Computer Consultant Asks: to Grow or Not to Grow?

SPECIAL TO THE TIMES

Impact Computer Services seems to be the perfect candidate for growth. Sales at the home-based business are on the rise, profits are up, and demand is growing for the one-man operation's services, whether to rescue a crashed hard drive or design an entire system.

According to owner Michael Haschka, there is only one thing standing between the Calabasas company and double, or even triple, current sales: himself.

"I would like to expand but it's just a frightening thought," Haschka said. "If I get a commercial space, I have to pay rent, pay insurance, commercial phone rates, etc. etc.; then there're salaries. It just goes on and on."

The 3 1/2-year-old business has grown without any planning or organized effort on his part, said Haschka, who, even before he started getting paid for his skills, described himself as "the computer geek around the office." Haschka attributes his success--sales hit $188,000 last year and the company has been profitable since Day One, he said--to his passion for the work and the customer service skills and contacts forged during his 12 years as a residential real estate agent.

The next step, though, is unclear, the business owner said.

"I'm pretty much maxed out for a one-man operation," Haschka said. To grow or not to grow? He's not sure he wants to take the risks.

Adding to the pressure is the role the small company plays in Haschka's dream of retiring in 20 years. The business is the most important asset he and his wife, a workplace consultant studying for an MBA, have, according to the financial planner who reviewed the couple's finances for a personal finance make-over in The Times' Business Section Tuesday. The bigger the asset, the better, it would seem.

A word of caution was offered by business consultant Pauline Field, who met separately with Haschka to review his company's readiness for growth.

"The decision should be made because he sees the possibilities of what he could accomplish with the business, rather than out of someone else's experience or because his wife wants him to," Field said. "If it is not something he is and can continue to be excited about, the chances of success are slim."

Getting it on paper

Having said that, she made it clear she believes the addition of some business basics--planning and management skills, mainly--would equip Haschka to take the company to the next stage of growth, if he decided to do so.

"I think what could push him over the edge [decision-wise] is that it's not as hard as he thinks," she said. "If somebody could convince him he's not going to lose everything, and it's going to be OK, and the benefits are going to be there for him, then I think he will go for it."

Haschka would have a clearer picture of his company's chances if he put on paper his assumptions about his customers, the size of his markets and the resources he'd need for pursuing more sales, said Field.

It's standard consultant advice: Write a business plan. For many business owners, though, the consultant might as well advise a hike up Mt. Everest. The goal may be worthy, but the task is daunting, and there are a thousand reasons to delay.

"I have a copy of a business-plan builder [software program] on my desk," said Haschka. "It's been there for about a year."

Field, the owner of FieldWorks, a Los Angeles-based management consultancy, said Haschka also will need to develop his management skills, an acknowledged weak area for the business owner, and take steps to untangle his business operation from his personal life. In the process of making those moves, she predicted he will gain the confidence and skills needed to grow the company.

Field offered a few suggestions to help Haschka get started on a business plan. It helps to realize the time involved--she suggested Haschka devote about five hours a week to planning--is not a cost but an investment with a future payoff. Breaking a plan into parts--the sales forecasts, marketing strategy, competitive research--makes it more manageable. It's OK to tackle the easy parts first, she said. And be realistic about the time it will take, advised Field.

"There are some very tough questions that have to be answered as well as research that has to be done," she said. "Things have to be worked through with [certified public accountants], consultants, attorneys. . . . There is a whole slew of resources that need to be accessed."

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The much-maligned mission statement should be part of any business plan, she said. A well-reasoned and written statement will make it clear to customers, employees and potential investors the company's purpose and focus. A mission statement can help a business owner and his staff make decisions that will keep the company on course to reach its sales goals.

To help decide what those goals should be, Field recommended Haschka learn more about his current market and customers, who are chiefly in the real estate industry, with the goal of saturating that market. He also needs to research industries or business sectors that would be logical targets for diversification, she said.

Making a plan

Once Haschka has formalized the purpose and focus of his company, and decided how big his potential markets are, he'll have an easier time with other key parts of the business plan, said Field.

Those include writing a strategic plan that broadly outlines where he'd like the company to be in the next one to five years, setting the short-term (up to one year) and long-term goals that will get him there and figuring out and writing down a plan to achieve each goal.

Haschka will need employees to grow, said Field. So his business plan should include an organization chart listing each function in the company and noting how many employees will be needed to handle each job.

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Job descriptions should spell out the responsibilities of each position and the role each plays in the company. The job description should also outline a typical day for an employee in each position.

In Haschka's case, she recommended he plan initially to hire a part-time administrative assistant to free up his time for planning, new business development and customer contact. Before too long, he should consider adding a computer technician to handle the extra work, said Field.

"He could hire the assistant and the tech person right now and within probably a month, build his business back up to where he's fully profitable again," the consultant said. Without taking the time to learn about his market and figure out his costs, "he wouldn't be able to see that," said Field.

Aside from planning, Haschka also will need to address his lack of management skills, said Field. The business owner is the first to admit he knows little about how to manage a business or the people in it.

"One of the largest flaws I have is that I like to control, to maintain control myself," said Haschka, a former pilot and software designer. "I have a hard time delegating authority."

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He also will have to learn how to work closely with other people again. That may be a challenge, given some of the reasons he gave for enjoying his solo career as a computer consultant: "There aren't as many personalities involved. . . . I'm pretty much a master of my own ship, and my clients trust me and . . . there is never any questioning of my business or abilities."

If Haschka decides to hire people to grow his company, the consultant recommended he study three topics first: basic supervision skills, effective communication skills and styles for managers and performance management. She suggested he attend the one-day classes in basic supervision offered by national training companies such as Fred Pryor or Career Trak.

She also recommended "The Supervisor's Big Book of Lists," by George T. Fuller (Prentice Hall). The book will give Haschka concise tips on everything from conflict resolution to how to handle employees who show up late, she said.

Branching out

Joining a networking organization would give Haschka a chance to compare notes with other managers and owners, develop business relationships that will likely boost his confidence in his decisions and competitive strength and possibly lead to new business, said Field.

Once he's confident in his ability to run a company, Haschka would be ready to explore another avenue of growth, by merging with or acquiring another small computer consultancy, said Field. Or he could negotiate an arrangement to manage such a business along with his own and "reap profits from that," she said.

Before he gets much further along in his business, whether or not he goes for more growth, Field recommended Haschka begin to untangle his business from his personal life.

"It puts up a red flag to me when somebody doesn't have even a business phone line," said Field. "If I was to call directory assistance, I wouldn't be able to find the company." It's not a smart way to save a buck, she said.

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If he decides to grow, the business should be incorporated, she said. That will cost him several thousand dollars but will provide a shield between Haschka and potential business liabilities. Incorporation can provide a more advantageous way to organize the business and offers a vehicle for the company to continue if Haschka were suddenly unable to run it. Incorporation may also be useful for retirement planning purposes, she said.

Operating the company as a professional endeavor and not as a hobby also means Haschka needs business insurance--inventory insurance at a minimum, said Field.

If he grows, Haschka also will need to find an outside office. Field recommended he look for a small industrial park. Space there would be relatively inexpensive and would be configured to match his needs--an office or two up front and a warehouse/workshop area in back.

Making the leap

Finances are another area where home-based business owners can too easily mix up business and personal expenses, she said. Haschka considers a large chunk of his business checking account an emergency fund for the couple, he told the personal finance planner. Lease payments for both cars and a small loan to his wife are included in the business' finances.

That's not unusual for a small business, said Field, and vehicle costs are a legitimate part of most companies. But if an expense is more personal than business, it can cloud the picture when a business owner tries to assess the company's resources for growth.

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"You need to structure it such that you are looking at [an expense] from a business viewpoint, not your own personal viewpoint," she said.

Once Haschka has a business plan started, begins to develop his management skills and takes the final steps needed to separate his business from his personal life, he'll be well on his way to making the decision to grow the company, she said.

Haschka has the technical and organizational skills, the referral base and work ethic to expand, if he wanted to, said Field. But his heart has to be in it.

Haschka still seemed unsure.

"I could probably go on for years and years doing what I'm doing, but there won't be any growth and I'll be working like a dog," said Haschka. "It's frightening in some ways to contemplate growth. I'm not the youngest guy, I'm almost 40, so I don't have many years to make it right."

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Michael Haschka and his wife, Michelle Villanueva, had their personal finances reviewed in Tuesday's Money Make-Over.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

This Week's Company Make-Over

* Name: Impact Computer Services

* Headquarters: Calabasas

* Type of business: Computer systems and consulting

* Status: Sole proprietorship

* Owner: Michael Haschka

* Founded: January 1995

* Start-up financing: $5,000 in savings

* 1997 sales: $188,000

* Employees: None

* Customer/clients: Small-business and home-based business owners

Main Business Problem

Home-based business can't handle more work without expanding, but owner is afraid of the risks.

Goal

To provide high-quality, customer-service-oriented sales and on-site service of small-business networks and individual systems.

Recommendations

* Owner must decide, free from outside influence, whether he is ready to take the business to the next stage of growth.

* Separate the business from owner's personal life.

* Create a business plan.

* Develop management skills.

Meet the Consultant

Pauline Field founded her Los Angeles-based management consulting firm, FieldWorks, in 1982 after two years in sales. She works with a network of independent consultants.

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