Posts Tagged ‘small business’

Closing the store is the brave thing to do. …You are daring to imagine that you could have a different life. Oh, I know it doesn’t feel like that. You feel like a big fat failure. But you’re not. You’re marching into the unknown, armed with … nothing. Have a sandwich.

~ Birdie Conrad, from the film You’ve Got Mail, Warner Brothers , 1998

One of the things I find most annoying about the Internet is that it’s constantly changing.   Resources come, resources go, Google changes its rules, new social media appears, web services are created, and just as fast – things disappear.    I have lost count of the number of blogs, feeds, twitter uses I have subscribed to which have just…. faded away.

They don’t end, or stop, or conclude – they just…. fade.

In 2011 I made some big decisions.    I decided to end the development of two software products I had developed, I fired three customers (I tried to fire five but two gave me reason to reconsider) and I called it a day on two or three personal projects (which were not going anywhere).

As Birdie Conrad says (from the quote above), closure of anything can be a tough call, but sometimes it’s the brave (and right thing to do).

As freelancers and business owners, we are told we need to expand all of the time – more clients, better clients, more work, more projects.  Growth (we are told) is good.

But, sometimes all that is really needed is to call it time on the things that are holding us back – the bad customers, the waste of time projects, the pet activities which are distracting us.  When I have taken the difficult decision to make the brave move and cut these things off, I have always found that it creates a vacuum of time and effort which is quickly filled by new customers and new work.

So what are the things that are holding you back, that you need to cut off and close, in order to move forward?

It’s also useful to plan ahead, and know things that will also come to a conclusion at a future date.  This helps us know when we will have spare time and resource in the future which aids in planning.

As an example of this, this blog will end on the last day of December this year (2012) – that’s the date when I will make a final goodbye entry.   There is plenty of time between now and then, but I don’t want it to just fade… it will conclude.   Which will allow me more time to move forward on other things.   But plenty of advice from me between now and then.

And what about you.   Any brave moves you can make this year?

Late payers can kill your company.   There is nothing worse than having completed work, and having to nag, chase and threaten a client in order for them to pay their bills.  Whilst they sit back withholding your money, your own bank balance reduces and panic can set in.

There is lots of advice available on the web about what to do about late payers for Freelancers, Contractors and Small Business.  I myself have talked before about various ways of dealing with late payers.   But a lot of this advice is not being honest about the real world, and how business really happens.   So let’s all put aside the make believe situations, and talk about what you can REALLY do about late payers.

Do you still want them as a customer?

Everything boils down to this question.   Once they pay that outstanding bill, do you still want them as a customer for future work?   If the answer is No, then all the options are open to you because the relationship is already damaged, so it’s hard to make it any worse.  Once you have decided the relationship is over – you are free to send nasty emails, make nasty calls, and even turn it over to legal professionals to send them threatening letters.

BUT, if you intend to keep them as a customer, and there is a real chance of more work, and you don’t want to ruin the relationship, then in a REAL world, your hands are somewhat tied.

This decision even extends to the pre-emptive measures that are advised.   Tighter payment terms, full payment up front, payment on delivery – all of these options sound great – right up to the moment you are in the sales negotiation.    When you are struggling to land a new customer and a prospect is willing to award you the work but only if you agree to their standard 100 day payment terms – are you really going to say no?  Really?

What you can Really Do

So that’s assume we work in a real world full of recession, tightening of belts and late paying customers.   What are some of the options that you can do if you don’t want to kill the relationship and the prospect of any future work?

Late Payment Fees – This is my method of dealing with late payers.   When somebody is late, I give them a sting through an invoice for an ‘administration’ fee.  I make a small bit of money out of it, and they get nudged into paying the original bill.  If push comes to shove, you can always cancel the late payment charge to keep the relationship sweet for future work.
Money Up Front – A lot of customers will reject this idea – but it comes down to negotiation.  Where a customer is always late, you could threaten to start raising Pro-forma invoices which would need to be settled before work is started.  Full payment up front is one extreme of the payment cycle, with late payment after the deliver as the other.  So you have a wide width for negotiation for future work with an agreed percentage (10%, 30%, 50% or 75%) up front and the rest after delivery.
Put them on STOP – If they want additional work, you can put them on stop – which means that you are not allowed to do any more work for them until they pay.   I have a mean person appointed in my company (a person picked at random) who I can blame for the decision.  Putting them on stop and not being allowed to provide support or that new development is never my decision – no, I was instructed to stop work by Jo Blogs (who is not available and won’t discuss the situation whilst money is outstanding) – sorry.
Extended Payment Terms – The bigger the customer, the more power they will use against you.  I have one multinational client which sent all suppliers (including myself) a letter 3 years ago which said they were rejecting all supplier terms and replacing them with their own 90 day terms.  I had the choice to take it or leave it.  Guess what…. They provided me a fair chunk of work – so I took it.   In my situation, there was no room for negotiation, but in a real world, payment terms could be reduced for late payers through negotiation.
Check your customer history – For new customers, don’t forget you can do credit checks.  At the very least, it is worth Googling “Their Co Name Late Payment” or “Their Co Name Accounts” or “Their Co Name supplier problems” to see if anybody else is talking about them being a problem payer.   If an existing customer suddenly starts making slow payments, it is worth doing this for your existing relationships to see if anything has changed.
Protecting Yourself with a contract – When push comes to shove, you can only threaten your customer with what is in your contract.  So make sure your payment terms, late fees, the right to alter the terms and ownership rights are clearly detailed.
Resign to chasing forever – But at the end of the day, if they are an existing customer and you want the future work, you may not have any other option than to resign yourself that they have the final decision on when they will pay you, and that you just have to keep chasing without turning nasty in order to keep the relationship sweet.

For my small company 2009 was a pretty good year – with the recession just starting and people cutting back, I still managed to increase both my company revenue and profit.  2010 was even better than 2009.  But by far, 2011 was the best year my company ever had.   I doubled the revenue in 2011, and tripled my profit level.  After analysis, I calculated that in 2011, my profit margin was 76.5% of turnover – which is a very good number indeed.

This good year has left me with a couple of problems; (1) A very large corporation tax bill due in the Autumn (so large in fact, I almost cry) and (2) a problem of how to invest the extra surplus money my company now finds itself with (a topic I will cover in a later post).   But in terms of all possible problems, these are two of the nicest problems to be facing.  I would rather have too much money than not enough.

So how did I do it?   How did I have a better year, each year, and expand my turnover massively in 2011?   Well it all comes down to the following 14 simple steps which I have built up over many years freelancing, continue to review and add to from time to time (details of each action in the links below):

1. Adwords as marketing – The vast majority of my marketing was carried out using Adwords.   In 2011, I spent £780 in adwords, and the projects generated from the adwords generated me £179,000 of revenue (I had additional revenue from projects from elsewhere, plus support and change revenue).   Now that is a good return by anybodies standards.
2. Respond to enquires FAST – I have seen various reports that suggest more than 50% of work is awarded to the company that responds first.   I made sure when I received an enquiry, I responded within the hour – faster if possible.
3. The never ending question sheet – As I have described previously, I have a ‘never ending question sheet’ which I build up over time to tease and pull out the exact project requirements.  This has helped me with a lot of work over the years as I seem more knowledgeable than my competitors.
4. Repeat the Requirements back to the prospect – In a recent post, I talked about the power (and additional revenue) of creating a Summary Of Understanding.   In 2011, my analysis shows that I generated an additional £19,000 of ADDITIONAL revenue through this technique, above and beyond the additional project scope.
5. Creation of very good proposals that deal with their needs and desires – I would like to think that I now have an almost perfect quotation template for projects that I have developed over time.   Plus, I have recently started utilising tools to create proposals and estimates much faster
6. Reward yourself – I treat myself with a little reward at various milestones, with biggish rewards when I win a contract (I even do a little dance) and also at the end of the project.  But I also reward myself at other times when I do a good job to keep my motivation going forwards.
7. Cloud Based project management – Once the project has been awarded, I used cloud based project management to control projects, which means I have less administration to do, and can run multiple projects at the same time whilst saying in control
8. Keeping control of my company finances – Other than adopting cloud based project management, switching from a standard accountant to on-line accounting has really changed my business.  I know my finance picture immediately with every invoice raised, bill paid or payroll payment.  Its so easy to do, I regularly mentally kick myself for paying my old accountant so much for so long when a child could do it.
9. Watching the cash flow – Coupled with the company finances using a cloud based system, tracking cash flow is a must.   I selected Float for cash flow and budgeting, and this has allowed me to see what my finances will look like next week, next month or next year and so make sure I am on track with my budgets.  This in turn means I no longer have to think about money, and can simply get on with generating it.
10. Increased productivity on the next project – I now cannot imagine a world without my two favourite free productivity tools; Dropbox and Evernote.   Dropbox makes the transfer of files between computers seamless, and Evernote means I am so much more efficient.   I use Evernote to piece together work I have done in the past for new customers, save any new routines which may be useful and so become a Professor Frankenstein of development with terrific results for all concerned.
11. Review and learn the lessons – At the end of the project, I do a review.  I review my project costs against my estimates (how profitable was the project, should I quote more next time), I review any problems to review this action plan, review my tools and review my documents to see if there were any holes which need to be plugged.
12. Offer follow up and bolt on services – After this internal review, I then create a project completion document for the customer, with suggestions for next steps, considerations and suggestions.   This generally leads onto more work and sometimes nice lucrative support contracts.
13. Upgrade LinkedIn – I also make a point of updating my LinkedIn profile with any new experience.  Whilst LinkedIn rarely produces any work directly, I have lost count of the number of times that somebody has told me that they Goggled me before awarding the work, only to find my LinkedIn profile near the top, and then viewed all my experience which gave them more faith in my company’s ability.
14. Repeat – And finally, repeat the cycle.  Of course, my marketing is always running (unless I am really overworked), so the repeat may loop back to step 4, 5 or 7.

For most freelancers and contractors, one of the things that customers want is regular status updates.   This may be to provide regular updates on project development, or support provided, activities completed or support/development time used.  Generally, I have 2 or 3 regular status updates that need to be sent every week or so.

Yesterday, I was given a great tip for providing easy status update emails.

Now whilst I am able to avoid having to send project progress status emails thanks to my cloud based project system, I still have to report support time usage for customers who have pre-booked some support days, or quick updates to senior company managers who insist on being kept in the loop but don’t want to go looking for the information.   This tip I was given has saved me lots of effort.

The tip is to simply set up an email with the status report, type a default template email (“Hello, this is how much support time we used…” etc) but before pressing send, use the “Delay delivery” option and set the date to the scheduled status date.   Then, include yourself in the blind copy (so you know when it’s gone, and have the template for the next week or month).

The email will then sit in your outbox, waiting.   Whenever I do an action which will need to be reported, such as do some support work, I just click on the outbox pending email, and add it to the email text.  Come the day of the status update, it gets sent automatically with the progress to date.  Effectively, I am using the outbound email as a notepad (so much easier than trying to remember it all).

When the status emails do get sent, I of course get a copy.  With this copy, I then simply hit “reply to all”, and I have the next template email for the next status run – just remember to change the “Delay delivery” option to the date that the next email is due and remove this weeks/months activities.

Note, with this system it is worth setting the status template email to initially say something like “This week, there has been no activity” so the email makes sense if not changed – this no activity can be removed and replaced with the activity once something happens.

Effortless status reporting.  Thanks for the tip Richard.

One tip that I was given many years ago was to start a project the right way.  It was suggested to me that the best way to do this was through an initial ‘Summary of Understanding’.

Generally, when you start a contract, or meet with a prospect or chat about a freelance job, the client will do a brain dump of what they need.   The term ‘Brain Dump’ is a good description, as in the majority of cases, they don’t have anything on paper – everything they explain comes directly from their brain to their mouth and into your ears.  Because of this flow, their thoughts, requirements and needs can come out as a jumbled collection which you need to put into order to create the project or proposal.

A Summary of Understanding
So before any quotation is produced, work started, or plan put together, it is worth investing the time to quickly create a Summary of Understanding.   This is a short (can be a single page) document which details your understanding of their needs and requirements.  This document can then act as a working plan that everything else is generated from.  Your client or prospect will undoubtedly find it valuable as it documents their muddled thoughts.  And with your branding (logo, name, web site, etc) all over it, your credibility is boosted even before the project begins.

But if you are clever, it can be used to also boost revenue.    Not only should it contain an outline of the project, but it can also be used to check with the client that there is nothing missing, and you can use it to suggest additional options that maybe they hadn’t thought about.  There has been many times that I have produced a summary of understanding, only to have the customer contact me to say that they had thought of 3 or 4 other items they needed (that they had originally forgotten about), or that they liked the sound of some additional options I had suggested and to include those as well.

Format of Summary
When I produce a Summary of Understanding (or Requirements) document, it tends to be either 1 or 2 sides of A4.   They all generally have the same basic layout which includes:

1. An overview (in descriptive text) of what the client is looking to achieve and why (new software because old software is out of date, new web site for a launched product, etc)
2. A bullet point list of the features that the delivery should contain
3. An overview of their dates as discussed (start date, expected delivery date, any other key dates)
4. A list of recommendations (from you) for additional items
5. A list of recommendations (from you) for first steps
6. A list of recommendations for stages (if the project is going to be large, and it is best ‘chunked’ up)

One Word of Warning
I have often found that the Summary of Understanding can lead a prospect to increase the scope of work by 25%, 50% or even 100% of the original requirement; prospects can get very carried away.   So when it comes time to convert this into a quotation or project plan (if already engaged on a T&M contract), it is best to provide figures and time based on the original core requirements, with the additional suggested items added as ‘optional’ extras outside of the original project totals.

It is far too easy to be called in and produce a proposal for a project only to find that the additional elements price you out of the market.    By listing them as optional elements in your cost or time proposals, the customer can select the elements they require based on their budget, and still allow you to keep within expectations where their vision goes beyond their spending limit.

One of the problems that can occur with the feast-and-famine cycle for contractors, freelancers and small business owners is the funny logic that begins when we are in the famine mode.   When we are sitting around, bored, looking for work, sometimes logic can fly straight out of the window.   This is especially true when it comes to maths.

At the end of the famine stage, it may be that a contractor or freelancer is sitting with a variety of paths open to them – with roads leading to different contracts, or with 2 or 3 potential new customers, not knowing which one to take or put the most effort into landing.

The boredom, the need to be active, but also the desperate need for money may cause us to jump in the wrong direction.

Let’s say that a contract or freelance job is offered which pays (for the sake of keeping things simple) a rate of £500 or $500 a day.  But, there is the prospect of another job or contract which pays £600/$600 a day, but won’t come in for another week.

In a world where the chances of getting both are equal, the obvious choice is the one that pays the more money.  Right?

But hold on.  If we have 5 days of unproductive time to wait for the higher rate work – that actually dilutes the value of the 2^nd job – the average day rate is reduced when we factor in the 5 days of unpaid time.

Assuming that the contract or job runs for a month, the immediate start contract pays a day rate of £500/$500 – as no unproductive additional time needs to be factored in.  However, the £600/$600 job is actually reduced to £490/$490 (1 month equals around 23 workable days, PLUS the 5 bench days = 28 days).

So waiting to take the higher paid work would actually cost you £230/$230 in lost revenue over the course of the month.  Whilst this figure may not be high, is still a reduction in earnings.   When you add in the week of sitting around, maybe the choice is not so obvious after all.

When I produce estimates or quotations for customers, I generally produce them quickly and easily using the tools available to me in FreeAgent (the on-line accounts system).  This works for the majority of quotations as I can use the price list system to easily apply standard items, and the quotations are emailed to my customers using my pre-defined template layout.

However, now and again I have to produce more detailed proposals – with lots of text, examples, concepts, terms and payment profiles.  The sort of quotations we all have to produce now and again – the multi page proposals for those ‘larger’ projects.

Recently, I have come across two new cloud based applications which could make the process of quotation generation that little bit easier.  Especially where the quotations are repetitive in nature (where the same text is used over and over again).

Similar Concepts

Both systems are designed around producing quotations.  Both allow you to define customers, define price lists of common tasks, templates for look and feel of quotations (colours, fonts, graphics etc) and allow you to add free text.   Both systems then allow you to quickly generate new quotes by pulling in items from your price list (then saying how many items/hours/days are required) – and will do all the maths for you including adding sales tax/VAT.

Both systems will also allow the quotations to be sent to your customers by email, to view the quotations in web or PDF views, and both will even let your customers accept (or comment) on the quotations on line.

So initially they appear very similar.  However, it’s the way that they generate the quotations, and the integration that sets the two products apart.  Whilst both produce similar cost breakdown in the same way, its how they deal with the text that surrounds the figures that is of interest.

QuoteRoller

Quoteroller is the newer of the two, but for me, has more potential.   The big plus for me is that it integrates with FreeAgent.  Whilst this is currently restricted to pulling your contacts in (which saves a lot of setup time), the developer says it is early days and hopes to push quotes back out to freeagent in due course.  However, it also integrates with Basecamp, Highrise, and Fresh books.

QuoteRoller allows the definition of template ‘pages’ – you can have standard text of any pages which cover any subject required.  Within this text you can paste ‘tokens’, so it can insert the client name, company name, project name, quote number and so on in the text for you.

You can define as many templates as you like to cover all kinds of different quotations – and use the same layouts, words, proposals and information over and over again.  The templates can include text, images, tables, video, HTML and even links to external web sites.  Templates can also be imported from ‘the community’ of users, so regardless of what type of company you run, there will be a template out there to get you going – you just need to customise the text to the way that you prefer to work.

Whilst QuoteRolloer is good, the one thing that is missing for me is a common catalogue of text BEYOND the template that I could pull in before the quotation is complete.  As an example, I could create a template which covers everything I do, but have a section that I wanted to pull in for overseas customers which talks about conversion rates.  If they could include this, it would be perfect.  It also has one major limitation (at time of review) that when entering the cost breakdown, you can only enter whole numbers as a quantity (so if you charge per day, you have the option of 0 or 1, no half day options).

QuoteRoller is free to register and use.  However, once you get past the set limit of quotes per month, you need to pay to add additional quotations.

QuoteRobot

Quoterobot is similar to QuoteRoller, but seems less flexible on the setting of templates.  Whilst it is just as powerful on the pulling in of cost items, you have to enter more text at the time of creating quotations rather than using templates (of standard text blocks).

However, quoterobot is stronger in terms of payment terms planning.  You have the ability to put payment terms per week and it will include a payment plan chart for your customers which is a nice feature.

The one disadvantage with quoterobot is that its price model is designed around a pay to try pattern – so to give it a try you have to have a credit card handy which I didn’t like (although you can cancel after 30 days if you don’t like it).

If you produce enough quotations that you have to pay, quoterobot is significantly cheaper at only $10 a month compared to the $18.99 a month that QuoteRoller charges.

If you have to produce any large or repetitive proposals/quotations, either product could save you an awful lot of time.

I am going to share a Contract Search tip which was emailed to me by a long term reader of this blog (so a big thanks to Rob).  It’s a very useful tip for those looking for the next freelance gig or contract job.

Rob says when you are applying to 5 or 6 contract/freelance jobs every day, it can quickly become confusing on what you have applied for, what jobs need what skills, and which agent was used for what position.

To aid in the search, Rob cleverly uses Evernote.   When Rob replies to an emailed job, or just before he hits the ‘apply’ button on the web based job board, Rob highlights the job detail text and uses the Evenote web/text clipper to add a new note into a new Evernote ‘Contracts Applied For’ folder.

If an agent calls or emails him back, it’s a quick task then to pop into Evernote, search on the agents name (or company), and all the posts applied for through the agent are listed.

It’s also a useful tip for checking that you are not applying for the same position again where it is re-listed in the jobs board, or is going through more than one agent.

If you have never used Evernote before, the clipper function is an add-on which installs itself as a tool button into most browsers and MS Office/Mac programs and allows you to quickly highlight text and add it as a new Evernote note.  The clipper can be downloaded from the Evernote add-on site.

Thanks for the tip Rob.

A real quick one from me today on a new resource I have come across.

Predominantly this is for UK business to business (B2B) companies, but will be useful for business to individuals based companies and companies/freelancers from anywhere outside of the UK.

With the economy in such a bad way, with Europe about to implode and with money on everybody’s mind, it is useful to find out where you stand on late payers.

PayOnTime (www.payontime.co.uk) has everything you need to deal with late payers.  It includes the details of UK laws regarding late payers, templates for letters and emails you can use, rules regarding interest and late payment fees, a discussion/advice forum and a late payment interest calculator.

If you have ever had a late payer, a bad payer or think this situation may arise, you need to visit and bookmark this great FREE web resource.

I am sure it has not escaped you that we are less than one month away from Christmas.

Whilst we are all cutting back this year (as the world teeters on the edge of yet another financial meltdown), Christmas still brings the awful few weeks of worrying about what to buy people.  What do they need, what do they want, what will not make us look like a Scrooge?

As a contractor, freelancer or small business owner, we have the advantage of needing gifts that can work both for us, and for our businesses.  So if you are fed up with yet more socks, bath salts or wall calendars, can I suggest a business Christmas list which you may like to consider and pass on to those stuck for something to buy you?

• Business Books – A little boring, but some can be very useful.  Ones I suggest include the Ultimate Small Business Marketing Book, The ultimate Guide to Google Adwords and The Wealthy Freelancer.
• Tablet Computer – If you don’t own one, a tablet can be very useful.   And tablets are coming down in price all the time (you can get tablets for just over £100).   If you don’t yet have one, it will revolutionise your world.
• A scanner – you can do away with all that paperwork and keep electronic files as described here.  Scanners can be purchased from as little as £30.
• A day at a spa – We all need a break from the day to day grind.  A day of relaxation can be used to rest, relax, recharge and most importantly, plan next year’s activities.  Spa days can be expensive, but a ‘trail’ day can be as little as £30.
• Stamps – Again, seems boring but… a) They won’t devalue, b) Purchased now they will be worth more when postage costs go up in the new year (in both the UA and UK), c) They are always needed and d) Can start you off with a new year mail shot campaign.  Much better than gift tokens.
• An extra monitor – If you use your computer a lot and you still only have 1 (or 2) monitor, an extra monitor will increase your efficiency.  Monitors can start from just £60.
• A better chair – If you spend a lot of time sitting and working, a good chair can make all the difference.  Chairs don’t have to be expensive, but avoid the ‘make it yourself’ variety as sold by Staples as these will be uncomfortable after an hour or so.
• An e-book Reader – one of the modern ebook readers (such as the Amazon Kindle) is perfect for catching up on your reading, whether it is novels, business books or blogs.
• A Love Film or Netflix subscription – DVD disks are becoming a little passé.  A much better option is the gift of a LoveFilm (UK) or Netflix (UK or USA) subscription which can allow rental of movies or streaming to your home.   Use it to catch up on movies which will motivate you to new business heights.
• A portable phone charger  - our mobile devices are the communication hubs of our businesses, so to have one low on power is a disaster.   With a cheap portable battery pack, a dead phone is never now a problem.