This is a reminder that you only have a couple of weeks to book your place at the BEST Christmas party for small business owners! Interested? Read on.
Are you a business owner who works on their own or with just one other person?
Do you miss the traditional office Christmas party, where everyone let’s their hair down and has a fantastic laugh?
If so the Billy No Mates Christmas bash is for you – so if you haven’t already booked now is the time to do so!
The ‘Bash’ is on 19th December (so the Friday before Christmas) from 12pm onwards at Beah, Union Street, Wells, Somerset.
For just £22 for a three course meal with wine the ‘Bash’ is great value – and great fun.
But don’t just take my word for it:
Kim Robinson who is a Billy No Mates stallwart said: “The only thing missing is the photocopier!”
To book your place or simply to find out more go to:
This post is a follow on from ‘How to get paid – part 1’ so if you haven’t read that you might like to do so before reading this one!
Once you have decided on your payment terms, ensured that both you and your client understand what is to be delivered, and paid for your services, there is still the possibility that a client will let you down and not pay.
The most likely scenario is that the client is strapped for cash and you are not seen as the first payment priority for them. This is a difficult position to be placed in for any service provider. My advice is that you must stand firm and by doing so you may well move yourself up the payment list – especially if the client is looking for further work from you.
Just as an aside, I generally provide an ongoing service to clients and so agree with them a fixed price service, so they can set up monthly standing orders. This has proved to be a win/win strategy. Clients like it because payments are broken down into monthly bite sized payments and I like it because I don’t have to do monthly invoices and then chase for payment.
However, what I did not appreciate until a client pointed it out to me was that, for them, my payments had moved up into the ‘unavoidable’ category – along with rent, rates, electricity etc. Unlike other professional service bills which are paid as and when money is available, my payment is made as one of the first.
Now, many service providers get lulled into doing more work for a client who is not paying, because they believe that they will not be given further work if they insist on being paid. As in my previous blog I would most strongly urge you not to get into this way of thinking. Firstly, the surest way of getting paid for work done is to stop working until payment is made. Secondly, if the client is bad at paying why would you want further work from them – rather than using your limited time to work for a client who will pay!
If a client is unlikely to use your services again, you are in a psychologically stronger position. You may well not be so reticent in sending tough letters demanding payment. Or, in fact, starting legal proceedings. If you want to go down this route it is very important that you understand what your rights are and how best to proceed. My advice would be to use a payment collection service such as that provided by companies like Credebt. They take the hassle away and enable you to concentrate on more positive areas in your business.
Finally, as I said in my earlier blog, don’t be coy about collecting money owed to you. As long as you have done the job required, and to the standard agreed, you are entitled to be paid!
Last week I was given the opportunity to be part of the Packed Lunch radio programme on Glastonbury FM.
I had not previously thought about talking on the radio. But when Alan Philpott proposed the idea it appealed to me, because it gave me the chance to talk about how business owners in the local area could tackle some of their issues.
Fortunately, the programme was prerecorded so it was not too scary. I knew if I made a complete hash of it we could just start again – just as well!!
We recorded 3 15 minute slots to go out in future programmes and these first slots covered how confidence effects business performance, the benefits of business planning, and how to price effectively. Hopefully, I will have the opportunity to cover further subjects later in the year.
I have no idea whether anyone will listen but I gained from having taken part.
Doing this type of exercise reminds us that we really do know a substantial amount about our subject – which in turn makes it easier for us to be confident when talking to prospective clients. For me, it also enabled me to give some practical tips to business owners I would not otherwise reach.
So if you have the opportunity to take part in a radio programme I would definitely recommend it.
I am just in the process of organising the Billy No Mates Christmas Bash for 2014.
As usual it is on the last Friday before Christmas – this year 19th December – at Beah, Union Street, Wells, Somerset. It starts at 12pm, for sit down at 12.30pm, and usually goes on well into the afternoon.
If you have been before you will know it is the office Christmas party for those of us who work on their own – or just with one other. It’s a wonderful opportunity for a pre-Christmas hair let down with like-minded business owners over a glass of wine, a superb meal and a couple of party poppers!
If you haven’t been before – why ever not?
All the details – including the menu – are on the www.billynomates.info website, just click on Wells Christmas Bash.
If you don’t live in Somerset but fancy the idea of having your own Billy No Mates bash the website also gives you some tips on how to do so. If you want us to include it on our site it all you have to do is send the details and menu to email@example.com and we will upload it.
I often come across service providers who are finding it difficult to get paid. This got me thinking about the psychology of payment.
There are clearly two sides to this particular coin – us and the client. We can be as much, or more, to blame as our customers for not getting paid, because of the way we think and act.
Firstly, as Brits we are sometimes embarrassed to talk to clients about fees and payment. Some business owners hide behind hourly rates, which means there is no upfront agreement about exactly what the client will be expected to pay. This means it is highly likely there will be disagreement and therefore delay in payment. Not only that, but disagreement about fees can leave a bad taste in everyone’s mouth.
Secondly, many service providers are slow to invoice, which means clients receive bills quite a long time after they have had the service. This sends a message to the client that the supplier is probably pretty well off and so doesn’t need the cash quickly (or the invoice would have been sent more promptly). Consequently it is more likely that payment will need to be chased.
Other suppliers do not make it clear what their payment terms are. Now, it is in clients interests to delay payment as long as they can (especially at the moment when many businesses are finding cash flow difficult) so if you are not clear on payment terms you cannot be surprised when payments don’t come through. Make sure your letter of engagement clearly states what your payment terms are and re-iterate these terms on your invoice.
Further to payment terms ask yourself the question ‘Am I a bank?’ If the answer is no (as I expect it is for anyone reading this blog) only give credit if it is absolutely necessary – and then ensure there is some allowance for interest in the price you are quoting! Otherwise, make your payment terms ‘payment on receipt of invoice’. You probably won’t get paid immediately but at least you can chase earlier.
I know business owners who don’t like chasing for payment, even if they have agreed a fixed price, invoiced promptly and have clear payment terms, because they think their good clients will think badly of them. This, in my opinion, is the worst ‘sin’ of all. Firstly, GOOD clients pay as agreed in the contract – a good client is not one who bitches about the agreed price and then fails to pay promptly. Secondly, we are business people who should expect to be paid for a good job done, so there is nothing to be coy about when it comes to asking for what you are legally and morally entitled to!
So, to recap:
1. Agree clearly with your client the exact terms of the engagement both in terms of job to be done and fee to be paid.
2. Bill as soon as the job is complete.
3. Be clear on your payment terms and give as little credit as possible.
4. Be professional! If money is owed to you do not be coy about chasing for it.
Although the recession is officially over, it is still difficult to get financing and customers in most sectors continue with their belt tightening exercise. With further government cuts on their way, anyone who deals with the public sector in particular, have found life increasingly hard.
So what can you do to ensure your business survives, and even flourishes, in this environment.
I think that for anyone who sells their expertise – business coaches, accountants, lawyers, web companies etc. – the key is VALUE. What value do you give your clients? How do they perceive the service you offer?
If you can identify what your clients really value, and ensure you really deliver in these areas, they will love you and tell all their friends. The problem for many of us is to determine what that is. It may often not be what we think is the most important part of our service.
Take an accountant, for example. If you talk to some accountants they believe that their USP is that they do a cracking good job of preparing a set of accounts. If you talk to accountants’ customers they take it as read that they will get a cracking good set of accounts. What adds value to them is having their accountant available to discuss their business issues with (without getting over charged!) and for this key advisor to be interested in them and their business.
It you just offer the service your competitors do why would your customers stay with you? They would be better off going for a cheaper option if the service they will get is the same!
If you really connect with your customers so they see you as an integral part of their team, and recognise the value you bring to their business, why would they go elsewhere? And how do you find out what is really important to your customers? TALK TO THEM!!
I am probably preaching to the converted, but I know that many business owners are not asking their clients exactly what they value. The reasons are complex. We Brits are not very good at talking money, let alone putting ourselves on the line by asking our customers what they think of us. However, the act of doing so shows our customers that we care what they think. That we want to provide the right service for them.
Getting to grips with the value proposition can ensure you don’t have to drop your prices to win work, or retain customers.
One last thing, we all know it is much cheaper to retain a good customer than to win a new one. So I see spending time with my customers to cement the relationship as part of my marketing activity. It’s a win win situation! They get an advisor who is interested in their business, available to discuss their concerns when they need to, and some one they are confident knows them and their business well. I get to better understand my customers businesses so I can give them the best service I can.
Pricing is an area many businesses struggle with. It is part science, part art and part psychology. Confident pricing is as much about how we feel about our business and our product/service, as it is about rules and processes.
Many businesses will stick to a cost plus method of pricing. They will add up all the components of a job and add a percentage for profit – job done (?). However, this approach takes no account of the market in which they are trading or the value of their product/service to the customer.
If you don’t know enough about your market you run the risk of overpricing by using the cost plus pricing method. If other suppliers are providing the same product/service as you and charging less than you, you need to know! If you constantly loose work it may be that you are pitching to the wrong type of customer for you.
Alternatively if you don’t understand the value of your product/service to your customer, you could be regularly underpricing. Take, for example, an instance which happened to me a couple of months ago. We had just had new carpeting through out the upstairs of our house. You know how it is, for a micro second everything looks great until… the cat gets trapped in one of the bedrooms and rips up the carpet in front of the door!
I phoned our lovely carpet guy who came along and patched in some of the offcut left over from the original fitting. He did such a good job that we cannot actually see where the join is. Obviously for me this job had a good deal of value because our carpet is pristine again. But he priced on a cost plus basis and so only charged me £15! He probably left over £80 on the table because the job was worth at least £100 to me.
Now cost plus as a starting point is not bad, because at least you ensure you get the minimum price you need to cover your costs – as long as you have a very good idea what those costs are. But relying on it alone will mean that you undercharge clients for whom the value you provide is more than the costs of providing it (plus profit).
For effective pricing you need to do your homework. You need to understand the market you are in; who your ideal customers are and what they value; and you need to have a very clear idea of what you need to achieve to make a profit.
For many businesses the last few years have been really tough – and the next couple may be just as challenging. Although we are, in theory, out of recession the financial difficulties which come from an economic downturn will continue to be felt way into the future.
If you own a service business there are things you can do to make yourself as resilient as possible and I include my take on the most important ones below:
In a service company the level of customer spend can be quite high. For this reason it is vital that you review the level of credit you are prepared to give clients and stick to it. My payment terms require that clients pay either by monthly standing order or on date of invoice. Even if they don’t pay immediately at least I can chase from the earliest possible point.
Ensure you invoice promptly after work is completed, and, if the job spans several months, agree stage payments with your client so they don’t owe you more than 1 months worth of work.
Bare in mind that none of us really knows what is going on in another company. A seemingly sound company can be on the verge of collapse due to cash flow problems. Credit checking services can help you assess the credit worthiness of a business, but remember their information is out of date to some degree and they don’t pick up the full picture. The only way to ensure you don’t get caught out is to collect the money owed to you as quickly as possible.
Remember, even the banks are reluctant to be banks at the moment – so don’t fall into the trap of acting like one!
A key way to survive the recession is to provide the BEST service you can and be as close to your customers as possible. I see many service providers who think they can get away with average service and who assume clients will stick with them regardless. This is an arrogant assumption which will lead them, quite rightly, to lose good clients to much more customer orientated businesses.
For any business, but particularly for service companies, the relationship you have with your clients is king. A client who knows you well, and believes you are giving him the best, most focussed service available, is unlikely to shop elsewhere, even if he has the possibility of getting the service ‘cheaper’.
Build your referral network
We all know that people buy from people. You are much more likely to engage a supplier who has been recommended to you by a trusted advisor/contact than one you have met fleetingly at a networking event.
For this reason I think it is important to build up a network of people around you who:
– although they are not competitors to you, have the same types of customers as you do.
– understand exactly who an ideal client is for you so they can spot one when they meet them
– understand exactly what you do and the problems you solve for your clients
– are people you would be happy to refer to your contacts so the relationship is mutually rewarding
If you have a strong network you can be much more focussed in your marketing and will be much more likely to get the type of new clients you need.
At the end of the day those businesses which will remain standing will be stronger than they were before the recession, because they will have grasped exactly what makes a great business. The prize for getting it right is not only survival, but the opportunity to achieve great heights once business becomes easier again.
Running your own business can be the biggest thrill you will achieve in your working life, or the most stressful and demoralising experience you can imagine. On some days it is both!
However, I have come to realise from my own experience, from talking to business owners, and from gurus such as Ron Baker, Peter Thompson and Steven Covey, that running a successful business is all about minding your Ps and Qs.
Given the stresses involved in running your own business it is vital you are passionate about your product or service. Let’s face it, it is much easier to engage with potential customers if you can show passion for what you do.
Once you know what you want to do, you need to have a robust plan. We business owners are often knowledgeable about our product or service but avoid those business areas we struggle with – often marketing, sales or finance. The process of creating a business plan forces us to review ALL the areas of our business which are crucial to our future success.
We need to present ourselves to the market. If, like me you run a service lead business, one of the best ways to do this is to network. People buy from people they trust so you need to be out there meeting, and getting to know, local business owners.
Consulting professionals to help in areas you are not expert in is wise. Very few of us are instinctive business people and there will be one or two areas we struggle with. Interesting it is often more cost effective to get an expert in to do an efficient job than to try and do it ourselves.
To me a key element of a quality service is communication – this means listening and responding to clients’ concerns. Even if you sell a product there is a service element to what you do and this will be your contact with your customer.
Effective communication will allow you to qualify a potential client’s needs and what they particularly value. Having established value it should be fairly easy to give them a price.
To close, your business will not be measured by the outside world on what it is but on what people perceive it to be. So keep your ear to the ground and ensure peoples’ perception matches your reality.
Many business owners, especially if they are a sole trader, struggle to know whether they are doing well or not.
The reasons for this are as follows:
Firstly, many business owners do not have a plan for their business. This means that, even if they have up to date profitability figures in front of them, they don’t know if the figures are good or bad. It is only by having a robust plan, covering several years and based on your own goals, that you can judge whether your business will meet your goals, or not. A business which does not meet the owners’ goals is not doing well – however much profit it might be making.
Secondly, many business owners do not have up-to-date financial information. This means that even if they know their goals, they have no idea if they are meeting them. Some business owners keep a pretty close eye on sales/turnover but leave the rest to sort itself out. However, sales are just part of the picture. If you don’t control your costs or your cashflow, your business will struggle.
Thirdly, it is vital to know who’s definition of ‘doing well’ is important. For me, the only measure which is meaningful is YOURS. I see business owners struggling to match someone else’s ideal, rather than their own.
Finally, if you don’t know whether or not you are doing well, the chances are you will via to one extreme or the other. You will either believe you are doing far better than you are, or you will believe you are doing far worse. The first delusion will probably mean you come across quite unexpected problems with cash flow. The second will leave you feeling disillusioned and demotivated.
So, do yourself a favour and make sure you have a robust business plan, which you are updating with current financial figures. That way you will know for sure if you are doing well.