Posts Tagged ‘small business’

Today’s final post is a letter which I dearly wish I could send back in time to myself in the past; a younger me from ten years ago when I first made the leap from permanent employment status to Freelancer.   I think it will be useful to other freelancers who are either just starting out, or are struggling.

Without any further delay or waffle…

Dear younger and more inexperienced me,

As you read this, you will be just starting out freelancing. It’s a scary experience. There is nobody to hold your hand, or guide you, or give you advice. At least, I know it seems this way. But I wanted to drop you a quick line to reassure you about a few things. Plus I wanted to include some really good advice, which will stop you making some silly and expensive mistakes.

It may seem that you are own your own, but there are a lot of great resources out there. The web is full of freelancers who have gone through what you are going through, and some people have been kind enough to write those experiences down in books or web blogs (such as this one) – all it takes is for you to take the effort to read them, understand them, and follow the advice. But remember, if you don’t bother looking, or take that advice, and you make the mistakes other are trying to help you avoid – then there is nobody to blame than yourself.

I am sorry to say that there will be hard times, and tough times, times full of worry when you wont be able to sleep at night, times of self doubt, and times where things seem very unfair. All freelancers and small business owners go through this, but at the end of the day, you will do OK. Anybody who makes the effort to rise above the average, who has put in the hard work, and uses the resources that are out there will do OK – better than OK in fact. In the end, choosing a freelance life will be one of the best decisions you will ever make.

But there are things that will help you on your way. Dear younger me, please listen to these, because these are nuggets of wisdom from years of experience. These tips will save you time, money, effort, and will make the whole thing so much more enjoyable. They will also allow you to rise above the troubling times.

My advice to you as you start out freelancing is:

1. When times seem tough, don’t sweat the small stuff. If things seem unfair – that’s because they are – nobody ever said life was going to be a fair game. Either accept those things as unfair and move on, or change them. But don’t lose sleep about the small or unfair things
2. Build up your list of supporters from the start. Have a good bank manager who you can contact whenever you want, an accountant who will explain things to you in detail, and make sure your partner (wife/husband) is included in everything you do
3. Do not let the accountant run your finances. Keep everything close. Don’t let the accountant charge you too much or have your accounts vanish in to a black hole. Instead, use online accounting from day one (the accountant should be there to sign off the accounts and save your money). Having a clear picture of your accounts and cash flow every moment is key not only in making decisions, but allowing you to sleep at night.
4. Know what you are doing it all for. Have a set of goals, and review them regularly. Get hold of a copy of the success principles, and read it – twice a year. It’s the best book on the planet! Trust me on that
5. Do not waste effort trying to keep everybody up to date on project progress – you will end up stressing about projects and being overworked. Instead, invest in a cloud based project management system – the moment you do, your business world will change in leaps and bounds. You will never look back
6. Don’t chase the money. Customers will try to take you in directions you are not prepared to go. It’s ok to say no if the work does not interest you, is not inline with what you want to do, or how you picture your small company. Be strong with customers.
7. Don’t be scared to take on work involving skills you don’t have. Whilst you will be reluctant to do this initially, eventually you will come to realise that this will lead to you growing in skills and confidence, which will make your time more valuable.
8. Invest in time management tools. Your time is money, so use tools like Evernote to keep track of everything you do and create, and re-use it over and over again. When you start doing this, you will see your worth grow.
9. Get everything down on paper – simple terms, agreements and contracts – and get them signed. This will get you out of more problems than you could possibly imagine.
10. And get a mentor. Approach your old bosses, or a local mentoring group, and become accountable. It’s also a great way to make new friends and stay in touch with what is happening ion the business world.

Younger me, its important to remember to enjoy the ride. Yes, times will be tough, customers nasty, and sometimes money will be tight – but nether the less, enjoy the ride. Getting where ever you are going is half the fun.

Regards

A more experienced Me

And that’s It!!
At the start of 2012, I said that this blog would finished at the end of 2012 – and as I type this, it’s December 2012.  So that’s it – the blog is done.  There is no more.

Dear reader, whoever you are, I really hope that you have found this blog useful.  I have found it fun to create, and get my thoughts, systems, and processes down on (electronic) paper.   I hope that you have gained something from reading my advice.

My advice does work.  I am not perfect, I do not run the perfect company, I make as many mistakes as any other person out there, but my company has grown year in and year out using the tips I have written down.  Most of my advice comes from people who are far more experienced and successful than me – so if any of my advice, or systems I describe feel right to you – give them a try – see if they will help you grow your own company.

As I sign off from my blog, I wish you dear reader well.  I hope your company grows as you want it to, and I hope to meet you in the real world at some point.

As for me, I will continue on with growing my business, heading towards my goals, but now without the need to document it here.  This blog will remain on the net until the end of 2013, at which time it will then be consigned to the great internet dustbin.

Goodbye and good luck.

Jaffa Brown
Author of this Web site , Freelancer, Small Business Owner and passionate goal setter/achiever
December 20^th, 2012.

In the last post on the series regarding my freelance Passive Income project, I wanted to wrap it up with where I am now, and how it all worked out for me (so far).

I started my passive income Buy-To-Let project in the spring of 2012, and I am writing up this wrap-up entry at the end of December 2012.  So in theory, the project has been running for 8 months.

How long before I made Money?
As I said in my previous post on my buy to let project, the purchase of the rental property completed on Wednesday, 25^th July.   We spent the next week with decorators in making the place fit to live in – they decorated the walls and ceilings, we replaced all the light fittings, replaced the curtain poles, purchased new white goods (washing machine, fridge freezer, put in a dish washer).  We then selected the property management company, and on the July 30^th, the agents went in to take pictures and advertised the property.

The management agency initially advertised the property at a rate of £750 per flat per month.   We had budgeted for £700 a month, so we were initially delighted.   But a week of no interest and a bit of right move research showed there were a lot of similar properties for rental at £725 – so we instructed the agents to reduce the price to £720 a month per flat.

That was the right move – within days, viewings had increased through the roof, and by the 8^th August (2 weeks after completion), we had tenants agreed on all flats.  In fact, on the majority, we had multiple offers and we were given different options about which tenants we wanted – all tenants were offering the £720 asking price – so we were above budget.  Happy Days.   On two of the flats, prospects got into a bidding war, on on these flats, we ended up accepting a higher offer of £750 a month.   Even better!!!

How The Money Works
At the start of the project, I created a spread sheet with the budgets for the project (per flat).    But, now that money was coming in, I double checked the income, which worked as follows:

The block of flats we purchased

Each month a tenant would pay £720 (2 were paying £750).   Of this, the funds initially worked out as….. £520 went back to paying back the loan on the property – interest and principle (so the tenants were paying off our loans – nice!), £49 went to the managing agent (their fee for dealing with finding the tenants, collecting rent, dealing with any tenant problems), which left £151 profit per month per flat.

However, we decided that ever 4 months, the extra income money would be then transferred back to the loan payments.  Our lender had a clause which said when we pay off a chunk on or above £500, the interest is recalculated.   So paying the additional income not only reduced our debt amount, but also changed the monthly payments back to them.  So on month 5, the £520 loan payment reduced to £507, which means that each month our profit increased to £164 per flat.  It may not seem a massive leap – but its compounded – every 4 months the loan payments went down and the profit went up – exponentially.

And of course – this is cash in profit (from rent).  On top of this, our share of the property increases (as the loan is repaid) so that increases the net worth, and if the properties increase in value, that’s triple bubble on the passive income.

 It’s a rocky Road Ahead
Of course, is a great picture now.   My company owns more property, which hopefully will increase in value, and in the mean time, my tenants pay off my loans which means that in a few years, I will own the property outright (and so will double my originally invested money).  Once the loan is paid off, all rental income is then passive income.

BUT, despite all the efforts of the central banks, Europe, the USA is in a desperate financial state (and soon Asia will join them).  This means that interest rates could change very quickly from the current historical lows to shocking highs – who knows.    My own predictions are that in the next 6 to 12 months, interest rates will drop further (to ZERO %?!?), before starting to grow – but that is why we are keen to reduce the loan amount as quickly as possible.

However, if you are thinking about following me into the Buy-To-Let passive income route, careful consideration should be given to the turmoil which may follow in a few years time.

In Summary
when I started this project, I was looking for a passive income stream, and I found one that I am happy with.  Yes, its not as ‘freelancery’ as say writing e-books, or developing a sell-able software product or generating money through advertising, but all of these seem to be hard work for little return.   For my investments, I am already generating a reasonable amount of money.  And whilst the monthly income may not be shockingly high, it compounds up very nicely and very quickly, and will generate a big pile of catch with little no no risk or work – just what I was looking for.

It’s still early days in this project.  I am not looking for a quick win or to make millions – but it is going to generate cash over my ten year plan.  If things continue in the future as they have done in this project, I will certainly be looking to expand into more properties whenever a major non-passive (regular day job) project generates sufficient cash to allow additional investment.

So, that’s it – that’s my passive income project.

What do you think??

Today I want to continue talking about my Passive income project for my company, which as I had described earlier, was taking shape in the form of the purchase of property and then generating income through the Buy to Let market. Today, I want to talk about the project finance.

In 2011, my company had done rather well, and was sitting on a pile of cash. However, it was not sufficient to purchase a house (or other residential property) outright. Therefore, my company needed further finance – in the form of a bank loan.

When it comes to finance, there are a lot of options available:

Loan, Interest Mortgage  or Repayment Mortgage
Clearly, the three main options that were open to me was a banking business loan, an interest only mortgage or a repayment mortgage. In terms of the maths, there is really no difference between a business loan or a repayment mortgage – on the amount of money I was looking to borrow, it would still need to be secured against the rental property we would be buying.

In my Buy-To-Let growth spreadsheet that I had put together earlier, the maths suggested that a repayment mortage was the way to go rather than an interest only. After all, with interest only, I would still be left with the value of the original mortgage to pay back at the end of the loan period – so growth would be less. So in my mind, a repayment mortgage would be the way to go.

Also, I liked the idea that the rental for the property would basically be paying off the loan (with the risks of months without rent and bad tenants accepted).

UK Bank Backing – They don’t really want to know
So with the decision made, we went off to see our friendly business bank – the Natwest (who we had banked with for 10 years). We met with the business manager, who was more than happy with our maths, more than happy that it worked, and was more than happy to lend us the money we needed (to top up our own cash into the project). After all, the UK government had introduced Project Merlin a year or so ago, which was a banking incentive to lend to small business with projects such as this, so the project helped Natwest meet their own lending goals.

However, the interest rates quoted by Natwest were shocking. When the UK base rate was at 0.5%, Natwest wanted to charge us just under 6% VARIABLE. We questioned this high interest rate (after all, Natwest were borrowing the money from the IMF at less than 0.3%), and the manager was very frank with us – because there really was not any real need for a UK bank to generate money from UK customers.  They were already making so much money elsewhere.

Good old UK banks – you have got to love them.

Re-scoping Risk
I was also not very happy about paying a variable interest rate. Yes, interest rates had been at a record 0.5% for the past 3 years, but sooner or later they would be heading up, and I wanted to keep the risk of the rental not meeting the monthly repayments to a minimum. This project after all was all about minimum risk for maximum returns.

Luckily, there is a good table of BuyToLet mortgages and loans listed on the internet, and there was some cracking deals to be had – if we looked further afield.

The Final Solution – from an interesting source
In the end, the finance came from…. The Bank of China. And what a cracking deal it was – 3.88% for the TERM OF THE AGREEMENT. Interest rates could rocket – and it would not cost us a penny more. Our tenants would never have to worry about us charging them more rent to meet the monthly payments because our own payments would be fixed – it was a win for all concerned.

We had to do all the financial applications (and provide 6 months of personal and business bank statements, 3 years of company year end reports, credit checks on all directors (free from Experian)) and a couple of other bits of information. Then, on Monday 16th April, the Chinese Bank said yes to the finance. The project was green-lite (lighted?!?) and we could really get cracking on our passive income project.

Exciting times.

Today I did something I have not done for a long time – I said no to a prospect.

There I was; with an email landing in my inbox saying that they wanted me to provide services, there was the purchase order number, there was the day rate we had agreed, lets get cracking. And I said no.

I thought it was worth sharing this story – in case you ever find yourself in the same position.

The history with the prospect is not complex. They had found my company via a Google web search, I had gone and visited them, we had talked terms, agreed rates, and then the emailed order arrived.

Trouble with my Gut

Now, I could say there was something wrong with the prospect. I could say that they tried to beat my rate down or demand too much bang for their buck. But no. The problem was with me – or to be more specific, it was my gut.

The logic of wanting to earn money and have a new customer was telling me to take the work, but my gut said… something was not right.

I could not put my finger on it. I have never had the bad feeling twinges about a prospect that I was getting about this one. Not ever!

I discussed the situation with my wife and some business friends, and when they asked me why I didn’t want to work with the prospect, all I could say was that it didn’t feel right.

I even tweeted my worries:

Jaffa Brown ?@JaffaBrown
Today, i am having a hard time deciding whether to take on a prospect as a new client. Something seems wrong, & my gut says No, run away.

And got a great reply from one of my twitter friends:

@idea15webdesign The measure of your business’s quality isn’t the projects you take on, but the projects you turn away.

Confirming and attempted work around

So for the next day or two, I worked with the prospect to try and work out what was wrong. But as soon as I started to talk about working practices (rather than the work to be done or the day rate), it threw up even more concerns.

They started talking about being available for out of hours phone calls, free consultations, multiple levels of approval for work, and paying by the day with full record keeping. The worries started to crystallize. My gut feelings maybe were making me more weary than I should have been, or see problems which were not really there, but every moment the sense not to work with them grew.

In the end, I sent them a very polite email in reply to their order of work saying “Sorry to disappoint, but…..” with a few reasons why I could not work for them. At the end of the email, I said “For these reasons, I feel that it would not be prudent for us to form a working relationship at this time. However, if you are still looking for assistance, I would be happy to suggest some alternative freelancers who could assist you”.

Once I pressed send on the email, I honestly felt so much better.

The take away

Let me be straight; I may have got this very wrong. It may be that the prospect would have been a great customer, caused me no problems, would have paid their bills, and everything would have been great. But, my gut said something was wrong. Call it gut instinct, sixth sense, sub-conscious decision making or a guardian angel, but whatever it was, it was shouting to get out of there, and out of there I got.

As business owners, it is far too easy to say yes when trying to win new business or earn money, only to find that we have taken on the customer from hell which will cause us sleepiness nights, grief and lost money.

My advice for fellow freelancers, contractors and small business owners is: If in doubt, try and work the doubts out. But if at the end of the day, your gut or heart has concerns, just say no. Saying No is not just a decision which is exclusive to the customers, we freelancers have the right to say No as well if it’s the right decision.

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.

When negotiating with prospects, you will sometimes come across the ‘Day Rate Apprehensive’ customer.

Generally, such customers will demand to know your day rate (even if you intend to quote a fixed price project), and will make all kinds of ‘ohhhhh’ or ‘hmmmmm’ noises, and will try to get you to drop your day rate down.

How should a freelancer, contractor or small business owner deal with those demanding a reduction in your day rate?

I have found the best way to keep the rate the same whilst still winning the business is to make them realise that negation on day rate has absolutely nothing to do with the price they will end up paying.

My two suggestions are:

Option 1 – The Duration Equation.  In this discussion, yes, the day rate is indeed one side of the equation.  BUT, so is the duration – how long the project will take to complete.  Talking about a day rate without considering the effect on duration is a zero-net equation.  As the day rate drops, so the duration will increase to balance out the work cost (even if you actually spend the same real time doing the work, and the slack time working on other projects).

Option 2 – The Quality Equation.  In this discussion, you may be asked to talk about the day rate but also talk about the duration – in which case the final part of the equation is the quality.  This is like haggling over the cost of apples; you may get the same quantity of apples for 4p each rather than the premium 20p apples, but they will be bruised or rotten.  If just getting a cheaper apple is the ONLY goal, then a cheaper cost per item is a quick win for the customer – but will either of you be happy in the end?  No!!!  This is the negotiation to be having with your prospect – a cheaper day rate for the same duration may involve a less skilled (outsourced to a lower skill level) freelancer or overseas development house, which in the end may mean a lower quality delivery, which will then cost more with fixes and problems.

Remember, when you offer a service, you can offer it delivered quickly, cheaply and for the delivery to work – but your prospect can only pick two out of the three.

When your prospect demands all three (and a low day rate), they are really asking for a sub-standard delivery which will cost somebody (either you, or your prospect) more in the longer term.  Unless you are really desperate for work, it could end up being you who pays the additional cost, so this is a prospect you should be walking away from.

Even for the most busy of freelancers or small business, running a business can be a roller coaster of moving between famine and feast. Bank balances will of course reflect this – with an ever changing cycle of too much money (which leads to higher taxes) to almost being broke.

But when times get tough, customers dry up, work is just not there, or you are forced to take work which frankly does not cover the costs, what is a responsible freelancer or small business owner to do?

Last year, I attended a small business workshop with a hundred or so other freelancers, and this subject was discussed as part of a finance round table. I thought it would be worth me sharing the collective thoughts for anybody who is currently struggling in these difficult times:

Things to do Before you run out of cash

The following advice is worth all companies considering before you start to run out of money and get desperate:

• Keep an Eye On Cash Flow – The number one task is to keep an eye on cash flow. Have a clear picture of your incomes, outgoings and what this means to your bank balances over time. Do this for both your personal and business accounts. It doesn’t matter if you do it on paper, use excel or better still, use a cash flow projection system. Know what your cash situation will be at all times.
• Be proactive – Keep an eye on your work load, and recognise when you have less work than you want or can handle. When you have free time, send out feelers for additional work to your business contacts, old customers, friends, family and social network. Don’t leave it until you reach the period of inactivity, send out the requests for work as soon as you realise there is a work gap.
• Offer incentives to fill the cash gaps – When you have been working hard but cash flow is becoming a problem because of other reasons, offer incentives to fill the gap. Offer discounts for customers who pay early or before a project starts. However, recognise that by discounting, you may be actually be making the situation better today, by creating a bigger problem in the future due to less (discounted) income.
• Other Work – When looking for additional work to fills the famine cycles, don’t forget that there are additional sources of work. You could be looking for agency based work, contract based work, sub-contracting to another freelancer, or even doing work outside your normal scope if it means the difference between making it to the next feast cycle, or going bust.

Things to do when you are running out of money

The above list is great for day to day running of your business, but what do you do when you’re a freelancer who is running out of money? Here are some suggestions:

• Pick up the phone – When the future of your business is on the line, don’t be too proud to pick up the phone. Forget social networks and online adverts, desperate times call for desperate measures. Find local companies who may need your service and start calling them. It doesn’t matter if you get 1,000 rejections, as long as you get 1 yes which will bring in money to help pay those bills.
• Don’t Skip the Tax – Whatever you do, do not try and skip on your tax obligations or attempt to borrow from your tax pot to ease you over the lean times. Tax income (from sales tax or VAT) is not your money. If you borrow from this pot and then cant pay your taxes as they are due, the interest and fines will become massive very quickly. By all means, contact your local tax office and see if they can arrange staged payments, but don’t be tempted to skip the tax.
• Defer Payments – If you have business and personal bills due, defer making payments (if possible). Make a list of payments and sort them in priority. Only pay those which could have an impact on yourself personally or could effect your business. But remember, this is a short term solution and those suppliers will eventually want paying.
• Cut those costs – By the time you reach the point of panic, it may be too late, but it still may be worth cutting costs – both personal and business. If you can cut personal costs, you can afford to pay yourself less, which in term helps your business cash flow.
• Asset/Stock Strip – If things get desperate, look for assets you can strip. Stock and technology (computers, printers, etc) that are no longer in use – generally these can be converted quickly into cash via E-Bay or Amazon. But be warned, this not only hits your future profit margins (as they will have to be heavily discounted from their actual value), but there are tax implications so speak to a financial adviser before heading down this path.
• Business Loans – Of course, the most sensible route would be to arrange a business bridging loan from your business bank. It is well worth trying this route, but it is a general rule that banks are now only lending money to businesses that don’t actually need it. Therefore, don’t use this as your only route of escape, and pursue other options at the same time.
• Short Term Loans/Credit Cards – Where business loans fail, there are short term ‘pay day’ loan organizations springing up which will now help business, or bills can be paid by credit card. This is generally a very VERY bad idea – with loan terms having interest payments of between 30% (credit cards) and 2000% (for payday short term loans). This option is almost guaranteed to make any short term cash situation much worse.
• Family, Friends and other businesses – A better source of short term funding may be from family, friends or other businesses you may know. Of course, this could then not only effect your business, but the relationship you have with the people you borrow from. And of course, they will expect some form of return for their risk, and any agreements should best be put down on paper.
• Peer to Peer Lending – The final option for short term lending is business peer to peer lending such as Funding Circle. They work almost the same as a bank, but seem to be offering better interest rates, and are more willing to lend than the big banks to businesses with cash flow problems. Again, remember that with interest payments, this will cost you more longer term, so make sure there is a feast cycle planned in the future to pay off the loan.
• Mothball the business – The final option is to close the business. This does not need to be a permanent closure, it can be a temporary mothball of the business whilst the economy recovers and you earn money in a permanent job. This may be a much smarter route than sitting with no work, burning through money. Sometimes, walking away for a short while is the smart and brave thing to do.

So these are the suggestions that came out of the freelance finance discussion.   Do you have any other options you can add?

Some freelancers worry about money, or clients, or delivery dates, or taxes.  Me?  My biggest Freelancing headache is always holidays (or vacations to you in the great old USA).

Suspending projects, leaving customers unsupported, jetting off to somewhere warm, sunny and relaxing may be how holidays are supposed to be – but I always panic that as I fly off to the middle of nowhere, servers will crash, bugs will be uncovered and customers will need assistance which I am unable to provide.

Of course, disaster can be averted, and vacations can be turned into a more relaxing experience through some simple preparation.

Whilst this preparation will vary depending on the type of freelancing work you do, the number of existing customers you have, or number of projects on the go, some preparation activities will work for all freelancers.

My own check list of top twelve pre-vacation activities for restful and stress free holidays are as follows:

1. Holidays over public holidays and weekends – Let’s start with the simple ones.  Scheduling your vacations to include as many non-working days as possible not only means you are not wasting potential money earning working days, but also reduces the number of days when customers will need supporting.  Of course, vacations over public holidays will cost a little more.
2. Cut off of Work – I have a two week window before any overseas travel where I will not install software changes of any kind on any customer’s site. In the past, I have found that the bad-luck demons will happily sit back and watch that typo turn into a nasty data corruption bug, which of course will only be discovered 20 seconds after your plane takes off.  Leaving a settle in period means any problems should have been discovered by customers before you leave.
3. Have an Email Filter - You know all those emails you get with small business tips, blog posts, LinkedIn updates and the like, you don’t need them on holiday.   Create a filter which automatically moves them to a holiday folder which you can review on your return.  Also worth noting that the rules need to be in your core email store (such as exchange) rather than your email client (outlook) as otherwise the rules will not be applied.
4. Have a email Check schedule – and agree this with your partner and friends that are traveling with you.  Nothing will annoy your husband or wife more than them feeling like there are on holiday on their own as you always have your phone in your hands checking emails.   Two email checks a day is a good compromise, and schedule those times based on the time difference between your holiday destination and your customers.
5. Tell the customers – If your customers know you are a one-man-band freelancer, tell them when you are going to be away.  Tell them as soon as you book your vacation, so everybody has plenty of time to prepare for the window of ‘no support activity’.  Of course, if you are ‘pretending’ to be bigger than you are, tell them anyway, and direct them to a generic support or issues email address.
6. Check you can get to the Internet – Don’t leave it to the last minute to check that you can get on the internet at your selected holiday location.  Can you access internet via hotel WiFi, via your mobile phone operator – and what will be the speeds and costs involved?  Most hotels have a web site these days, and most will indicate what ‘business’ facilities are available.  If there are problems, have a backup plan ready before you fly.
7. Arrange external support? – If you are supporting important projects or customers, it is always worth speaking to other friendly freelancers to see if they will help support your customers whilst you are away getting a tan.  This will need some serious preparation time in terms of technical knowledge transfer, setting up access to the project files, access to the customer files, and of course contracts between you and them.  Such agreements do not necessarily need to be for money (you can arrange a situation where they cover you, and in return you cover them), but generally, paying them for their time can be money well spent if it means you can relax on holiday.
8. Make key files accessible – Just in case you do end up getting dragged into a support or question-answering situation, it is well worth making sure key files for key customers are to hand and in a format that is usable.  For making files accessible, nothing beats cloud storage such as dropbox (which allows access via browser or mobile phone).  Just remember that you need them in a format that you can view without a full computer (unless you are taking your laptop).  It is no good having your SQL server database backed up to dropbox if you don’t have a server to load the data onto – better to have the table formats and scripts exported into a text file that you can read on a text viewer (same goes for application source files, graphics files (you wont have photoshop available), etc).  Also, if in doubt – push all customer files to the cloud as it’s the ones you don’t have access to that you will undoubtedly need.
9. Look for common problems – Another good exercise prior to leaving for vacation is to review your old customer support issues and look for common problems.  For my customers, the same problems crop up over and over again (forgotten passwords, query on the movements of data through a data system, etc).  A lot of pain can be eased by creating a quick ‘how to overcome or answer your most common questions’ crib sheet which you send out before you fly.
10. Remote Project Management – For me, there is no better feeling than having a project start off as I fly out to holiday – and knowing that some poor freelancer I have subcontracted to is working hard whilst I drink frozen cocktails by the pool.  If you have a cloud based project management system (see below), this can make staying up to speed a breeze.
11. Remote issue logging system – As discussed, having a central support email address for incoming issues is good, but having a cloud based issue logging and resolution system is so much better.  Your customers will feel more in control, and you (or your friendly supporting freelancer friend) can respond to and resolve issues via an internet connection.
12. Possible Remote solutions – The final option is to see if you can organise a remote support situation.   I give more details on my particular solution below.

Remote Project Management
One of the cloud based tools that I have been using for the past couple of years has been the TeamworkPM project management system.  Having a project system which controls work flow, and that myself, my customers and (in some cases) my outsourced developers can see has been a gods-send.

I am even happier now that I have found that Teamwork PM have mobile phone based applications which run on both Android and iOS based mobile phones.   A great tool is now even better – allowing me to track progress on projects, update statuses, chase for progress and keep track of projects whilst I am traveling or enjoying a break with the minimum of fuss and the minimum of data bandwidth (which saves a lot of time and cost when on a roaming data plan).

Using Teamwork and the mobile based client, I am able to keep working whilst sipping a drink, and the project continues along without me – keeping all my customers very happy.

My own Remote Support Solution
In terms of my own remote support system, I recognised that for me, a lot of my support questions came about regarding the data that is held on my customer databases (generally Oracle or SQL Server).   Therefore, to aid in remote support, I invested a day and developed myself a remote support system.

The system comprises of two parts:

1)      I developed a web form on my own internet server (where I host my business web site) which presents me with a text entry window and a drop down list of my customers.  In this window, I can type some freehand SQL script (or pick from a set of 12 common queries), and select a customer.   The customer code and the SQL script is then written to a file on my web server

2)      I also developed a customer end service, which runs on each customer site (in the background) once an hour, and reads the text file from my web site.  If the customer code is the code of the site, and the save time is within the last hour (to stop duplicate runs) it connects to the product database, runs the script, gets the results into an HTML grid table, and emails me the results

It’s crude, quick and nasty – but is very effective.

When a customer logs a support call saying that they need to know why something has happened, I can bring up my web form on my phone, and type in my SQL command (“select * from audit where data = ‘the problem code”).    Then I go off and get a drink.   One or Two hours later, I get a response email back from the customers database server with an HTML formatted set of the results, as if I was dialed into their computer.

In my leisure, I can look at the data on my phone display, and using my cloud based customer support form, quickly type a response.  If needed, the SQL script that I send to be run can be an update (to sort out data), a select on a database object (to view a stored procedure) or can even reboot a server.  All from my sandy beach location on holiday.

Perfect.

Whilst my solution is designed to work on client databases, maybe a similar solution will work for you to get web details, page files, documents, or whatever else your freelance business deals with for customers?

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:

1. Not being too demanding or pestering for the work (but that does not mean don’t chase, just do it in a casual way)
2. 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)
3. 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.

Google Alerts is a great free service from, as the name suggests, Google!

If you have never used Google Alerts, it allows you to define a Google search term, and whenever new web pages or sites are created which match your search criteria, Google sends you an email with a summary and link of the new web pages that Google has just added.

If you have never used Google Alerts before, they are well worth playing around with.     You just register as a Google user, set up an alert, and say how often new results should be sent to you (most of my alerts are set to be daily).   But even if you are a long term user of the service, here are:

10 Google Alerts a Freelancer, Contractor or Small Business should be setting up now:

1. Your company name – Get notifications when ever anybody mentions, references or talks about your company.
2. Your own name – For the same reason as your company name, but know when they are talking about you personally
3. Your land and mobile numbers – Useful to know if your numbers are listed in any directory based service
4. Your email address – Not only will you know if you are personally referenced, but also know if your email address is made available on a spam list (which are sometimes published on the web)
5. Your post/zip code – To find out what’s going on in your neighborhood
   
6. Your industry (i.e, Freelancing) followed by ” major news”, “import news” and “major changes for ” – Keep up to date with the industry news
7. “New mentoring group” for . . . – refine for your geographic location to find mentoring groups when they are set up or hold events (if you need a business mentor)
8. Your competitors company name – If you know of multiple companies that do the same thing, keep an eye on what they are doing in terms of marketing, sales, news, products etc – useful for new ideas.
9. Your co-working freelancers company names – the same as above
10. Your dream and hobby subjects – Be if for travel, photography, fashion or food, there is life outside of work.  Keep up to date on new sites and news.