Starting Your Own IT Company

1
Starting Your Own IT Company

• Group 9

Jennifer Mertens Marianne Doyle Aaron
Johnson Willie McGarry
2
Overview

• What is an Entrepreneur?
• Statistics
• Entrepreneurial Characteristics
• Skills an Entrepreneur Should Possess
• Starting a Business
• Interviews
• David Garthe
• Harry Brumleve
• Case Study
• Red Hat
• Comparison and Conclusion

3
Questions?

• How many of you have started your own business or
  currently own a business?
• How many of you hope to start your own business
  someday in the future?

4
What is an Entrepreneur?

• Coming from an entrepreneur himself, Bob Reiss
  says,
• "Entrepreneurship is the recognition and pursuit
  of opportunity without regard to the resources
  you currently control, with confidence that you
  can succeed, with the flexibility to change
  course as necessary, and with the will to rebound
  from setbacks.

http//www.thinkinglike.com/Essays/entrepreneur-de
finition.html
5
What is an Entrepreneur?

• A person who organizes, operates, and assumes the
  risk for a business venture.

http//www.thefreedictionary.com/entrepreneur
6
Statistics
7
How many businesses open and close each year?

• Starts and Closures of Employer Firms from
  2000-2004.

Category 2000 2001 2002 2003 2004
New Firms 574,300 585,140 569,750 553,500e 580,900e
Firm Closures 542,831 553,291 586,890 572,300e 576,200e
Bankruptcies 35,472 40,099 38,540 35,037 34,317
http//www.sba.gov/advo/stats/sbfaq.pdf
8
What is the survival rate for new firms?

• Two-thirds of new employer establishments
  survive at least 2 years, and 44 survive at
  least 4 years, according to a new study.
• Major factors in a firms remaining open include
  an ample supply of capital, the fact that a firm
  is large enough to have employees, the owners
  education level, and the owners reason for
  starting the firm in the first place, such as
  freedom for family life or wanting to be ones
  own boss.

http//www.sba.gov/advo/stats/sbfaq.pdf
9
What role do women and minority entrepreneurs
play?

• 66 of all home based businesses are owned by
  women.
• Today, 4.7 million women are self-employed in
  the United States. This represents a 77
  increase since 1983.

http//www.sba.gov/advo/stats/sbfaq.pdf
10
What role do women and minority entrepreneurs
play?

• Of the 23 million firms in 2002, 6.9 percent
  were owned by Hispanic Americans, 5.2 percent by
  African Americans, 4.8 percent by Asian
  Americans, 0.9 percent by American Indians and
  Alaskan Natives, and 0.14 percent by Native
  Hawaiian and other Pacific Islanders.
• In 2002, minorities owned 4.1 million firms that
  generated 694.1 billion in revenues and employed
  4.8 million workers.

http//www.sba.gov/advo/stats/sbfaq.pdf
11
Top 10 Cities For Entrepreneurs

• Minneapolis
• Norfolk/Virginia Beach/Newport News Va.
• Washington D.C.
• Atlanta
• Miami

• Fort Lauderdale, Fla.
• Charlotte/Gastonia/ Rocky Hill, N.C.
• Salt Lake City
• West Palm Beach, Fla.
• Orlando Fla.

Journal of Accountancy Source
Entrepreneur and DB, 2003
12
Entrepreneurial Characteristics

• A Good Match
• Outside the Norm

http//www.startupjournal.com "Are You Qualified
To Be an Entrepreneur"
13
Entrepreneurial Characteristics

• A Good Match
• Self confident
• Multi-skilled
• Innovative
• Results-Oriented
• Risk taker
• Committed

http//www.gdrc.org/icm/micro/define-micro.html
14
Entrepreneurial Characteristics

• A Good Match
• Children or grandchildren of immigrants
• Relationship with key breadwinner in the family
  is competitive
• Complete a college degree
• Get fired from several jobs Dislike working for
  others

http//www.startupjournal.com "Are You Qualified
To Be an Entrepreneur"
15
Entrepreneurial Characteristics

• Some of the most often found qualities in
  successful entrepreneurs are tenacity, leadership
  skills and the ability to adapt to unexpected
  developments.
• Some argue that although personal traits are
  important, they do not necessarily determine why
  someone becomes an entrepreneur.

"Mastering the Entrepreneurial Life Cycle"
16
Entrepreneurial Characteristics

• Outside the Norm
• Some people think in order to be entrepreneurial,
  you have to start your own company but this is
  not true.
• Buy Companies
• Inherit Companies or take over for a founder.
• Work within large corporations, starting new
  ventures that spin off.

http//www.startupjournal.com "Are You Qualified
To Be an Entrepreneur"
17
Skills an Entrepreneur Should Possess

• Focused
• Have a Vision
• Are Leaders
• Persistence and Passionate
• Have Technical Skills
• Flexible

http//ezinearticles.com/?Critical-Entrepreneurial
-Skillsid84877
18
Skills an Entrepreneur Should Possess

• Organized
• Strong Work Ethic
• Good Decision making ability
• Trustworthy
• Determined
• Healthy

http//www.geocities.com/mengle98/Ch1/page2.html
19
Before You Start

• How well do you qualify to be an entrepreneur?
• http//www.liraz.com/webquiz.htmq10
• Go through a checklist similar to this one
• http//app1.sba.gov/survey/checklist/index.cgi

20
Before you start

• You need a strategy
• Every business strategy needs to have the
  following elements
• Arenas where will we be active?
• Vehicles how will we get there?
• Differentiators how will we win in the
  marketplace?
• Staging what will be our speed and sequence of
  moves?
• Economic logic how will we obtain our returns?

http//proquest.umi.com/pqdweb?did105262864Fmt4
clientId45249RQT309VNamePQD
21
Getting Started

• 31 Tips to face your fears and get started
• Most startup articles focus on the mechanics of
  launching a business. But the inner journey to
  starting a business is just as important as
  writing a business plan and getting financing.
• Suzanne Mulvehill

http//www.entrepreneur.com/article/0,4621,320394-
1,00.html
22
31 Tips

1. Say yes to your yearning.
2. Start a journal.
3. Write down your goals
4. Visualize your success.
5. Create and read affirmations
6. Evaluate your beliefs
7. Do what you love
8. Do something different every day
9. Act "as if.
10. Go out and scare yourself.
11. Spend time in nature
12. Accept all your feelings.
13. Finish unfinished business.
14. Get educated.
15. Accept and believe compliments.
16. Acknowledge your gifts.

http//www.entrepreneur.com/article/0,4621,320394-
1,00.html
23
31 Tips

1. Give up excuses
2. Eliminate "I can'ts.
3. Accept confusion
4. Know there is no "right" time
5. Start small
6. Say no when you mean no and yes when you mean
   yes.
7. Resist self-judgment
8. Stay out of overwhelm.
9. Expect resistance.
10. Answer your "what ifs.
11. Practice patience.
12. Overcome the "not good enough" syndrome.
13. Ask for help.
14. Trust your instincts.
15. Treat yourself with tlc.

http//www.entrepreneur.com/article/0,4621,320394-
1,00.html
24
5 Mistakes Entrepreneurs Make

• The best way to succeed is simply to avoid
  failure.
• To avoid making mistakes Entrepreneurs must
• Examine the 3 Ts
• Time
• Temperament
• Talent

Five Mistakes Entrepreneurs Make Jim Stovall.?
Accounting Technology?CPA Wealth Provider Best
in Show?BostonOct 2005.? p.?18-19?(2?pp.)
25
5 Mistakes Entrepreneurs Make

• Find his/her market niche
• I never perfected an invention that I did not
  think about in terms of the service it might give
  others I find out what the world needs, then I
  proceed to invent.-Thomas Edison
• Have ample financing
• Be ready to do everything by themselves
• Understand the amount of time and passion it
  takes to be successful

Five Mistakes Entrepreneurs Make Jim Stovall.?
Accounting Technology?CPA Wealth Provider Best
in Show?BostonOct 2005.? p.?18-19?(2?pp.)
26
Getting Started

• This website helps you get started
• https//www.sos.mo.gov/

27
Interviews David Garthe Harry Brumleve
28
David Garthe

• Age 33
• Single
• From Ballwin, Missouri
• University of Missouri-St. Louis
• B.A. in Finance
• Minor in Partying

29
David Garthe

• Watlow Electric, Inc.
• Started in Accounting, then IT
• Net Assist Temporaries
• Providing temporary Network Specialist
• CareerConnection.com
• Similar to Monster.com
• Used by many Fortune 500 Companies

30
Garthe Corporation

• Garthe Corporation
• Incorporated in 2000
• Initial Business Plan
• Create websites that provide advertising value to
  casinos
• Sell advertisement to Casinos
• It was easy then (dot com boom)

31
Garthe Corporation

• Time Management
• 15 Sales, 25 Admin, 60 Projects
• Results of Initial Business Plan
• Very Profitable until dot com bust
• Clients changed after bust
• Sold off sites to fantasy sports group.

32
Garthe Corporation

• Refined Business Plan
• Create websites that provide subscription-based
  services
• ConnectMe.com
• Refined Time Management
• 50 Marketing, 15 Admin, 35 Projects
• Results
• Closed site after legislative issue with State of
  Missouri
• Next initiative already on the way

33
Business Resources

• CPA
• Protect yourself from IRS
• Save money in unexpected places
• Guide through financial planning
• Attorney
• Assist with incorporation

34
David Garthe

• 8 Must-have Traits of an Entrepreneur
• Ability to work, work, work
• Ability to read people
• Ability to listen
• A good business plan
• Financial Stability
• Love and belief in offered product
• Never think you are smarter than customer
• Accountability

35
Harry Brumleve

• Age 32
• Single
• From Ballwin, Missouri
• University of Missouri-Columbia
• B.A. in German
• B.S. in Computer Science

36
Harry Brumleve

• GA Sullivan (Avanade)
• Worked as Jack-of-All-Trades
• The perks were small
• Tellabs
• Worked on telephone exchange system
• Worked here for the big money
• Cambridge Business Partners (Novell)
• Worked on commerce logistics architecture
• 20 of all Logistics dollars spent

37
Harry Brumleve

• Started Jet Engine Consulting in 2003
• Himself and a partner
• Formed once they had clients
• Did work for National Parks Dept.
• Wanted to get into consulting
• Was tired of working for the big firm
• Mergers
• No direction in accomplishing goals

38
The Business Plan

• Two part Business plan
• Consulting A partner and himself
• Invest time and effort
• Produce superior customer service
• Solve people problems
• Help companies become more efficient
• Create a name through good PR

39
The Business Plan

• Product Enterprise Service Bus
• Incubation period tied into consulting
• Work out the bugs
• Develop a relationship through product
• Consume product and make money
• Let mature and take to market

40
Harry Brumleve

• What is an Entrepreneur?
• Career must be Humanistic
• Help solve people problems
• Had two mentors
• One was in computer science
• No such thing as a one time deal
• Invest to provide better service
• Not afraid to turn jobs down

41
Harry Brumleve

• How have things worked out
• Consulted for Accenture
• Worked on eDemocracy software
• Currently Consulting for Botanical Gardens
• Writing classification software for Botanists
• Consults 35-40 hours a week
• Works on product 30 hours a week
• Travels 4-5 times a year
• Owns his home
• Has money invested

42
Red Hat
43
The Beginning

• Marc Ewing
• Carnegie Mellon University
• Started company after graduating from college
• Couldnt afford 10,000 Unix workstation
• Decided to use Linux because it was free
• Bob Young
• University of Toronto
• Ran a distribution company for Unix products

www.salon.com
44
The Beginning

• Marc Ewing created a Linux development business
  to accomplish a specific task
• He decided there was more potential in developing
  Linux and dropped his project
• Bob Young was enamored with the concepts of open
  source and free market
• He saw the potential in Linux and begun
  distributing it through a catalog company

www.salon.com
45
Coming Together

• In 1994, Ewing released the first version of Red
  Hat Linux
• Young bought 350 of the 500 copies Ewing had
  planned to print
• Young decided he wanted to be more than a
  distributor and Ewing didnt want to do all of
  the business stuff

www.redhat.com
46
Coming Together

• In 1995, Bob Young bought Ewings business,
  merges it with his company, and names the company
  Red Hat Software
• Red Hat Linux 2.0 is released the same year
• Red Hat is able to secure the number one brand
  name in the business

www.salon.com
47
Company Profile

• Their mission
• To be the defining technology company of the
  21rst century
• 980 employees
• Publicly Held Company as of 1999
• Eighth biggest first day gain in history
• Headquarters
• Raleigh, North Carolina
• 27 Worldwide offices

www.redhat.com
48
Company Profile

• They surpassed Sun Microsystems in share price in
  2002
• In 2003, posted a profit for the first time
• It is announced that Red Hat ranks among the top
  ten software companies in gaining share of IT
  dollars (2004)

www.redhat.com
49
What They Have Done

• It is estimated that Red Hat holds 70 of the
  worldwide global Linux market share
• Amazon.com is able to reduce technology costs by
  25 by using Red Hat (from 71 million to 54
  million)
• Acquired AOLs Netscape software for around 25
  million

www.redhat.com
50
What They Have Done

• Released Red Hat Desktop 3 which is their first
  dedicated desktop product.
• Have entered into a partnership with IBM, Sony,
  and Novell to take on Microsofts dominance of
  the market (2005)
• This partnership is buying up Linux patents to
  control cost and control market share

www.redhat.com
51
How They Did It

• Bob Young was never a computer guy, but he was
  fascinated by open source and believes in a free
  market
• He saw opportunity with Linux when others just
  laughed
• Marc Ewing found something that worked better and
  focused on it
• They both took chances

www.redhat.com
52
Overview

• What is an Entrepreneur?
• Entrepreneurial Characteristics
• Statistics
• Skills an Entrepreneur Should Possess
• Starting a Business
• Interviews
• David Garthe
• Harry Brumleve
• Case Study
• Red Hat
• Comparison and Conclusion

53
Overview

• Comparisons
• Clearly defined plan
• Adapted to continuously changing
• environment
• Vigorous implementation
• Sound technical skills

54
Questions