Posts Tagged ‘business’
Once an initial project has been completed for a customer, the project invoice raised and the hand over done, it does not necessarily mean that your relationship with a customer is over. In addition to staying in touch in the hope of future sales and new projects, one thing well worth considering is arranging a Support and Maintenance contract with the customer.
There is no right or wrong way of selling Support and Maintenance. Sometimes, I will mention it during the prospecting stage (“of course, once the project is over, happy to discuss the support of the system”) or sometimes I will mention it on project completion (“So, that’s all done. Now are you happy to support the system in the future, or will you need support going forward?”)
Charging Support and Maintenance can be the icing on the cake of a project. Once the project is complete, the customer pays you an annual support payment upfront, and in return, you agree to fix any problems that come, up, answer questions etc, without further charge for the year.
Think of support and maintenance (S&M) as an insurance policy taken out by your customer for the year ahead.
What to charge for Support
Within an IT industry (other industries will vary), the going rate of support charges can range from anything from 10% to 20% of the original delivery cost. Typically, 15% is viewed as ‘fair’ – so this is the amount I generally try to aim for – charging 15% of the original project development cost per year. Sometimes, it is easier to work out how much time I am likely to spend supporting a customer (based on the help needed during initial development and handover), add a ‘fudge’ factor for the unexpected and then multiply this up by my typical day rate to find the annual cost for a customer.
And don’t forget that support charges also need to go up in line with your annual price increases on the anniversary.
Some customers prefer a call off support arrangement, where they pre-book a number of days of support in advance and use (and pay for) them as required. This may seem like an attractive option for a support and maintenance agreement, but unless they are paying up front, all the advantage is with the customer. It is a much better option to organise a proper and full support agreement.
Be specific about support dates and times
In addition to the cost the customer will pay for support and maintenance, the other major factor which can influence the price will be the dates and times of support.
Will you provide support from Monday to Friday? What about weekends? And will support be from 9am to 5pm, 8am to 6pm or will you provide support 24 hours a day? Also bear in mind that if your customer is in a different time zone to you, their 5pm may be your 2am.
Whilst there are again no hard and fast rules for how support charges change for different days of the week or times of the day, my general rule of thumb is that any weekend day is TWICE the cost of a week day (so 7 day support is actually charged as 180% cost of a standard working 5 day support contract – ((2 days * 2) + 5 days)). Then, for the extended hours (beyond 9am to 5pm), I add 12.5% per hour (so 8am to 6pm adds 25% again).
Companies who demand 24hour support will be used to paying through the nose for this constant level of support. Again, in an IT industry, typically a 24hour 7 day support contract will cost between THREE and FOUR times the cost of a standard Monday to Friday 9am to 5pm support arrangement (although I do know some BIG IT companies who charge upto 20 times a standard support cost for 24-7 support – and their customers pay it!!!).
Bear in mind that for extended hours or 24 hour support, you need to work out how they will contact you. In needs to be using a method that will wake you (if you yourself are providing the support and they decide to call at 3am) and that you can respond to.
Finally, when working out the costs, factor in the response times. You need to provide details of a) How quickly you will email/call them back, b) provide a solution or at least a get-around and c) A full solution if it’s a major issue. These times will vary from project to project, and industry to industry. My starting position for support agreements is 1 hour for call back, 4 hours for a get around and 48 hours if it’s a major issue or requires a fix.
What to Include and Exclude
Which leads us onto the big issue of what is and is not included. This list should be stated up front, and be in all discussions, all emails and in the final support agreements – as it is pivotal. Once agreed, if you leave holes, it is possible the customer could use the support agreement for all new future work or you may end up supporting things you never initially supplied.
Again, this will will be vary from project to project, and industry to industry. However as a starting point, here is my standard inclusion and excluded list:
- Support is provided only in terms of the project (name the project)
- Support is provided only in terms of hardware and software provided for the project by your company (name your company)
- Support is provided only for errors or questions relating to the existing functionality of the project
- Support is provided for any questions or software errors within the project, including data generated or stored by the project
- Support is provided in scope of the current functionality of the project or additional functionality added to the project by (your company) on a paid for enhancement basis in the future
- Support is provided on all functionality explicit to the project, including GUI front end functionality, back end database, supplied interfaces and data held in the database
- Support is not provided for errors resulting from 3rd party software, 3rd party hardware, interfaces or data (including database software, operating systems and the like)
- Support is not provided for additional features, additional data to be held, new entry prompts, changes to interface definitions or data entry changes – these would be provided under a separate enhancement quotation
- Support is not provided for additional reports or enquiries, either from within the software, or using 3rd party tools – these would be provided under a separate enhancement quotation
- Support does not include any additional training of staff. This can be provided separately as an additional service
- We reserve the right to charge separately for corrections or time required resulting from your staff errors (such as invalid entries)
- Support if provided on the basis on standard working days, excluding bank holidays, Monday to Friday, from 9am to 5pm… (etc)
If you want to see what my standard support agreement looks like (the wording), I offer you a copy to download for free.
I recently had a dinner with my business mentor.
I have great respect for my mentor. He has been in business for over fifty years, and worked his way up from a 1 man band business, to his current position of owning and running three major IT companies with a joint turnover of over £50million a year. When he gives advice and thoughts, I listen.
During the course of the meal, we started talking about social networks media. After all, every other blog post, tweet and conversation seems to be about one form of social media or other.
His thoughts on social media were as follows:
It’s great – for what it is, but think of it this way….
In Africa, wildebeest, zebras and antelopes travel in packs. During the big migrations, these packs can number several million animals. The reason they travel in packs is protection. By traveling in a pack of so many animals, all the same, all in the same direction, the chance of being picked off by a lion or hyena is a lot slimmer. The lesson for such African ‘cattle’ is- do what others do to blend in.
BUT, in business, you don’t want to blend in. Being another zebra amongst the other 10,000 zebras is bad. How are customers supposed to tell one zebra from another? And shouting how different you are, when there are 9,999 voices raised in the same pack, all shouting there own message – well, your message just gets lost in the noise.
And social networking is just like zebras in a pack – yes it’s useful for some situations and it serves a purpose (and should not be ignored), but you will never stand out from the crowd if you are doing the exact same thing as everybody else
So whilst all the social media advice is to create blogs, create twitter streams, facebook pages and the like, maybe the best way of gaining attention is standing away from the crowd.
Again using my business mentors words, when everybody else Zigs, its time for you to Zag. In other words, time to revisit those ‘old school’ marketing techniques that everybody else is now ignoring.
I’m a freelancer, and this is crazy, but here’s my number, so buy from me maybe.
~ Altered version of Carly Rae Jepsen – Call Me Maybe
I have wanted to write about this subject for a while – and could not work out the way to phrase it. Then, whilst on holiday, I watched a poor lad propose to a girl in front of everybody in a bar, and she said a massive big fat NO!!!
He was devastated. But at least it gave me my hook into this subject.
Entering marriage is very much like the relationship between a freelancer and their prospective customer. It’s true that some customers may just want to grab an item, pay for it and be done with the transaction (such as when using Amazon), but for most time, customers want to be romanced.
Freelancers are brought into companies to carry out important work. But before they will raise an order for the work, the prospect needs to feel special, they need to feel a bond is there, they need to feel important, and they need to feel respected. Above all, they need to feel they can trust you.
Responding to an initial enquiry with a proposal and price is like walking up to a girl in the street and saying “Hi, we have only just met, but will you marry me??”. Good luck with that approach.
Seasoned salesmen always sales say that people don’t buy products, they buy people and relationships.
Also, they need to feel like they are the ones making the decision. Yes, you can persuade them, talk them round, and generally ‘sell’ to them, but if you put them into a corner to force their decision, more likely than not their answer will be NO. That girl in the bar may have said yes if he had asked her on a beach, with just the two of them (its how I asked my wife with no pressure of other people watching.
And just like getting a partner to say yes to marriage, there has to be a demand and desire; a sense of ‘everybody else wants it’. If the poor chap in the bar had proposed marriage when no other woman had shown interest in years, there may be a feeling of desperation – such as “he is asking me because nobody else will have him” – which is never a strong sales position.
But, if other girls were always hitting on him (and of course he was politely turning them down), then he would be in demand which raises interest and he may have had more luck. Put it another way, nobody wants to commit to rejections or the out of date products on the shelf.
It’s why we have panic buying at Christmas time for the latest children’s toy. Everybody wants it because… everybody wants it. Even if they are not sure why.
Of course, being a small freelancer or small business, it’s almost impossible to create this demand (where everybody wants you and everybody knows it). But it is possible to create a cloud of pseudo demand by:
- Not being too demanding or pestering for the work (but that does not mean don’t chase, just do it in a casual way)
- Never say you can start immediately (or at least say you will have to reorganise other projects if the customer prospect demands a quick start)
- You can even use reverse demand by saying “of course, we are selective on the companies we work with, so just need to make sure you meet that criteria” (which puts them into a pseudo exclusive club)
So when you bring it all together, don’t be the chap in the bar. Get to know your prospect, take your time, make the setting right, and then create the demand so that when you propose doing business, they will be happy to say yes.
Over the past few months I have experienced many examples of people running scared (or being too busy).
I received an invoice for services (which I considered were delivered very badly), which I rejected (with an explanation letter), and never heard another thing again. I have been sent various quotations for various bits of work – and not one of the companies or individuals has followed up the quotation with a phone call or email. A company I was working with made a small mistake, and actually sent me an email saying they assumed (with no communication from me) that I would no longer want to work with them and that they would not be invoicing me for the work done thus far.
I am seeing the same similar situations with some of the companies I am working for. I was asked to consult about recruiting and interviewing technical staff for a company. A lot of interviews were arranged, but so few people actually bothered to turn up for the interviews. No phone calls, no explanations, and no reasons – they just didn’t bother to turn up.
And the same is true for demos from companies bidding for a rather large Business Intelligence software sale to one of my customers – four companies booked for demonstrations; two didn’t bother to turn up.
The point of this is – for whatever reason, it should be getting easier out there to find customers, win business and make money.
After all, all you need to turn is turn up, make contact, and follow up.
No body else seems to be bothering to do this.
You want your freelance or small business to grow, right? You want an easy life, and happy customers or staff, yes? And you don’t want people complaining to or about you, do you?
If so, then can I recommend the following five rules of business communication (which were handed down to me by one of my old business mentors)? He taught me that if you follow these rules in all communication (with prospects, staff, customers and even in personal matters), it will make things run a lot easier and will head off a lot of problems before they occur.
I have these rules on a small card pinned next to my computer screen – just so I don’t forget them, and I try to follow them in all my communication.
Anyway – on with the rules…
Rule 1 – Keep people up-to-speed
One of the worst things in business is not knowing what is going on. It’s an easy situation for people to find themselves in. They ask you to do something, and the response is silence – they can only guess whether you are working on their request, they are number 100 in your queue of actions, or if you are ignoring them. So remember to communicate whenever anything significant changes, or just send them a regular status email to keep them informed.
Rule 2 – Be explicit in what you are saying and asking
Miss-communication is bad. But what is worse, is expecting somebody else to read your mind, or in-between the lines. If you want something, say exactly what it is you want. As an example, don’t say fuzzy things such as “well, your support ends next month, so what do you want to do about it?” – Say what you want – “your support ends next month, so I need you to raise a new purchase order for £5,000 which needs to be with me by Friday because without this….”.
Rule 3 – Make it easy, simple and obvious
Keep the communication short, use simple words, and keep it obvious in terms of subject and content. Think of each communication as costing you money – every word you can cut out saves you a pound, and every word that isn’t used on a day to day basis (the extra long padding words such as ‘conceptualize’, ‘dysfunctional’ and ‘leverage’) costs you £2.
Rule 4 – If in doubt, pick up the phone
Some things are better said than typed. If emails or letters have turned into a multi-bouncing discussion or too many people have been copied in, pick up the phone and have the discussion. If its bad news, pick up the phone and take the heat rather than taking the cowards way out with a text or email.
Rule 5 – Automate the communication
Where possible – automate the communication. This doesn’t mean adopting a spam generating system which will churn out useless sales rubbish, but use a system that either allows people to find the information themselves (such as using a really good online project portal allowing customers to keep track of their projects when they want), or create manual processes where you keep people up to date with the current situation.
A quick one from me on a internet service I have just discovered – Meetup.com
If you have an interest (be it a hobby, interest, desire, need or even a business aspiration), there will be a group of people out there in your local area who meet on a regular basis to explore and share that interest.
Meetup.com is a free service which allows you to connect to these groups, and attend the meet-ups for a nominal administration charge (typically £1 to £2 per event).
For personal activities, I attend interesting photography events (I have a passion for photography, and the meetups are always at great locations with great subjects) and personal growth events. But I also attend London based business mentoring meet ups as well, where small business owners give each over advice, review each others plans, and allow people to sanity check their ideas.
If you are into business networking, there will also be multiple networking groups in your local area as well.
Meetup allows you to search in your area (or any other specific areas) and you can set a geographical range for meet-ups.
Once you have identified interesting groups, you can join groups to take part in on-line discussions and to be notified of new face to face meet-ups. If a meetup strikes your interest, just RSVP and you will be sent details of the event by email.
As I say, a very useful resource for finding other business (or personal interest) groups for…. as the name suggests…. meeting up.
So you have a web site, and the web site has a nice Contact Us page, and maybe you have even done some extensive A/B version testing to see what layout will get the most enquiries. That’s all great, but….
Maybe you have a contact form, and you clearly display your contact details. Of course, this includes your contact phone number. All these are the right things to do, but….
And your contact form, you have it going to an email address you monitor, right? When an email comes in, it will go to your in tray on your PC/Mac, your phone and maybe even your dog gets a copy. You’re ready to respond.
What happens if something has gone wrong?
What happens if the script that runs your contact form is now incompatible with the software your hosting provider runs? What happens if the email address you send enquiry emails to has become lost via an ISP tweak? What happens if the emails are now caught in your anti-spam filter because of new rules?
In short, how do you know your contact form and email address is not dumping precious enquiries into the recycle bin of another parallel-dimension (or wherever bounced enquiries go to die)?
Why not put a reoccurring task in your calendar or To Do list to send yourself an enquiry once a week, or an enquiry email, and check it gets through?
Better safe than sorry-about-the-lost-enquiries.
For me, I love reading blogs by other freelancers, marketers and small business owners. Some can lead to advice and ideas which I can directly link to growing my business. But whilst I like reading blogs, I never let the blogs get in the way of my normal day job. Reading blogs for me is an activity reserved for when I am waiting in a queue, or on a train or erm, busy in the smallest room.
I also find myself reading a blog, understanding what the author is trying to say, thinking to myself that “that sounds like a reasonable idea” but never acting on it. I must have read hundreds of posts which caused me to take no action (for whatever reason). I am sure you are the same.
Well, rather than waste any more of your time, can I present to you a list of some of my action suggestions?
Any one of these actions (and associated posts) cover changes I have made in my own business. Each and every one of the suggested actions has grown my revenue, customer base and profits.
Pick one or try them all – I promise all will boost your business.
Ditch your accountant and go Cloud Based I wasted so much money on my accountant that in hindsight it scares me. Since moving to a cloud based accounts system, I have more control, more visibility, and I am saving so much money.
Get Your Terms and Conditions in Order. I know it does not sound sexy, but I know that having a straight forward, short but good set of T&Cs has landed me business whilst boosting my own business protection.
Be Bold, and Ask for the Business. I am a strong believer in asking for what you want (after all, nobody is a mind reader). I have won a lot of business simply by asking for it.
Set Goals. Your business needs goals in order to give it direction and something to aim for. Setting ambitious business goals has really helped me move forward
Reuse your previous work. This is one of my best tips for generating more revenue (cash) each and every day. Try it – you will be amazed!
Add communication and Control through Cloud Project Management. I have been using a cloud based project management system for the past 2 years and it has saved me so much time, effort and money. And my customers love the visibility it gives them. Perfect!
Streamline reading blogs and other content. I have moved reading content onto my mobile devices – and it means I can squeeze more productive time into the day. Free and Easy.
Keep the cash flow by Chasing Customers. My accounts system automatically chases overdue invoices with different levels of warning – which means I no longer have cash flow worries.
Offer a Bonus. And as my bonus suggestion, I recommend any serious Freelancer or Small Business Owner read The Wealth Freelancer – its packed with a whole lot more useful ideas for growth.
So let me introduce you to a great money saving application for your smart phone called vouchercloud. Note before you continue reading… this is currently for the UK only, but there are plans to expand into the USA!
Rather like the much hyped Groupon, the application works by listing different off-line (and on-line) deals available. The app is available for most brands of devices, and shows you scores of discounts without having to print out vouchers.
I have found that unlike Groupon (which I find disappointing for its range of discounts), vouchercloud has much to offer business users, with discounts at restaurants, as well as many office retailers such as Staples, PC World, Viking etc.
It’s simple to use – just turn it on at any high street and it will use the phone’s GPS system to show the discounts on offer at nearby restaurants and shops. Discounts are arranged into different groups including hot deals, meals, electronics, office products, entertainment and more.
Currently it has more than 2,500 retailers and chains on board, including Pizza Express, Cafe Rouge, Strada and Coffee Republic. The deals vary according to the chain, but in terms of meals, are typically two courses for £10, or a set percentage discount on the final bill. At business supply shops (e.g. staples) it tends to be in the form of £10 off for every £40 spent.
The system works so well that you can check it in the middle of your meal, drink or shopping adventure.
When you go to pay, you show the waiter the code on the phone’s screen and the bill is lowered accordingly.
It’s worth equipping your phone with this app – and saving you (and your company) money when you are out and about.
Download vouchercloud now!
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?