When first starting an IT consulting business, many newly-minted entrepreneurs gravitate to home-user clients. Everybody knows somebody who could use the help of an IT professional. So home users can help you get started and set you up with some good testimonials. But don’t get too comfortable.
Why? Generally, servicing home users cannot sustain your business. Before you spend time and money marketing to home users (also called the Business-to-Consumer, or “B2C” segment), take a look at why you should be finding Business-to-Business (“B2B”) clients instead.
Home Users = Very Low Lifetime Value
Both in relative terms, compared to the small business market, and absolute terms, the home user market is not very profitable.
Home computer users will generally not provide many lucrative opportunities for a small IT consulting business. While they may keep you “busy,” home computer users don’t see IT as an investment. There’s no ROI to calculate.
And how much can you really bill for troubleshooting a $75 inkjet printer? What about the five-year-old PC that won’t boot up? How about troubleshooting a poorly installed “home” edition of a software package?
Very Tough to Break Even, Let Alone Service Profitably
Because you must care about your profit margins, keep in mind that the average home user won’t turn into a long-term client that will provide substantial revenue.
Stop and consider how many one-shot-deal home user customers, at a low hourly rate (or even lower flat fees), your business will need to make a profit.
The solution? To sustain your IT consulting business, focus on building long-term relationships with small business clients that need ongoing support and see IT as an enabler and lever for business growth.
If you’ve been successful at targeting your new IT consulting business to small companies, please share your tips in the comments section below.
And to follow-through on the tips introduced in this short article, be sure to download the free special report on How to Start a Computer Consulting Business: 6 Proven Ways to Build Your Initial Client Base.
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