fence sitting. “At some point you have to get out of the planning stage and into execution,” he urges. “The best way to do that is to get a few people willing to be ‘beta test partners’ and help you iron out all the bugs in whatever business you’re trying to run.” These brave souls can also provide references to help find new customers and get financing. “You have to go out and sell your services or product to somebody to be credible.”
Yvette Moyo is president and CEO of Resource Associates International. Her organization is responsible for the creation of “Real Men Cook for Charity” and the twice-yearly Marketing Opportunities in Business and Entertainment (MOBE) conferences.
“I would recommend you build something you can be creative and stay passionate about,” she advises aspiring business owners. “Because as the market changes, if you have your passion and your basic structure, and if you haven’t thrown away all of the rules of integrity and honest dealings, then you have the ability to rebuild. You just have to go back to the basics.”
Black MBA Magazine 2001
Photo Credit: www.sage.com
Cleanups are a Family Affair at Alpha-Omega Environmental
Along the hallways of Alpha-Omega Environmental Company, the air seems to hum with subdued activity. Amid the instruments of the company’s trade-mass spectrographs, gas chromatopographs, plasma units, and atomic absorption spectrometers-white-coated employees set about their tasks with quiet efficiency. The company’s president and CEO, George Jackson, Sr., Ph.D., and his staff work together to identify and remediate environmental damage caused by pollution.
Alpha-Omega is a full-service company offering a wide variety of environmental cleanup activities, with about 6,000 square feet of lab and office space in a southeast Cleveland facility. With annual revenues of more than $3 million, the company performs chemical analyses and remediation of soil and water; underground storage tank removal and upgrading; asbestos identification and abatement; and lead identification and abatement. The company also installs, operates, and maintains environmental treatment facilities.
“We believe we have the scientific acumen that allows us to do more than UST (underground storage tank) work. Because of all the activity in underground storage tank removal, everyone with a backhoe is saying they can remove underground storage tanks,” Dr. Jackson says. “We possess the expertise not just to remove tanks, but to provide the required environmental consulting services, so clients can get it all in one place.”
Dr. Jackson began his business after a 24-year stint as a chemist with Union Carbide, using his own funds after taking an early retirement. Like many successful smaller enterprises, Alpha-Omega has been through a number of incarnations: as a formulator of non-aqueous, biodegradable cleaning components; then as a distributor of fuels and lubricants; also as a distributor of wholesale pharmaceuticals and medical supplies. In 1986, when the company got involved in asbestos abatement, Dr. Jackson realized the coming trend for small businesses in the chemical industry was environmental cleanup. Having worked in industrial hygiene while with Union Carbide, he decided to give that direction a try.
The company began full-scale asbestos abatement operations in 1988, and expanded its services to include underground tank removal in 1989. Since then, Alpha-Omega has performed a variety of environmental cleanup projects that also involved soil and ground water remediation.
Alpha-Omega encompasses a broad range of skills among its 30 employees, whether they are chemists, equipment operators, engineers, technicians, or mathematical modelers. As a June graduate of the Small Business Administration’s 8(a) minority set-asides program, Alpha-Omega has successfully performed on contracts in sixteen states in the Midwest and on the Eastern seaboard for federal agencies, such as the Coast Guard, NASA, the Environmental Protection Agency, the Navy, the Air Force, and the Army Corps of Engineers.
Dr. Jackson credits his company’s 8(a) experience for its continued prosperity. “We did all the underground storage tank removal for the Coast Guard’s district nine, which is around Lake Erie, Lake Michigan, Lake Huron and Lake Superior,” he says. ”We did the same thing for all of the Coast Guard’s district two (the Eastern seaboard).” Upon graduation from the program, Alpha-Omega was awarded a four-year, operation and maintenance contract on a major water cleanup project with the Coast Guard in Traverse City, Michigan.
Unfortunately, unforeseen snags and snafus on jobs come with the territory in a construction oriented business, such as environmental remediation. The company is no stranger to unexpected complications on projects, though those experiences helped make the company stronger in the long run. For example, a straightforward asbestos abatement project turned out to be not so straightforward, and it ended up costing Alpha-Omega $100,000 in cost overruns. As Dr. Jackson learned from the experience and from others in the field, “You really do need to build a cash reserve just to cover yourself if, despite your best efforts, a project goes south and turns into the project from hell.”
A key factor in Alpha-Omega’s performance is its family connections. Two important team members are Dr. Jackson’s daughter, Lynn Jolly, manager of operations, and son, George Jackson, Jr., vice president of the company. Ms. Jolly is an experienced administrator, having previously worked for the American Sickle Cell Anemia Association, the former AmeriTrust bank, and two Cleveland radio stations. The younger Jackson, known as J.R. around the office, handles the company’s sales and marketing as well as computer information systems.
Under J.R.’s direction, the company has been very active in moving into electronic commerce, known as electronic data interchange (EDI), and Internet marketing. “As a small company, we feel we are right in step with the changes taking place with the way business is being done today,” says the younger Mr. Jackson. “We are developing a Web site and are encouraging employees to conduct business using e-mail and the Internet whenever it’s a practical alternative. Because we’ve been primarily government contractors, and the government has been requiring all its vendors to move towards paperless transactions and EDI, we’ve become fully EDI capable.”
J.R. Jackson came back to Cleveland after working in Atlanta, where he built a career in sales and marketing with businesses such as The Atlanta Journal Constitution newspaper, and GTE Directories Corp. He is also the former editor of Clubdate, a Cleveland entertainment and lifestyle magazine. Now, he is living out his fondest dream –– working with his father. “When my father started this business, I always hoped I would be able to join and grow into it. But I never took that as a guaranteed thing.” A serious taskmaster, Dr. Jackson never gave his son special treatment, he says. “My father is very tough. When I came here he started me at the very bottom, and I took an enormous pay cut. But I really appreciate working here because I get to be with my father on a day-to-day basis and help him to build something we hope will last several generations.”
Dr. Jackson’s work ethic is also an important factor in employee morale and efficiency. “One thing I’ve heard from employees is that it doesn’t feel like they’re working for a typical family business,” says the younger Mr. Jackson. “I believe that’s because our family has done a very good job at separating family issues from business issues, and not letting the family dynamic come to bear in the business world.”
As he looks toward the future, Dr. Jackson envisions a kind of role reversal with his son. “It is apparent that since we left the 8(a) program, we need more markets,” he says. ”I’m going to go out and do more selling (in the private sector), marketing, and follow-up because I believe people will buy my expertise.” Dr. Jackson plans to give his son more responsibilities on the operations side so the business can run efficiently while he is on the road.
Despite the nature of their work, or perhaps because of it, the Jacksons have a real commitment to their community. “We are always looking to work with other minorities,” J.R. Jackson says. “We purchase from minorities whenever we can. And we are certainly interested in hiring minorities, particularly environmental engineers and environmental scientists. Certainly we want to be of service to the general community, but we also feel we have a responsibility as a minority firm to try to answer the needs of the minority community as well.”
That responsibility includes involving the community with environmental cleanups in urban areas. “We feel it is important to have minority firms like ourselves participating in those types of cleanups, since it’s mainly the minority community that has suffered from urban contamination,” Mr. Jackson says. “Also it’s important to make sure there are systems in place whereby the people who have lived in those communities have a chance to be trained and get jobs in the cleanup process.”