Archive for January, 2011

I am a great believer in rewards.  When I was a permie working for a large software development house (in the awful days before I started my own small company), my staff regularly received rewards from me.  These ranged from simple treats (of the eatable kind) through to extra holidays and pay rises when they did something exceptional.   It’s a philosophy I carry forward today with my small team – and that includes myself.

The psychology of positive reinforcement says that when an accomplishment is rewarded, the part of our subconscious brain which is responsible for driving our efforts seeks to accomplish more to receive other rewards.   The psychology of positive reinforcement is a fairly complex subject and covers why rewards (the pull in the right direction) are far better than stick punishment (a push in the right direction).  An outline is available here.

But in a nutshell, I go out of my way to reward myself when I do something well, or do something to grow my business.  This can range from a simple pat of my own back (yes, I actually do that) for a simple task, through to a major purchase for a big accomplishment.  It can be something small such as an eatable treat (I love Foxes jam cream biscuits) through to some new tech device (I purchased myself a brand new NAS drive for a recent large sale). 

I honestly believe such a reward system boosts an individuals performance.  So why not take 5 minutes to acknowledge your own recent achievements, and give yourself a reward ?

I know a freelancer/contractor who has a problem.   His problem is that when it comes to applying for work – he always worries that he does not have ALL the skills that a customer is looking for.  Therefore, he is very selective of the contracts that he applies for, with the result that he often finds himself on the bench rather than working and bringing in the money.

Finding yourself faced with a requirement for knowledge on a skill that you do not have is a fairly common occurrence.  In my line of work, typically contracts will be posted with between 10 and 12 skill sets required (or at least desirable), and typically a contractor can only expect to be able to hit 80% of the skills.   But from my point of view, rather than being something to be scared of, this is in fact the perfect situation.

For me, being a successful contractor or freelancer is all about knowledge, and without our boundaries being pushed, that knowledge will soon become confined, specialised and worse – dated.   I much prefer to have a requirement for 10 skill sets of which I have no knowledge of 1 or 2 of the skills required.   As long as it’s not the main skill the client needs, I am happy to either bluff my way thorough the interview or just admit I have no real knowledge of these skills, and then pick up the skill during the life of the contract work.

It’s a perfect win situation.   I can fulfil the majority of the requirements, I can pick up the new skill at the customers site as I work on the project, and effectively, I am getting paid to be trained.   I cannot think of a single contract or freelance job which I have undertaken which has not pushed my experience beyond my current knowledge, and where I have come out the other side more skilled than when I went in. 

So don’t be afraid of the lack of those skills – instead embrace the lack of knowledge and use the contract to expand yourself.

Have you ever visited an office where they have placed a large TV against the wall, and it is busy displaying all kinds of impressive information?  I have seen this where companies show number of incidents, share prices, weather, turnover and lots of other information.  This trend started in call centres, where it was used to show how many calls were being processed, how many callers were waiting and other such information.  It kept the telephone operators mind on getting through those calls.  

Some of the companies I work for ask me to produce such screens – they give them all kinds of nice flashy sounding names such as dashboards, or alert boards or KPI boards.  All do the same thing – take information critical to the success of the company, and boil it down into a few graphs and alerts showing a clear picture of if the company is doing well or badly.

As freelancers and small business owners, we all have our own critical information – web hits, turnover, subscribers to our social feeds, maybe number of support calls, maybe number of todo tasks.  I would guess that if you are anything like me, you visit these numbers everyday and wish there was a way to pull it all together.

Well, a new web service has been introduced called Geckoboard. As the image suggests, you can include lots of information on a single screen via widgets which you can configure.  There are all kinds of display widgets including text, charts, tables, gauges and up/down pointers.  It can pick up from a wide range of data sources using either the standard widgets they provide (such as links to BaseCamp, FreeAgent, Google Analytics, Twitter, etc) or you can create your own, pointing it to an XML data feed.

You can define multiple pages which auto rotate, and if you sign up for a premium account, you can then start tweaking the look, feel and colours using modified CSS (I am not so keen on the black background as a default).  The configuration is very easy, and the refresh times are very rapid.

Whilst the board is designed for the big monitors/TV’s on the corporate wall, it works very well either as a new home page for your web browser, or to run on that spare monitor you have.

Geckoboard is currently in free beta testing – and so far it’s unclear how the service will be funded – it may become chargeable as the service evolves, or (as I hope) will become Freemeium.  But if you want to get serious about your business metrics, you can do no better than Geckoboard.

Last week I was having a conversation in the business mentoring group that I attend, and I was asked how much I was willing to pay for future events. I won’t tell you the actual figure, it’s irrelevant. What is important is the conversation that followed with my wife, and a few friends about the amount I said I was happy to pay. All thought I was mad – it was way too much. After all, their logic was that with 5 or 6 people attending and all paying that same amount, if it was projected forward for a whole day, it would come to over £2000 pounds.

Which bring me onto the difference between the cost and the value of things. I could see their point from one side – would I pay somebody £2000 a day for business advice – most likely not. Is anybody really worth £2000 a day? But, my logic was that for the couple of hours each month, I get to sit down, talk about my business and how I can move it forward, and get feedback. And its not £2000 a day because we are only there for 2 hours, and we are not paying for the whole day – just the 2 hour portion (its only £2000 if you project it forward to 8 hours and therefore multiply it up). Plus, and this is the big factor for me, I can pinpoint some advice that I received in previous mentoring sessions which directly lead to sales worth tens of thousands of pounds.

So let me ask you dear reader, if I was to say to you that for a fee I could get you tens of thousands of pounds of revenue – what would that be worth to you? If you are honest – what would you pay?!? And that is my argument.

This is the difference between the cost, and the value. Things may look very expensive, but when you work out what they save, what they generate, or how much use you get from them, are they really that expensive?!? And there may be cheaper options out there, but would I get the same value, the same results?!?

Which is why some salesman do really well – they are the ones that when presenting a proposal which is in the enterprise/luxury side of the price scale, they can sell the value, compared to the cost.

It’s also why we don’t all fly Ryanair or Easyjet.

Recently, I was working on a project for a customer, and two of the tasks I was asked to do was to recruit more staff – one was a permanent member of staff and the other was another freelancer to complete some coding.   The permanent position went via a contract listing board, and the freelancer job went to one of the various freelance bid boards.  After 24 hours, the CV’s and bids started to come in, and I was completely shocked by how bad all of the responses were.

Take the CV’s for the permanent position responses.  The advert was for a SQL Server developer, with experience of finance data, and SSIS development skills.   99% of the covering letters went as follows:

To whom it may concern,

Please find attached my current CV.  If you think I would fit the bill, let me know.

Regards

Whoever

Some of the CV’s had the skills I needed, some of them didn’t, but going through all of the CVs was hard work trying to work out who was who.

Then there was the freelance development work – every single one of the responses went as follows:

Hello, We are Such and such a company.  We provide such and such technical skills.  We would love to work with you if you can supply details of the job.  We have many staff who we can use, we will assign one once you tell us what type of work is required, and will complete it quickly and cheaply.  Let us know the details and we will bid.

Seems fine, except the work requirement already said what the work was – it was very specific – it said the databases, how many columns were involved, what the code needed to do, the style of coding to be used, code language, etc etc etc.  Those responding clearly hadn’t even bothered to open the bid details – they had seen the category (coding) and the max bid price, and just sent out a standard cut-and-paste response.

The point is, all the responses, all CVs and all job bids were scatter gun – the people at the other end of the interweb wire were sending out their CVs and bid notes to as many people as possible in the general hope that somebody would bite.   It was really awful to read all the cover letter and bid notes.  If just one of them had taken the time to respond with something which tied them in to the requirement, they would have most likely been awarded the work.  None did – and there were a LOT of CV’s and bids posted.

If I was sending my CV out for the contract work, my cover note would have gone something like

Sir/Madam,

Please find attached my latest CV.  I can confirm that I am a SQL Server developer, and as required, I have extensive SSIS development skills.  I can also confirm that I have experience of the financial data processing as requested, in both a transactional and data warehouse context.  I therefore feel my skills match your requirement.

I hope you agree. If you would like to meet and discuss your requirement or this contract in more detail, my contact details are…. Etc

The scatter gun approach never works.  Agency staff don’t have time to check you match for jobs – so they are more than likely to just bin the CV.  And even if it gets through to the end recruiter, a scatter gun cover letter will never make your CV stand out – you need to be specific and TELL THEM why they need to select you for the contract role, freelance gig or customer work.

So if you are sending out your CV and you are not hearing anything back, take it from me – it’s likely your CV was never opened because your cover letter didn’t call them to action.

One of the things that I have found to be on the increase for me personally over the past 18 months or so is end of work payments.   By this, I mean that I have done the work, completed the project for the customer, installed the software/delivery/report and raised the invoice.  Then, right at the end, the customer will ask for something more.   I am not talking about extra product work (more developments), but instead the customer needs additional services such as support, or call off help time, or question sessions.  I have been asked to supply this extra resource in a variety of ways, and all have their own advantages and disadvantages:

Support and Maintenance
For any company looking for growth, this is the ideal situation – its how big business makes their real money.  Once you have delivered a project, a sum is agreed between you and the customer, and they pay you this fee annually up front and you provide fixes, advice and resolution.  Note, support and maintenance never includes new features or tweaks (these are for enhancement requests for which you charge your normal rates).   Its insurance for the customer – they know your be around to fix things that go wrong and they know how much it will cost them as they have paid up front.  The flip side is that if the support payment charge is too low and they hog a lot of your time with questions and problems, you can actually make a loss against the revenue it can bring.   Of course, if they only need you a little for the year, you have made a shed load of money for little to no effort whilst you go off and do the next project.

The ratio between a support/maintenance figure and the initial delivery/development cost will vary from industry to industry, and of course will be down to the size of the project.  But a starting point (this is typical for say computer software supply) would be around 25-28% of the initial cost, but be prepared to haggle over the final figure.  And of course, if the support is renewed at the end of the 1^st year, don’t forget to include a provision to uplift the yearly charge by inflation.

Call Off Booking
Call off booking is where the customer may need help in the future, so they agree to pre-book and pre-pay for a number of days of effort, and they are then free to ‘call off’ (use) the time as and when required.  They would do this as it makes the administration easier on their side.  Whilst they don’t want to set up formal support agreements, and at the same time don’t want to go cap in hand to their boss to raise purchase orders every time they need help, raising an order for 5 or 10 days of support time in advance may be an easy decision.   For call off booking, its best to make sure that the payment is in advance of use, that the days paid for expire after a set length of time if not used (say 6 months or a year), and that they understand that because they are not on a formal support contract, it will be provided on a best endeavours basis (i.e., you will provide support when your time allows).

Clearly with such an arrangement, you will need to carefully track your time, and I suggest a minimum time slot for rounding.  For my customers, I provide call off booking with a minimum use of ¼ of a day.  If they pre-pay for 5 days and need a quick answer by phone or email, this uses a ¼ day of their 5 days.  This saves having to reconcile down to minutes and hours.   I justify this minimum by the fact they will be interrupting normal work, and it may take an hour or so to get back on track.

Whilst it’s not as good as support and maintenance, call off pre-booked time does mean that you have the cash in the bank for work that may or may not be required in the future.

As and When Agreements
The next arrangement is not really an arrangement at all – it’s most likely what you do now.  When they don’t want to set up support, and don’t want to pre-book, they will just call you when ever they need help, and you charge them.   There is no advantage for them and no advantage for you – so it’s a neutral balance.

Agreed future call off rates and time
The final option is the one to avoid at all costs – where they force you to agree to future day or hour rates, and to be available, with no promise of the work.  All the advantages are on the customer side – and you don’t get any balancing money up front.   The difference between this agreement and the “as and when” is that they have nailed you down to price.  This is not an issue until the time you want to raise your rates, and find you can’t.

Is it right to take something you have done, and charged a customer for, and give it or sell it to somebody else?  That’s the question on my mind today.   Let me explain…

Take as an example the car that you drive.   You have purchased that car.  But the design, the specifications, the look and the feel… well that is owned by the motor company.  You buy the metal and the plastic, but you don’t own the design.. or do you?

But what about the web page or the code or the design you put together for your customer?  What are they buying – are they buying everything including the ideas you have and the design, or are they buying the end result  – the car if you like – that they can use, drive and work with?!?

For me one of my biggest work assets is the tools that I use – I have in my Evernote account, a thousand little snippets of code that do all kinds of things – from complex searches in SQL Server, to universal date conversions, through to full applications to do data quality reporting.  As I am forced to develop something new for a customer, if its useful, I clip the code to Evernote and its there for the future.  And that clip means that instead of wasting 4 hours reinventing the wheel, I can find the code, paste it in and it only takes 10 seconds.   But is it right that the customer has paid for my time to do the work, and I am snipping it for use in the future – for future clients and projects?

My view is.. yes.  My logic is, ok I may be snipping something that they have paid for my time to develop, but in the majority of cases, I have saved them time and money by using the code clips on their projects– I haven’t spent 5 hours of their time working a problem in the past when I solved it from my evernote collection.  It balances out – I am not taking the entire package they are asking me to develop or design, just a very small part of it.

Where I am in doubt, I always say up front this is what I will be doing – and it’s never been a problem for any customer.

And it’s a massive saving of time, effort, and more importantly – my sanity through relief from boredom; doing the same thing over, and over and over again.

Timesheets – urrgghghg – the very thought can make the hardiest contractor, freelancer or small business owner shudder with the thought of over complicated administration.  I mean, timesheets – what is the point?  Really?  Your working hard, your making money, you can see your business bank account growing (or at least not declining), so who needs them right?  Well, maybe you do – or something very like them!

Let me ask you this – the last project you did – be it bespoke for a customer, freelance or on a contract – did it make you money?  Was it profitable?  If so, how much?!?  If you don’t know the answer to those three questions, how do you know if next time you quote for work, you need to up your day rate, increase your estimated time, maybe reduce it to make you more competitive, or if you were on the money?

Over the last 3 or 4 months, I have been recording time on projects.   I have not been over precise in time recording, but generally when I start work on a project I start a clock, and when I am done I stop the clock – it’s as simple as that.  When I was interrupted by a call or an urgent email or went for a cup of tea, the clock just kept running.  But if I stopped work on one project and started on another (for a change of scene) I did change the clocks on my projects.

I did this exercise as I wanted to really see how bad (or good) my estimation skills were on a couple of projects, and to be honest, they are not that far out.  However, I noted that I was quoting a little light on the real time taken to complete projects, so I have now made a mental note to increase all future quotes by around 3% of effort (rounded up to the nearest half day).

Now time recording does not have to be a major chore – there are plenty of free applications available for the web (if you use Freeagent for accounts, BaseCamp or ProjectTeamPM, they all have online time tracking and reporting), Windows or Mac desktop widgets or even better (in terms of recording time when you are not at your desk) on mobile devices such as Android or iPhone.

It doesn’t even have to be a full time commitment – its useful to do detailed time recording for a week (record time on calls, emails, surfing, eating, commuting, etc) to see where your time is being eaten up, and then try some outline time recording on some projects (as I did and described above) for 1 or 2 projects – just to see how good your quotations really are.  Of course, if you have contracts or freelance gigs which are billed on a daily or hourly rate regardless on the amount of time you spend, then I am sure you are already tracking your time correctly… aren’t you?!?

You remember that girl you dated at school (if you’re a women reading this, it was the guy you dated) – the one you were not so nice to, the one who’s heart you broke.  Well, thanks to the internet she can now find you, track you down, see where you work, what you do, and what your thoughts are on last nights TV.   The Internet, and especially in social media, has made all of our lives transparent.

But you know what else?  That potential customer you have been talking to can also see it all.

I met a freelancer the other day that had a twitter account, and on his feed he was busy tearing holes into all the processes, procedures and systems his last customer used.  Now what do you think would happen if after attending a contracting job ‘interview’ or putting a proposal in front of a new prospect, that person googled him?  Do you think he would get the work?  This is why you need to double-think everything you put into the cloud.

One of my former lecturers once told me that reputations and trust take a lifetime to build, and a moment to destroy.   I would suggest in this internet and social connected world, it’s even faster than that.

When it comes to invoicing, there is a golden rule of business which says “Invoice as soon as possible”.  This clearly gets the bill in front of the customer as soon as possible, which in turn helps cash flow as we get the money into our bank accounts as soon as possible.   But, sometimes later payments or earlier payments are more prudent.

The three possibilities for invoicing are as follows:

Up Front Invoicing
This option is preferable for both large scale projects, and when we are dealing with a new client.   At the start of any project, agreeing as part of the terms of business, an initial up-front payment (say a 50% deposit) means we have money in the bank before work is started.  This reduces the risk that we get half way through the project and the customer cancels, goes bust or just does not pay.   It also has advantages for very big projects which may take several months in that we don’t have months of no cash coming in, which can lead to all kinds of famine/cash flow problems.   Clearly, sometimes asking for money up front can be difficult, but this option does reduce a lot of the payment risks for you.

At End of Work Invoicing
To be honest, this is my general method of invoicing – raising a full and complete invoice once the project has been completed, and including all the quoted work, expenses and other costs.  I normally select this method of invoicing because I am not so good at asking for the money upfront (a case of do as say, not as I do ), plus I balance this off by the fact I have a reasonable amount of cash in my company account, plus the customers I have been lucky to land have been bigger name companies.

Delayed Invoicing
The third and most surprising option available is to delay the invoicing of the customer.  Even once the project is complete and handed over, there may be some situations where you don’t produce an invoice for a few days or even a few weeks.  This option is really only advisable for really trusted customers, but it can have a cash flow benefit close to period or year ends.   When an invoice is for a large amount, delaying the creation of the invoice for a few weeks can push the payment into the next VAT quarter or next year end, which then delays when the VAT has to be repaid, or when the corporation tax appears on the profits.    I am currently sitting of 3 or 4 large invoices which I will be sending out at the end of January, once I have completed my year end accounts – thus delaying the payment of a few hundred pounds of corporation tax by 12 months or so.