Archive for June, 2010

A man who insists on walking up stream against the flow of water, will only realise his mistake once he is drown.  
Chinese proverb

A list of old technology for you: Cassette tapes, floppy disks, modems, walkmans, arcade games, VHS tapes (and recorders), Black and White Televisions, pagers, fax machines, Visual Basic (v4, v5 or v6) and Compact Disks.  Ok, so maybe CDs are not dead, but the time is coming when they will be a thing of memory.

As the news filtered down that the iPAD was selling at 3 every second, and apple are selling even more of the 4^th generation of the iPhone, we can all imagine the land fill that will be created as everybody sells the iPhone 3’s for the new sleeker, sexier, faster iPhone.   Change is a certainty, progress is optional.

As a fairly old freelancer, I have watched lots of technology come and go.  All of it served its purpose at the time, but now none of it is used, and in time nobody will remember it.   When change occurs, whatever the form, there will always be people who are scared because, well, change can be scary.  Whether it’s the latest phone, a change in direction in your work life, a change in your personal situation, or a change of health.  But change can sometimes be good.

As the old Chinese proverb teaches us, we can fight change all we want, but sometimes (more often than not) by the time you realise change is happening, it is too late to fight the change.  Best go with the change, otherwise you will end up drowned.

But there is a third way.  Rather than fight the change, or be swept along with the flow, the other option is simply to move out of the path, let it pass you by, and look for the solid ground where you can create your niche.  In Freelancing, landing the customers is all about have a niece, where you stand out, excel and don’t try to fit in.  If you are just another programmer, or writer, or marketing consultant, how can you be spotted amongst the throng?

Seth Godins always good at spotting the third way, so let me leave you with some of Seths thoughts on the iPAD revolution….

Steve Jobs reports today that Apple is selling an iPad every three seconds.  This is a pretty urgent moment for my friends on the Kindle team….

…..You either become the best and only platform for consuming books worth buying or you fail. And the only way to create that footprint in the face of an iPad is to make it so cheap to buy and use it’s irresistible.

I saw a two-year old kid (in diapers, in a stroller), using an iPod Touch today. Not just looking at it, but browsing menus and interacting. This is a revolution, guys.

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I have read in many books, and seen on many TV programs (such as Dragons Den) that the worst thing you can do is run a business as a hobby.  I guess what they mean by that, is hobbies are designed to be recreational not to make money.  People who run businesses as hobbies end up ploughing masses of cash into their business with little coming back out.  To this extent, I agree that a hobby business is a bad, bad thing.

However, I also believe that we need to treat a successful or growing business as a hobby.  When you take up a hobby such as golfing, gardening, fish keeping or wine making, you have an interest in the subject but very little knowledge.   Then you read books, join groups, and learn the skills needed for your hobby.   But once you have become proficient in your hobby, you continue to study the subject as the technologies, ideas and physical elements of your hobby will change.

I encourage all small business owners, contractors and freelancers to treat their business as a hobby.  Learn all you can about getting the most from your business, but as with any other hobby, make sure you link in with business groups and RSS feeds to take sure you keep up to date with the current methods and technologies.

Freelancing and IT contracting is in a fairly depressing place.   As with most industries, it is suffering from the continuing downturn in the global recession, but on top of that, the value of quality is dropping.   You only have to look at the glut of FREE applications available for the iPhone or Android to see that people expect more for less, cheaper and cheaper (or free), and they want it all now.  This is reinforced by the growth of opensource.  Being a writer or systems analyst is no better, with many web sites allowing overseas suppliers to cut throat each over in a price war which means for freelancers, making a decent day rate is getting harder and harder.

So if you’re a freelancer/IT contractor and need to increase your day rate, or even just keep it the same, what can you do?

I am coming to the view that trying to win on price is a fools game – overseas or part time freelancers will beat you down on price.  Keeping up to date with the technical skills is of course a must, but trying to be the most skilled person in your field (software development, document creation, whatever) is another lost battle – there are people who are going to be on the cutting edge who will be better than you, and will people pay a premium because you know the beta version of the next Visual Studio product?

Instead, where we are all heading is to be experts, to have experience, to be able to advise and direct.   People may want a freelancer who can come in and create web sites or a 1 page sales brochure, but they will pay very little for it and everybody ends up loosing.   Instead, when I take a look at contract pricing sites like UK contracting, it is clear that the high day rates are for people who can manage, who can direct and can bring the expertise.  Who can take a situation, and replicate what has worked before in a very niche situation.

Yes, it will always be very useful to write code, know how to put a good article together or how to do SEO on a web page, but when all of these can be done by students working from home or a far off land at half your rate, building up a level of expertise in a specific area is where the smart money is.

As freelancers and small business owners, everyday we have to strike the delicate balance between keeping customers happy (and therefore coming back for more services and products), and falling for the carrot that customers use to get services for nothing.

Clearly, in the current climate, everybody is pushed to get more for less, and customers (or potential customers) may offer all kinds of tempting treats to try and pull you into doing work for little reward or for more risk than you are happy with (in the form of tighter deadlines etc).  Getting the balance right is a psychological power game between you and them.

As an example, this morning I had a customer who I was charging support for on a ‘time and materials’ basis – it was their choice of this type of service not mine.  However, when I reported the use of time for the previous month, I got a response on one issue stating ‘well, as this could have been down to software, can you not charge for this, and then we may be able to give you more work in the future’.

It was a tough call.  Yes, I could have wiped out the support for the issue, but then I would be paying for the effort and would need to offset these costs with work in the future, which may or may not appear.  Or, I could explain nicely that I was sorry, but they had agreed to the service terms and therefore the support was chargeable.

After a long battle with my own thoughts, I decided the support charges had to stick, and emailed them with this conclusion.

Yes, I could be forcing them to go elsewhere in the future for work, but at the end of the day, the future work may never appear, or it may be so small the benefit is wiped out by the offset of the support work.  At the end of the day, when in doubt, it’s better to have the cash in hand.

Its just one of the battles we freelancers have to fight not only with our customers, but also with our own self doubt.  Sometimes those carrots that customers dangle in front of us are too tempting and we have to take a bite.  Sometimes, the carrots can end up just not being as tasty as they appear.

A couple of days ago I attended a very good sales workshop for small business owners and freelancers.  It was run by the FSB (Federation of Small Business), and didn’t cost a penny.  Yet one of the speakers was fabulous.

After he was introduced, the first thing he said when he stood up was “Your not selling products and services, your fishing”.   Yes, I was confused too, but as he held up a large picture of a salmon jumping out of a river, he gave this great talk which I will try to repeat here.

In a nutshell, he said that small business and freelance sales is like fishing because the way that you land those customers is the exact same way that you land fish.   Now I am not a fisherman (I did some fishing when I was a child, but that was a long, long time ago), but I still know enough to see how this rang true.

First, you lay the bait.  With fishing, you throw down some bait into a river to get the fish feeding and interested.  In marketing, you need the same thing, something to get them biting without becoming full.  Good examples are technical documents with real value, product trials, free services etc.  But, you don’t want to fill up the need, just give them enough to raise their appetite.

Next, your cast your lines.  Yes, you can cast one line with some bait, but the more lines, the more chances of catching fish.  The same with business sales, cast some sales lines in amongst the bait – the more the better.  This can be different methods to communicate with you, multiple ways you communicate with the people, multiple ways of tracking people interested in the bait.

Once your lines are in, you watch for a bite, but now and again, you twitch the bait to make it dance for the fish to keep them interested.  This equates to the watching for the sales feedback – calls, web site enquires, calling them and getting the interested ‘bite’ sign, or waiting for the more information request.

When you get a bite in fishing, you react, and you react quickly.  It is important to do the same in sales.  If you get a call, a response to your call out or an emailed enquiry, react quickly – do it THEN, immediately, don’t waste a second.  If you pause, you end up with a hook with no bait or fish, and an enquiry already answered by a competitor.

The final act is to land the fish, to get them from the feeding ground to the bank.  When fishing, you have to keep the line tight, pull them in and keep the fight going till they are in your hand.  With business, just because somebody bites and says yes, doesn’t mean you have landed them – you need to keep up the pressure, the communication and the information right up to the point they are a paying customer.

After all, you don’t want to be the salesman or freelancer talking about the one that got away.

At the start of this week, I was talking to a potential customer and made a mistake.  I have seen the mistake made time and time again by other people, but I still fell into the same trap.  The mistake was this – I assumed I knew what the customer wanted.

This potential customer had dropped me a fairly long email wanting a quote for a data migration from one database format to another.   As the customer was in a different time zone and had indicated they would be travelling, it meant that a phone conversation was difficult, I replied with an equally long email stating how we could help, how I would migrate the data, and how I would provide a migrated database for them to load on their new system.  It was quite detailed, priced up and I thought everything was great.

However, I then received a reply saying that they assumed that I would be providing the migration not only as a live migration run, but with 2 test migrations.  At this point, I had the option of correcting their incorrect assumption and increasing the quote.  I was actually sat in front of outlook, typing a reply when it suddenly struck me.   We had both made incorrect assumptions, and I was asking them to pay for both mistakes.

As I say, I have seen the mistake of assumption made time and time again, and here I had made the exact same mistake.   What I should have done is with the initial email, confirmed I was happy to do the work, but asked for some more information and questions – how many migrations, how many test runs, was each run to and from the same database locations, formats, versions etc.

In the end it all turned good.  I won the new business and customer, but only by agreeing to do extra migration runs (which are an automated process so it’s just a button press) at the original cost.

My tip: don’t be afraid to ask as many questions as is needed to remove all the assumptions (or at least, put the assumptions down in the quote so everybody is clear).

As the recession (possibly with the dreaded double dip) continues to bite and permanent jobs look more and more unstable, many permies are considering dipping their toe into the contracting or freelancing world.   One of the questions I get asked most often is how somebody gets started as a contractor/freelancer, so here are my tips to becoming a contractor or starting a freelancing company.

Before I begin, lets look at the two types of role – contracting and freelancing.  Typically, contractors are employed for a fix term to do a job, and will be based around a clients office.  Freelancers typically work from home or a rented office, and are project based.  However, I have always felt the lines of division are very fuzzy – I have done freelance project work at a customers site, and I have done contracting from home.

One of the easiest steps to make into this world of IT contracting or freelancing is a step into freelancing.  This is especially true if you already have a permanent job as you can do the freelance work during the evenings and weekends, and therefore can be used as a good stepping stone.  However, the problem with this route is that you need to first find a paying customer – and this can be tricky whilst holding down a full time job.  It also eats into your personal time (you will be working all weekends and evenings), which is why so many permies make the jump by starting as a contractor.

IT contractors are like permies, they will attend job interviews, and will be selected from all the interviewed candidates to work for a customer.  Unlike freelancers, agencies will provide the middle ground between the customer and the contractor, so the hard work of finding a contract is done for you.  You work a given number of days a week (normally 5, but can be 3, 4 or 6) and turn up, do what is asked for a set period of weeks or months, for a set and agreed day rate.

So some tips, about making the big leap into contracting:

• Agencies do not care so much for contractors as they do about the customers.  Therefore, don’t use one agency, but register with several.  Use Google for “contract agencies” to find a few and send in your CV (see tips about contractor CVs here).
• Also, take a look at the job boards for contract jobs.   A few good UK based contract job boards are here and here.
• Contractors are normally expected to start within ‘the week’.  Therefore if you are in a permanent position, you need to either leave before your notice period is up or pre-negotiate a weeks notice period.
• If you are in a permanent job which is in a key position, a snaky technique which can work is to quit, then offer to contract your existing role.  Some companies will agree to this whilst they look for your replacement (clearly a lot wont, so it can be a risky move, but I have known lots of contractors who started this way).
• Again, if you are in a permanent job, there may be existing customers or suppliers of your permi company that you can contract with.  Approach them, but be aware that you need to do it personally (e.g. don’t email them using your company email address) and be prepared for the feedback to get back to your current boss.
• Agencies will expect you to have already set up (or be in the processing of setting up) a Limited company, or found an Umbrella company (who will handle tax and payroll for a fee each month).   Good sources of how to set up a Limited company or select an umbrella company are the websites by PCG and ContractorUK.
• At the end of the day, the best method is to just leap (it’s what I did).  You should only do this if you have skills that are in demand, and you have some money behind you if it backfires.  But for me, I quit my highly paid management job to start contracting with no contracts in place or even looked at, did my 3 (yes 3) months notice, and the week before I left, I started contacting agencies for work.

I was recently listening to a small business and freelancers show on BBC Radio4, and there was a really good item on a small business in trouble.  In this radio show, a small business guru visited this company (it was a door sales company) and found out the company was having problems landing new customers.   It was a small company, 7 people in total, of which 4 people were salesmen.  Out of the 4 salesmen, 1 got his sales quota each and every month (had done for years) and the other 3 were making next to no sales.

They interviewed the salesmen.   The one making all the sales felt letdown by the other 3, felt the company could go bust because they were not making their quota of sales, and was really feeling under pressure.  On the other hand, the three other salesmen were all saying the same thing; they were trying their hardest, leads had dried up, nobody was buying and they were worried about their jobs.

Of course, as an outsider, its easy to spot the problem – the good salesman is overworked and should be passing some of his leads down.  But they had already tried this, and the other 3 salesman could still not close the sales.

After interviewing each of the salesmen individually, the Business “Guru” got all 4 salesmen together and asked one simple question…

“Have any of you spoken to the guy making the sales to ask what he is doing which make the sales, and try to do the same thing”?    There was a long awkward silence.

For me, its one of the great things about the Internet.  All around the world, no matter what you are trying to do, somebody has been there before, done it, and can lend advice (or at least answer some of your questions).   Just the fact that you stand back and ask the questions can cause somebody to point out the obvious thing that you (as somebody too close to the problem) cannot see.

When you are a small business owner, an IT contractor or freelancer, you can spend a lot of time on your own and it’s useful to have locations where you can discuss ideas, get business advice or just shoot the breeze.    Whilst I prefer the face-to-face mentoring type approach, a couple of good sources for bouncing ideas are:

Freelance advisor has forum sections covering freelancing, contracting, accounts, agencies and general chit-chat. 

The UK general business forum covers all other areas of business both big and small.  Here you will find people discussions their business ideas (for feedback), asking for advice on how to tackle business problems, and business news.  It’s a VERY active forum.

PCG (professional contractors group) Members Forum is for registered PCG members only.  However, if you are not a member, it is worth joining just for the insurance perks (see main PCG site), and if you are a PCG member, it’s a great place for contracting and freelancing advise.

I talked yesterday about taking an hour from your hectic schedule of running a freelancing or other small business to review your costs.   Today, I would like to suggest that another break worth taking is for business planning.

If you are anything like me, you are either so busy working on customer projects or business promotion that you don’t have time to think about where you want your business to go, or you are a money chaser, jumping from purchase order to purchase order, keeping the cash rolling in, and just letting the demand for your services shape where you go and what you do.

Many years ago when I managed a division of a medium sized company (back in the horrible days of working for somebody else).  One day my wise boss took me aside and instructed me that every week, I should put two or three hours aside, turn off phones, emails and other distractions, and spend some time thinking and planning for the future growth of the division.  Now whilst I would not suggest that as a small business owner you can afford to invest 3 hours a week into business planning, it is sensible advice to spend at least some time on this critical area of your business.   As per my boss’s suggestion, it needs to be a solid block of time, free of distractions.  Catching 10 minutes here or there, or do this whilst driving does not seem to work.

I find for myself, the best time for business ideas is when I am lying in the bath.  I make sure the door is closed, there are no distractions, and just relax and think about different aspects of my business (existing customers, what I did to land them as customers, future prospects, marketing ideas, ideas for new services, ideas for new products, etc).  I don’t actually try and think of ideas or answers to questions, I just think of the problem or area, relax into the warm water and then let my mind go blank.  Normally, my mind will wander and then ideas will form.  

I firmly believe that if you don’t make time to plan where you want to go and how you want to get there, your small business will run you rather than you running your business.   It might be that in these troubled economic times we need to go where the money is, but by having plans in place or ideas where we want to go in the future, when opportunities arrive we will be better placed to decide if they take us in the direction we want to go,

As a final thought, I also find it very useful to keep small pads of paper and pens dotted around the house in strategic locations (next to the bed, by the bath, in the toilet).  When the ideas and plans come to me, they can come really fast and if I don’t get them down on paper, they are lost as quickly as they appear.

When you are busy working to generate money for your small business, it’s all too easy to let the admin side of things slide. Over time, it’s easy for your companies recurring costs to mount up, for direct debit payments to increase, and the value of the items you pay for on a regular basis reduce in value whilst the money leaving your company bank account stays the same.

It is therefore a good idea to have regular reviews of your company costs during the year. Yearly reviews will work, although I review all my costs at the end of every quarter. An event sits in my electronic diary which reoccurs every 3 months, and prompts me to take an hour off and review my costs.

I do this by:

• Reviewing bank transactions via a P&L report (any accounts system such as Freeagent makes this a breeze), to look for any spending which is getting out of hand (in my case, normally take away meals whilst I am busy over a hot keyboard)
• Use on-line banking, check standing order payments and direct debits, cancel any that are no longer value, and check that each is getting value for money
• Look at cash spending (via expenses and credit card purchases) to make sure they are valid and not too extravagant
• Look at regular payments by any form, to see if there are cheaper options available (for items such as mobile phone contracts, insurance, hosting, broadband costs, etc)

Any money saved means an increase in profit. It is well worth the effort.