This is the next installment in an ongoing series where I talk about my history in business, starting all the way back when I was a child to now, my mid-forties. Feel free to read parts zero, one, two, three, four, five, and six if you haven’t yet to get some context.

We last left off when I had, finally, just quit my last corporate job and started my own business full-time…

October, 1996

After walking out of the corporate world as an employee for the last time in my life, I was finally there, a full-time business owner at age 24. I was so excited to get my full-time computer consulting business started that I could barely contain myself. Because of this, I immediately started making mistakes, though I would not be able to identify these mistakes until years later.

The first mistake I made, though it was a fun mistake to make, is that I actually rented an office. I could have just as easily started the business out of my home, but I was both excited and inexperienced. My false Societal Programming told me that a “real” business needed a “real” office.

Stupid.

I rented a small office in the cheaper part of downtown Portland, Oregon. The office was on the second story of an old house that had been remodeled into shitty little offices for artists, since artists were the only ones poor enough to afford these crappy offices. I was the only non-artist in there of course.

There was no parking, meaning you had to parallel park on the street, often several blocks away. Not fun when you’re carrying computers and servers. There was also no elevator; fine if you were an artist or attorney, but for a computer guy regularly carrying heavy computers and servers to and from your office (computers were really heavy back in 1996), not good. I definitely had not planned ahead.

I didn’t care. At least not yet. I was too excited.

I used an old scuffed-up desk that my dad was going to throw away and bought two cheap folding tables from Costco. I then made my second mistake; I purchased a very expensive laptop and my own server. I figured, again incorrectly, that since I was a computer consultant I “needed” to have the “best” laptop and my own server. I borrowed several thousand dollars to buy this equipment and ended up rarely using either one. Man, I was a dumbass.

All of this would bite me in the ass later.

For my next mistake, I allowed a friend of mine at the local chamber of commerce to talk me into buying an actual phone system for the office. All I needed was a single, cheap phone line for both voice and internet (we had dial-up internet back then), but I was an excited, young dumbshit, so I purchased an expensive, small-but-fancy multi-line phone system thinking I would need it “someday” (which I never did).

Despite a decent amount of book knowledge about business, I was completely ignorant of the core maxim of brand new businesses: cash flow is king. Low monthly cash in (income), with higher monthly cash out (expenses) is what kills new businesses. It’s what causes most guys to eventually throw their arms in the air in defeat and go back and get a corporate job.

Your goal should instead be as cheap, cheap, cheap as humanly possible when you start a new business. I would, later in life, go on to start multi-million dollar companies with just a laptop, but again, I didn’t know this at the time.

Instead, I was stupidly increasing my debt (meaning monthly loan payments) and needless business expenses that jacked up my monthly payments, making it that much more difficult to get the business needed to stay in business. Loans on my computer equipment, payments on my phone system, my monthly office rent, not to mention the gas of driving 35 minutes one-way to and from my office every day when I could have just worked out of my home. Stupid.

But exciting! I didn’t know any of this was stupid yet. I was just pumped to be a business owner.

Then I started doing things correctly.

I worked fast. It only took me about a week to get everything in place, and then I started cranking.

I whipped up a spreadsheet where I calculated what I minimally needed per month, added a hunk for taxes, then divided it by $50, which was my standard hourly rate for computer consulting work at the time. That was my next mistake: charging by the hour instead of a retainer or flat fee projects. Later, this hourly rate would make me a lot of money while simultaneously blowing my brains out with stress and overhead.

I calculated the number of billable hours I would need on average per week. I forget what the number was, but I think it was about seven. If I could get seven billable hours per week, I could at least breathe a sigh of relief that I could stay in business. Then I would worry later about making big money. I already had about two (I think) of those hours (on average) covered by my existing part-time clients, so that meant I needed more clients to fill up those remaining five hours. And I needed them NOW.

I wasted no time. I got on the phone and told all of my current clients (what few I had) plus several of my old clients that I was looking for more companies that needed help with their computers. I told my parents and uncles and other local family members the same.

Out of all these calls, I got one new client, and a small one at that.

Crap. Not enough.

Next, I sat down and brainstormed a list of literally everyone I knew and had ever known. I don’t remember how many names I came up with, but I think it was about 80. (This is a technique I still teach to this day.) I looked up all of their phone numbers, if I could, and put them down.

Next, I grilled all of my close family members and friends for anyone they knew who either owned their own businesses or who were closely aligned with anyone who was. From this, I got another big hunk of names and phone numbers, I think about 30 or 40.

Armed with my big list, I would drive to my office at 8am every morning, pick up the receiver on my stupid, expensive phone system, and call people. I used some techniques I had learned from several books on telemarketing I had read.

It was scary. Sometimes my hand would shake as I picked up the phone and dialed the numbers. My heart would beat out of my chest. Often I would just sit at my desk and stare at the phone and sweat in fear. On really bad days, I would spend time screwing around on my dial-up internet connection reading nerdy websites (which was pretty much all the internet had back in 1996) or playing a little Diablo on my computer.

It was brutal, but eventually, I worked through the list. Most people were very nice, even the ones who rejected me. A small percentage of people were rude or angry, which just made me even more scared. But I knew I could never go back to the prison-life of being an employee, so I kept trudging forward.

I got some appointments to meet people. I put on my cheap suit with one of my terrible shirts at the time with ties that looked stupid and didn’t match, grabbed my shitty little briefcase (we had those back then) and went to the appointments, trying to be nice and convince people that A) they had computer problems and B) I was the man to fix those problems for them.

I finally got some more clients. Not many, but a few. Still not enough to pay all of my bills, but enough to give me confidence that I was on my way and that success was indeed achievable. I was scared and excited at the same time.

Next, I contacted all of the other computer nerds I knew who had their own businesses, and asked them if they needed help with their clients. Two of them said yes and instantly referred me some business. Some of these clients I could have myself, but most of them I could only take as a subcontractor under them, taking a cut in pay in exchange for “free” business. I was desperate, so I did it.

Over the months, I started getting referrals and word-of-mouth business too. Not a lot, but enough.

Through all of this work, I finally hit my goal. I don’t remember exactly when I hit my goal of paying my bills, but I’m pretty sure it was around the spring of 1997, less than a year since going full-time.

I was sooooo happy! I was now an honest-to-goodness business owner, actually making enough to pay my bills (although barely) as a full-time, self-employed computer consultant, something many other men I had known had tried and failed.

It was still rough though. I had to be ridiculously careful of every penny I spent. Sometimes I was late on my bills. At one point I even was behind on my payments for the stupid phone system, causing them to call and harass me. I finally paid them what I owed and returned the phone system back to them, getting just a single normal phone line like I should have in the first place.

I was paying my bills, sort of, and I felt good about that, but I still felt poor, something I promised myself years prior that I would never feel again.

It was at this time that I made the biggest mistake of my entire life; I got traditionally married. This would disrupt my business and all my hard work in ways I couldn’t even imagine. I’ll talk about that in the next installment.

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