Archive for April, 2012

A question for you: When you look back at your historical quotations, estimates and proposals, is it clear on the documents how long the figures are valid for?

Put it another way, what happens if a prospect from a few years ago knocks on your door and expects you to honour the quotation you produced which is based on your 2006 prices? Do you honour it, or do you expect that you can refresh the quotation with the current prices and everybody will be happy?

On the flip side of this, do you produce quotations and fall foul of saying “this quotation is only valid for 90 days from the date of quotation” (or other such words?) After all, if a prospect wants to raise an order on day 91, I am sure you will be happy to take their money.

For me, the compromise is to reference the date of your annual (hopefully scheduled) rates review, and make that the cut off date when quotations will be valid up to.

Something along the lines of:

This quotation is valid up to and including the date of our annual rates review, which is scheduled on the 2nd of August each year. On the next review date after the date of this quotation, the prices shown will need to be refreshed with any amended prices to be valid.

Last week, my business made £1,180 from a customer without doing any work. All it took was for this particular customer to pay their invoices late.

I know that Late Payers are a constant worry for the majority of freelancers and small businesses. The majority of my own customers pay late. However, on the whole, my late payers are only 2 or 3 days late in making their payments – which I can live with.

But this one customer was over 80 days late in their payment, and the amount was large – very large. In fact, the original invoice was nearly £60,000 in value. As you can imagine, when the amount is so large, and with payment being so long overdue, it can lead to a lot of sleepless nights – will they pay at all? Will I have to take them to court? Will they eventually turn around with 1,000 reasons why they are not paying (delivery was not as they wanted, etc)? In short, would I ever see the money?

I had a signed contract – so was covered from that point of view. In the contract, it talked about my terms and conditions, which included my late payment penalties – so was covered there. And my online accounts system (the wonderful FreeAgent was regularly sending them chase notifications).

After the invoice was 30 days overdue, and after a lot of worry – I bit the bullet – and raised a late payment invoice for 30 days of interest (8% over the base rate – so maths = (((amount of invoice + 8.5%)/365 days) * 30 days) plus my £50 admin fee.

30 days after that, I raised another 30 days of interest and another late payment fee, and then a third late payment invoice. They now had four invoices outstanding (the original plus 3 late payment invoices)

After the third invoice, it did seem that I was wasting my time – I was calling them and was being given more and more complex reasons for the late payment (we have a new accounts system, the payment manager is on holiday, its in the next payment run) – I even started to research on Google which debt collection company would have the most success (and which would cost me the least).

And then, guess what…. they paid. There was no email or call or anything – the money just magically appeared in my company bank account. Not only did they pay the original invoice, but also the late payment invoices – so an extra £1,180 into my bank for no effort from me.

And you know what – that’s more money than I would have gained in interest in having it sit in a bank – so I am very happy.

We all suffer bad payers – but don’t give up. Chase, chase, and chase some more. When things get too much, threaten and then do it – raise that late payment invoice. Don’t put up with those late payers. And don’t wait until they pay to raise a late payment invoice – raise one a month – it acts as a reminder to pay the original invoice (and that you are serious).

As long as you have a signed contract and a clear set of terms, the law is on your side.

I checked it very thoroughly,” said the computer, “and that quite definitely is the answer. I think the problem, to be quite honest with you, is that you’ve never actually known what the question is.”
“But it was the Great Question! The Ultimate Question of Life, the Universe and Everything,” howled Loonquawl.
“Yes,” said Deep Thought with the air of one who suffers fools gladly, “but what actually is it?”
A slow stupefied silence crept over the men as they stared at the computer and then at each other.
“Well, you know, it’s just Everything … Everything …” offered Phouchg weakly.
“Exactly!” said Deep Thought. “So once you know what the question actually is, you’ll know what the answer means.

The above quotation is taken from the HitchHikers Guide to the Galaxy (the world famous book, radio show and film), and is the conversation that takes place after the computer declares the answer to the Ultimate Question to be… “42” (you need to read the book/watch the film for this to make sense).

But, what if the computer had got it wrong? What if the answer to Life, The Universe and Everything was in fact, 43, 44 or “eat more carrots?”. How do we ever know that any answer is the right answer? And does it really matter?

The problem with Numbers In Business
When working with my customers, most of the products I deliver are based around Business Intelligence. I provide tools for them to perform quick analysis by dragging selection criteria (in the form of column names) into windows, and selecting which information they want to report – the tools then crunch large amounts of data and produce answers in the form of tables, graphs and trend plots. Using such tools, they can quickly report on anything from yearly turnover, number of patients seen in a hospital, or breakdown of budget verses actual figures.

But what if they (or the system) gets the answer wrong?

One thing I always stress to my customers upon delivery and training is that with the power to produce data so quickly, it is critical they produce their reports in 3 different ways – or ask the same question 3 different ways. Only when all 3 answers are the same can they start to trust the results. And even then, if the question is wrong (the filter and selection criteria incorrect), the answer is not going to be the answer they are looking for.

This leads me onto the numbers in my own business, and in particular, a new project I am working on.

My Passive Income Project
In the last few weeks, I have started work on a passive income project. I have talked before about how my business is not scalable in any true sense (I provide a service, and the only way to generate more income is to clone or hire another me) – so I have been really keen to find a way of generating growth and income whilst I get on with my day job. I will be talking about this project and all the maths involved at the end of the year.

As part of this project, I wanted to make sure the numbers were sound. This project was going to be investing an awful lot of my company’s cash into the project, and I didn’t want anything that could be seen to be risky. If the project numbers did not stack up, then it was not going to work for me.

But here is the problem – how do I check the numbers? Yes, I had created a nice spreadsheet of the numbers (expenditure, income, taxes, etc) – but what if I was asking the wrong question. What if there was an error in my assumptions or understanding – the answer which I had calculated as being “go for it” could actually really be “stay away from this” – and I would not know until I was way over the point of no return.

Checking the Numbers
With the project reaching a critical ‘do or don’t do’ stage, I decided that I would take my own advice, and have the numbers checked.

My first port of call was my wife. Having her check the numbers made sense as she could run through the spreadsheet, check for errors in my calculations, and check she was also happy with the numbers. I asked her to use her own blank spreadsheet to make sure that we were getting the same result by approaching the numbers from two different directions.

Of course, her numbers were different from mine, but we sat down and compared the figures – spotted the reason for the differences and agreed that both sheets gave the correct answer depending on different points of view. The numbers were close enough to be insignificant, so we agreed to move onto more robust checking.

And for this, I paid money. I had my accountant check my numbers, had my Independent Financial Advisor check the same numbers, and also had my bank business manager check the numbers. Each charged me a small fee for checking – but the fees were not high compared to the reassurance it provided.

The only person who said there was an error was the accountant who confirmed that one aspect of my tax calculations was incorrect and adjusted my figures for me – luckily for me, the error actual improved the situation.

Who’s checking your answers
The point of this story is, our project is a GO! But only after I had four other people (including three professionals) double check my numbers. Yes, it cost me some money, but I can sleep better at night because of it.

In my freelance business life, I have seen time and time again people make mistakes on assumptions and calculations – only to be disappointed (or out of a job) when the numbers do not materialise. I have seen data analysts at customers sites produce reports in seconds and send them out as ‘the answer’ only to find that the original question was wrong, or the way that they turned this into a report was wrong.  I have also seen software developed and cloud services produced only to come to a sticky end when nobody purchased them (I have done this myself).

At the end of the day, if the answer is important, its worth double or triple checking both the answer and, maybe more importantly, the question.

I got professionals to check my question and answer. Who is checking yours?

In my previous post, I talked about how I have started sending out regular newsletters to my old customers and future prospects. Today, I wanted to cover why, who and how.

Keeping In touch – The Why and Who

I have no doubt that when it comes to marketing, out of sight is also out of mind. Which is why I wanted to start sending out newsletters. But I am also a believer that its easier to win back old customers that it is to find new customers – you never know when that old customer will need some help on a new project, or some additional consultancy time or help on a new project.

With this in mind, I decided that the initial target of my newsletters would be my old customers. So a quick email went to each of them saying that I had been working recently on some exciting other projects and I thought that some of the things I had created whilst working on these other tasks could benefit them to (pretty much those exact words). I said that I was going to be sending out a regular update of some useful routines and tips, and also stressed that the updates would only come from me every 2 weeks or so – so it would not be overload. I also pointed out that if they were not relevant, they could unsubscribe at any time.

My feedback was good – I got 100% sign up on everybody I emailed (although it did help that I had worked with them in the past, therefore they knew what I did and how I liked to share useful information).

Of course, I then took the opportunity to contact my current handful of prospects and offered to sign them up in the same way. So far, the uptake from prospects has been 45% – which I am fairly happy about.

The newsletter – The How

From the beginning, I wanted my newsletter to be no effort for me. I also wanted to keep track of my subscribers, and see if anybody was actually reading the newsletters (no point in wasting time producing something that nobody was reading). After a quick bit of research, I decided that I would use the marketing email system – mailchimp.

Mailchimp is an internet based mass emailing system. It is really designed for sending out large numbers of emails as part of a marketing campaign (you know the ones, the ones we all get every day and curse (50% off sprockets in our Spring sale)).  But it works just as well for sending out newsletters.

Mailchimp is not designed to be a free service, but it is free for the first 2000 subscribers with 12,000 emails a month (enough for everybody who could run a small business to keep in contact). If your newsletter gets more than 2000 subscribers or needs that number of emails, you are doing so well you can probably afford to may the $10 a month usage fee.

Setting up a newsletter is a snip – you can quickly design a sign-up form, manually add your subscribers if needed, and then design your newsletter (in terms of Mailchimp, each fortnightly email I want to send I setup as a campaign so I can track who is reading it).

One of the magical things about Mailchimp is that when you register, you give it your personal details including web site, and it does so much work for you – it goes to your web site and finds your web site style sheet and graphics – so straight away it sets up a template with your company logo, fonts and address. All I had to do was enter the text. Text editing is a breeze – you can change the look feel, fonts, colours and so much more within your text. you can also include graphics if required.

Once you have your first newsletter done, you can then duplicate it for the next week, and the next – and just have to paste in the text you need – for that weeks edition. The creation of a newsletter really just takes me 4 or 5 minutes (once I have the text from my Evernote files – see my previous entry).

Once defined, the mail can then be sent straight away, or (as I do) scheduled to be sent at a point in the future. I already have newsletters set up taking me into the summer.

When the emails are sent, MailChimp takes care of everything – the email is sent from your email address, and appears in both text and HTML format (depending on the recipients email client and preferences). Once sent, everything is tracked – for each weeks newsletter, MailChimp tells me how many emails it went out to, how many people it was sent to, how many opened the email , how many clicked embedded links in your mail, how many unsubscribed and how many people it was forwarded on to.

I am sure if I was a big company, I would be using MailChimp for sending offer and sales emails – but even for something as modest as my newsletter, it does everything I need.

So everybody’s happy. My old customers and prospects get some (hopefully) useful information, I get to be noticed by them every week (which should lead to more work), and I get to get on with my day job, leaving Mailchimp to track how well my newsletter is performing.

If you would like to take a look at my sign-up form or even read what I am sending out (my tips are about SQL Server databases tips and useful functions), my sign up form is here.

Enjoy.