As people are now looking to employ I thought it would be helpful to overview the general costs involved with employing someone in the UK and how you can factor that back to an hourly charge.

Some Assumptions

1. As most of my readers are within the IT industry, I've based these figures on hiring within our sector
2. For simplicity's sake, someone who is over 21 (minimum wage and the factors vary when employing someone younger).
3. The employ won't earn over £844 (around £44,000pa) to avoid needing to account for different NI values (refer to Directgov for more information)

The calculations

I've created a spreadsheet for you which calculates the hourly cost for employees on various salary levels. It should be fairly self explanatory, if it's not, leave a comment and I'll explain as necessary.

Download: Hourly_Rates_Breakdown.xls

Other costs to consider

Once employed, there are a number of other costs that haven't been factored into the spreadsheet:

Downtime

It's unlikely that your employee will be working at full capacity (if they are you should consider employing another!) so it is important factor in some downtime within your calculations.

First Year

Although the process of employment doesn't have to be too costly by using freejobsites and pre-written employment contracts, there is still an inherent cost with employing someone.

Think carefully about what you'll need to buy for the new employee -you will need to give them somewhere to work (i.e. a desk), something to use to do the work (i.e. a computer) and importantly somewhere for them to sit!

On-going

As everything in business needs to be broken down to a monetary value so here are some other things that you will need to factor into your calculations:

• Office space -apportion the employee's area of the office's rent
• Stationary -pens, paper and ink all costs
• Telephone
• Training/course fees
• Electricity
• Software and licenses
• Business insurance (if this is your first employee this is likely to increase substantially)

Conclusion

Breaking the salary down to an hourly charge should help give you confidence in being able to afford the additional resource. If you're working flat out at £50ph and finding that work isn't getting done, you can in theory employ someone at around £25,000pa and by keeping them busy still earn £55,594.66 (approximately!) yourself without needing to do any work. I'm sure you can see that by adding to your team and keeping them busy you can very quickly start growing your business.

It's also worth noting, when making a considerable investment such as employing someone, it would be wise to have a contract written specifically for your role.

Update: I've already had some great feedback on the spreadsheet courtesy of Sean Ronan from Active Pixels. He added a new table "Weekly billable hours needed to break even". This breaks the total cost of employing someone down into the weeks they can actually work. As they're unlikely to work 52 weeks a year, it works out the number of weeks based on the other information you entered. Great idea, thanks Sean.

It's taken some time to get here and there's still more to add as I think this is a pretty big topic but I thought I'd get started. I wanted to keep the session more focused on the selling points of Umbraco and how people pitch Umbraco to the clients than selling techniques which on the whole we managed to do.

The first thing I stressed was that I wasn't going to teach you how to sell or selling techniques as I've never found that hard selling works -though I'm not saying it doesn't, I just prefer to educate the client into the most suitable solution (even if that isn't us).

There were a number of questions that were raised and I'll answer what I can here, if you were at the session and I've missed something, please let me know and I'll get it added:

1. What are the key selling points of Umbraco
2. How do you pitch Umbraco
3. Do you tell clients it's open source (or use that as a sales point)?
4. How do you price Umbraco
5. Once you've won, what do you ask your client
6. How do you support Umbraco
7. How do you get around the question of "What happens if you get hit by a bus?"

What are the key selling points of Umbraco

A couple of the attendees came up with better 30second sales pitches so I'm sure they'll post those up shortly but here's a few I remember:

• It's easy to use -you don't need any previous computer experience
• You can edit any page's content yourself at any time
• It's highly flexible and lightweight
• It's search engine friendly
• It's open source (this really can be a selling point at the right time)

Do you tell clients it's open source (or use that as a sales point)?

We do and we don't. Again it really comes down to who you're pitching Umbraco to. Where the client has had issues with developers not releasing source etc then it's clearly a selling point.

Generally we do tend to explain to clients that we will base their website on an open source project that we then build on and customise further to suit their needs and that by using best practice methodologies, any developer can in theory pick up the system and continue to develop it (even if they have no experience of Umbraco).

How do you price Umbraco

This question was asked in a couple of different ways throughout the session and it's a topic in itself (see the article I wrote a while ago about pricing your work).

If you look at Umbraco in the right way you'll see that it's actually rather easy to price as there are a few components that you can sell either individually or together:

• Installation and configuration
• Customisation
• Hosting
• Support

All you need to do is work out a minimum cost for each component and then that will give you a core system cost.

Once you have your core Umbraco costs (don't forget to factor in your license costs) you can then alter the costs accordingly for your client -and this has to be on a case-by-case basis. 

How do you pitch Umbraco

This is easy, there are so many selling points to Umbraco that regardless of what the client is looking for, as long as it's CMS based, Umbraco will have some benefit you can overview to the client.

When pitching Umbraco, we have found educating the user as to the benefits and what the client should be looking for in other systems. If you do this, then the majority of the time, the rest of the competition falls by the wayside.

If the client is a large corporate it's always worth mentioning that it offers much of the functionality that SharePoint does but with little of the cost (or setup pain!).

Once you've won the contract, what do you ask your client

The first thing to do is to get all the information you need to complete your contract (or at least tell your client what you'll need and when). You should know what you'll need already but we tend to ask for:

• Design inspiration (websites the client does and doesn't like -and why)
• Logos and other source imagery
• Text for the website (you'd be best to load the initial content during training but get the client to think about it while you're developing or you'll never get there!)

Next, you'll need to make sure your paperwork is in order. Once you have agreed the general premise of your contract, it's important that you confirm all deliverables (what you'll be doing for the client) in a work order with the client. This avoids an ambiguity on what you'll be delivering and when. This doesn't need to be pages of text (though sometimes it needs to be) but avoids disagreements later.

You should always request signed work order and deposit (we request a minimum of 20% regardless of project spend) at a minimum before starting any work.

Once you have the signed work order (you sign one for the client to keep and keep one yourself), you can start thinking about the project. If it'll take longer than a week to deliver, I recommend you provide the client with rough timescales, this will have the added benefit of helping you focus your mind.

How do you support Umbraco

This is something that Paul Sterling addressed through another session and if he doesn't write up his notes I'll make a few notes in another post.

How do you get around the question of "What happens if you get hit by a bus?"

Although this was asked a couple of times throughout the session, I avoided answering it a little due to a conflict of interest. For the past few months we've been working hard on a new system called Crisis Cover which has been designed to help you with this exact question.

Crisis Cover monitors you to ensure that you're still around and if you don't respond to a number of alerts, it will contact your clients informing there's something wrong.

I'll post more information about Crisis Cover, but if you're interested in getting involved with the beta, leave me your email and I'll get one sent out.

In Closing

There is a lot of information about selling and business in general in my previous post "Business start-up advice" which if you're starting out, I really recommend you reading as it should give you a really good start (and includes example Service Level Agreements, Contracts and other useful documents).

We've recently (and somewhat oddly) had a lot of dealings with Yellow Pages. In the past when asked, I've suggested people shouldn't bother with paying to be listed within the Yellow Pages -especially if you're an IT related company. This was purely based on my experience of stupid numbers of callers wanting an e-commerce site for £50 and the fact that I've believed for a long time that it's quickly losing any useful market share thanks to the likes of Google, Yahoo! and MSN. Now however I've got several reasons not to.

A little history/background for those of you who aren't aware who, or what Yellow Pages is

Yellow Pages has for a long time been the place to find the telephone number of a local company. It neatly organises everything from your local kebab shop to your nearest funeral parlor (not saying the two are linked!).

Yellow Pages ran into a problem a few years ago that I don't think they ever really realised/addressed -this little thing that wouldn't catch on called the Internet. Although they launched a website somewhere around 2001 they were (IIRC) more interested in competing for the 118* directory service (btw how many variations are there? 35ish? -How many do you remember!). Then, by the time they started to realise the potential of the web over the premium rate call lines, they pricked their ears up.

But instead of following suit on the web by opening their service up as widely as possible, they decided to dig their head into the sand and take the same course of action many large corporate do of "We're so big, we don't need you piddly client, you need us", and this leads me to believe Yellow Pages (and to a large extent) yell.com will soon be a thing of the past (thankfully some might say).

So what's my gripe? What've they done to me?

Nothing is the simplest response but that's also what they've done trying to satisfy a couple of our clients. I'll refer to two of these to argue my point, both SMEs, for arguments sake we'll call them Company A and Company B.

Company A

Company A spends approximately £5,000 advertising in Yellow Pages each year. This equates to about 20% of their turnover (a fair chunk of it!). Company A has also had a website for the past few years. Originally developed by Yellow Pages, but updated by us in 2003.

Ever since the website was created, Company A claimed that the majority (est. 80%+) of their custom came from Yellow Pages so each year, when the Yellow Pages rep gave them a call happily invested yet more money.

Recently though, Company A decided to redesign their website as their old one wasn't snazzy enough anymore. Despite fairly heavy traffic and our objections, the decision was made to turn off the existing website (rather than replacing it a temporary holding page) while the new site was being designed and developed. This was only going to take a month (it took a little less than this). But in this time, Company A found that his bookings for the next month or so were massively down on the same period last year. As soon as this was realised, a holding page was put online with a telephone number but it served to prove a point -Yellow Pages' share of the "record search" industry is depleting.

I realise that it's not always as cut-and-dry as I've made it out to be here (mainly for simplicities sake) but the most of the traffic to the site originates from keyword searches on the service rather than the company name or direct traffic (suggesting that they're not looking at Yellow Pages and then coming to the site).

Further to this shock, Yellow Pages originally registered the domain name for this client but despite having fully paid all his accounts, Yellow Pages are yet to release the domain name into our control (we've been chasing them since 2003). This is despite several promises (both verbally and written) that they would release the domain. Needless to say this was unnecessary aggravation over something quite minor.

Thanks to the trouble caused over the domain (and apparent lack of interest from Yellow Pages -despite a huge spend) Company A is now looking at completely stopping their advertising with Yellow Pages.

Company B

Unlike Company A, Company B has historically had a much smaller spend. Usually opting for the smallest advert in a single directory because very little business has come from previous adverts. Company B is in a fairly competitive industry but features prominently.

This year when the Yellow Pages sales rep came calling, they explained to Company B the reason they'd only seen a very small return on their investment was because they were advertising in very few of the Yellow Pages directories. To get more sales Company B should advertise in two other directories and pay for a premium listing which would ensure his company was always on the first page within his area. This sounded reasonable -and logical (advertise in more places, get more enquiries) and as Company B had had a few good months trading decided it was a good investment.

For the first month or so Company B checked on their yell.com listing every few days, sure enough there they were on the first page. A couple of months on and several hundred pounds later however, something wasn't right. Where Company B had previously had 2-3 enquiries in the same period this year they'd had none. Company B asked us to look into their online position as far as Yellow Pages' yell.com was concerned and despite being promised a first page position on certain areas/phrases, they were rarely appearing inside the top 40 enhanced listings (there are currently 47 listings).

Somewhat concerned Company B decided to monitor the situation and started to monitor their position regularly (and we did too). Between all the visits, they were lucky if their result showed up in the results for the areas they serviced -let alone the one they were based in! Having spent over 3 times what they did the previous year, Company B felt somewhat cheated by the sales person so decided to complain.

The customer services rep was somewhat dismissive of Company B's claims and told him that he was appearing in the searches but despite this, they would have their sales team look into what he felt he was sold. The sales team phoned back and informed Company B that they'd only paid for an enhanced listing -which meant the advert wouldn't always be on the first page and there was no way the salesman would have said this as this would cost several thousand pounds. Company B however remembers the salesman stating this so asks us to talk to them about not appearing in the results as when asked, the rep started "talking technical".

When I called to discuss the account I was meet with a very pleasant lady "Sarah" who was the technical sales person who after spouting a little crap about web metrics explained the situation:

After this she hung up (I kid you not). Ok the easiest way out of the conversation by Company B hit the roof when they heard.

We're still awaiting an explanation but have mysteriously started to appear on the first page more often-than-not. Clearly they have some weighting system at play...

So what's my point?

I don't think I really have a point, I just felt like a rant but here are a couple of other reasons why I think Yellow Pages sucks and won't be around for much longer:

Enquiry rates down

I heard another advisor talking about some analysis he had been involved in with a local company. For the past few years they had been recording every enquiry to their firm and aggregating the statistics for comparison at the end of the financial year to decide on whether to advertise next year.

These are the approximate number of enquiries per month:

· 04/05: 110

· 05/06: 80

· 06/07: 40

· 07/08: 32

Their service is not seasonal and the competition has not changed dramatically over the years (certainly not enough to warrant the change seen here). Furthermore their turnover had been increasing. Oh, and the advert for comparisons sake was always the same.

I'd love to get hold of some statistics on Yell.com and Yellow Pages enquiries in general to see if this matches the general trend. Google Trends suggests it's started to drop a little.

Prices staying the same

Despite massive competition online, Yellow Pages are still charging a fair whack for their service and have no intention of changing this. I think as soon as the smaller advertiser cottons on to the fact that they can run a pretty intense pay-per-click campaign for the same amount of cash and reach a larger audience Yellow Pages will be in some serious trouble.

Non-recyclable

Would you believe it? In this day and age, for some reason our recycling people won't take away your Yellow Pages? I tried putting it out a few times but each time they lifted it out and put it back in the box for me.

I expect there's some logical reason for it but I know very few households now that keep the heavy directory so where do they all go? The tips? Disgraceful!

That said, I think I do have a point. I think Yellow Pages is a very good example of a company that has disgraceful customer service. Taking the two (I have more) examples mentioned here I think the issues could have easily been rectified:

Company A: Transfer the domain into the control of the client.

Company B: Simply apologise for the misunderstanding (no-one said they were sorry for the misunderstanding, instead they just made out that Company B was stupid) and if needs be, offer some form of discounted service next year.

I can only hope that Yellow Pages reads this and realises they're going to seriously P off their loyal customers in time to save themselves, but I don't think my blog is important enough for that to happen yet, sadly.

If you're asking me in the future. Steer clear of Yellow Pages and talk to us about some Google AdWords advertising.

This started out as a response to a comment and then I thought it might be better as a post in it's own right.

In his commentDavid Conlisk said:

First off Tim very well done on providing some excellent information on the site. I've just spent my first afternoon as my own boss reading your business start-up advice and it's been excellent (it's called research, not slacking off!)

One question I would ask you about this post is what about market rates? I am going from being a contractor on an hourly rate to being a limited company. I never considered working out a base rate like you've done, instead I spoke to as many people as possible in the marketplace to gauge what the rates are and I price accordingly. Of course this works fine for more corporate clients, but I doubt I could charge smaller companies similar rates. Let's hope I can make a good enough impression on my corporate clients to keep that kind of work coming in!

Keep up the good work,

David

Hi David,

Thanks for your kind words, I'm glad to hear you found it of use.

In regards market rates, it's one of the oldest debates in the book AFAIK and has a rather unhelpful answer of "You should charge what you feel comfortable charging". I'll try to improve on that a little as it's always hard but in essence it's true. Basically from experience I would keep it as simple as possible, have as few rates as possible for all clients, just make sure you feel you're worth the rate in your own mind.

Although you need to keep an eye on the "market rates", you'll find your rate will determine the type of client you work with. Being the cheapest on the market is not necessarily a good thing. One advantage of offering a freelance service to other development companies is that we get to see what happens when your prices are rock bottom -take it from me, more often than not, it's more hassle than it's worth. When you have someone going el-cheapo all the way you often find they're overly picky about every aspect and require a lot more management time (that's not to say those paying higher rates aren't, I guess you just notice it more).

As long as you're reasonable with your rates, clients who are willing to pay your rates, will use you (they may complain a little but it's unlikely) but at the end you'll both be happy with the work produced. As long as you believe in yourself -and your rates, this will be conveyed to your clients so if you know you're value for money you will be able to justify it to any client (corporate or otherwise). It's up to the client to decide whether you're value for money.

Believe it or not the service industry is not the only industry to set it's fees and then get them negotiated on -Stacey used to work in Debenhams a few years ago, for those of you who don't know what Debenhams is, it's a large department store in the UK, they sell items for a set fee, everyone knows this but regardless of this she still had people trying to negotiate on the fee. Be open to negotiation but don't be silly about it otherwise the client may always expect a discount of that level (so stick to no more than a 10% variation).

Don't worry about having clients not use you because of your rate, as long as you're around the market rate there will be a client for you. At the end of the day, you can't realistically expect to service every prospect that comes through your doors -sometimes you just have to say "sorry that's the price".

I'm not saying charge £1,000ph when the market rate is £10ph as that's just silly but I would say your base rate shouldn't be cheaper than the market rate or more than 3 times the market rate (unless your service really is that good and you're bogged down with work [I did have a link for here about an ?SEO company charging $1,000ph and still being too busy but I can't find it atm], in which case go for it!).

Tip: How do you find out market rates? That's simple, find a couple of companies who offer similar services, to a similar client base who are a similar size to you, call them up and just ask them what their daily rates are. Call 10 or so companies and you should have a few prices to compare :)

Another tip: Always ask for an rough idea of their budget -even if it's just a range, this will give you a good idea of they're realistic or not.

And one more: Don't forget your rates don't need to be fixed. If you find you're too busy, increase your rates a little, if you're too quiet (whereas everyone else is really busy) then you may need to look into how you market your business, your presentation skills and finally possibly reducing your rates.

A word of warning: I would avoid dropping your rate "for the nice client" as the majority of times you'll end up regretting it, either because it gets out of control and you get frustrated because "you're doing them a favour" whereas they feel they just negotiated your service rates down (and so should be getting the same level of service. Remember, it's business, you don't need to do anyone a favour, charge what you feel is fair for your time and you'll always enjoy your work :)

On the flip side of this, if you're lucky enough to get a large corporate, make sure your rate is their market rate as we've lost work for being too cheap (and in my eyes we were already overcharging for the workload).

It's easy to be busy and cheap, but being a busy fool is no way to live!

HTH

Tim

One of the quandaries I've had for a while with The Site Doctor is our name, it sounds silly but I've lost count of the number of times I've had to spell out "site", it may not be too obvious why at first glance but there's two common spellings of "site" -one relates to websites, building etc, the other opticians (sight). Silly eh!

It has never really bothered me in the past but now that I have Stacey working with me we run into another issue -not only does she have a difficult to spell surname (Shapcott), people use so many inflections of "Stacey" it's comical. So this week I've taken it upon myself to sort this and have gone all out creating email aliases (we used to just have name@, name.lastname@, initiallastname@) but Stacey now has Stacie, Stace, Stacee and numerous other counterparts.

In an effort to make life easier for our clients, we've also got a few more domain names that point to our main domain name which include:

www.thesitedoc.co.uk

www.thesitedr.co.uk

www.sitedoc.co.uk

and my favourite:

www.thesightdoctor.co.uk

A little overkill perhaps but for the sake of £20 I thought it was worth it ;)

Moral of the story: Don't have a long winded name that has words that sound similar to others in it ;)

Ok so today's quite an exciting -and pretty scary day. After a few months of speculating, Stacey has finally decided to hand in her notice and come and work with me full time. It's scary because although I know it'll make her much happier and drive the business forward but it also means that the business will now be the bread winner (main household earner) so there's no more time for messing around!

I think it'll be quite an interesting time both for us and for others worried about doing the same sort of thing so I'm going to try and keep a fairly up-to-date diary of the events, trials and tribulations here.

The main concern from Stacey's point of view is that as it's a web development business she can't add anything to it which I personally think is tosh as there is a lot of non-specialised work involved in running a business which she will be able to do and there are many paid aspects of our work that she can get involved with as well.

Anyway, here goes, lets just hope she remembers to hand in her notice ;)

As part of the company's branding overhaul, I'm currently reviewing The Site Doctor's business plan to make sure it still fits in with where I want the business to go and what I would like to achieve and Stacey (our latest and greatest employee yet) asked the simple question "Why are you doing it?".

It's a good question and one I wanted a witty but honest response from but I couldn't think much further than "To make money" and "To improve our lifestyle" -both of which are perfectly valid I know but I would have liked something like "To make the world a better place through a variety of events aimed at improving people's outlook on live", complete tosh of course but hey.

So why am I in business? Why did I setup The Site Doctor -other than because I felt it was my calling and a quicker way to a better life? It's certainly not the money otherwise I would have given up a long time ago and it's certainly not the social status being a web developer brings so why do I do it? Personally part of it for me I think is to prove people wrong, this isn't the main motivator and I realise may not be the best reason but a part of me wants to be able to show all those people that told me I was mad when I first started talking about it they were wrong and they're the silly ones for suggesting otherwise...

Are you in business yourself? I'd love to hear why you do it, why you get and work hard -often for little initial reward. What drives you?

While at the recent Startups Live event I got asked a question that I really should have been prepared for "Why should we use you?". At the time I was tired and hungry (no excuse I know) and so I was a little thrown.

I think it's important to look at networking as a form of job interview but without the job at the end of it. What I mean by this is you should have a set of questions, answers and interesting topics to discuss¹ prepared before you go into the event.

¹ Make sure you know what you're talking about though -you never know, they may know you're bull-shitting which isn't a good start to an ongoing relationship!

I've steered clear of a fair few networking events in the past on the basis that they're often pissing contests but networking itself is an important part of any business and so shouldn't be avoided. So how should you answer "Why should we use you?". This is a silly question in my eyes because as the purchaser you have the power, you should already have a list of criteria on what you're looking for from a supplier. I can understand if you're looking to find out whether my list matches yours but you're most likely going to get the same responses:

• "We're the best" -you're really going to take your word for it?
• "Just because" -they clearly don't care about their company, do you really want to do business with them?
• "We've got a proven track record" -fair play, good response, now you've got to do your research

Either way, whatever response you get it's most likely going to be a conversation killer and so, not something you want to ask while networking, if you want to ask this, I would keep it for an initial meeting.

So how did I respond? "That's a good question" -not a good response by any means but Stacey has come up with a superb answer in my view, put the ball back into their court and respond with

Why do I like this response? Well because it's honest and gives the client control, you could baffle them with sales talk till the cows come home but if they don't like you or get on with you then doing business isn't going to be fun (and business should be fun!). Get rid of the question and move onto something more interesting, save the grilling for the initial meeting!

Seeing as I don't seem to have time to post my long, beautifully formatted posts at the moment -and that I don't think people really care whether they're beautifully formatted or not- I'm just throw this one on...

Last night I went to the first in a new round of Startup Live events. I've come across them in the past but never paid much attention to them as I thought it would be another '99 venture capitalist haunt and I wasn't really interested in wasting my time with it. The event however was better than I was expecting. Well, it was and it wasn't.

Sadly we got there a little late (what's new!) and missed the start of Tim Smit's talk however I really have to complement him on his talk, it was absolutely brilliant. It was probably one of the best -if not THE best- and most inspirational talks I've heard in a long time.

For those of you who aren't aware who Tim Smit is, apart from having a great name and having been involved in the Lost Gardens of Heligan he's the founder of the Eden project. Tim Smit is clearly very passionate about the work that he's involved in which is really conveyed to the audience during his talk and I really do recommend you go and see him if you have a chance as you won't regret it.

I think one of the most amusing things about the night was the speaker from Natwest who was clearly there to show how friendly and accommodating Natwest are but ended up demonstrating how far out of touch he is with their actual processes which was a shame as he really could have pulled the audience in and had them all signing up there and then.

Other than Tim Smit however the majority of the event was pretty much as I expected which I was a little disappointed about but I guess that's the way it goes. At the end of the day, if you can come away with one small nugget of information/inspiration the event was worth it. Luckily last night Tim Smit was able to produce the goods ;)

When running any business, there will inevitably be a time when you need to ask a client for permission for something, whether it's to use their name as a reference or to bill them for a service. These letters are always tricky, get it wrong and your client will be able to avoid taking action on your request, get it right and you'll be able to reap the rewards of success (or so I'm told!).

I had one such occasion recently and thought it may be of use to share my experience/findings with others. Take a look at these two emails (semi-fake), one got what it was after, the other not. Once you've read them, I'll explain why and how you should word something so you can get what you want (which is most likely money!).

Example Email 1

Example Email 2

It should be fairly obvious which one got what it was after but incase it isn't, the second email got what it was after (an SLA of 10 hours a month) but why?

Lets look at the two emails in more detail:

Does the reader really care what you feel? Unlikely. Do they care about avoiding unexpected invoices? Most likely yes but would they be worse off paying the odd (semi) unexpected email? Probably not as if you're an ethical company you'd keep them up to date with their time usage at any time...

This first call-to-action required the reader's input for something, if (and this is most likely the case) your reader is either a business owner or executive, their motive to respond is almost nill as it's unlikely they're going to want to respond to your request just so they can give you money.

You may also notice that there's no penalty to this first request, it's open ended i.e. if the reader doesn't do anything, he's no worse off -in fact, he's actually better off!

Now lets look at the second email:

Although similar in wording and still expressing what you would like to happen, you're not over complicating the issue and remaining factual.

Notice that this time, the call-to-action is reversed, instead of asking for action to do something, you're asking the user to action something if he doesn't want it to happen? This may only read like a small difference, but it's a massive difference from your POV .

The second thing to notice is the deadline (or penalty) -this time, if the reader doesn't respond by the given deadline, the action will go on regardless of whether they have given their input.

 So there you have it, two ways of writing what looks like the same email but with two very different results, just remember, next time you want something, tell your client it'll happen if they don't do anything -I'm sure you'll get more success!

If you're a semi-regular reader of my blog you'll know that I'm a great believer of having goals and targets to meet when you setup in business. As I mentioned in my mini series on starting up in business, these targets have to be achievable and quantifiable.

Recently however I have had a couple of pretty zany ideas passed by me which, at first sight may sound completely nuts and unachievable but I've been left wondering why that is. I have always felt that The Site Doctor is a foundation for something larger but quite what that is I have no idea at the moment but one idea that's readily stuck with me is one that Rich Davies and I merely jested about -buying a big, expensive yacht and sailing it around the Caribbean for the rich and famous.

I've put this idea to a couple of people since and every time they've laughed. I can understand why they see it as a joke but why should it be? When I first setup in business I had a surprising number of people assure me I was mad and it would never work so why should this idea be any different? Ok the investment involved is on a scale way out of the league of The Site Doctor but I still don't feel it's unachievable if the time and effort is put into it.

What do you think? Is thinking big just a waste of time in your eyes or is it more speculative than wasteful?

After a somewhat hectic week last week, with most of it being spent on the phone (which is becoming a more regular occurrence) I asked myself “has all this time on the phone been wasted time?” Well, I spent time talking to clients, developers, friends and family and this is important. Although it may cost you a little development time, talk is cheap (that’s what the telecom’s companies want to tell you isn’t it?)

Rather than looking at it negatively I think it’s best to look at it from another point of view, I could have spent developing some weird and wonderful new creation for a client however, this phone time was doing something else –it was promoting my business. Admittedly the business couldn’t survive if we all spent all the time with the phone glued to our ear, but once in a while I believe is a good thing.

Why am I looking at it like that? That’s simple, if you make time for your clients, friends and family in any context it shows that you care for them beyond a pay check and at the end of the day, if they need some development they’re more likely to think of you in a good light.

What do you think? Do you feel time spent on the phone is wasted time or a business investment?

As part of my mini-series on Business start-up advice I posted a simple accounting database (see: Finances (VAT, Accountants etc)) but today I realised I had just uploaded the mdb which won't be served by IIS so I just wanted to let you know I've uploaded it as a zip (incase you were one of the people that tried to download it).

Example Microsoft Access Accounting Database (21KB)

I’m still somewhat shocked at how well the series on business start up advice was received, I was expecting one or two hits on it but so far I’ve had over 1,000 visits to the article which is pretty shocking as this blog in its entirety was only getting that a year(ish)! I’ve also had some fantastic feedback which is very touching so those of you who have got in touch thanks!

Ok, following the posting of my recent business start up advice mini series I was asked by a number of people to post it as a PDF which I’ve finally managed to do. It’s rather long I’m afraid weighing in at around 26 pages so it should keep you busy giving me time to write the additional articles!

Download the PDF version of the complete business start up advice article here (27 printed pages including a 1 page feedback form - 189KB).

Billing

This is something that we’re in the process of re-working as we have a variety of billing periods ranging from ad-hoc to annual. This is fine as long as you have some method of determining which method a client requires.

Stacey has devised a very good suggestion that should also avoid any complications with large annual invoices:

• £0 - £300: Invoice Annually
• £300 - £600: Invoice Bi-Annually
• £600+: Invoice Monthly (£50+pm)

There are a few reasons I like this method:

1. You won’t upset your client by sending them a £500 invoice they’d forgotten about
2. It keeps you in contact with larger payers more frequently
3. For the larger invoices it reduces the impact to you if the client chooses not to pay
4. £50pm+ is sufficient an amount to justify the 10 minutes admin a month

Payment periods are important, make sure every invoice has a payment period on it but don’t expect your clients to adhere to it. You’ll learn what each particular client is like at paying as you build your client base but many will wait until the last payment date to pay, if at all until you start to bug them (see: Processes and Procedures about having a dedicated admin day). Having a shorter payment period (or “Payment Required on Receipt”) will allow you to start chasing the client sooner.

What should your invoice look like?

There are a lot of example invoices on Microsoft’s Template website [http://office.microsoft.com/templates/] but it’s simple, keep them simple (this is a nice example: Services invoice with hours and rate) and only contain the information you need. Have your designer design you a nice letterhead that you can use with your invoices, not only does it look more professional but it ensures your main contact details are contained on the invoice, if your letterhead is a little different you never know, they may pay it faster as it catches their eye!

Again it depends on your particular line of business but I would suggest you have the following information on it at the minimum:

• If the invoice isn't on your letterhead paper then make sure your address is shown
• Their address –and if it’s a corporate client include a contact’s name to ensure it lands on the correct desk
• An invoice reference (an auto-number should suffice but you could prefix this if you like)
• If you have it, the purchase order number
• The date your invoice was issued
• The payment due date
• A summary of the items included on the invoice including:
  • An SKU (if relevant) i.e. 1HOURDEV for 1 hour of development work
  • A narrative (description) of the item
  • Unit cost of the item
  • Quantity of the item
  • Line total
• Total amounts –if you’re VAT registered, include the amount with VAT, without VAT and the VAT itself
• Your payment terms (i.e. all invoices must be paid within 14 days)
• You payment details –sounds crazy but I see so many invoices without bank details or even information on who to make the cheque out to anywhere. It’s so simple to place this information on the bottom of the invoice, why make it harder than it needs to be for your client to pay you? If it’s not there, they need to make contact with you (if you’re around), you then need to look up that information, they then… ok you get the idea ;)

It’s obviously optional and up to you but I think it’s nice touch to thank the client for their business on or with i.e. on a complimentary slip the invoice (see: Client and Supplier Relations) –yes, I love my clients!

Accounting

I’m not an accountant myself but my (far) better half Stacey is a chartered management accountant with CIMA (an alternative to ACCA) and I ran this past her as I had concerns with it. Her response was rather than obtaining (expensive) textbooks that you’re unlikely to understand (I’ve seen them, I can understand them but they’re somewhat boring) the best thing you can do is read through the documentation from the Inland Revenue –mainly because as soon as that textbook is printed it’s out of date which can (obviously) have massive re-processions for you!

There are many different accounting bodies and they all have their own specialities. It’s important to understand that a Chartered Management Accountant can’t necessarily help you with your tax return, in the same way a taxation specialist can’t necessarily help you with profitability analysis (whereas a Management Accountant can). One amusing ditty about Chartered Accountants (and I expect this covers other industries with multiple bodies) is that they all feel their chartering body is the most superior whereas they’re probably all much the same.

It’s important to remember that it’s the same as your industry, it’s great that the client knows what you’re talking about but it’s highly unlikely they know as much as you.

Again from Stacey, any accountant worth their money will save you more than they cost you, as with many things in business –recommendation is key, ask around friends and family or fellow businesses to find a reputable accountant and if at all possible get a few references.

There are many accounting bodies out there (CIMA, ACCA, CIPFA to mention a few) but make sure when choosing your accountant that they are chartered in some way or another as this means they’re more likely to be up-to-date with their knowledge and to some extent being regulated. When you’re setting out, you should be able to have all your books done for under £500pa comfortably.

VAT

Should you go VAT registered or not?

When setting up The Site Doctor, I chose not to go VAT registered on the basis that the majority of our start-up contracts would be non-VAT registered companies. As it turns out I was wrong as every man and his dog these days is VAT registered but more than that I feel that many businesses perceive non-VAT reg'd companies more fly-by-night.

Most people (especially in business) expect companies to be VAT registered so it hasn't affected potential contracts and we have the added advantage that we can claim money back ;). Sadly, the only people that suffer are non-registered people and at the end of the day they're unlikely to have the money to justify you not going VAT registered.

One thing to note if you’re setting up as a team is there is a limit on the turnover of the company at which point you are forced to be registered, this year (06/07) the limit was around £65k (refer to the Inland Revenue’s website [http://www.hmrc.gov.uk/]) so if there’s 3 of you in the team and you hope to take home £20kpa you’ll need to go registered straight away.

You don’t need to be over the threshold to be registered as you can voluntarily register before you reach this threshold. There are a couple of benefits to voluntary registration that come to mind:

• The perception of your company’s earnings is increased. When not registered, your clients will know you have a turnover lower than the current threshold. This is not a good start when approaching clients with a proposal near over this threshold.
• By charging input tax to your clients, you can claim some money back, virtually ever purchase you make has VAT added to it which you can offset on your charges.

One flipside however is the additional administration work.

Once VAT registered

Yes, a great tip and this is so easy to do if you've got access to internet banking through your bank, it also means you have a nice nest egg at the end of each year as Sean said -I did the same with my personal tax before going VAT registered.

In the case of LloydsTSB they allow you to manage both accounts within the single login which makes it even easier, if you want to be really prepared, just halve each invoice, put one half in your savings account to cover VAT and Taxes etc and the other half is what you take home.

Having a little money totting up on the side in this way allows you to have either: A nice little Christmas bonus (by this time you should know what your tax bill is going to be and you’ll have a reasonable idea of your Quarter 3 VAT return) -or- A tidy sum to invest into the business someway :)

We recently registered for VAT and the official stance on claiming VAT back was:

3 years on goods (hardware etc) as long as on the day of incorporation you still have the item, receipt and you've not sold it on.

6 months of services (hosting, domains etc) as long as you have the paperwork.

I was told that the Inland Revenue think nothing of start-ups and businesses in the IT sector to have a very low (or credit) first return (and if you're going registered from day one then the first few returns) due to the cost of setting up.

For the latest up-to-date information check out the Inland Revenue’s website: http://www.hmrc.gov.uk/

I couldn’t agree more, when you’re small, set aside a day a week to input your expenses into a database and as long as you’ve got your invoice lists to hand totalling up your income isn’t hard, the form’s dead simple (see photo) so there’s no need to worry about that. I’ve even uploaded the MDB that we’re currently using as a stand-in while our accounting system is finalised.

While on the subject, in-house system development –choose it carefully, weigh up the costs of doing it yourself against buying an off-the-shelf solution. As a developer it’s all to easy to say “I’ll do it myself and save a few quid” –it’s not always the case, I’m only having ours custom built so I can tie it in with other areas of the business.

Example Microsoft Access Accounting Database (21KB)

Banking

Whatever you do, make sure you have a separate business account, it portrays a more professional image for your company (payments to your company will be addressed to your company name rather than your personal name).

Keeping up a pension is important, talk to your accountant about the options available to you. It’s also worth considering alternative pensions such as property investment. I know a few business owners that own the property the business operates within.

That’s a fine tip, using a personal account for your company savings can indeed earn you an extra 3-4%pa which soon adds up. Make sure however it’s a separate personal account that you don’t tap into and don’t top-up with personal funds. That way you’ll make life a whole lot easier when calculating the business’ income from interest.

LloydsTSB also offer an e-banking option which is exactly the same as all other accounts except electronic payments (debit cards, e-pay etc) are free, paying in cheques however still costs (and a little more IIRC). It’s a good account to have if you’re web savy and can do the majority of your banking online.

Good point, the banks love you when you’re doing well however expect to be charged for your overdraft –many banks now charge a (reoccurring) annual charge of £50-100 for your overdraft facility, it may be a better (and cheaper) option to loan the business from your credit card if needed –taking advantage of the 0% period etc.

Day-day running

Evaluating when it’s best to do something in-house and when to outsource it is invaluable -especially in the case of a developer, the temptation to develop all your internal applications is great. Sometimes it’s better to outlay £500 rather than spending many hours not getting paid by clients.

If you’re starting up with more than one person, having some form of blog is a useful method of conveying this information as it means people can easily subscribe to the RSS feeds and keep up-to-date with the latest information with minimum effort. If you use blog software such as DasBlog [www.dasblog.net] you are also able to have different authors on one portal.

While on the subject of blogs, I would recommend setting up a company blog, or at least a personal blog with plenty of references to your main website. These back links will increase your visibility and hence ranking on Google but it will also increase your company’s profile.

I would advise reading my other posts [The Scourge of Google and Public Facing Blogs and Blogging And Competition] which overviews what I see as the pros and cons of blogging. As you’re here reading this, it’s evidence enough as to why you should blog IMHO.

Processes and procedures

Depending on your background, you may not be too interested in the management side of business but it is very important to have a number of management processes in place, you won’t necessarily be able to set these up before you start but as you learn your business, get them in place ASAP.

What sort of processes am I referring to?

• Have a client sign an agreement that outlines the responsibilities of both parties (what you’re going to do for them and what they’re going to do in return –e.g. pay) before you start work for them. Make sure you’re as clear as possible so you can charge for additional services without the client quarrelling with you.
• Depending on the size of the company have the client provide you with a purchase order number. It’s best you ask whatever size the company is as it portrays the image that you’re dealing with larger organisations but the worst they can do is ask you what you mean. A purchase order number is basically a reference in the clients purchase database letting their accounting department know your invoice is on the way in. In many situations it also speeds up payment. When dealing with larger invoices it’s a must because it’s the loosest form of guarantee the person you’re dealing with has informed their accounts department and had the amount authorised.
• After you’ve had a meeting with a client follow it up a few days later with an email/phone call thanking them for their time, make it relevant to the meeting if you can and word it so it requires some form of response from the client. Making this post-meeting contact can be the difference between getting the work and not –in the same way making contact with a recruiting company after your interview thanking them for their time can make the final decision sway your way.
• Have a dedicated admin day. Initially this can be something you do once a month but as your business grows you’ll most likely need to increase this to once a week, as outlined in my previous blog post about setting your rates [Pricing your work] you’ll probably find around two days a week are taken up with adminy type work. People are forever moaning about how boring doing a years accounts is however, if you do break it down to say 2-3hours a week it’s a lot easier It’s important to remain strict with yourself as there’s always something more interesting available ;).
• Invoice regularly! Sounds obvious but it’s important. Depending on your business model, I would recommend setting a day aside every month which is solely for invoicing. I’m not just talking about sending out invoicing, I also mean chasing invoices as you’re bound to have plenty of clients who will delay paying until you really bug them!
• Log payments and receipts –this should be part of your admin day but it’s worth mentioning again. If you log all your receipts and any payments on a weekly basis it should dramatically save that end of year rush trying to find all your receipts for the accountant, if you do it really well it should also save you a few quid!

Team structure

Having someone who’s able to carefully put people in their place and ensure the company is moving in the right direction is important, it’s even more important when friendships are involved. If one of you can’t cut the niceties and point out the obvious you’re more likely to fail from the start.

Having someone who is presentable and can communicate well is intrinsic to getting new business, everyone operates differently but if your new client can’t relate to your representative you’re unlikely to retain them for very long. As James said, if you can’t at the same time tell them to cough up, you’ll probably find yourself with a very low cash flow very quickly.

Getting Employees

This is something that I’m approaching at the moment, so it’s probably best to add in an article later however there is a very good series of articles on Joel on Software [www.joelonsoftware.com] about Finding Great Developers which is a good start [http://www.joelonsoftware.com/articles/FindingGreatDevelopers.html].

The hardest thing you’ll face (if you’re anything like me that is) is loosening that tight grip you’ve got on your business. It’s taken me 3 years but I’m finally allowing Stacey to take over some of the admin work for The Site Doctor in an effort to lighten my work-load (admittedly I should be blogging less too but hey). Accepting that other people work in different ways is a surprisingly hard thing to accept when it’s your own business. I’ve already accepted that if I want my business to grow, I’ll have to put up with someone else’s coding style until we’ve found common ground.

One final point I’ll make here though is (again depending on your business model) you will need to get employees at some point so make some form of provision for them. If you don’t get an employee and try to do all the work yourself forever your business is capped and you’ll more than likely burn out. Someone once told me the perfect business is one that can easily be converted into a franchise.

Business Management

Well put, you need to be able to fall off your bike and get back on again so to speak, you will make mistakes and if you don’t I doubt you’re taking enough risks and so will just end up ticking over, there’s nothing wrong with making mistakes as long as you can learn from them and move on. Listen to your gut instinct and as soon as it turns sour pull out!

Taking an all -or- nothing approach to things, giving it everything you can/need to until the point that your instinct says enough and then cut it off straight away is important.

Be careful, but don’t let your project or company suffer as a result of being prudent. If you’re going to talk to someone that’s in the position to do what you’re proposing (i.e. they have the skills or can buy them) at the very least have them sign an non-disclosure agreement to give you a little backup. If you’re really worried, prepare your material so it gives them the minimum amount of information required for their input and explain your reasons for doing so.

Either way, if you ever discuss a project with someone else (even internal employees) there’s a chance it’ll get stolen. The best advice here is learn from it and move on. If you want to pursue the matter in the courts weigh up whether it will be at the cost of the detriment of your company and/or image.

When I first set out, I had to take a client to court and cutting a long story short settled out of court because I calculated the rest of the time I would spend preparing for court would cost me more than I would be awarded. It’s also worth noting that if the amount is below a threshold (IIRC £5000) you can go through the Small Claims courts which saves you a lot of expense and agro.

Action pack or Empower

When you set out, cutting costs is crucial to your long-term success so working from home is an ideal solution, but is it really a good idea? What will happen when a client wants to meet? Will I ever be able to leave work?

Your working environment

Firstly, make sure your office space is as dedicated an office space as possible, I know it’s difficult to spare the space when you live in a 1bed apartment but at least have a desk that allows you to fold away your papers safely. This is doubly as important if you’ve got kids or a loved one as that will take away the opportunity for them to “accidentally” spill a mug of coffee over your latest proposal.

If at all possible, dedicate an entire room –or even a floor if you can spare it to the business, there are a couple of reasons for this, the first is that you’ll be able to rent it to the business and then offset that expense on your tax return, another and I feel more important reason is that you’re able to get into another frame of mind when entering that space. I have an office at the rear of our property which is completely separated from the house with the exception of a small tea hatch. I’ve always felt that this has allowed me to semi-detach* work from home even though they’re within the same boundaries. Where at all possible I avoid mixing the two to re-enforce the segmentation.

*You’ll never really be able to detach from your business –it’s part and parcel of running your own business I’m afraid.

Depending on your personal mentality, having some form of dress code can also help you segment home from work, if you’ve already got a suit from a previous role, why not wear that while at work, then when you get home in the evening change into your home clothes. This may seem wacky but you’re not doing it for others, more so you can mentally detach from work. At the end of the day, you’re working from home so you can wear what you like and the likelihood is no-one will know*.

*I was told an “interesting” fact the other day, apparently it’s been estimated that somewhere in the region of 30% of home-workers work naked. It’s a disturbing thought –especially when you’re on the phone to someone you know works alone. Luckily I can reassure you that I’m not in that 30%. Yet.

Have a routine

Have a routine –this is very important, in the same way you would if you were working for someone else, make sure you’re in work for a given time and stick to it. Luckily, my better half Stacey has a full-time job which means she is up at 0630 every day for work as it is, I’ve forced myself to get up with her and get into the office ASAP which has worked well. It doesn’t matter whether your routine is 0900-1700 or 1700-0900, as long as you stick to it you’ll avoid countless duvet days –remember, when you’re not working, the likelihood is you’re not earning*!

*Again, this depends on your business model!

It is also worth setting yourself a finish time as part of your routine, you’re likely to work over a lot of the time but actually having a time to stop and get your coat gives you a deadline to work towards. There is a great article from Ryan Carson on A List Apart about working 4 days a week [The Four-Day Week Challenge], I think it’s a great idea and one that really is achievable but I agree with him, it's worth accepting that there'll never be enough time to finish everything.

Being the only person in the office I didn’t overly want to leave the office to itself and not having anyone to spend that extra day with (Stacey’s at work), I’ve chosen to make this change in stages. At the moment I’m following Google’s example of 20% time. 20% time is something that Larry and Page adopted from academia but in short, everyone is allowed to dedicate 20% of their working week to something that isn’t part of their day-job. This may be something they’re interested in developing for personal reasons or just an idea that you could profit from.

I’ve found this to be very beneficial to my working week especially when I’m in the middle of a large project, it gives you a little breathing space which in the past has allowed me to work out issues that had me banging my head against the wall. It also makes the weekend feel longer so you can relax more and prepare for the week ahead.

I like this 20% time concept (or as I call it “Fun Fridays”) not only because I'm able to step back from any on-going projects and relax a little more during the weekend (even when working on the weekends) but also because of where it takes me. For instance, a couple of Fridays ago I came up with the idea of writing a “Suggestion Box” -a simple Web User Control that can be added to any future project, it allows the user of the site (usually an admin user I would think) to suggest additions/alterations to the application. The suggestions are then stored in a central database for me to review later. The users can also rate other suggestions (using a little AJAX rating system ;)) so the managers are able to see the most popular ideas and gauge which are worth adding to the system. The plan is to review the (user) based suggestions with the management on a regular basis (even if it's just over email) and generate more work that we wouldn't have otherwise had. Although I identified the idea during the normal working week, had I not had “Fun Fridays” it would still just be an idea.

Having a routine for starting and finishing your day will allow your mind to be in the right frameset and again add another level of segmentation of home and work life. Being able to turn off at a given time and feel that you’re able to relax in the evening is very important.

Won't my clients mind?

In a word: No. I wouldn’t worry too much on having clients come to your house for meetings as depending on your business, I expect you’ll find that the majority of your client face to face meetings will be on site but for those that aren’t, why not check out the local hotels, pubs and coffee houses for a suitable meeting place. Find a couple of options and check them out at various times of the day and week so you know what to expect. Are they quiet? Are the tables big enough? Does it portray the right image for my company?

Many local hotels now offer conference and meeting rooms that include facilities like internet access, tea/coffee and other amenities but they’re at a cost. Alternatively your local Chamber of Commerce is likely to offer the same forms of facility if needed.

Asides from the work/home segmentation, one downside to working from home is that you will get rather cut off from the outside world. This is fine if you have the need for many client meetings or on-site consultancies but can be tough if not. You can easily remedy this by finding your local coffee shop, gym or pub and take a little time each day/week to get out of the office.

There is a new form of business establishing itself at the moment which offers dedicated office space on a monthly retainer so if you choose to work from home for the majority of the month but would still like to retain a little face-to-face contact with the outside world you could check out the serviced offices. Another advantage of having these offices will also mean you meet other businesses.

Telephony

I’ve been working out of an office at the back of the house for 3 years now and it’s the same telephone line, friends and family know this so when they call and I don’t answer, the “Welcome to The Site Doctor” answer machine message doesn’t worry them. I’ve not had any issues with this, the only thing I would recommend is you have Caller Id added and if you can’t remember telephone numbers get a phone/display that has a memory for you, that way you can easily ignore business calls out of hours if you so wish.

Remember that when starting out, it’s important to keep costs as low as possible and although having dedicated office lines is nice, it can also be expensive. Skype is a cheap VOIP solution however I’ve had issues with it’s reliability for Skype-Skype calls in the past so can’t personally recommend it.

At the very least I would recommend it’s worth writing a SWOT analysis, this will give you focus and allow you to visualise your Strengths, Weaknesses, Opportunities and Threats more clearly and perhaps spot something that’ll be crucial to your success or failure. Depending on how fast paced your industry is, it’s always worth re-evaluating the SWOT analysis every now and again.

Once you’ve written your SWOT analysis, show your friends, family and colleagues and see if they can add to it at all. Don’t worry if they criticise it, if you can’t justify or argue your point, perhaps it needs a little more thought.

Defiantly, when setting out less is more. It’s easy to setup i.e. a web development business for only a few hundred pounds but by having lower overheads, it will mean as you earn off your first few jobs, you’ll have more to invest in the company.

What benefit is there to your company if you go out and get the best PC, the biggest office with a couple of secretaries and some flash car? In reality you’re more likely to struggle as you’ll be setting off on the back foot. Make sure you carefully weigh up any purchases, perhaps by categorising them into i.e.:

• Need
• Would improve work capacity
• Would like, could perhaps improve work capacity
• Would like but wouldn’t improve work capacity
• Don’t need but look, it’s cool!

If you’ve got investment for the company and can afford to buy all the cool kit from the offset, great but it may be a better idea to keep that for a rainy day. Although I’ve got no proof I’ve always felt that had I not had to earn every penny we had to spend as a business I would have been far more complacent and so lazy and the business wouldn’t be where it is today. Along the same line of thought, I sometimes wonder if I could have done anything differently/better if I did have money to invest at the start and whether it would have got The Site Doctor any further.

This is a very good point, it would be worth noting this down in your targets and goals list [Targets and Goals] as it will give you something to focus on. Think of all expenditures on an annual basis, then when you have the annual expenditure you can work it out on a average number of jobs and/or a monthly figure making it feel more achievable.

Targets and Goals

Personally I can't stress how important targets are enough. Have a set of personal targets as well as business goals -NOT "Make loads of money". The targets should be SMART* (Specific, Measurable, Achievable, Realistic and Timely), write your targets and goals down somewhere as it commits you, you don't need to read them again just as long as they're there.

*Thanks for the acronym Stacey!

When setting out I had a few:

1. Turnover £500pm for the first 12months (then rising in year two)
2. Pay off all and any accumulated debts that we had (credit cards etc)
3. Go on holiday once a year
4. Be able to buy and afford to run an RX-8 (long story)

Tick them off as you go and add more as needed, they'll give you focus and drive. I would recommend having a selection of goals including something that would appear to be unrealistic as it will give you something to really strive for. It's also worth telling other people about your goals as in an odd way, it commits you to the goals.

A new one on me that I’ll be reading up on tonight! Guanxi [http://en.wikipedia.org/wiki/Guanxi]

At the end of the day, a business plan should enable you to visualise your goals as a business which in turn will allow you to focus your efforts. Don’t panic about not achieving everything at once, prioritise and attack one thing at a time.

Setting your rates

Firstly check out my previous post about how I suggest you go about set your rates [Pricing your work] as it has a great way to quantify your rates with meaning that’s also scaleable.

I agree and this is something that I’ve only come to appreciate relatively recently. When setting out I decided that the first few jobs would be relatively in-expensive to build on our portfolio, this was a real Catch-22 as I felt compelled to deliver amazing results for next to no reward. This temptation is great when you start out. You end up becoming a busy fool, working all the hours given for little financial reward (which limits potential investment in your company). You end up begrudging your clients and if you were to let it continue I would imagine start offering a lower service, or worse decide that running your own company wasn’t a good idea.

We recently re-jigged our pricing structure while analysing where I felt the business could do better and the only difference it has made is to my happiness, I feel far more rewarded for the work I produce. Interestingly the quantity of work being obtained has also increased somewhat dramatically so don’t think that your price will always sway the decision –a lot of the time it’s more about whether the client responds well to you.

It’s also worth pointing out that higher (not extortionate) rates, aren’t always a bad thing, I’ve lost out on pitches before because we’ve been too cheap and the client has opted for a more costly company, this isn’t always the case but oddly being more expensive often suggests you’re better.

Finding a niche isn’t always something you can do when you first set out as until you’re within a market you may not know the market well enough. If you do find a niche however, make sure you run a SWOT analysis on it first, it may not be that no-one else has noticed it, it may just be that others have tried and failed –that’s not to say that you can’t make it work however!

It’s defiantly one of the best things you’ll ever do –I would imagine this still counts even if it goes terribly wrong. I was once told that once you’ve been self-employed you’re effectively unemployable ever again and after having been self-employed for 3 years now I can see what they were getting at. I don’t think it’s so much from an employer’s POV but an employee’s, I would find it very hard to give up the freedom/control myself and so will do almost anything to avoid it!

I think this is a nice place to close this article, so in closing I’ll say that even if it fails you won’t regret trying, it’ll most likely be one of the hardest but also most rewarding and filling things that you’ll ever do. The worst thing you can do is not try and end up forever wondering what if…

IIRC as a new business you’re legally entitled to 30 minutes of a solicitor’s time which you should take advantage of. Sadly 30 minutes won’t last very long so prepare a set of your most important questions first. It depends on your local Chamber of Commerce, but when we were a member of the Birmingham Chamber of Commerce, they used to offer you low level legal support as part of your membership.

Although it may seem a large expense when you’re starting out, I really would recommend getting some form of T&Cs drawn up. Spending a couple of hundred pounds at this early stage is likely to save you a lot of hassle later down the road. It’s also an idea to have a coversheet written up that can accompany the T&Cs which has a few blanks you can fill in. We’ve called this our “Agreement for the provision of service” and it reads along the lines of:

IMHO you can write these yourself as they’re more just a summary of what you’ll be doing for the client in plain English so there’s no argument. I would state the total amount you’re charging –both in numbers and words, any time frames and additional services i.e. hosting.

Make sure you have the client sign two copies of your coversheet before you start any work for the client, you then sign and return one copy for the client’s records. The other, make sure you store somewhere safe (just incase!). I’ve not found clients object to signing T&Cs before work starts as it protects both the user and the client but I have found the coversheet helps clarify things for everyone.

There are a lot of contracts available for you to download online if you don't want to write your own or can't afford to have them written for you.

If you’re setting up with more than one person –especially if they’re a friend or loved one writing some form of contract between the two of you is incredibly important. Not wanting to sound negative but you never know what stresses and strains may be put on you and what effect they may have.

When forming the contract, if you’re going to do it yourself, make sure you overview the financials very carefully, at the very least I would cover the following:

• Any investments including details about who invested what, how long the investment will be for, any conditions associated with the investment and clear details on the repayment(s) of the investment.
• Profit share, I would suggest including information about percentages if possible (even if you’re planning on a 50-50 split).
• Liabilities and ownership–this is something that will come with time but it would be a good idea to overview everyone’s roles within the company. I wouldn’t encourage a blame culture but associating responsibility is important.
• Decision making. At times you will be required to make important decisions on a company basis, this is easy if you’re a sole trader but if there’s more than one person, how will you decide what to do should there be a split? Will you bring in a mediator to make the final decision or will you toss a coin?

At the end of the day, as John was getting at, no matter what the current the relations are between the company’s partners it’s best to be as explicit as possible to avoid any disagreement later.

A great point and well put. When you set out, scream and shout about the fact; let everyone know what you’re doing –and don’t forget to tell all your friends and family too. If you’re lucky, they’ll know someone who needs your service and will recommend you (or mention the fact allowing you to follow it up). The best business* we’ve had in the past has always come from recommendation.

*“Best” isn’t always quantified by the cheque at the end of the job

Wednesday 6th December 2006 was an interesting day for me, I often get asked about how I run The Site Doctor and how I set the company up in the first place, but on Wednesday I had no less than 3 people mention that they had thought about setting up their own business but weren’t sure how to go about it or whether they should so I thought there must be more.

Leon Jollans was the first and posted a question on the MsWebDev list (message in the archive here) asking for some advice and seeing as a plethora of fantastically useful information was offered I thought I’d wrap it up for future reference.

Before we get down and dirty with the advice, the first thing I’ll say to you is:
If you’re thinking about it, do it –there’s never a better time than now.

Cheesy as it sounds, it’s true, the number of people I’ve spoken to in the past saying that they’ve thought about it but the time’s not right is unbelievable, if you start off with that attitude, the time will never be right, there will always be a reason not to do it. The thing you realise once you do take the leap is; it couldn’t have been a better time!

In regards to how many businesses fail, I believe the official figures in the UK at the moment are 1 in 5 businesses make it through the first year. This would explain why the government is giving so many breaks to SMEs, so just remember -you're the 1 in 5!

Ok so to the tips, I’ve tried to get these into some form of logical order but some comments span multiple topics so I apologise about that.

Update 16th Feb 2007: The article is now available as a downloadable PDF

1. Business start-up advice
   • In Closing
   • Thanks To
   • Useful References / Links
2. Before you get going
   • Identity
3. Contracts and Terms and Conditions
4. Business Plan
   • Targets and Goals
   • Setting your rates
5. Working from home
   • Your working environment
   • Have a routine
   • Won't clients mind?
   • Telephony
6. Day-day running
   • Processes and procedures
     • What sort of processes am I referring to?
   • Team structure
   • Getting Employees
   • Business Management
   • Action pack or Empower
7. New Business
   • Networking
   • Meetings
     • Before the meeting
     • The day before
     • What should you wear?
     • On the day
     • After the meeting
   • Client and Supplier Relations
   • Christmas Cards/Gifts
8. Finances (VAT, Accountants etc)
   • Billing
     • What should your invoice look like?
   • Accounting
   • VAT
     • Should you go VAT registered or not?
     • Once VAT registered
   • Banking

In Closing

Thank you for taking the time to read the articles, I hope it wasn’t too overwhelming for you and more importantly I hope it’ll be a useful reference for you in one way or another. There was a lot more I want to add but it was starting to be never ending story so I had to put closure on it, over time however I expect I’ll add more so check back soon!

Here’s to your success!

Tim

Thanks To

As I said at the start of this article, it is largely based on information posted on the MsWebDev list so thanks must be given to all those that contributed:

• Sean Ronan
• John Mandia (http://weblogs.asp.net/jmandia)
• Jos Vernon
• Andy Henderson
• Alex Homer (Stonebroom Ltd)
• Mike A
• Ian Blackburn (http://www.bbits.co.uk/)
• Duncan C. Ion
• James Murphy
• Mickey Puri (http://www.ivtelecom.co.uk/)
• Sunny
• Michael Wall

Useful References / Links

The following links may also be interest to you:

• http://www.startinbusiness.co.uk/ -This should be one of your first ports of call, there is a huge amount of information available on pretty much every topic you'll ever need.
• http://www.businesslink.gov.uk/
• http://workalone.co.uk/mailman/listinfo/wauk_workalone.co.uk -The WAUK mailing list
• http://www.mswebdev.org.uk/ -The MsWebDev List on which this article was based on, full of interesting people chatting about development on the Microsoft platform
• http://www.under-score.org.uk/ -underscore_ is a collective of individuals working in New Media in and around Bristol.
• http://lists.evolt.org/ -Discussion list for designers, developers, and web managers working to make the web a better place for all!
• http://www.multipack.co.uk/ -The Multipack is a community of multi-talented individuals from across the Midlands UK, that come together to discuss all the things web and share their knowledge, skills and talents.
• http://www.soflow.com/ -Soflow an online business network.
• http://www.linkedin.com/ -LinkedIn is another networking tool that helps you discover inside connections to recommended job candidates, industry experts and business partners.
• http://www.whichwebdesigncompany.co.uk/ -Which Web Design Company is an independant website allowing clients who have used a web design company's service to rate and review them.
• http://www.hmrc.gov.uk/ -HM Revenue & Customs
• http://www.chamberonline.co.uk/ -The British Chamber of Commerce's main website.