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September 3, 2008

From Freelance to Business Owner - A model for success

Josh Perrymon is a case study in consulting success. he started out as a Freelancer two years ago and today owns three profitable and working businesses. His revenue model splits 80% services and 20% via products and an SaaS model.

The pride of his fleet, as I see it, is Packet Focus, a company focused on providing best-in-class security services within the Global Finance community. Specializing in Penetration Testing, Technology Audits, Compliance Assessments, IT Risk Assessments, and specialty consulting.

Q1. From freelancer to owner of three profitable companies in three years! That is an amazing record. A lot of freelancers find that their first job is easy to find, but the next one is harder. (All their time spent delivering work etcetera)

How did you get over those first hurdles to get the momentum that you seem to have now?

(JP) This was hard to get going, but after the first year my system really started to grow.  When I moved back from Australia to start PacketFocus, I only had about 30k saved up. This gave me about 6-8 months of operational expenses before having to make money so I had some pressure on me.  First, I put together a good website describing what services I would offer.

I tend to specialize rather than being a one-stop shop for everything security related. This helped me to better define my target market(s).  So after having the business image setup with the website, cards, and a 1-page flyer I went after work hard and heavy.

Once you have a specific service to offer, you need to clearly get the work out to your market. Setup a few package(s) or blocks of hours with some type of fixed pricing.  The first business I every started was web design. I offer 5 pages and logo for $750, and called every business I found find in the yellow pages.  It’s easy to get the jobs here and there, but you really need to focus on building a steady stream of sub-contracting work through association with larger shops. Most times, overflow for specialty work is available if you ASK for it!

I replied to all the companies on Monster and Dice even if the job was full-time.  Just pitched on the value of subcontracting, experience, etc. Sometimes you have to make less margin, but just keeping steady cash flow if VERY important the first couple years.

Q2. You have mentioned that your revenue model runs at something like 80% services and 20% products and SaaS mix. Can you tell us a little about that? In particular how you came to develop them while working freelance at the time. (Presumably)

(JP) Sure, it’s all about making good business partnerships with vendors in your market.  In the IT security arena, you will find numerous automated scanning vendors for example. I can partner with the vendor to provide this work to my clients as well.  If you work the relationship right, you will get leads In your area. The goal is to use services like this to get in the door.  I try not to oversell, or suggest too much if they don’t need it.  Once you show that your deliverables are high quality, on-time, and provide value-  the clients will beat your door down.

Whats the secret to growth from freelance to three companies Josh? organic, debt or venture capital? Whats the story behind your success?

(JP) My grandfather was a very successful entrepreneur. He started out with a small farm, and ended up owning 1000’s of acres, a convenience store, BBQ restaurant, etc.. He told me once, if you can’t afford it, you don’t need it. So I have used this in my business etiquette. The first business PacketFocus provided the cash flow to re-invest in the company first. Then as it grew even more, I started up new companies to focus on even more specific areas.  Much of the overhead is shared with the first company so it works out great.  So to answer the questions, I’m self-funded but with no debt as I used the first 30k I saved as startup funds.

Q4. You seem to be an advocate for partnering with vendors. Can you tell us a little about the strategies that you have used successfully here?

(JP) Sure, partner only with vendors that offer products you believe in. if they don’t provide value, you don’t need them on your team. It’s hard to say what type to vendor, but you should identify this need during the first year or so.

Q5. With all of the miles under you over the past two years, what does the immediate future hold for Josh Perrymon and his entrepreneurial endeavors?

(JP) I’m going to start giving back as much as I can to the security industry and my community to begin with.  I’m helping other start up their own companies in my spare time. As for business, it’s about the be on. Now I have the money to invest into R&D and other areas of the business, I can roll out new services in specialty areas.

I just spent 30k on RFID equipment and plan on really growing over the next 2 years.  I have had it setup for a while before the market was ready to build a strong presence, now I’m positioned as a leader and supplement this my speaking at Global speaking engagements.

The most important bit of advice I can give is don’t give up! There will be times when you are broke and low on cash, and just want to go back to work for a company. I have been in positions where I needed to have $2500 on Monday and I had $500 on Friday before. But somehow,  it worked out. I’d get an emergency job in, or get a check I have been waiting on for months.   Set a goal of having at least 20k liquid assets in your operations fund, and invest in ways of becoming more efficient. Watch overhead, and be sensible about what you REALLY need to operate.

Drive a 1999 BMW instead of a 2009 model.  Once you get the company profitable, go pay cash for a new one!  That’s how I like to do it. You mileage may vary..

What a great story.Josh is a case study of how to do it for those of us wanting to improve our lifestyles and get more satisfaction out of the consulting career. We wish him well!

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