Archive for the ‘OLF’ Category
There are also 3 articles in this blog under the topic of OLF which cover the presentation in an easier to digest format and if read in order of date posted should closely match the slide deck. They are:
There are lots of other articles here that can also help you as you start a new business, so feel free to look around while you’re here and leave comments or questions.
In my previous posts, (1, 2) I’ve been talking about why Small and Medium Sized Businesses (SMB) need Linux and Open Source solutions. I’ve also talked about Open Source industries. But what we haven’t covered is getting in the game.
While I could go high tech here or dazzle you with business terms, the truth is, going into business only requires that you understand the ground rules.
Think of it in terms of poker or any other game. Yes, it might take you a while to develop the skills you need to be really good at the game, but one of the most important steps is learning the rules and understanding what makes for a winning hand.
No matter how unique your method of doing business, or your business model, you will need to pick up the basic skills and techniques. But just because you may not have a full tool kit at the outset doesn’t mean you can’t get started. Especially if you surround yourself with people who have the strengths you need.
The really good news is that you can get the basics lots of places. There are countless business resources online and many in your local community. If you’re in the United States, SCORE offers free business counseling and low cost workshops and the SBA sponsors Small Business Development Centers (SBDC) where you can also get free counseling and learn the basics of writing a business plan, accounting best practices and other essential skills.
Where you’ll find it getting tricky is getting past the no-cost mindset when you, and your clientele, begin thinking about free software solutions. I can tell you that the early years of my FOSS business were rough until I figured out how to properly position ourselves in the market place.
Our business model needed to be tweaked more than once to be sure our potential customers could see the value in doing business with us. In some cases we raised our prices, others we lowered them. In some instances we dove into the marketing plan, hammering out little details and studying our customers.
As I have branched out and helped other FOSS projects think about their positioning I’ve found the biggest issue is marketing messaging. You see, it isn’t about what they wanted to say about their latest and greatest update, but about what the customer needs to hear.
While that statement could be interpreted as the sort of thing con-artists do, it’s not about trickery, but about point of view.
Think about it this way… What are the key things high level geeks think about when it comes to setting up a new computer? Processor speeds, RAM, Kernel version, getting the proper video drivers and all those other spec sheet gems.
Now think about what a business owner wants to know. They want to know how much it’s going to cost. Is there going to be any down time? Will their employees adopt the new tech and use it effectively? Who’ll be able to solve any problems that may arise? Why should they trust that a free download isn’t going to be a lemon? If it’s so great, why is it free?
My best advice, DON’T Underestimate the importance of re-programming your thinking so that you can step away from the for-geeks-by-geeks FLOSS marketing that you’re use to seeing. If needed, find someone familiar with FOSS and SMB speak to translate for you.
The reality is that the barriers to starting a successful business aren’t that big if you’ve got the right mindset going in. Again, a good team of advisers can help you overcome any portion of the business process that you have questions about. The rest comes down to your skills and ability to get the job done to your client’s satisfaction.
If you ask a software developer how to make money writing code, you’ll usually get employment or selling applications as your answer. It’s my opinion, however, that most are missing the boat and need to think of their skills as a marketable service.
The other answers, while not wrong, have to do with point of view.
If I get a fancy box and shelf space in the big box chain stores, then I’m offering a product. The transaction might even present itself as selling of services – like getting the neighbor kid to mow my lawn. But no matter how you look at it, it all starts with a skill.
If I toss Open Source software into the mix, then I usually have to deal with “Yeah, Right. How am I going to make money competing with a free download?”
Here’s the thing, software isn’t the only Open Source industry. In fact, many other open source businesses are very profitable and are generally skills that have been around for quite some time.
Let’s think about Open Source for a moment. The first line of the Wikipedia article states…
Open Source describes practices in production and development that promote access to the end product’s source materials.
To me, it’s just the way we’ve always done things.
Software isn’t the only open source skill, in fact I’d say that all of these could be considered open source.
- Repair – Automobiles, Washers, Refrigerators, etc.
- Fashion – Sewing, design ideas, etc
- And many others
The people who practice these trades might have their own secret sauce, but all can be learned in an open source manner by examining the construction or using freely available information to gain understanding of the process. If I can get a book at the library or search the internet for the information I need, then I consider the industry to be open source.
Let’s now consider what it means to be in an open industry where anyone has access to the tools and materials that you do…
Wouldn’t the existence of prepackaged seeds put farmers out of business?
What about home improvement stores? Shouldn’t that put Plumbers, carpenters and electricians out of business? Does access to scissors put the barber out of business?
With the answer to those questions being a resounding “NO,” then why do so many people within the Free and Open Source Software movement think that there’s no business opportunities for their skill set?
Yes, there is a bit of a vacuum in the consciousness about the use of Open Source software, but I don’t think that it’s going to be too hard to overcome.
What the middle market is missing people with marketable skills who are willing to begin offering their services in various formats. It could be shelf ready products, it could be custom work. FOSS could even be offered alongside commercial options.
The thing is, FOSS has so many advantages and one of them is price. If you are a provider and can offer the same services and functionality, but you don’t have to undercut your profit to be the less expensive option, that’s a big advantage for you and your customer.
So you make more money, they spend less… Talk about bringing value to the table. You’re happy, they’re happy, the computers are effective. How can you loose?
To keep this post on topic and in an easy to digest format, how about we stop here for now.
In the next article I’ll talk more about how to position yourself as a service provider and how to set yourself up for a win.
It’s become quite clear to me that I’ll never fit all I want or need to say about the business of Linux in my LinuxCon talk. In fact I could make it a full day workshop and still not cover everything there is to know about making money on products your customers can get for free.
The solution is to begin evaluating what information really needs to be in the presentation and what would be better here. In some cases I’ve begun shucking slides from the deck and for others I’ve decided that there needs to be a better explanation of what I’m trying to cram into my allotted time.
With today’s post I’m going to start addressing some of the topics that could use a little more depth than what time will allow. I also hope that by exploring the topics here I’ll have a better grasp on what is most important to convey when I stand at the front of the room next month. ~Karlie
Midmarket Companies are the Key
Less than a month ago, eWeek published an article titled “Midmarket Companies Steady on PC Purchases, Report Finds.”
This article is based on The NPD Group’s Small and Medium size Businesses (SMB) Technology Report.
As you can guess from the name, the midmarket is made of up of companies who sit right between Mom-n-Pop operations and big businesses. They’re generally smaller than 500 employees and actually make up most of the US economy.
The first bullet on the slide above is fairly easy to understand – Buying is going up this year. While that’s good news, it’s the next two that set my heart all a flutter. They show me some really good numbers – Let me explain.
The biggest reason I’m in a very good mood following this report is that the percentages give me a starting point for basing a financial model off of.
Yes, 40% is less than half, and on first look can seem sort of dismal. The thing we need to understand is how big that 40% could really be.
According to the US Census Bureau, there are nearly 5 million businesses with 499 or fewer employees. So if we do a little math, 40% comes out to be approximately 2 Million potential clients. It could be even more if you set your pool to include business with over 500 employees.
We also need to factor in that the estimated market share for Linux is just about 1%. If we assume the market share is the same with SMBs, we’re looking at about 20,000 firms to get your feet wet with.
I’d also go out on a limb and suggest that if SMBs began adopting FOSS technologies that 1% market share for Linux would rise rapidly. How far? I don’t know exactly, but for every percentage point it jumps you’d be looking at another 20k or so in your national customer pool.
The lesson here is not to get hung up on what constitutes big or small in the business world, or even take a percentage at face value until you understand what those numbers actually represent.
20-Thousand businesses may not seem like that many either, but could you handle that many clients? Probably not while you’re just starting out, so 20k is really a fairly large number for you to grow into… Especially if you can grow the Linux adoption rates while you’re at it.