Posts Tagged ‘contract’

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.

As IT contractors or freelancers, one of the unhappy facts that we soon get used to is that we will always have one or two customers where they are never happy with the products or services we supply. That may sound a little unfair to customers, but as a rule of thumb, regardless of whether you provide IT services, write software, develop web sites, documentation or consultancy, everybody wants it to do more, something different, work in a different way, interface with something else, and with no impact to the timescales or cost.

Now with the exception of ordering a meal at a restaurant (where you may order a side dish, hold the veg or ask for a different sauce), I can’t think of anything else where customers expect that level of customisation and change during the development process.

You don’t see Joe Blogs walking into his local Ford dealership and saying, “yes, the 4×4 looks great, but can you make it a little taller, add two more wheels and allow it to be hooked up to my 28 inch plasma television”. Or how about Mrs Smith going to her local supermarket and saying “I want a packet of cornflakes, but I want them to be in a wooden box and to have the instructions in Russian”. So why do people expect so much from Computer Systems or expect to buy a standard system and then tweak it so much?

The reason customers expect this level of customisation or change is..… well, to be honest, I don’t know. But, the solution to this situation is clear contracts, clear specifications and most importantly, the customers/users signature on the paperwork. Now, this won’t get you over the really challenging person who insists the product be exact to meet all their needs, but at least it gives you a fighting chance. For software developers, a clear specification of what the software or service will do is a must. For writers and web designers, you really do need to have in writing, a number of reiterations that are allowed before changes become chargeable.

For my own peace of mind, everything I do gets a specification (which of course I charge to produce) which I insist is signed before any work starts. And I always include a standard item of text which I include in bold to make sure it is read at the end of the introduction which I offer for you to copy and paste into your own contracts/specs. This text has saved me from arguments and free changes a number of times….

It should be noted that the details provided in this specification, including any example screen displays, data held and methods of processing are a guide to the development of the solution. It should be noted that some screen layouts may vary from those shown in this specification due to coding restrictions, and some functionality may change very slightly during development. Where this occurs, every effort will be made to detail the changes back to the interested parties before the software is delivered.

This specification provides a guide to the functionality to be developed. It should not be assumed that if functionality is not listed in this specification, that it will be included in the final delivery.

At the start of the year, I made a radical change to the way that I quoted for business.   Now I have to say that I don’t produce mountains of quotations for products and services, but for those that I had been producing, I had never really been happy with the format of my quotes.

 The old format for a quotation consisted of a quotation cover letter (what the quote is for), the quotation breakdown (figures, what’s in, what’s out, etc), and then the Terms and Conditions which at that time took over 4 pages of A4 (I could have printed this with a small font and fitted this on 1 page of T&Cs, but I hate small print).

Just before Christmas, I was required to send out 3 or 4 quotes in the same week.  I was happily putting them in envelopes and reviewing the quotes and a thought struck me.  Here was I, saying give me your business, and by the way, here is a whole load of legal nonsense to scare you away and give you reasons why you should not accept the quote.  

I am now using a new format of quote, which I am a lot happier with.  The letter and quote are the same, but the Terms and Conditions are replaced with a single page of a service Guarantee and an abridged version of my T&Cs.  As you will see, I still link to the full unabridged version for those that are really that interested.

This single abridged page now looks as follows:

THE TOUCHSTONE SYSTEMS GUARANTEE

Touchstone Systems provides the following guarantee on all its products and services:

• We Guarantee that any deliveries will be on time and within budget as agreed by both parties or we will make up the difference
• All products and services will be of the highest industry standard. If you disagree, we will correct the situation at our own cost.
• If you still feel that the service/product does not meet the agreed specification, we would not expect you to make final payment
• When meetings, appointments or deliveries are scheduled and agreed, if we don’t meet the agreed times, you don’t pay
• We will provide regular status reports (each day for short projects, weekly for longer) on progress of the work by email or where you prefer, by phone.
• If we provide a product and after all of this you still don’t like it, return it within a month and you don’t have to pay

ABRIDGED TERMS AND CONDITIONS

A full copy of the Touchstone Systems Terms and Conditions are available from the Touchstone Systems Web site at www.touchstone-systems.co.uk/Terms/ However, if either party reaches the stage where we need to look at the small print, something has gone very wrong and we will work with you to put it right. The Terms and Conditions simply state that:

• We will keep a record of work we do, hours we keep and our activities. We will provide these on request or at agreed regular intervals
• If you are not happy with somebody we supply to do the work, we will replace them, no questions asked. But if you are still not happy and want to terminate the relationship, please provide us with 4 weeks of notice to wrap up the project
• When we supply project work, products or information as part of a delivery, we will retain the rights and ownership until you pay for the goods or services
• We agree to keep all information, including details of the work, and any client information seen fully confidential. We also fully comply with the Data Protection Act
• Before work starts, you have the right if required to interview the personnel we assign on the project and select which staff to use. However once work is started, they are deemed to be approved to work on the project, subject to swap out as already stated
• We agree to be fully insured for the project, as you would expect, including public and product liability
• We provide an invoice at the end of the project on 21 days payment terms plus expenses as agreed. We would expect payment to be made in these terms, otherwise late payment charges may be applied
• With the exception of death or personal injury through our negligence, our services and products are limited to 20% of the contracted value.

Yesterday I shared some of my favourite small business general RSS feeds.  Today, I complete the list with RSS feeds from some great freelancing and contracting resource and blog sites.

Freelance Folder
The Freelance folder provides a news feed which will be useful for IT contractors and freelancers looking for tips on productivity, growing their customer base, working smarter and promoting their business services.

Guerrilla Freelancing
Guerrilla Freelancing is a website news feed dedicated to helping every freelancer still in the trenches, working as hard as they can to build up a solid freelance business. It’s main objective is to be a voice for those who have not “made it” and provide straight to the point advice and tips for the guerrilla freelancer.

FreeLanceSwitch
This is a community of freelance professionals from around the world, spanning all manner of fields.  As well as providing a very good podcast, this news and information feed covers a large range of useful freelancing and contracting tips, which will prove useful for any small business owners working in or around IT.

Contract Calculator
The calculator website is a great resource for working out tax rates, how much to charge customers, day rates, and a host of other contracting tools.  The RSS feed provides finance and tax tips for IT freelancers, contractors and other small business owners.

I thought I would share what has happened a couple of weeks ago . Before I start, please bear in mind that I found myself in a lucky position of knowing how much the customer wanted me, and I accept no responsibility for this if you try it yourself.

So I have been in a contract for 5.5 months of a 6 month contract, and the customer had already taken me aside and made noises about renewing the contract – all good stuff. I waited, and on Monday, the call came in from the agency, “they want to renew for another 3 months, with possibly 3 months after that”, great says I, “However they have tight budgets, and day rates are dropping, so we need to discuss money” says the agent.

What followed was a 20 minute chat about rates, and how both the customer and agency wanted me to drop my rates by around 9%. Well, as much as I like working for the customer and the work, there is no way that is going to happen. So without really thinking about it, I said, and these are pretty much my actual words…

“Well, it surprises me that you are talking about a rate reduction. Over the past 6 months, I feel I have proved myself and actually done more for the customer than they asked or really paid for, so I was going to ask you for a day rate increase. As I am doing more work than was expected, how about we look at a day rate of xxxxx”. Xxxx was my date rate plus 30%.

In my view (and oh god, agencies are going to comment below about this), an agents job is not only to find the right contractor for a position, but to find the right rate for the customer. I didn’t in fact want 30% more, but I picked a high number so that they could beat me down and look good to the customer.

Directly after the phone call, I went in to see the customer, and said that the agency would be calling, and that we had had a strange conversation about rates, and whilst I understood from the agent that budgets were tight, I felt I had a lot to offer, and was prepared to be flexible, but if they really wanted to retain me, we would need to look at a rate increase. I pointed out that yes, they could get somebody cheaper, but the job involved more than was originally suggested, and for the lower rate, they would be hard pushed to find anybody with the right skills (this may or may not be the case – I have no idea).

Over the next 24-48 there was a series of phone calls between the agent and myself, and the agent and the customer. The customer went up a little, but not too much. The agent told me the increase, and I quickly said “No. Sorry, I understand the gesture but I said xxxx and they said yyyyy. Whilst I understand budget pressures, the only person who is loosing in this are myself for getting a lower day rate than I need, and the customer for paying more.”

Anyway, after all the phone calls were nearing an end, I caved with “Cut the difference. I want xxxx, they offer yyyy, if you can add £10 a day onto their offer, I will accept” – the agency said yes – so the agency cut its commission by £10 a day.

The customer came in to chat to me, they are happy – it means for slightly more money, they get to keep me and saves the effort of finding someone new, training them up, and taking the risk of signing up a dud. The agency told me that they are happy – they don’t loose face to the customer, and have ‘beaten me down’ from my original request, and of course I am happy, as not only am I not having my day rate cut but in fact its gone up. In the end, its gone up a few pence under 10%.

As I say, this may sound slightly underhand, but what I am trying to get across is the power of asking, and the power of negotiation. If you don’t ask, you don’t get.