Here at aidpreneur.com we focus on two main audiences: independent professionals and small companies (we lump all NGOs, CBOs, charities, consulting companies, advocacy groups, etc. into the term “company”).
Our distinction between these two audiences is simple: if you sign contracts with “your name”, then you’re an independent professional. If you sign with a “business name”, then you’re a small company.
Ok, ok … I know there are issues with this:
- You could be a sole proprietor with staff (why you would do this in the age of LLCs and S Corps, I don’t know)
- You might have a “dba” (Does Business As) name, so the business is still “you” technically, but you’re operating as some alias
- You’re a one member LLC (highly likely)
- Some other reason I can’t think of off the top of my head as I’m writing this.
My point: we’ve got to draw the line somewhere. Really, this is just to help us keep this blog, podcast, trainings and other resources tailored to their intended audiences.
Over the past 10 years, I’ve been lucky to work with 1000s of talented and wonderful development and aid professionals. During this time it has been a not-so-infrequent event for me to hear someone say “You know, I’m really thinking about starting my own company.”
What they really mean, almost all of the time, is, “I’m going to become an independent consultant.” Upon hearing this, I try my best to convince them this is, usually, a less-than-great idea for their career. But sometimes, they actually mean they are interested in starting a company and throwing their hat in the ring with the many other consulting companies, NGOs, CBOs, advocacy groups, charities, etc. that are already out there.
As someone who has run one of these companies since 2005, rather than suggesting this might be a less-than-great idea, I usually calmly put down my drink (these conversations often happen over drinks, or tea, or food consumption of some kind, no?), look them right in the eye and say, “Why in the WORLD would you want to do that?”
You see, it’s (almost) understandable when people are interested in becoming independent consultants. They’ve usually reached a level of expertise that can offer serious value to their future clients and they want to take that out for a spin, and a chance at the pot of gold everyone seems to see at the end of that rainbow. I get that. But starting a company in the development and humanitarian aid space is really only for the truly insane.
Here are four of my top reasons why:
Other people: Getting things done yourself is challenging. When you decide to start a company, you have just multiplied that challenge umpteen times because you’ll be responsible for dealing with other people in some way, shape or form at all times. These “other people” come in many forms, e.g. co-owners, employees, independent consultants, partner organizations, vendors, suppliers and clients. As the owner (or co-owner) of a company, you are giving yourself the burden of sourcing, interviewing, hiring, managing, disciplining, overseeing work, giving raises and bonuses, settling disputes among them … the list goes on and on.
The best part of this is that you’ll depend upon these people for some of the most precious stuff, like delivering work to your clients, defining your brand and managing your company’s reputation. Most of us in this profession have a hard enough time describing what it is we “do” to the uninitiated (usually friends and family); can you also hack managing the people who will have those conversations on your behalf?
Regulation: No matter where you decide to register your company, you will have to do so with some government entity. (note: this is NOT a small-government rant; I’m not interested in talking politics here). Most of the people who tell me they are starting a company believe doing so will also create more freedom for themselves. While I admit everything in life is perspective, IMHO owning a business is the epitome of the ball and chain.
You have to keep your company registration up to date, your taxes more complicated, you have to make payroll (and then file payroll taxes), you need representation, you have to register as a vendor with agencies and governments, you need insurance and … well … the list seems to go on and on. Double it if you plan on having offices in more than one country. Triple it if you intend to employ people in more than one country.
Your ego: I choose this as one of my top four because I think it’s an often neglected topic. When you create a company, it becomes a part of your identity, not unlike having a child. It’s always on your mind, you’re always tweaking it, always massaging it, always looking for ward to improve it.
Because it become such an intimate part of who you are, it’s important to consider the expectations of others – and yourself – about what your company “is”. If your company has any level of longevity or success, regardless of your responsibility for said success or longevity, others’ perceptions of you will change (e.g. you’re rolling in money, you’re well connected, you’ve “got it made”). And, if you try it for a while and then close up shop … well … let’s not go there.
You are where the buck stops: As the owner or co-owner of a company the single most important thing to consider is that – at the end of the day – you are ultimately responsible for all aspects of the machine: the money, the deliverables, the legal issues, the client relationships – even when everyone else F’s up. This INCLUDES your co-owners (if you have them).
So there you have it. My advice is to walk away while you’re still ahead. Advance in the organization or company you’re with now. Or, change companies and get a better job/salary/title/whatever. These are super awesome ways to make a difference in the world, serve those in need and actually still have time for your kids and your favorite hobby.
But, if I haven’t convinced you otherwise and you still feel the burn that characterizes the other aidpreneurs out there, please read on, join us and let us help you get it done right.