Archive for the ‘Business Thoughts’ Category

So how long does a typical project take you?  From initial signing of the contract to delivery to the customer – is it a day?  A week?  A month?  A year?   More importantly, how long do your customers think it takes you?

I have talked in the past about the difference between needed activity time verses the actual amount of effort (including why you should bill for the needed activity).  But the other part of the time equation is how long it is assumed it would take.

Needed, vs Actual vs Assumed

So let’s take an example project which is going to take you 2 weeks to complete.   You have your shortcuts, the code (or designs) you can re-use, which means if you were starting from scratch without the short cuts, it would take you really 4 weeks (which is what you should be charging your customers).  But how long should you tell your customer it will take?   Should you say you can deliver it in 2 weeks, or 4?

If it was my project, and assuming the customer is not giving us rock hard ‘we must have it by’ delivery dates, I would say it would be delivered in 5 or 6 weeks.  Of course, they would be quoted and billed the 4 weeks of effort, but the extra time gives me breathing room.

It’s important to remember that we are the experts in our particular field, we have the knowledge of how long things take and what our schedules are like.  It will be assumed we know what we are talking about.  Put it this way, if you received a quote to build an extension on your house and the builders said it would be complete in 15 weeks, are you going to argue and start trying to manage their time?  Or would you assume they know what they are talking about?

Projects are never brick shaped

One of the problems with running projects in our companies is that projects are never ever brick shaped.  They never just ‘start’, run for a period of time, and then just finish.  I would argue that they are more diamond shaped.  They start gradually (whilst dates, specifications and designs are agreed), have a mass of activity in the middle, and then sort of fade out (you deliver, they test, you wait for sign-off).

So treating projects as neat squares, that take 3 or 4 weeks, then connect to the next project never works.  Making this assumption means we will end up with slack time between projects whilst we try to win more work, or wait for the next project to be agreed.

As per the diagram above, I treat my projects as diamonds, fitted together, with one project starting up whilst the previous finishes.   And the easiest way to manage this is to add the ‘assumed’ slack time onto the project which means I have more room to fit the project pieces together.

Plus, it means I am never late delivering projects, the customer is delighted when I deliver early, and I don’t end up with the slack time between projects.

So how do you join your projects together?

Do you keep a journal?  I don’t mean a scheduling of upcoming events and appointments, I mean a historical diary – as in the things that teenage girls are normally associated with (that may seem slightly sexist, but it’s generally accepted that boys don’t keep diaries).

Diaries and Journals can be life savers for contractors, freelancers and small business owners when you need to refer back about when things happened, who said what, when and the timeline of problems.   Somebody who can say in a meeting “Phil confirmed to switch off the server at 4:15pm on Tuesday 12^th” is going to be believed more than somebody who responds with “yes, but somebody, I think it was Tony, said not to – he may have said this on the Monday or the Wednesday – I think it may have been Wednesday”.

Diaries and journals don’t have to be big.  Business journals don’t have to be war and peace on everything that happened at every point in a day, but can be very useful to record key points as they occur.

I keep an electronic journal and quick but important events I like to record include:

• Go ahead’s during phone calls
• Key decisions (during a meeting or a chat, somebody says to go with option A or delay the project)
• When people promise to get back to me
• Dates when I send out documents, contracts or invoices
• Notes about disagreements, who was involved and how it was resolved

There are plenty of ways of keeping a journal.  For some, paper will work, but for me Electronic is best.  I keep an electronic journal on my Android Tablet (always with me during the working day).  Having an electronic journal means I can very quickly add a note, categorize it (normally by customer/prospect) and then quickly search for the key information.

Electronic journals are available on PCs (one is already available in Outlook), for iPhones/iPADS and of course Android (I use Orange Diary for android which I can recommend).

Making an entry during a phone conversation or meeting takes me just 10 or 20 seconds, but it has saved my bacon on a number of occasions.

One of the things I have found really useful over the past 18 months was to find business mentors.  I have 2 sources of mentors; one is a small business group or 6 people which gets together once a month (or so) and we discuss problems, work out solutions and challenge each other to grow our businesses.

I have also been lucky to find a new Entrepreneur friend who has a lot of business experience.  Over 25 years, he created a business which started as just him, and grew to employ 150 people with a turnover of over 80million a year.   Now and again we meet up, and he gives me advice.

Both forms of resource have really helped my business over the last 12 to 18 months grow in size and turnover.  But Alex has been the best – he has really guided me.

Words on the BIG CHANGE

Just after the new year, I met with Alex for a meal and we got talking about the BIG CHANGE that most business owners look for to quantum leap their business from a struggling start-up into the fully fledged profit generating machine we all yearn for.

Without doubt, the advice on the BIG CHANGE is the one thing that has allowed me to double the size of my company in a year, and as Alex allows me to record the conversations, I provide the key part of the conversation for you:

Alex : The problem is that most small businesses, most freelancers, even most independent high street shops are looking for the BIG CHANGE that will move them up a gear.   Let me tell you a secret – there never is a BIG change that works!
Me: No?
Alex: No.  The only thing that works is making small, constant and positive small changes.  They all add up, and become bigger than the one BIG CHANGE that everybody is looking for.  Even when a company appears to make a big change, it’s just an outside perception of lots of small changes made from the inside.
Me: So what types of changes, and how do I know if they are positive?
Alex: That’s the thing, the changes can and should cover everything.  Marketing, accounting, money management, working, customers, support, products – cover them all with small changes, just make a small change in one area, then move onto something else.   How do you know if they are positive – well most times you can just tell – in your gut.  But if you have a doubt, measure the impact, and if it doesn’t move your company forward, just reverse the change and try something else.
Me: It all sounds great – but sometimes I am just so busy….
Alex: We all are.  We all are.   But, try this.   At the end of every working day, just before you finish, think to yourself “what did I do that moved me forward today?” The answer has to be something other than normal work – completing some code, or making a sale or creating a quote – they are the day to day stuff, it has to be a process change, or a system change or a mind set change or a direction change – something positive.  If you haven’t done anything on that day, stop, and do something positive.  Most positive steps will only take 5 or 10 minutes.
Me: And how will I know what steps to do?
Alex: That’s the easy part – if I asked you to write down some ideas, I bet you could already think of 40 or 50 you could do.  As you think of something you can do, write it down for future action.  If you see a company do something which may work for you, write it down, an article which gives a tip, write it down, you experience bad service but can turn it on its head for your company, write it down.   The hard part is finding the time.  So just aim to do one single positive small change per day, and before you know it, your company will be flying.

You know what, Alex was right on the money.  One small change, each day, and my business is really flying.

I am pretty sure you recognise the image on the right as a thing called the ‘sales pipeline’; the mythical funnel shaped flow of a sale process, with lots of customers going in the top (at the prospect stage), which then get whittled down in number, to eventually hit the thin bottom of the funnel as sales.  The sales pipeline has been around for decades.

Well, here is a confession. . . . I don’t have a sales pipeline shaped like this.

Whilst I am on confessions, I am going to say something pretty radical, which goes against everything which is 21^st century…. I don’t do Social Media sales.

Social Media – Not for Me

My company does not have a facebook page, it doesn’t have a twitter profile, and it doesn’t even get mentioned in Google+.

The reason is simple – I am still not convinced that social media works for small companies.    Oh, it may work for Nike, McDonalds and NASA. . . but who wants to follow the tweets of my company?  Nobody.   It would be wasted effort.

I have read all the blog posts and books which talk about making yourself a Leader in your field via social media – and they may work for marketing gurus or Business Leaders, but for a small company such as me – nah. . . . it just isn’t going to work.

I have my own personal Twitter accounts, Facebook Account, Goole+ and Linked in.   But they are mine, for my own social use (mainly about business growth) – they don’t try and sell my company.

My company sales Pipe

The sales pipe above, and social media is all wrong for me.  It’s too ‘scatter gun’.   People talk about using Social Media to get as many people in as possible, get them crammed into the top of the funnel, and don’t engage – just hope that you don’t piss them off so much and they stick around and eventually buy something from you. . . at somewhere down the line.

So my sales pipe is just that – it’s not a funnel, but a pipe.  Narrow at the top, narrow at the bottom.  I work with just a handful of prospects, and lead them through the process, to the final sale.   When I need to engage with them, I pick up the phone or visit them.

It may not be right for everybody, but its real, and it has helped me drive my sales up and up, and made 2011 my best year so far.

Maybe being non-social media, non-email campaign, but being Pro real conversation and meeting makes me and my company different.  Maybe that’s one of my USPs.

What do you think?

Times are still tough out there (so I am told), and judging by search queries being run through Google and posts on small business forums I visit, a lot of small companies are finding it increasingly difficult to find new customers.   The two biggest phrases I see from SME’s at the moment are “dealing with late payers” and “how to attract new customers”.

This is odd, because if small companies and freelancers are struggling in making sales, it does not really explain my recent experience dealing with small companies.

Over the last few weeks I have spent some background time working on a project for a customer, finding one or more suppliers to provide IT software development services.   The customer needed a company or two to provide a mixture of services such as web site design, some database design, and application development.  My task was to define the requirements, help find companies to perform the work, vet the companies and make recommendations.

How I found the Companies

Luckily, finding the companies was not my task – it was given to an office junior who used a combination of google searches (both using adword adverts and natural results), advertising on freelancer work sites, and using a small list of previous suppliers.   In all, I was given a list of 31 possible suppliers to approach with the specification of work required.

It’s worth noting that for the sake of integrity for this work, I did not put my own company forward for doing the work.  I was simply tasked to create the outline specification, recommend a supplier and then work with them during development of the systems.  The budget for the entire work package (not including my own companies time) was £198,000 – a fair chunk of work then.  Most ‘chunks’ of work were budgeted at between £17,000 and £34,000.

The shocking Response

After  discounting 2 companies (due to geographical restrictions on the project), 29 information packs were sent out – including the outline requirements spec for all work required, rough time lines (spring next year for completion so no pressure), asking them to get in contact with bits they were interested in and outline costs.  I didn’t include the outline budgets – I didn’t want to tell anybody what they should charge.

Out of the 29 packs sent out – the stats after 4 weeks were as follows:

• 9 companies never made contact – in any form.  No emails, no calls, no letters – nothing.  I have called all 9 companies and all 9 are still in existence.
• 7 companies made contact by phone, said that the information was good enough to work with, and would provide outline costs and timelines within 2 weeks – none of them sent anything through.
• 5 companies visited for meetings for more information.  Out of these 5, 1 company visited 3 times.  Out of the 5 companies, none provided any costs or timelines – they simply. . . .vanished.
• 2 companies responded with what I would call a standard information pack; a background of their company, projects they worked on in the past, and various services they offered.  Nothing was provided specifically for the project – no timelines, costs or even reference to the project.
• 3 companies provided responses with what they would do, how long it would take, how many people would be assigned, how they would do it – but all 3 would not give a price – any price.  No day rate, no total, no overall outline– it was as if pricing was a national secret.

Just 3 companies provided the information – what they would do, by when, and how much.  And guess what, all 3 got the business (they all wanted to do different parts).

What this means for you

The companies made it so easy for me.  I could happily recommend the 3 companies who got the work as they were the only 3 companies to respond with the information needed.  Any of the other companies could have been awarded some or all of the work too, just by providing the information that was required.

Now I am sure that if asked by a potential customer to provide a bid, you would create a quote in the agreed timeframe with the information requested.  But, it just strikes me as crazy that so many companies are searching on how to find work and customers, when the work was there all the time, and all they had to do was respond.

Have you ever been on a web site looking for information, and the first thing they present is a “Will you take a survey” pop-up?   What about where you order something, and they demand your phone number – it’s a mandatory option – you must give them a number – so you make one up.  Or how about a web site which demands you select your STATE from a drop down list, but you live in the UK, Germany or South America – so you end up picking Alaska because it’s the first on the list?

Now don’t get me wrong, all of this can provide useful information – but there is a time, and a place, and a question of is it relevant.   I would suspect that the pop-up surveys would only be used by people with an axe to grind (or those who are really, really bored).  I would also suspect that all the phone numbers held in peoples databases are wrong – if you FORCE me to provide a phone number to order a pair of socks on your web site, you can bet your going to get a “99999999” phone number.

There are some exceptions.   Based on advice from blogs of master marketers that I read, pop-up ‘follow me on twitter’ or pop-up/side bar ‘join my mailing list’ have a value – but to ask for a survey for a first time visitor – just seems like a bad idea.

If you are going to ask for surveys, send them out to people you know and make sure they are relevant.  And if you’re going to ask for phone numbers or other personal information, make them optional and remember that not everybody lives in the same country as you.

In the course of running my business, I have fired customers three times.  Firing customers works in the same way that they may decide to fire or end the relationship with you. . . just because it is no longer working out for them.

There are various reasons why you may need to fire a customer.  These can include:

• They are low paying, and you are trimming the low payers to make room for higher payers
• The  work they need you to perform no longer fits with the work you do or want to do in the future
• You are uncomfortable with the company – it could be down to what the company does (whale Killers Incorporated), their politics or how they operate
• A personality clash with somebody in their management team
• You are just bored working with them

Trimming the Low Payers

The reason I fired all three of the customers I no longer work for is that they had turned into low payers.  Whilst they may have generated revenue in the past which I was happy with, the amount of work they offered, the money this generated, compared to the amount of effort to retain the relationship meant that it was costing me money to service them.

The one thing that we all have a limited amount of is time.   If I have a customer demanding I work for them for a day for £200 and this stops me working for another customer at £300, the first customer is actually costing me money.   I will end up resenting that customer, and so will not end up doing my best work.

Sometimes we need to cut ourselves free from customers that will pull us down or hold us back.

Methods of Firing Customers

There are several ways of firing customers – several reasons you can give.   I would always advise that when you fire a customer, do it face to face.  Firing a customer by email or over the phone never works out well.

Some reasons you can give (which may or may not be true, but you need a reason) are:

• Your team has changed and you no longer have the skills you need to service the customer
• You are taking your company in a new direction, and you are no longer a good fit for the company
• You have to reduce costs, and therefore are no longer offering any customers your {whatever} service
• You are discontinuing your product or service due to lack of demand and therefore can no longer support them

The reason has to be about you.  Your customer does not want to hear that the reason is because they kill seals, have an aggressive line manager or just are not paying you enough money.  The bonus of the above reasons is that there is also no comeback.  They can’t say “but can’t you just hire someone with xxxx skills?” – Because if you could, so could they which means they don’t need your service.

The Price Rise Gambit

The other option you could consider is a sudden and unprecedented price rise – just for them.  Using an excuse such as “Because of the harsh economic conditions, we have been forced to raise our prices by 35%” is sure to have those customers you don’t want running for the hills.

One word of warning, do expect some people to accept the rise.   I have fired 3 customers, but I did try to fire another customer using this technique.   Surprising to me, they agreed to the price rise and they are still a customer today, just paying a lot more than they were (which returns them back into being a profitable customer).

Don’t make Enemies or Burn Bridges

The big golden rule of firing a customer is – don’t make an enemy.    The customer is going to feel aggrieved and let down when you fire them, so don’t make matters worse by making it personal – keep it professional and apologetic.

If possible, have alternative options to hand.  Have an alternative company details who can carry on the work, offer to train their staff (or replacement contractors) with the skills needed to keep going, suggest alternative products or alternative strategies.

Two final thoughts

One thing to bear in mind is, business is business.   If a customer is holding you back or making you feel uncomfortable, do not let guilt hold you back and stop you growing your company.   Sometimes firing customers is the only way.

And lastly, don’t forget to re-read any paperwork you have produced for the customer prior to the ‘Your Fired’ discussion.  The last thing you want to do is fire a customer, when you have a contract which says you will support them through thick and thin for the next 10 years.

Son, your Ego is writing cheques your body can’t cash.  
From the Movie TopGun, 1986

To be good in business, it helps to have a slightly inflated Ego.   Think about all the big names in business and you cannot accuse them of being shy or backward.  (sir) Alan Sugar, Richard Branson, Donald Trump, all the dragons of Dragons Den – they all push themselves forward and present a Better Than You attitude.   Freelancers and Small Business owners should not be ashamed of having an inflated ego.  After all, when we are busy selling ourselves and our products or services, are we not all saying ‘buy from us because we are the best’?

But, this can backfire.  If not kept in check, it is so very easy to start writing EgoCheques.   As per the TopGun quote above, we can get carried away with how good we are and walk away from good business.

Have you ever been working on projects and had the thoughts “I don’t need this hassle, I can get other clients elsewhere” or “If they ask for just one more change, I am dropping this project”?    Yep, these are EgoCheques.   You Ego makes a decision which can effect your bank balance.

Now don’t get me wrong – sometimes walking away is really the best and only option.  But sometimes, the balance of what is right and what is wrong is unbalanced by our own self worth.

I personally have attended a few “trouble sort out” meetings over the past year repeating “Don’t write an EgoCheque” in my mind, over and over.

So tell me Maverick, is your Ego writing cheques that your business can’t cash?

I have spent this weekend in Paris to celebrate my wife’s 40^th Birthday.   As part of this trip, we visited a fabulous restaurant called Le Fermette Marbeuf.  The restaurant is very pricey, but the food is very good and the decoration is exquisite.  But in spite of spending an awful lot of money with them, the service was nothing short of shocking.

We both ordered starters, main courses and deserts.   My wife received her starter and I got. . .  an empty plate.  Yes, they actually brought me a plate with nothing on.    We explained that I had ordered a starter, but they didn’t seem at all fussed – they disappeared to check on the starter.   About 30 minutes later, two more plates arrived – with our main courses.   When I explained I was missing a starter, the waiter just shrugged, and wandered away.

So OK, they had made a mistake – they had goofed.  They were very busy, and maybe they didn’t have enough staff.  They had somehow lost an order for a starter (or turned my order into an order for “Starter La Empty-Plate”).   But, we all make mistakes in business.  It’s how you handle them that makes the difference.

The head waiter could have come over to apologise – but no.  They could have offered me something in return, but no.   Instead, when I was presented with the bill, they said because of their mistake, they had not charged me for the starter I hadn’t received.  Well shucks – that’s good of them. 

Business Mistakes are an inconvenience.  They will always be an inconvenience to somebody – the question is – who?    If you make a mistake – you deliver late, you miss something off, you forget something, is it good enough to just say “sorry” and expect your customers to deal with the inconvenience?   If this is the case, would you expect repeat business, quick and easy payment, and recommendations?  Or would you expect complaints, bad reviews (that internet is a powerful place for people with axes to grind) and problems in the future?

I for one want a simple life – a stress free life.  Which is why whenever I do make mistakes (it happens), I make sure my customers are not inconvenienced.

What about you?

Business Partnerships can be great.  If you can find another company that compliments you, the result can be business opportunities that are bigger than the sum of the individual parts.  But, there can be one major problem with some partnerships – spec (free) work.

I have worked in partnership with many other companies in the past.  In each instance without exception, we have agreed who is the lead in the partnership, and the leader pays the other for their services.   This works for me – we can still run the process as a partnership, but money is not an issue.  Everybody knows where they stand.

Recently, I was asked to work in a partnership, but where the work was done on spec.   they asked that I (and my company) work for free, investing our time and resources for a share of the future possible sales of the resulting project.

Now don’t get me wrong – this sort of relationship may well work for some people.  I can see in situations where work is thin and money is tight (such as when two start-ups meet) this can be very tempting.   It may be very beneficial to all concerned, and the results in the future could be massive.

But the word to consider here is could.   Could to me is a gamble, a chance, a risk.   With such a relationship, you are of course assuming that the company/product you partner with is good enough to make a lot of sales – but what happens if it doesn’t?  It could be a lot of wasted effort for no returns.

Call it boring, but I prefer to know that I am going to be paid, how much and by when.   Anything else is just a gamble.

And the only time I gamble is when I order take away food.