Ronald K. Ferguson – A Bit About My Background
I have 35+ years of experience as a small business entrepreneur – all of it self-taught and on the job. I’ve had two sputtering years of college, plus a wealth of technical training from the incredible education centers that IBM maintained before the U.S. Justice Department broke the company up in its infamous antitrust lawsuit of 1968.
In 1978 I founded my first small business, a one-person mainframe software education company. At the time, my biggest goal was to get out of what I thought was a dead-end job at a very large Fortune 500 company, where the workforce was so stable that individual advancement was extremely slow. Significantly, having just completed eight years in the U.S. Air Force at salary far below the poverty level, the manager who hired me took advantage of my naiveté and brought me in at a salary far below that of my peer group – and once that happens it’s almost impossible to catch up. In fact, since pay raises are normally handed out in percentage increases, the gap only widens.
My entrance to the small business world was a classic example of ‘jumping out of a perfectly good airplane and assembling the parachute on the way down’. The monthly disposable income that my wife and I lived on would barely buy two coffee lattes, and we had less than two month’s salary in the bank. Needless to say, the start-up company wasn’t under-capitalized – it had no capitalization at all. For operating capital to see us through our initial start-up, we explored several banks for a loan, including an SBA-guaranteed loan at several banks, but in those days it was an automatic no. It was also two decades before real use of the internet began, so getting any information and tips on best practices for starting a small business involved long hours at the local library – and how-to books at local bookstores were few and far between.
But my wife was totally supportive, we had nothing to lose, and it was a business venture that had a very small barrier to entry – mainframe software education classes, mostly taught on-site at very large corporation and government data centers. With a tremendous amount of hustle, creative thinking, and plain hard work, our tiny company survived against all odds, making it through the first year, then the next – until it reached a level of profitability. But we never eased off, keeping our eye on one goal, then another, and still another.
For the next 15 years, I averaged 300 days a year on the road, about half of it in the U.S., and the other half internationally. By our tenth year, the company was up to 14 instructors, plus a small office staff to support our employees in the field.
In retrospect, one of the best things that ever happened to us was an implosion of the mainframe education business. Almost overnight, our business dropped 85% due to technology changes, but rather than give up we transitioned the company to consulting work, acting quickly on several serendipitous opportunities that came our way. Within two years our annual sales were almost double their previous high, and we essentially had a new company that emerged from the old. It was an amazing turnaround, and not based on luck, but rather, by recognizing the obstacles as opportunities and then acting on them.
By the mid-‘90s, we again transitioned the company, this time into mainframe software development, slowing developing a stable of software products that became valuable assets for growing the company. Prior to that, it was strictly a service-based company, where the number of staff and hours in the day determine your maximum revenue. Granted, the barrier to entry is much higher with a product-based company, with huge software development costs, building a sales and marketing team, and developing a technical support capability – but the sales and revenue returns can be much greater and the asset value of your company is greater. By the time we sold the company in 2006, it had grown to 83 employees, and our annual sales were well over 10x what they were at the peak of our original software education company.
Lest anyone think this road to success is all easy-cheesy, I’m here to say it isn’t. Not only did it involve many 14-hour days, but along its 28 year path, we experienced every possible bump in the road, made every imaginable mistake, and several times we paid dearly for it. I was learning on my own how to operate a small business, and because of terrifying stories at the time of entrepreneurs who lost control of their companies due to bringing in outside capital and expertise. I elected not to rely on investors and professional managers (except for one absolutely disastrous situation, which taught me more than any business school degree could have). Instead, we focused on organic growth – where every inch forward was financed with internally-generated profits, although we also relied heavily on a bank line of credit, and researched several alternative forms of business credit. The downside was, I honestly didn’t know what I didn’t know, oftentimes until it was too late.
Overall, the experience in running my own company was more valuable than any college degree, and while there were many days when I wished I could be finished with the whole business, I wouldn’t have traded it for anything in the world. Our employees were wonderful, and so were our customers – mostly very large national and international corporations and government agencies. Best of all, it was truly a business that helped the world.
My experiences in starting and running my own small business for almost 30 years provided the background for the book I’ve written – Start-Up! An Entrepreneur’s Guide to a Successful Small Business – available in Kindle format at Amazon.com.