Five years ago today, I started Usable Web Solutions, LLC with the intention for it to be a boutique web design firm that specialized in creating websites for local nonprofit organizations and start-up businesses in the Monmouth County area. And – five years later – I’ve only partially met that intention, but that’s not entirely a bad thing.Like any businessman setting out on a new venture, I spent a good amount of time researching the competition prior to even opening Usable Web Solutions, LLC. Through my research I found that most of the local web design shops were charging outrageous rates for a substandard product and substandard performance. In terms of generating income for the new company, my intention was to price my services such that they undercut the local competition by 15% – 35%. The idea was that by undercutting the local competition by this type of margin, I wouldn’t sway any existing websites to switch to my services, but I would become the service provider of first choice for new websites.
And, honestly, that strategy pretty much worked.
However, what I learned as I went along was that my original intention of focusing on websites for start-up businesses was a losing proposition. The truth is that many local start-up businesses do not (and will not) generate any revenue from their website. And as we saw over the last few years with the tough economy, when times are tough companies begin to cut costs. So, if you’re a small business owner and you have to decide what gets cut in your budget – do you opt for cutting your website services or for cutting your salary?
I think we all know how that usually ends up…
Over the last few years, I’ve had a surprisingly large number of clients simply stop paying me for contracted services (i.e. deadbeats). In fact, altogether I’ve had 36 contracted clients since I opened up Usable Web Solutions, LLC. Actually, that’s not a bad amount of clients to sign up over a five year period considering that this website company is my side gig after my day job, teaching at the local university, and teaching at the online college. But to get back to the deadbeat clients – of the 36 contracts I signed in the last five years, 12 of my clients turned out to be deadbeats.
It’s an astonishing number when you think about it. A full third of my clients either just stopped paying, were horrible clients and screwed me out of contracted revenue, or just randomly disappeared. It’s outrageous. But, like I said above, I learned as I went along and what I learned was interesting on its face, but not totally surprising.
When I was working with outside clients, the chances of me getting screwed over were 1 in 2. However, when I was working with websites that I had a direct stake in, the chances of me getting screwed over were 0%. Some of you may ask, “what does it mean that you had a direct stake in the website?” Good question. As it turns out, of the 36 contracts that I signed over the last five years, 10 of them were with myself! That’s right – my best client looks at me in the mirror every morning.
Websites that fall within the boundaries of me having a stake in them include the one that you’re reading right now – JerseySmarts.com. In addition, I own 3 professional wrestling websites, 2 fraternity websites, 2 websites that are nothing more than domains right now, the actual Usable Web Solutions, LLC website, and a photo hosting website for my Mother’s eBay sales. Over the course of the last five years I’ve actually owned more than these 10 websites, but I’ve been shedding the websites that don’t turn a profit.
About two years ago, it became glaringly apparent that the majority of Usable Web Solution, LLC’s revenue was earned via advertising on the websites that I had a direct stake in. Further, it became apparent that with at least half of my outside clients screwing me over, chances were that I was wasting my time with them. So I began doing what any good businessman would do – I began shedding the outside clients and increasing my investment in the revenue generating websites.
From my perspective, this change in strategy from focusing on local nonprofits and start-up businesses to focusing on websites that I have a direct stake in paid off. For example, in its first three years of operations, Usable Web Solutions, LLC was losing money each year. Sure, it wasn’t losing huge sums of money, but it was losing money nonetheless. However, in the last two years the company has lost much less money. Now, some folks will read that and say that it’s still losing money and that’s true. But there’s no comparison between losing, say, $1,000 during one of the first three years of operations and losing, say, $20 during one of the last two years of operations.
Besides, the truth is that these losses are simply based on income versus expenses. Anyone who works in accounting could look at my books and know that, in terms of real dollars, Usable Web Solutions, LLC has been generating revenue since I started shedding the deadbeats. It’s been great, actually.
And that’s about as succinct a wrap up that I can provide after five years as a small business owner! I suspect that during the next five years I’ll continue this trend of shedding third party clients (I still have some) and focusing more on the websites that I have a direct stake in because – at the end of the day – it makes smart business sense.