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    # Tuesday, May 06, 2014

    To 08xx or not 08xx that is the question

    Tuesday, May 06, 2014 3:55:49 PM (GMT Daylight Time, UTC+01:00)

    Alternative-Numbers-To-0870-Save-Money-On-Phone-CallsAt some point, when setting up a new website or business you need to give some thought to your telephone number.

    In the UK we have numbers that start with 08 which have different charging rates (free, local, national etc) and I've been asked several times in the past what's best -some people perceive having an 08xx number as being more professional and easier to remember.

    There are cases when an 08xx number is a good idea but generally if you're running a local business, I would use a local number i.e. one that starts with 01 or 02 (not 03 -I'll explain why later).

    Why 01xx/02xx over 08xx? Simply put, many phone contracts (mobile and landline) don't include 08xx numbers in their "free" call plan and customers with those that do (there are a few) often aren't aware whether it's included or not. Adding any form of barrier to the customer contacting you has to be a no-no.

    Don't forget people object to 08** numbers so much there's even a website dedicated to giving you alternatives to the 08** number - http://www.saynoto0870.com/.

    So why not 03 numbers as they're local numbers as well right? Yes they are but as with anything unusual, it acts as another barrier to people contacting your business.

     

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    # Wednesday, January 08, 2014

    How to price your products

    Wednesday, January 08, 2014 12:50:14 PM (GMT Standard Time, UTC+00:00)

    price-tag-01I blogged a few years ago about how to price your time I thought I should blog about how to price a physical product.

    Recently, I've been involved in setting up a new company selling all sorts of Christmas decorations, artificial trees and more called Festive Sparkle. Part of setting up any business is setting a price for the items you plan to sell.

    Pricing a physical product is a little different to how you would price your time but there are similar factors that you have to take into account. At the very least you should factor  the following into your calculations:

    • [COST] The original cost of the item
    • [BUYTAX] Any taxes incurred for buying the product
    • [STORAGE] The cost of storing the item before it's sold (whether this is a garage, shop, warehouse etc)
    • [BREAK] A margin for breakages, returns etc
    • [MARGIN] A margin to make some money
    • [WIGGLE] A margin to allow for discounts
    • [SELLTAX] Any taxes incurred for selling the product

    If your products (and market) allow for it then I would ensure your margins allow for at least a 15% discount. Personally I would include that in the [WIGGLE] if you can as you ideally need to sell your items and make some money!

    This then gives you a nice formula to start off with:

    Actual Cost = ([COST]+ [BUYTAX]) + [STORAGE]

    Minimum Sell Price = [Actual Cost] + [BREAK] + ([MARGIN] + [WIGGLE]) + [SELLTAX]

    Depending on your situation, the storage cost may not be that easy to calculate. In an ideal world you'd sell all your stock but realistically you are likely to have some stock left so if it doesn't have a shelf life (i.e. eggs, bread etc) so you can break it down: firstly into an annual cost and then into a per item charge.

    Calculate the total cost of your storage for your items for a year. If your cost is directly attributable to all your stock, be pessimistic and calculate it on having 50% of your stock for an entire year (so if you had 100 items, each costing £1 a year to store, your rough storage cost will be: ((100 / 2) * 1) = £50). This is a very rough calculation but it should give you a baseline to start with. Once you have the total cost of annual storage, spread that cost all your products - so your £100 of stock will cost £150 over the year.

    Breakages are often forgotten about but it's an actual cost that needs to be factored in. Depending on your product, you may not get breakages or accept returns but I would still factor in at least a 1% return rate to be safe.

    You also want to give thought to the cost of shipping, if you're thinking about offering free shipping on the items then you will need to factor that in as well.

    To help, I've put together a little spreadsheet you can use. You can download my product pricing spreadsheet here.

    I hope that helps someone, if I've forgotten something else, let me know.

    Finally, if you're selling items that are the same as ones sold by others e.g. branded goods then you obviously need to give consideration to the price that your competitors are using, if your prices are way off then perhaps you need to think of another product to sell?

    A quick example

    So, if I bought 100 items at £1 each, the cost of storage was 1p per item per day, I needed to factor in a 2% breakages/return rate, 15% discount and a 10% margin with tax at 20%, the numbers would look like this:

    Item storage cost: ((100 / 2) * (£0.01 * 365) = £1.83
    Actual Cost: (£1.00 + £0.20) + £1.83 = £3.03
    Cost Of All Breakages: £3.03 * (100 * 0.02) = £6.05
    Cost inc Breakages: £3.03 + (£6.05 / 100) = £3.09
    Cost inc Margin: £3.09 + (£3.09 * 0.10) = £3.39
    Cost inc Wiggle: £3.39 + (£3.39 * 0.15) = £3.90
    Minimum Sell Price: £3.90 * 1.20 = £4.68

    So for an item that you purchased for £1.00, you'd need to sell it for £4.68 but this is a slightly simplistic as it doesn't factor in the other costs to sell the item (all of which you would need to factor in).

     

    Don't forget to follow me on Twitter.

    # Monday, December 09, 2013

    Don’t dwell - get over it and move on

    Monday, December 09, 2013 9:33:12 AM (GMT Standard Time, UTC+00:00)

    One thing that always amazes me in business is the tendency people have to dwell on things and then miss opportunities that are out there.

    If you spot an opportunity then weigh up the pros and cons of the opportunity, what it will cost and the expected outcome. If it still looks like a good idea and the costs weigh up then you should do it.

    Just as equally, when something goes wrong, review what happened, analyse what you could have done about it and then work out a way forward.

    Obviously there are exceptions to the rule but by remaining proactive and reactive to situations you will ensure that you're more likely to survive.

    In short, don't over think things.
     

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    # Friday, August 09, 2013

    Starting something new - Part 2: Designing a brand

    Friday, August 09, 2013 2:00:28 PM (GMT Daylight Time, UTC+01:00)

    Read Part 1: Naming the business here

    So you have a name, what next? For us, it was all about getting the company's look and feel right (the brand).

    Branding a company is not just a matter of it's logo and colour scheme, it's also about giving careful considerate to it's tone of voice, target audience and a wide variety of other factors.

    Defining Your Target Market

    There are many techniques on how you should go about defining your target audience but as we are working on a somewhat tight deadline, we decided that it would be best to brainstorm who is likely to buy the products we are selling.

    As we have a wide variety of product ranging from cheap Christmas decorations to high-end artificial Christmas trees with built in LED lights; we had to ensure that we would appeal to the widest audience possible.

    With a little stereotyping and a few assumptions, we categorised each product type into it's anticipated socioeconomic group/customer demographic to see if the product range was weighted more towards one demographic than another and it wasn't overly (everyone loves Christmas!).

    After a little thought, we decided we would go down the route of having a "premium" range of products -akin to Tesco's "Tesco Finest" range and keep the main company brand friendly and generally appealing.

    Considering How It Will Be Used

    How you intend to use your logo has a bearing on what you can design i.e. if you plan to use your brand on paper then adding animation needs to be considered carefully.

    We only plan to sell online so the paperwork that we would be sending out will be minimal. We also decided not to produce much printed media i.e. business cards, letterheads and complement slips as one of the perceived selling points of our artificial trees is the environmental benefits -printing on a lot of paper unnecessarily is a negative in this respect.

    Getting the word out about the business is key to the success with this, so to encourage people to refer a friend we decided we will need to package some form of leaflet with the order (similar to how Amazon do). With this in mind, the branding would need to work on printed media.

    Putting Pen To Paper - The Design Process

    Knowing how we intended to use the resultant brand, the designer got to work. Unlike when designing a website, when designing a brand at The Site Doctor we design a couple of routes to choose from. Each route is designed to have a different look and feel, from these routes we decide which is the preferred route and refine that further.

    Design Round 1

    fs8-TypographySnowflake fs4-Traditional fs7-TypographyBauble

    fs5-50sTypography fs6-50sRetro fs1-Corporate fs2-Sketch fs3-80sChristmasCard

    Being the client for a chance was an interesting experience as we liked two very different routes and chose to pursue the both as we planned to use one for the premium range.

    Design Round 2

    Rt2 Rt1 rt3

    Design Round 3 (The Final Thing)

    Print

    And for the premium branded products

    rt2-3-1

    Getting The Tone of Voice Right

    Being understood by your target audience may sound like an obvious requirement but it's something that people all too frequently miss the mark with. How you communicate with your customer says a lot about the company you are.

    When I was getting started in business, the bigger corporations would go out of their way to remind you (the customer) that they were an enormous company and should not be trifled with. This resulted in very cold, blunt and impersonal content being written, small businesses would aspire to be this large faceless corporation as well. Since the start of the recession however many of the larger corporations have been working on making themselves more like the smaller companies -friendly, approachable and as a result, their tone of voice has been largely softened.

    Not being a large company -and not needing to scare/impress our customer base we have made conscious decision to keep the wording plain and simple; where possible avoiding large words (something that is very important considering the global market of the internet) and keeping all interactions fun and friendly.

    When engaging on social media (which we will be doing) we plan to maintain a jovial tone -more so than we might with The Site Doctor.

    So we're set -keep it friendly, keep it simple and have fun.

    What do you think of our logo(s)?

     

    Don't forget to follow me on Twitter.

    # Saturday, July 27, 2013

    Starting something new - Part 1: Naming the business

    Saturday, July 27, 2013 4:31:55 PM (GMT Daylight Time, UTC+01:00)

    WP_000384I've been a little quiet recently as other than running The Site Doctor, we've embarked on a new venture and as we're starting a new business from scratch. I thought it might be interesting for some if I blogged about our journey which kicked off February this year (although the buying process started a few months earlier).

    Where To Start

    Although many will preach that you should have an in-depth business plan and concrete strategy. I've found in the past that this mostly takes a lot of time up and often results in you missing opportunities as you feel obligated to follow the original plan; instead of pivoting the business and taking a different route. So our business plan pretty much "get the stock into the country and sell it".

    Late February - Choosing a Name

    The first step for us was to choose a name for the business. People often stress about creating a name -and it has got harder as it's important to ensure that some form of domain name is available but it doesn't have to be that tricky.

    As single word domain names have pretty much all gone now (in .com/.co.uk at least) rather than coming up with something completely random (which would be hard to remember), I think it's better to concatenate a couple of words that relate to what you're doing (hence "Crisis Cover", "TrendSeam", "Simply Gigabyte" or even "No More Nails"). Although the words may not initially very obvious to the reader, using words that are easy to spell/remember will increase your chances of being remembered.

    There is also a train of thought that says you should include various specific letters in the name (and these vary according to the source from S, K, V, X) but I'm not so sure this logic applies anymore but there might be something in it.

    So we sat down and wrote down all the words that we could associate with Christmas, Decoration and Trees. We came up with 50-100 words. Armed with these we then started mixing them up to see what worked and what didn't.

    Once we had 5-10 combinations that worked, we then checked if the domain names were available on Heart Internet (it's also worth using domai.nr). Once we had 2-3 that worked, we then asked a few people what the names and domain names brought to mind. When asking people, try not to give them too much insight into the business behind it until they've told you what they think. Also be careful of what your friends and family members say as they're often biased. Ask on behalf of "a friend" if you can so they're not so worried about offending.

    So without further ado I introduce "Festive Sparkle" -although we had to resort to a hyphenated domain name (festive-sparkle.co.uk) it was the clear favourite.

    Late March - First Look At The Stock

    March was an exciting time for us as we got to take our first look at the sample stock that had just hit the shores. It was great fun seeing 50 or so trees erected with twinkling lights all over them -even though it was March, it was like a bizarre warehouse winter wonderland.

    Now we had the samples of the stock it was a matter of identifying which items we were going to stock. This is a process of elimination as you don't want to stock two items that look overly similar -it would be better to invest more in one to get a better deal.

    Stock chosen it was about time we got cracking with the design process -but that's for another post.

     

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    # Tuesday, October 30, 2012

    Do you know where your company’s skills are lacking?

    Tuesday, October 30, 2012 9:58:51 AM (GMT Standard Time, UTC+00:00)

    We're recruiting again and to work out what type of recruit we would benefit from the most, we decided to try and assess our strengths and weaknesses. It was a really useful exercise and meant that we were quickly able to identify which areas we should increase capacity in.

    I am over-simplifying the skillsets a touch here, but when we were assessing what we use to create our websites, we boiled it down to:

    • Design
    • HTML/CSS (to be fair, this could be split into two)
    • JavaScript (annotated below as jQuery)
    • ASP.Net, ASP.Net MVC, PHP (or other dynamic language)
    • C# / VB
    • SQL (the database interaction)

    We did this so we could map out the skillsets we had internally and where we would gain the most benefit in our next employee (we're hiring again if you're interested, get in touch). It turns out that our skills internally are fairly well balanced at the moment:

    WP_000249

    Looking at that however it's evident that we're a little light on the frontend side of things (HTML/CSS/JavaScript). That's not necessarily a bad thing as it's often quicker than the more codey aspects, so one developer can keep a couple of backend developers going. Another thing that I've over-simplified in this chart is the level each resource has so it may be worth factoring that in as well.

    So what did we conclude? Looking at that, I'd say we're looking for someone who is a little more backend based.

    How does your company's skillset look?

     

    Don't forget to follow me on Twitter.

    # Sunday, May 27, 2012

    From Side Line to Full Time - my DDD South West presentation

    Sunday, May 27, 2012 7:42:37 PM (GMT Daylight Time, UTC+01:00)

    imageThanks to all of you who came to my DDD South West talk, I really enjoyed and I hope you did too (and found it useful).

    For the benefit of you who came -and those who couldn't make it, here's the slide deck from my DDD South West talk on getting started in business.

     

     

    Note: Apparently you need to view the slide deck in full screen to view the notes (you'll need them).

    If you have any questions/feedback etc please get in touch via email or twitter, I'd love to hear from you.

    Finally, please do let me know how you get on, I'd love to hear what you get up to!

     

    Don't forget to follow me on Twitter.

    # Wednesday, February 22, 2012

    How to generate the data needed for a cohort chart- cohort analysis Part 3

    Wednesday, February 22, 2012 1:15:53 PM (GMT Standard Time, UTC+00:00)

    Sean Ronan pointed out on twitter that "what" the columns on www.quickcohort.com are which is a good point so I thought I would fill in the gaps a little. The data for a cohort is fairly simple and can be as granular as you decide but the columns needed are:

    1. First Action Date/Time
    2. Most Recent Action Date/Time
    3. Count of customers which have this First/Most Recent Action Date/Times

    Most of the time you can strip the time part from the date/time (especially if you're looking at the data on a month basis) but the tricky part is getting the count of users within each date grouping. You can't just select min/max dates as you need the data grouped by your unique customer identifier. If you're running SQL Server 2005+ then you've got the benefit of Common Table Expressions.

    For this example, I've assumed a simple order table structure which contains a Customer Reference (CustomerId) and an Order Date (OrderDate). You could however use any date and identifier which groups actions together e.g. ProfileId and LastLoginDate.

    SQL 2005 or later

    WITH Actions (FirstAction, LastAction, UniqueId)
    AS (
    	SELECT min(dateadd(dd, datediff(dd, 0, o.[OrderDate]), 0))
    		 , max(dateadd(dd, datediff(dd, 0, o.[OrderDate]), 0))
    		 , o.[CustomerId]
    	FROM Orders o
    	GROUP BY CustomerId
    )
    SELECT a.[FirstAction]
    	 , a.[LastAction]
    	 , count(a.[UniqueId]) AS [CountOfCustomers]
    FROM
    	Actions a
    GROUP BY a.[FirstAction]
    	   , a.[LastAction]
    ORDER BY a.[FirstAction]
    	   , a.[LastAction]

    Otherwise, I think you'll need to write something using temporary tables e.g.:

    Pre SQL 2005

    CREATE TABLE #Actions(
    	FirstAction SMALLDATETIME, 
    	LastAction SMALLDATETIME, 
    	UniqueId INT
    )
    INSERT INTO #Actions
    (
      FirstAction
     ,LastAction
     ,UniqueId
    )
    SELECT min(dateadd(dd, datediff(dd, 0, o.[OrderDate]), 0))
    	 , max(dateadd(dd, datediff(dd, 0, o.[OrderDate]), 0))
    	 , o.[CustomerId]
    FROM #Orders o
    GROUP BY CustomerId
    
    SELECT a.[FirstAction]
    	 , a.[LastAction]
    	 , count(a.[UniqueId]) AS [CountOfCustomers]
    FROM
    	#Actions a
    GROUP BY a.[FirstAction]
    	   , a.[LastAction]
    ORDER BY a.[FirstAction]
    	   , a.[LastAction]
    
    DROP TABLE #Actions
    

    This should then generate some data that looks like this:

    FirstAction LastAction CountOfCustomers
    2011-03-01 2011-03-01 1
    2011-03-01 2011-04-01 1
    2011-04-01 2011-06-01 1
    2011-05-01 2011-10-01 1
    2011-06-01 2011-11-01 1
    2011-07-01 2011-08-01 1
    2011-08-01 2011-08-01 1
    2011-09-01 2011-12-01 1
    2011-10-01 2012-02-01 1
    2011-11-01 2012-02-01 1
    2011-12-01 2012-02-01 1
    2012-01-01 2012-01-01 1
    2012-02-01 2012-02-01 2

    Which you should just be able to drop into www.quickcohort.com. I've not written a version for MySQL as I suspect someone far better at MySQL will be able to pop something together but the pre SQL 2005 script should work.

     

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    # Monday, February 20, 2012

    How to read and interpret a cohort chart - cohort analysis Part 2

    Monday, February 20, 2012 2:31:06 PM (GMT Standard Time, UTC+00:00)

    In my last post about Cohort analysis I briefly introduced what a cohort graph is, in this one I'm going to go into a little more detail about how you can use it. I'm planning on releasing some code so you can add it to your reporting suite in another post but if you can't wait until then, I've thrown up a quick online cohort generator at: www.quickcohort.com -just dump your data into it and click graph.

    What can the cohort chart tell us?

    A cohort chart can give you an idea of customer loyalty -and- an indication of potential problems in their lifecycle.

    The key metric it gives us is customer loyalty. This is also one of the most frequently ignored metrics in every company (mostly because people aren't clear on how to measure it) yet it's probably one of the most important at the same time.

    What is Customer Loyalty?

    That depends very much on your business and as a result the graphs will likely look very different. It's probably easiest to compare what a couple of business types -a retailer and an online magazine- might consider loyalty.

    Retailer Magazine
    • Repeat sales
    • Visits to the store
    • Engagement with the store e.g. email opens
    • Multiple Logins
    • Subscription
    • Number of comments on an article

    As you can see, although there may be some cross overs (Visits to the store and Logins are probably quantified by a similar metric) the "what" depends very much on your business but the longer the duration between the first and last engagement in all scenarios above is how you can demonstrate loyalty.

    How should I read a cohort chart?

    Unlike most tables which you read left to right (a row at a time), you'll probably get more value out of a cohort chart from reading it by a column at a time. This will enable you to spot possible problems in the user's lifecycle.

    Problem points in the user's lifecycle can often be spotted where the colours change in the same column. The greater the difference between the shades of colour, the bigger difference is between the two months. In a perfect world, 100% of the customers from Month 0 will still be using your site in Month 12 but life is rarely like that.

    Looking at the chart below of user logins over time, the eager should spot that there are three months which appear to have issues: Month 3, Month 5 and Month 9:

    Cohort-Created-To-Signup-Problem

    If you're not sure on what you're looking for, you're spotting those columns which have a similarly shaded background which then lightens in the next month (or in the case of Month 9 is completely unshaded.

    What does this mean?

    As the chart above was logins over time, a quick glance over this cohort chart this would suggest the following to me:

    • Overall there is a pretty good retention for the users (the percentage of customers going from month to month are pretty high)
    • The majority of users only remain engaged up to month 3, at which point a lot of users lose interest in the site
    • There is a clear drop off in customer retention after month 9
    • The eldest customers had the best retention rates (despite the drop off in Month 9, 30-40% of visitors were still coming back until then)

    When reading a cohort chart, you can generally discount the last cell of each cohort as it's the current month.

    What might the cohort chart look like?

    Repeat Sales

    Logically, to be a repeat customer, you have to make at least two purchase from the retailer so the duration we're interested in (the month) is the period between the first purchase and most recent purchase.

    First Date (Month 0): First Purchase
    Last Date (Month x): Most Recent Purchase

    Check out the cohort chart below and see what you can interpret.

    Cohort-Created-To-First-Purchse[3]

    Remember, Month 0 represents the first purchase -all customers appear in this column. Looking over the cohort chart, of the 69 customers the retailer had in October 2010, 39% (27 customers) were still around in November 2010 (month 1), 21% (15 customers) were still around in December 2010 and so on.

    None of the 69 customers who made their first purchase in October 2010 are still a customer 12 months later (although if your customers tend to make a purchase near the end of the month, the customer who made a purchase in September 2011 may still make a purchase).

    So looking at that chart, 30-40% of customers would make a second purchase 2 months after their first purchase. Of the older customers (those which first purchased before March 2011) 10% would make another purchase 5-6 months later.

    What else can we gleam?

    There are a few interesting things with the chart above, another is the sudden drop off in month 3 for those customers who first purchased in May/Jun 2011, similarly, the customers who signed up in Mar/Apr 2011 also stumbled in the same month, that could indicate some form of seasonal trend or change in marketing.

    With a little background you will be able to get a much better insight into the meaning behind some of the numbers. If for instance you had changed your marketing routine around Jun 2011 this might explain the difference in numbers. It might be that your business is very seasonal (in which as you'd be better to look at a 24 month chart rather than 12 month).

    Keeping a record of what you were doing around the different months is important, for instance you might start a pay-per-click campaign. Everyone's happy because you notice an increase in sales (so an increase in Month 0) but are they a valuable customer (a repeat purchaser) or a one-off? Cohort chart analysis will quickly highlight this to you as the increase in Month 0 will be reflected in Month 1.

    Although time will tell, it would appear that a lot of customers make another purchase about 2 months after their first. This could be co-incidence or it might be that you're selling a product with a small sample accessory (e.g. a free pack of chalk with each chalkboard) and that sample pack runs out after a couple of months. Alternatively it could be a fault in the product e.g. you sell hinges and the oil runs out after a couple of months so they're buying more grease. By adding a little context to the data you'll likely get even more interesting stats out (we certainly have in the past).

    Visits to the store or customer engagement

    Things start to get really interesting when you start comparing two cohort charts for the same customer base and period against each other.

    First Date (Month 0): First Purchase
    Last Date (Month x): Most Recent Login

    What's interesting when you compare the two charts is most of the customers who have made a purchase are still returning to the site (over 30% are still logging in in Month 11). This would suggest there's not as greater a problem with customer retention as there is with sales.

    This could be because your store sells seasonal products but you keep customers engaged, it might just be a co-incidence but it should drive investigation.

    Cohort-Created-To-Last-Purchse[3]

    What Can I do with this information?

    In isolation it's helpful but only really gives you a top level view on a customer's lifetime with you, it's when you're able to combine this data with knowledge of your business, sales statistics, marketing strategy and information such as a customer's LTV (Lifetime Value) that it gets really interesting and useful.

    Using a cohort chart and average sale value, you can use it as part of your sales forecasting and predict what your company's sales will be going forwards e.g.: if the Average Order Value is £10 and your average first 5 months looked like this:

    Month: 0 1 2 3 4
    Customer Trend 1,000 500 200 100 10

    You'll then know that of the 1,000 or so customers which sign up in the current month your revenue is likely to look something like this:

    Month: 0 1 2 3 4
    Expected Sales £10,000 £3,000 £1,000 £900 £100

    How have I got to those numbers? Well, of the 1,000 customers that purchase this month, 50% will make another purchase on or after month 1 and 20% will make a purchase on or after month 2. With this in mind, of the 1,000 customers from Month 0, 30% will make a purchase in Month 1 so the calculation is as follows:

    ([Number of customers] * [Percentage Returning in Month]) * [Average Order Value] = [Expected Sales]

    (1,000 * 30%) * £10 = £3,000

    There are a few assumptions with doing it like this -for instance, customers who purchase monthly will only be counted once etc but this is still a good start.

    Using a cohort chart with sales data becomes very powerful as you're able to get a really good insight into whether campaigns are generating worthwhile leads or just generating traffic to the sites. If you're interested in reading more about that I'll overview it in another post as that gets pretty heavy on number crunching.

    If you find that customers tend to drop off after a set number of months then it might be worth setting up some form of customer engagement which is triggered just before this point e.g. an email upselling a product that complements theirs or asking them to get in touch with feedback.

     

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    # Monday, December 12, 2011

    Start-up's golden triangle of customer loyalty - cohort analysis Part 1

    Monday, December 12, 2011 5:13:12 PM (GMT Standard Time, UTC+00:00)

    If you're from a financial or medical background you'll probably already be familiar with cohort analysis but more recently it's become a very popular way of measuring customer loyalty among your consumers. I've been playing with it with our customers for a while now and I think many more businesses can benefit from it's insights.

    Once you've worked out the customer's lifetime value (often referred to as LTV), average order spend and time until first purchase, your analysis often end there. LTV is better than nothing however you may be missing some major issues in their journey. Lets for example say you sell a widget. Your widget lasts 12 months but needs to be oiled every 3 months. Your gut tells you that this is the case but proving this is difficult without analysing each client individually.

    Individually you can't gain a great insight into your customer as each is slightly different. Cohort analysis works around the granularity and groups customers together into cohorts. Each cohort is based on a fixed point in the customer's timeline with you -for instance the date/time they signed up or their first order. We can then use this fixed point to compare other customers who have gone past the same period in their lifetime (or not as the case may be) to spot trends.

    The easiest way to understand you group the users is to imagine the following timeline of customer signups, we have three customers (Green, Blue and Red) and they all signup up at different times throughout a 6 month period:

    20111212-Cohorts-Timeline

    Spotting trends in these customers is less than obvious however all customers have passed through a number of similar points in their lifecycle (in this example month 1, month 2 and month 3) so looking at the data from this perspective will help you spot the trends:

    20111212-Cohorts-Lifecycle

    Most cohort analysis groups customers into monthly groups however the size of each group will depend on the number of signups/orders you have e.g. a system like Twitter will have enough data to produce cohorts on a minute or even second basis. By grouping customers together in this way you can then spot seasonal trends and retention (the length of time you keep a customer).

    What does a cohort chart look like?

    A cohort chart looks like this:

    Cohort-Created-To-Last-Login

    You get this very distinctive triangle because the users on the first row are your eldest users and will have been with you for the longest time (which is also why they have the longest row). The users on the last row have just joined in the current month so have the shortest row.

    The chart above is rather encouraging; it's from one of our e-commerce clients and it shows really a rather dedicated customer base -a year after signing up 41% of the customers are still logging into the system!

    You may also notice an interesting dip in retention for those customers who signed up in Dec 2010/Jan 2011. Although additional investigation is required, the type of customer base they have is very busy during these months so they've probably forgotten about signing up. This does however leave a prime opportunity for them to be contacted directly and encouraged back.

    In my next cohort analysis blog post I'll overview how you can read and interpret the chart in more detail and use it to spot trends.
     

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    # Friday, February 25, 2011

    Recurring payment provider options for a UK start-up

    Friday, February 25, 2011 3:42:23 PM (GMT Standard Time, UTC+00:00)
    paymentgatewaylogos[1]

    As many of you will know, we're currently in the process of launching a new online service -Crisis Cover which is a digital safe for your business' digital assets. A week before the launch we ran into a  slight hiccup in regards our payment gateway. The problem is simple:

    The trouble with this: to trade for a year, we need some way of taking payments for the service; so we had to start looking into alternative payment gateways.

    Our requirements

    • Low processing fees as the lowest plan is only £4.99
    • UK based payment gateway
    • Offer (or didn't require) a merchant account number
    • Billable in GBP
    • Handles the recurring element of the payments (so we didn't need to write a custom handler)
    • Trusted brand
    • Allows on-site payments (though this wasn't too much of a priority)

    The payment gateways we looked into were:

    Skip Our findings and jump to our conclusion.

    Our findings

    PayPal

    For

    • Quick setup
    • Known and trusted brand
    • Wide market penetration
    • Simple integration
    • Fully managed service
    • No merchant account number required

    Against

    • High monthly charge for a business account with montly recurring payments
    • Perceived as a B2C service rather than a B2B service
    • Constantly tries to upsell it's payment system to the customer (although the Website Payment Pro onsite option should work around that)
    • A large number of mix-and-match services it's hard to identify which one you need

    Verdict

    Although PayPal's offering is very appealing, it is still perceived very much as B2C service which is the main reason we decided against it. In addition to this, their monthly charge for the service we need and processing fees make it a potentially unviable solution to launch with.

    For recurring payments, you will need Website Payments Pro with their monthly subscription upgrade which is currently an additional £20pcm (it's buried deep but you can learn more on this page -click the "Reporting & Back Office" tab).

    Google Checkout

    For

    • No setup charge or monthly fee
    • Quick setup
    • Known and trusted brand
    • Simple integration
    • No merchant account number required

    Against

    • Offsite payment (thought they suggest you can do onsite too)
    • Recurring payments are in beta
    • General "feel" of the checkout experience is clunky
    • Not clear how to checkout if you don't have a Google Account

    Verdict

    Google's offering is certainly very appealing however the lack of non-beta subscription services meant that we didn't explore it further.

    SagePay

    For

    • No setup charge
    • Simple billing model
    • Known and trusted brand
    • Simple integration
    • No merchant account number required

    Against

    • No recurring payment facility
    • Potentially slow setup

    Verdict

    SagePay's offering is a good solution that we have integrated with many times. Their API makes taking payments onsite quick and simple however there is currently no recurring payment system built in so we initially discounted them*.

    * See conclusion

    Zuora

    For

    • Complete solution (apparently)

    Against

    • Overly flashy website that doesn't tell you how much it costs
    • Appears to be predominantly US based

    Verdict

    Although it may seem petty, if you can't find out even the most basic information on the company website it makes me think that they're massively overpriced or not ready to take clients. So sadly, Zuora were ignored due to the lack of useful information.

    Recurly

    For

    • Handles recurring payments
    • Quick setup
    • Simple integration
    • Fully managed service
    • Invisible to the customer

    Against

    • Not a payment gateway
    • Another additional monthly cost

    Verdict

    We've come across Recurly before and we initially discounted it as we didn't understand what it was/did. On revisiting their service in more detail however we realised what it does -and it's actually pretty good/helpful.

    Recurly is not a payment gateway. Now I've got that out of the way, I should explain what it is. Recurly is a system that integrates with third party payment gateways e.g. SagePay and enables you to use these third party payment gateways to take recurring payments without requiring Continuous Authority with the acquiring bank.

    This is massively important because Continuous Authority is usually what a start-up gets rejected on. Continuous Authority is basically a contract between the acquiring bank (the one "taking" the money) and the customer's bank which allows the acquiring bank to charge the customer (in theory) whenever -and however much- they like. This is obviously seen as a trust issue -especially when the company is a new entity with no trading history.

    So Recurly opens up a whole new potential avenue of payment providers (within their group of partners of course!) which is when we took another look at SagePay.

    AlertPay

    For

    • No setup charge or monthly fee
    • Handles recurring payments
    • Active development community

    Against

    • Appears to be a similar concept to PayPal (encourages the user to have an AlertPay account)
    • Lots of very small small print (check their prices page and "Some industries may be subject to a fee of 3.90 % + £0.59 GBP or equivalent for receiving funds from e-wallet and 6.40 % + £0.39 GBP for receiving funds by credit card")

    Verdict

    The offering from AlertPay looks good however because it encourages users to sign up for one of their accounts and they've not got enough market penetration yet to be a known/trusted brand which is a key factor in our decision.

    CheddarGetter

    For

    • Handles recurring payments
    • Quick setup
    • Simple integration
    • Fully managed service
    • Invisible to the customer

    Against

    • Requires a Merchant Account
    • Very costly
    • Not a payment gateway

    Verdict

    CheddarGetter is very similar to Recurly, just more costly. It's also not clear if your Merchant Account requires Continuous Authority.

    Spreedly

    For

    • Handles recurring payments
    • Quick setup
    • Simple integration
    • Fully managed service
    • Invisible to the customer

    Against

    • Not a payment gateway

    Verdict

    Spreedly is very similar to Recurly as well. We would need to compare them side by side sperately but although the website was clean and clear, the price reasonable (for 200 customers it would be $10pcm cheaper than Recurly). The lack of "pretty" information without signing up put us off. We read through the gumph however we were still left feeling it wasn't quite up to the same standard as Recurly.

    Chargify

    For

    • Handles recurring payments
    • Quick setup
    • Simple integration
    • Fully managed service
    • Invisible to the customer

    Against

    • Monthly charge
    • Requires a merchant account

    Verdict

    We came across Chargify very early on and again is very similar to Recurly, they've recently changed their pricing structure which has made it completely unfeasible to even consider them.

    Authorize.Net

    For

    • Handles recurring payments
    • Quick setup
    • Simple integration
    • Fully managed service

    Against

    • Primarily US based
    • $99.00 setup fee
    • Monthly fee of $30

    Verdict

    Authorize.Net offer the entire solution for what is a relatively low monthly fee however as they're mainly a US based company, this raises complications for us as a UK based company.

    Xylyx

    For

    • Quick setup
    • Simple integration
    • Low processing charges
    • No setup fee
    • Based in the UK

    Against

    • Doesn't yet handle recurring payments
    • Backed by www.moneybookers.com so encourages the user to sign up for an acount

    Verdict

    We immediately signed up to Xylyx having spoken to Robert Atkin who overviewed their offering to us in some detail. It's a very good service all in all however the one thing that let it down for us was the fact that they don't yet have recurring billing built in (though it's due to launch this month).

    If we were looking for a standard payment gateway (or when they've rolled out their repeat payments) we'd look at Xylyx again. Despite a somewhat bland website, Robert was very helpful.

    The Conclusion

    After carefully reviewing the options available to us, if you're looking to setup a service in the UK with recurring payments and minimal fuss I recommend the following order of options:

    • Recurly with SagePay
    • Spreedly with SagePay
    • Recurly with Authorise.Net
    • Spreedly with Authorise.Net
    • Recurly with PayPal Website Pro
    • PayPal Website Pro with recurring billing
     

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    # Monday, December 20, 2010

    Calculating what an employee will cost you

    Monday, December 20, 2010 10:17:56 PM (GMT Standard Time, UTC+00:00)

    240510c239ad497f876efc732b22a2f1_7As 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.

    SalaryGrades

    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 free job sites 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.

     

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    # Monday, July 27, 2009

    CodeGarden 09 Open Space Minutes - Space 1: How to sell Umbraco

    Monday, July 27, 2009 10:53:28 PM (GMT Daylight Time, UTC+01:00)

    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.

    apple-touch-icon[1] 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).

     

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    # Thursday, August 28, 2008

    Do you yell dot com?

    Thursday, August 28, 2008 7:53:13 PM (GMT Daylight Time, UTC+01:00)

    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.

     

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    # Thursday, July 03, 2008

    Market rates –can I have the same hourly rate for all clients?

    Thursday, July 03, 2008 8:36:01 AM (GMT Daylight Time, UTC+01:00)

    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 comment David 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

     

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    # Wednesday, March 12, 2008

    Site, Sight, Stacey, Stacie and all the other ways you can spell The Site Doctor wrong

    Wednesday, March 12, 2008 9:54:08 AM (GMT Standard Time, UTC+00:00)

    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 ;)

     

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    # Tuesday, November 13, 2007

    TOP SECRET - Today's the day!

    Tuesday, November 13, 2007 9:49:43 AM (GMT Standard Time, UTC+00:00)

    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 ;)

     

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    # Monday, November 12, 2007

    A show of hands -why are you in business?

    Monday, November 12, 2007 5:05:51 PM (GMT Standard Time, UTC+00:00)

    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?

     

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    # Saturday, October 13, 2007

    Why should we use you?

    Saturday, October 13, 2007 3:21:41 PM (GMT Daylight Time, UTC+01:00)

    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!

     

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    # Thursday, October 11, 2007

    Tim Smit and Startups Live visit Bristol

    Thursday, October 11, 2007 8:46:36 AM (GMT Daylight Time, UTC+01:00)

    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 ;)

     

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    # Tuesday, September 11, 2007

    Wording a letter/email to get something

    Tuesday, September 11, 2007 9:16:46 PM (GMT Daylight Time, UTC+01:00)

    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

     John,

    As the system has been in place for a number of months, I feel it is important that we have a support agreement put in place to avoid any unexpected invoices.

    As previously discussed, we recommend an initial support level of 10 hours per month, please let me know if you have any objections to this.

    Regards,

    Tim

    Example Email 2

    John,

    Now the system has been in place for number of months, I would like to implement the SLA as previously discussed. 

    If you have any concerns with the SLA being 10 hours a month, please let me know by Friday 31stAugust.

    Regards,

    Tim

    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:

    As the system has been in place for a number of months, I feel it is important that we have a support agreement put in place to avoid any unexpected invoices.

    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...

    As previously discussed, we recommend an initial support level of 10 hours per month, please let me know if you have any objections to this.

    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:

    Now the system has been in place for number of months, I would like to implement the SLA as previously discussed.

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

    If you have any concerns with the SLA being 10 hours a month, please let me know by Friday 31stAugust.

    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!

     

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    # Tuesday, July 24, 2007

    Big Dreams - a waste of time?

    Tuesday, July 24, 2007 12:38:20 PM (GMT Daylight Time, UTC+01:00)

    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?

     

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    # Wednesday, May 16, 2007

    How to calculate project timescales and costs

    Wednesday, May 16, 2007 2:42:04 PM (GMT Daylight Time, UTC+01:00)

    We’ve gone around in circles at The Site Doctor trying to decide the best method to calculate project costs and timings, historically I would look at the project brief, have a think about how much I wanted to work for a client and then I would –in effect- pluck a figure out of the air.

    As your company grows however you will need to think about a more scalable, resilient solution that reduces the chance of under quoting and I think we have a fairly nice solution so I thought I would share it :)

    Firstly, read up on how to set your base rate (see: Pricing your work). Once you have calculated your base rate, you will need to download this spreadsheet when offering the client various options, each option is given its own row on the summary table which is calculated off a dedicated sheet of times.

    The formatting is fairly simple and mainly for your own use but basically the main areas of development (i.e. the front end, my account or admin areas) use a grey background. The sub sections of these (i.e. Product management) use a yellow background and all other items have a white background, the main reason for this was when you have a large project it made it a lot easier to identify where you were. The top columns are not set but they’re just what we most commonly use, you can alter these as needed on the summary sheet.

    How to use it

    1. Add all your site elements (usually based on your sitemap) into the first column, separating each one out onto its own line.
    2. Go through each item, estimating the time required to complete the task. Remember that the spreadsheet is using decimal hours:
      • 0.02 = 1 minute
      • 0.08 = 5 minutes
      • 0.17 = 10 minutes
      • 0.25 = 15 minutes
      • 0.33 = 20 minutes
      • 0.42 = 25 minutes
      • 0.50 = 30 minutes
      • 0.58 = 35 minutes
      • 0.67 = 40 minutes
      • 0.75 = 45 minutes
      • 0.83 = 50 minutes
      • 0.92 = 55 minutes
      • 1.00 = 60 minutes (1 hour)
    3. Switch over to the summary page and update the hourly rates to your rates
    4. Et voila you have your project’s estimated cost :)

    You’ll be surprised how quickly project costs mount up when you use this method but it does ensure that you don’t get caught out, if it is still too costly for the client, why not show them the breakdown as it quantifies your efforts nearly. If that doesn’t work see how tweaking your hourly rate or removing the timings works out but don’t be a busy fool ;)

    Project time estimate spreadsheet

     

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    # Tuesday, May 08, 2007

    Time on the phone –wasted time?

    Tuesday, May 08, 2007 6:13:32 AM (GMT Daylight Time, UTC+01:00)

    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?

     

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    # Wednesday, May 02, 2007

    A GREAT! New resource for freelancers and others starting out

    Wednesday, May 02, 2007 7:24:54 AM (GMT Daylight Time, UTC+01:00)

    I can’t recall how I came across FreelanceSwitch because it was one of those links you see on a mailing list, open to read later and forget to read until a couple of days/weeks later, but nevertheless FreelanceSwitch is well worth a read as they have a tonne of massively useful advice and they seem to be adding stacks more!

    Scott Wills also posted an interesting read on getting the price for your work right. This article on pricing your work, Scott briefly touches on how to set a base rate for your work but concentrates more on estimating your time etc so if you’re interested in calculating your price or calculating a base rate for your work, have a read of my article on pricing your work (see: Pricing Your Work) as I feel it covers calculating a base rate for your work in more detail. Scott's article can be found here: The Price is Right on FreelanceSwitch.

    FreelanceSwitch also gave my article on business start up advice a shout the other day which was most flattering –I hope I’ve managed to pick up a few additional readers! Hello if you're new :). You can read the list of other useful links and see mine at: Linkswitch -a roundup of great links across the web 3.

    The long and short of it is to keep an eye on the FreelanceSwitch website at: http://freelanceswitch.com/.

     

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    # Thursday, April 19, 2007

    Getting more work done - Early Mornings vs. Late Nights

    Thursday, April 19, 2007 6:25:11 AM (GMT Daylight Time, UTC+01:00)

    If you’ve ever been involved with running your own business or indeed any start-up you’ll know long hours are sometimes a necessary evil to meet the demand or even just getting things in order. Well for quite some time now I’ve been wanting to work out whether it’s better to work early in the morning or late at night –I’m quite happy at working either but is there a better option.

    Recently I’ve needed to work long hours to get a couple of systems completed and get back on track with a couple of projects so decided there wouldn’t be a better time. I did want to do something clever like monitor the number of lines of code I write or something equally measurable but to be quite honest I didn’t have the time and I couldn’t be bothered to spend hours searching for a solution so it’s all finger in the wind stuff…

    Late Nights

    Firstly I tried late nights. As I mentioned in my business start-up guide (see: Business start-up advice) I’m very strict with getting up –I get up when Stacey does, see her off and then I’m in the office from around 7:30am/8am (please don’t call then –I like to have a little “quiet time” to sort things out ;)) and I work until she gets home –usually around 7pm now she’s in her new role. When doing the late nights I’d go in at around 7pm, have a drink and a chat, a bite to eat, perhaps all in all an hour or two’s rest before returning to the desk for a couple more hours.

    What I found with working into the night was that by the time I got back into the office I was already fairly tired from the day that had preceded (which a lot of the time is unpredictable as far as clients are concerned!) so my productivity for these additional 5/6 hours was lower than during the “normal” working day, then when I got up the next morning I would be pretty shattered from having little sleep (I still had to get up at 6:30am) which meant the next day was somewhat of a write off. So although I managed an additional 5 or 6 hours of lower productivity work, I also lost time the next day so it was semi-even.

    Early Mornings

    After testing working late for a couple of weeks I decided to try getting up early –initially I would get up at 5:30am as that would give me an hour or so before Stacey was awake, then 10mins waking her/refilling my tea and then another hour or so before breakfast and seeing Stacey off. I tried the 5:30am start a couple of times and could see the productivity difference almost straight away. As I was starting after a good nights rest (I could finish earlier and even get to bed earlier if I wanted!) I was fresh and ready to go again so I decided to start getting up at 5am, that way I could have nearly 4 hours of uninterrupted time before clients started calling.

    By getting up at 5am you avoid the jet lagged feeling at the end of the day, oddly enough this still comes at around the same sort of time so you don’t really lose out there and the 4 hours or so before other people make it into the office which means you get an additional 4 hours of uninterrupted time.

    The other advantage was if you had a deadline to meet you also had the evening available to work into –again at a fairly similar productivity level to when you get up at 6:30am.

    Conclusion

    Although I’ve not done any productivity level testing I know for sure that getting up in the mornings is far better without a shadow of a doubt, having the uninterrupted time where you’re fresh and alert means the development is a lot faster, unlike in the evening/night, no-one is online just “chilling” which a lot of the time can be distracting in itself, you’ve also got the added advantage of having a full nights sleep if required or working late into the night if you need to hit a deadline.

    Despite my findings I still know a lot of people that stay in the office late into the night thinking that it’s of benefit but one thing I found was not only was your productivity lower, your likelihood in making mistakes was higher –which you’d just have to correct the next day. A lot of the time they were simple things that had you been paying attention/been awake for you’d have sorted!
    Another thing I would like to look into at some point is whether morning or afternoon coding is more efficient and whether you can use that to structure your day better as from this “investigation” I’m inclined to do more adminy type work in the afternoon as I tire and leave the development to the morning (that is my 8 hour morning… ;))

    FWIW I really enjoy getting up before everyone else, watching the sun rise and then having an evening to go to the gym and have been getting up early now for a fair few weeks –and don’t see it changing anytime soon! I think any earlier than 5am however may well be detrimental.

     

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    # Wednesday, March 21, 2007

    Simple accounting database

    Wednesday, March 21, 2007 8:27:16 AM (GMT Standard Time, UTC+00:00)

    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)

     

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    # Friday, March 16, 2007

    Payment on acounts

    Friday, March 16, 2007 1:28:52 PM (GMT Standard Time, UTC+00:00)

    I recently released a mini-series of articles with a load of great business start-up advice (also available to download as a PDF) in which I talk about how the government is really going the extra mile for SMEs at the moment, helping them out in a load of different ways -really trying to encourage entrepreneurship within the United Kingdom. This was something I believed until I got my tax bill.

    The deadline for your self-assessment tax return is fast approaching and the government kindly sends you an invoice for your last tax return, mine arrived just before Christmas and to my surprise it was 50% more than I submitted. Seeing as I was off to Cornwall I decided I would deal with it on my return.

    I've never had an issue with paying tax, in fact I've always been proud of the fact that I've needed to pay tax, my logic is simple: if I need to pay tax, it means I'm earning! The more tax I pay, the more I've earned. See my logic?

    In the past, through claiming back expenses etc my tax bills have always been relatively small and although I seem to recall something called “Payment on account”, but it was IIRC an optional payment so next year the amount you have to pay is smaller. This is a good idea. As a small business owner I do put money aside for my tax bill but that’s always been 25% of each invoice. So what’s my issue?

    To me, payment on account seems like a half-arsed attempt by the government to help self-employed people out, while getting a couple more quid in the process, the issue however is I feel they’ve focused more on taking more money than helping out the self-employed people. The idea is simple: You submit your tax bill for the previous tax year, they take an additional payment (payment on account) which will go towards the next tax year, this payment is estimated on their data for you -in this case your tax bill. The first payment is due with your current tax bill, the second in July of the current tax year. Thus splitting the next year’s tax bill into two more manageable payments. -Bollocks does it. Please excuse my French but this is not at all thought out and this is why:

    I would consider myself to be one of the more sensible self-employed people when it comes to saving for tax, admittedly the first couple of years I was in business I paid the tax bill with a project we had on at the time but now I do put money aside for it with every invoice (now 50% of every invoice inc VAT goes aside). So come tax return time I have a nice chunk of cash to pay for my tax bill (always more than it needs to be because of expenses etc). I then follow the governments recommendation and fill out my self-assessment tax return online in plenty of time -a word of warning, I live with a chartered accountant who helps me out with this, it’s not something I just do on my own ;). In January I have the invoice for the bill and I pay it out of my savings, anything left I can use as I wish. All good so far! As far as the government is concerned I have followed what they’re recommending and that should be it. Payment on account however throws this into turmoil. What the government IMHO neglects to tell you is that you’re going to have to pay 50% more than you’re expecting in the first year you go over their threshold.

    What I don’t like about that is they’re encouraging a lot of self-employed people to complete their own return online (best to do this with an accountant really) and save for their bill but by not telling you about this additional payment they can in theory put someone out of business over night -and there’s nothing you can do about it. Take the average self-employed business owner with a turnover of £50,000. Assuming no expenses you should expect to walk away with around £38,300 (using rough maths). Cool, so you’re good and put £11,700 into savings in preparation and use the rest to pay the bills, buy a holiday, a car etc.

    You think all’s dandy until at the end of the year you get a tax bill for £17,550 with a further payment of £5,850 being required in July. That leaves you with £26,600 remaining rather than the initial £38,300 you were expecting. Why? That’s simple -payment on account, the tax office say "Well, you earned £50,000 this year, so you’ll do that next year so we’ll take that money from you now, that way next year you’ll already have some money on account -helping you out. Don’t worry though, if your tax bill for next year is lower, we’ll refund the money." -there are so many issues to this statement but I’ll come back to those.

    I've made a graph demonstrating the two differences. The light red segment is the amount you will need to pay in the July following your January tax payment, the dark red section must be paid in addition to your main tax bill.

    Comparison between the expected tax bill and actual tax bill

    Take my industry -the IT industry. It’s not unknown (or an infrequent occurrence) to have a large project (i.e. £100,000) which you can complete within a financial year. If you're already working in the sector and this £100,000 contract is your reason for going it alone this could be a serious issue for you. Ignoring how you take this money, by the end of a single fiscal year you take £100,000:

    • Turnover:£100,000
    • Tax Allowance:£5,000
    • Taxable Income:£95,000
    • Tax at 22%:£7,700
    • Tax at 40%:£24,000
    • Expected Tax Bill:£31,700
    • Expected to you:£68,300

    In the event you’ve taken £100,000 for a project you’re likely to spend a fair amount of that on things like credit cards, niceties after having gone without for a while etc, so you spend a fair whack, perhaps put a chunk on your mortgage, buy a house or invest a fair chunk. Say you get the payment a couple of months before the tax year ends so you take the time off and relax a little, basically using a fair amount of the money, but you’re ok as you’ve put £32,000 into savings in preparation for your tax bill. When it comes to filing time however you’re told that you owe them an additional £15,850 with your current tax bill followed by another payment of £15,850 in July. Starting to see where my issue lies?

    If you didn’t spend anymore of that £68,300 than you absolutely had to and some how had the additional £31,700 available you’re fine, but what if you decided to treat someone special, or invest the money where it’s not readily accessible, what can you do? I called the tax office to talk it through with them as I didn’t want to pay this payment on account as it would mean that things would be a little tight until the end of a current system development. The representative had absolutely no concern or understanding for my situation, when I asked her if I could spread the payments a little I was told that interest would be charged on the money if I didn’t pay it and a fine would be incurred. Furthermore she told me that this payment on account was ok because it was tax on money we had already earned (the payment on account is in theory for the current fiscal year), I did think about pointing out that a business’ earnings are not the same as a worker’s salary as they are frequently sporadic and go through highs and lows -in the case of The Site Doctor, the majority of our year’s income comes in during the final fiscal quarter.

    There were a couple of things I didn’t like about the representatives statement/government’s perceived understanding of the situation:

    1. Great they are trying to help you out with your business -hopefully making the next tax year’s tax bill a smaller payment (or not at all if you think about the logic) but how does making it a forced payment without making it very well known about help?
    2. It assumes that your business’ monthly turnover is the same as an employee in that your entire year’s earnings are the same (or similar) each month with no seasonal fluctuations. I know there are some more established businesses which do have a regular income but The Site Doctor certainly doesn’t. As already mentioned, The Site Doctor has the majority of the year’s earnings paid in the final fiscal quarter -after you have to pay your tax bill!
    3. They say they’ll refund the money if your next bill is lower than the last so it’s ok. But taking the example of the £50,000 turnover above, that’s a years worth of interest on £11,700 you’ve just lost potential interest of £936 or £2,536 in the example of our £100,000 contract. Can you afford to loose out on that?
    4. This can in theory put someone out of business, as it happened, I had to pay this bill mid contract when normally I wouldn’t have had any money for a fair while, to make things worse Stacey was having a short sabbatical. Luckily we had the money in savings but if we didn’t we would have without a doubt found it hard to pay.

    The solution?

    I don’t like bitching and moaning about things without having some form of solution and I can understand that the government wants to get this cash into the bank and after the first year or two it makes things better for them but for goodness sake make the payment optional, perhaps offer a monthly payment option without penalties or at least inform people about this so they can make provisions for it. Had I not found this out before this tax year I would be in serious trouble. Of course, having a tax specialist do your books should have highlighted this for you -and it goes to show that just because they’re an accountant, if they’re not a specialist they may not know about something that can break the bank (I’ve got no blame for Stacey before you wonder!).

    Note: These figures are derived from my own experience so please take professional advice on the matter as for all I know, there may be a sliding scale (I would hope there is) otherwise the government is killing businesses left right and centre. I’d be interested to know if anyone else knew of/has experienced this issue.

     

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    # Friday, February 16, 2007

    Business start up advice downloadable PDF

    Friday, February 16, 2007 6:54:35 AM (GMT Standard Time, UTC+00:00)

    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).

     

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    # Sunday, February 04, 2007

    Finances (VAT, Accountants etc)

    Sunday, February 04, 2007 8:58:09 AM (GMT Standard Time, UTC+00:00)

    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.

    • Front page of a VAT Return
    • Rear page of a VAT Return

    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.

     

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    # Saturday, February 03, 2007

    New Business

    Saturday, February 03, 2007 8:57:30 AM (GMT Standard Time, UTC+00:00)

    Call me a sceptic if you like but once you’ve been in business for a while there are two common elements to pretty much every new client:

    1. Every client’s idea is going to be the next big thing (in their eyes anyway).
    2. Every client has so many contacts that they’ll generate you more business than you can possibly handle

    Both statements are usually used to encourage you to give them a bigger discount or agree to some form of partnership. I’m not saying you should immediately dismiss what they’re saying, the best business comes off personal referral from a past client but instead take it with a pinch of salt.

    Don’t feel that you need to agree to any partnership etc on the spot, go home, have a drink and then weigh up whether you feel what they’re saying can be backed by what you see or whether it’s likely to be a load of baloney. You really should look at every client as a long term relationship rather than a one-off squeeze.

    While on the subject of investment partnerships with clients I think in the right situation they are a superb idea. Since setting up The Site Doctor we’ve setup a number of investment partnerships with our clients which have in some cases been very profitable, others not so. The trick is to form your own opinion, if the client suggests you do all your work for free and they’ll invest their time, ask yourself why they don’t have faith in their own idea to invest any capital. Sometimes they don’t have the capital ready and it’s a great idea, sometimes the investments can be quantified equally through doing this just don’t let them talk you into something your gut says is wrong.

    What I tend to suggest in the case that they can’t raise the full amount for your services is suggest a part share, part capital payment but again you must decide how much the shares are worth. It does take a little time to investigate someone else’s proposed business but you’ll be kicking yourself if you don’t!

    Once you decided whether or not to invest your time and you’ve negotiated the best deal you possibly can make sure you get it down in writing. This is very important and we’ve been caught out with this in the past. We had a client who suggested a 15% turnover share for the first year to cover 50% of the development costs. We negotiated over email and had the agreement written down, where we were caught out however was with a misunderstanding on our behalf –we assumed that we would get 12 monthly commission payments but what wasn’t clarified was the client offered the first month of subscription free –so straight away we were down to 11 months. Then thanks to WorldPay, the first payment wasn’t received until 2 months after the customer paid which meant we only received 10 months of payments –luckily we’ve got good relations with the client and it was resolved amicably.

    So if you’re going to go into an investment like this, make sure all the cards are on the table otherwise you may not be as lucky as we were! Before finishing this point, I personally wouldn’t agree to a profit share on the investment without having a breakdown of all the expenses otherwise an unscrupulous client may over-inflate the expenses and so reduce your share.

    Having a portfolio is a great start, depending on your industry this may not be possible. If you’re starting out and have no portfolio (and have time) then why not generate a few mock-ups of your work, don’t spend too long generating them and they don’t need to be perfect working examples but people do tend to respond better to something they can touch/see.

    Networking

    The classic phrase of “it’s not what you know –it’s who you know that matters” couldn’t be truer. When I setup The Site Doctor I was lucky to have some excellent contracts through a good friend Vladimir Srdanovic, though previously a developer he felt that he no-longer wished to develop but instead just generate new business. I was keen and ready to develop on a mass scale so teaming up made sense.

    If you’re not lucky enough to have someone like Vlad within your midst already then networking is an ideal way to generate new business and as you grow will become invaluable, whatever hang-ups you may have (age, gender etc) don’t let them come into the equation.

    Your local Chamber of Commerce will most likely host events, the fee depends on your local Chamber of Commerce, but the Birmingham Chamber of Commerce for example charges an annual fee, after which the majority of events are free to attend. We were a member of Birmingham Chamber of Commerce for a couple of years however last year we opted out because of the mentality within our local chamber. On reflection I would probably opt to try more dedicated events such as those run by dedicated networking companies but be prepared to pay through the nose.

    Don’t forget that networking isn’t just about making useful contacts to sell to, it’s also a chance for you to meet your competition and other people involved in your industry. I’ve been meaning to find time to setup a new media type networking group up in the Midlands for a while but I believe the Multipack [http://www.multipack.co.uk/] does pretty much the same thing as I was proposing.

    Meeting your competition and others involved in your industry is also useful because they may be able to throw you work that they’re not able to undertake for themselves, for instance you’ll find many design agencies have a mutual agreement with a development company in place by which they pass web development work to their partner and vice-versa.

    It’s also worth noting that networking is no-longer just a face-face meeting event thanks to online networking sites such as SoFlow and LinkedIn to mention a couple, getting involved in these online communities may not generate any business directly but will again give you the opportunity to promote your business.

    As time goes by, you’ll be surprised where your business will come from –always be pleasant to people and whenever possible have time for people as they’re bound to thank you in one way or another later. It’s always worth thinking long-term with any new contact, they may not contact you straight away but get in touch from time to time and you never know what may come of it.

    When you’re at a networking event –in fact anytime you could bump into a potential client make sure you have plenty of business cards available with you. The best thing you can do to save fumbling through every pocket trying to find a card is to have 5-10 cards in each pocket (yes EVERY pocket!). That way no matter which hand you reach with you’ll quickly find a card. For those times you’re not expecting, keep a few cards in your wallet too or perhaps attached to the back of your phone* -basically with anything you take with you everywhere. Keep the supply refreshed too, I’ve been caught out before and you may just miss a great opportunity!

    *I’ve not tried this but it’s a thought!

    “Keep your hands free” -that was something I was told by a networking advisor and has always stuck with me and it makes sense, they always have a lot of free food/drink at these networking events so avoid the rookie mistake of piling a plate high of food and taking a glass of wine in the other hand –how will shake hands on introduction? Have a small plate of food and/or a glass of wine* –it keeps at least one hand free to shake hands with or hand out business cards!

    *Some events shell out on fancy clips that hold the glass on the side of your plate but don’t get me started on those! Just don’t try is the best advice I can offer there ;)

    Fantastic tip! This is something that we do but haven’t pushed a great deal –a while ago, The Site Doctor teamed up with a Bristol based Mobile Development company called Mobile Pie, I grew up with one of the owners Richard Wilson while at school and felt that his services complimented ours. By teaming up we’re able to offer a broader set of skills without taking on additional cost. By reselling their services you can also start making money without needing to do all the work.

    Along the same lines, if you’re going into web development, identify and be-friend good/great design companies, if you’re able to get 2 or 3 design companies on your side then you’ll probably find they’ll bring enough work to keep you busy all year around.

    Meetings

    You’ll find your own style of meeting once you’ve had a few meetings with your new clients and the format of these meetings will obviously depend on your business sector but here are a few (some obvious) tips to having a successful meeting.

    Before the meeting

    • When arranging the meeting or at least before the meeting contact the client and ask them whether there is anything specific they would like to discuss.
    • Prepare! It’s probably best to think of a meeting a little like a job interview, before your meeting do your research into the company.

    The day before

    Get everything together the day before your meeting, if needs be have a list of all the items you need to take with you and tick each one off. At the least I would get together:

    • A pen and pad of paper (make sure there’s ink in your pen!)
    • Contact details of the client –I would write these on paper rather than just relying on your mobile
    • Directions to the client
    • Any supporting documentation for the meeting
    • Whatever you plan to wear. Deciding what you’re going to wear the night before the meeting saves time on the day and ensures that you’re not left needing to iron your shirt 10 minutes after you should have left…

    What should you wear?

    What to wear comes down to your personal feelings and what you feel is appropriate for the client. When I first set out I would wear a suit to every meeting as I felt it was what was expected of me –I expect this came partly from the fact that I went to a public school but also from the image I had portrayed in my mind but choosing what to wear isn’t always that cut-and-dry.
    More recently I’ve been going to meetings more casually dressed, this is carefully judged however from my research of the company before the meeting (or after the initial meeting) but I’ve found that when dealing with SMEs –especially when you’re dealing with the founder of the business people seem to respond better. Wearing smart casual clothes also portrays the image that you’re comfortable with yourself and confident in what you’re doing.
    Steve told me an interesting story about one of his friends who runs a very successful industrial heating and air conditioning company. This guy has a phenomenal turnover (his average contract is into 6 figures) but said that he soon realised he got most of his business when he turned up in a dirty boiler suit. His theory is that his clients feel that he as the MD is not afraid to roll up his sleeves and muck in.
    That’s not to say however that there’s no place for the suit! I still wear a suit to corporate clients as it’s what’s expected, I love wearing a suit I’m just saying wear whatever you feels right for the client and industry.

    On the day

    • Be yourself, what you wear is crucial to this, if you don’t like wearing a suit or jeans then don’t. Getting a new client is all about being able to bond with the client, feel comfortable in yourself (and not putting on a front) and you’ll find it a lot easier to find some common ground. You’ll also find that people can see through you if you’re putting on an act, if this is your first meeting, that’s not a very good way of building your trust!
    • Get there early. 10 minutes early is sufficient, if you get there earlier, wait in the car or around the corner but whatever you do, don’t be late. Yes you could argue that it’s because you’re so busy, but I feel it shows that you don’t care about the client more! If you’re going to be late due to i.e. the traffic, call the client and let them know 30 minutes – an hour before hand (with mobile phones you don’t have an excuse now!)
    • Have fresh breath –nobody likes talking to someone with smelly breath and if you’re up against a couple of competitor companies you certainly want to be remembered but not as the “guy with the bad breath”. Keep some chewing gum, mints or even mouth wash in your car or laptop bag
    • “To Tea or not To Tea” that is the question! I’ve found this can really disrupt a meeting if it’s a one-man-band. When the client asks if you’d like a drink, best respond something along the lines of “only if you’re having one” –if they walk in with a fresh brew you don’t want them to waste 10 minutes of your scheduled time making you a drink when you could be selling!
    • Make notes. When you get into the meeting, open your notepad to a fresh page, head it up (client name, date, attendees etc) and leave it open with the pen/pencil ready to use. Pay attention to the client, remember what you can but if there’s something you feel is important write it down –all to often I’ve got out of a meeting, intending to make a note of something I’ve forgotten! Don’t make the same mistake. Make notes about the little things, names of the client’s family, birthdays etc as it will allow you to personalise future correspondence.
    • Listen to what the client is saying. I can’t stress this enough, showing an interest in what they’re saying is important as the client is bound to give you lots of useful information –not necessarily about the job in hand but perhaps information you can use to your advantage later i.e. knowing they don’t like Whiskey would come in useful when sending them a gift.
    • Don’t invite distractions to the meeting. I’ve decided against taking a laptop into meetings these days because they make the meeting very disjointed and it’s often unneeded –especially in the initial client meetings, opening your laptop screen between you and the client is like erecting a large wall between you! Make sure your phone/BlackBerry/PDA is turned off and any.
    • Thanks to Mike A: Try to avoid talking business for the first 10-15 minutes of the meeting, use this time to talk about anything else possible. Look around the room and pickup on anything you can use as a talking point –perhaps it’s an example of their product or a family photo.

    After the meeting

    Whether you consider it successful or not make contact with the client after your meeting thanking them for their time and remind them of any information they’re meant to send you and/or any tasks you’ll be doing for them.

    Client and Supplier Relations

    Personally I think having good relations with all your clients is incredibly important. As I’ve said several times in this series of articles already, the best business comes from referrals, never underestimate the value of a good word. It really must speak volumes when a potential client contacts you and you’re able to say “look through our portfolio and feel free to contact any of the clients listed for a reference”.

    Having excellent client relations isn’t really hard, give them an shining service, keep it personal, be open and honest and keep in contact after they’ve paid, I don’t mean call them up and talk for hours everyday but drop them an email or a call once in a while asking if there’s anything you can do to help them and if you supplied a service or good to them such as a website ask whether it’s still meeting their needs. Making this little effort can often land you more work as there are numerous times I’ve contacted a client to say hi and they’ve said “Oh hi Tim, I’ve been meaning to call you about xyz for a while”… Remember that your clients are no-doubt just as busy as you so make it easy for them to contact you.

    The theory behind excellent client relations is that a happy client who has received an excellent service will come back -and- refer you to other clients. An unhappy client however who feels they have had a poor service will not only not give you their next piece of work, but they will tell a number of other people about the bad service they received. Someone once told me that 8 happy clients may refer you to one other client by one unhappy client will let 8 other potential clients know!

    If you’ve had a good service, let them know. All to often people are quick to criticise and point out the faults with any given situation so thanking someone for a good service is a real breath of fresh air, it can really lift someone and make them feel that all the hard work and effort that they have put into the product and/or service given to you has been worth it. Remember that even if they’re a supplier, they may very well need your services later down the line and taking a little effort to thank them will go along way!

    Absolutely, I feel karma has a lot to answer for in business. At the end of the day, you’re the boss, if you’re seen to be open and honest with people, they’re more likely to respond well, as your parents have probably always said, honesty is the best policy. If you’ve got a technical issue you may find they have a solution to it that means less work for you. If you call them to confess to some service downtime before one of their clients tells them, that’s got to be a good thing!

    Christmas Cards/Gifts

    I like sending out cards and I think excellent client relations are very important but every Christmas I hit the same question “What should I do this year?” Each year it generally ends up with me doing nothing but this year I actually got my act together and sent out a couple of gifts which seemed to go down well.

    Steve, my father-in-law has a client that makes luxury hampers and he recommended I contact them to see if they could help as the hampers were pretty darn impressive, he was right. The issue I quickly realised was however, who should I send them to? Some of our clients only bring in £20-30pa which didn’t really justify a £20 hamper. This year I had already decided which clients I should send to, but while doing my books I noticed a couple of other clients that I would have liked to send them to so in-line with my current business reforms we came up with a system of grading clients which I think will work well for next year.

    It’s quite simple really, work out the turnover and profit generated by each client/contact you have and grade each one. For instance, you could spend £10 for every £1000 of business the client/contact brings. I wouldn’t stick strictly to this however as you may have some lower profit clients who you enjoy working with –don’t be stingy, it’s Christmas!

    Then you have the issue of deciding what gifts you would like to send out, the first year I was going to send out a few bottles but a friend said that it was tacky, over-done and thoughtless (especially in the city) so I didn’t bother. Try and make it relevant to your company and different i.e. Cocoa Creative [www.cocoacreative.co.uk] this year sent us a bar of chocolate wrapped in pink paper, I thought that was cool, Stacey thought it was tasty. Either way it got them a mention  here which clearly means I’m thinking about them…

    A word of caution: before sending out extravagant gifts to your client it is advised that you check any restrictions that may be in place on the total value of gifts allowed. I say this because there is a limit imposed on the value of any single item for doctors -at one point drug reps were giving away holidays for doctors to use their product over another so it may also apply to other industries as well.

    I keep referring to clients and contacts here because I would thank anyone that generates your business more work, it’s a great situation to be in if you’ve got several mini-sales people!

     

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    # Friday, February 02, 2007

    Day-day running

    Friday, February 02, 2007 8:54:07 AM (GMT Standard Time, UTC+00:00)

    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

     

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    # Thursday, February 01, 2007

    Working from home

    Thursday, February 01, 2007 8:52:38 AM (GMT Standard Time, UTC+00:00)

    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.

     

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    # Wednesday, January 31, 2007

    Business Plan

    Wednesday, January 31, 2007 8:51:29 AM (GMT Standard Time, UTC+00:00)

    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…

     

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    # Tuesday, January 30, 2007

    Contracts and Terms and Conditions

    Tuesday, January 30, 2007 8:50:24 AM (GMT Standard Time, UTC+00:00)

    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:

    Agreement for the provision of services

    This agreement made and entered by and between [YOUR COMPANY NAME] (hereinafter referred to as “The Supplier”) and [CLIENT'S NAME], whose principal place of business is [THE CLIENT'S ADDRESS] (hereinafter referred to as “The Client”)

    The Supplier agrees to provide [LIST OF SERVICES] services as outlined within the proposal dated [DATE OF DETAILED PROPOSAL].

    The Client agrees to pay The Supplier [DEPOSIT AS A PERCENTAGE]% (£[DEPOSIT AS A FIGURE]) of the total project costs on the completion of this agreement followed by [NUMBER OF PAYMANTS AS A FIGURE] ([NUMBER OF PAYMENTS IN WORDS]) additional monthly payments of £[MONTHLY PAYMENT AS NUMBER] from [START DATE] totalling £[TOTAL PAYMENTS AMOUNT IN NUMBERS] ([TOTAL PAYMENT AMOUNT IN WORDS]).

    The Client agrees to the total project costs of £[TOTAL PROJECT COSTS AS A FIGURE] ([TOTAL PROJECT COSTS AS WORDS])

    The Client is aware and agrees that additional services beyond the original specification may be subject to additional charges. Any additional charges will be confirmed in writing by The Supplier before being undertaken.

    The Client also agrees that The Supplier will offer on-going support, maintenance and monthly reporting for a combined total of [DETAILS OF THE SLA] from [START OF SLA] for a monthly payment of £[MONTHLY PAYMENT AMOUNT] until instructed otherwise.

    On completion, The Supplier will supply The Client with relevant timesheets for the development work if requested.

    In accordance with our Terms and Conditions, Value added Tax, where applicable, will be added at the appropriate rate to the total of all charges shown on the Client’s bill.

    We agree to the Terms and Conditions of The Supplier

    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

     

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    # Monday, January 29, 2007

    Business start-up advice

    Monday, January 29, 2007 8:47:39 AM (GMT Standard Time, UTC+00:00)

    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
    2. Before you get going
    3. Contracts and Terms and Conditions
    4. Business Plan
    5. Working from home
    6. Day-day running
    7. New Business
    8. Finances (VAT, Accountants etc)

    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:

    Useful References / Links

    The following links may also be interest to you:

     

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    Before you get going

    Monday, January 29, 2007 8:44:40 AM (GMT Standard Time, UTC+00:00)

    I think this is a nice point to start off with; it’s unlikely that you’ll be setting up a company doing something that you hate but it’s worth thinking about exactly what you wish to do. When I first setup The Site Doctor and people asked me what The Site Doctor did, I said “Web Design and IT Consultancy” as I felt it was broad enough cover everything I was interested in doing, as it turns out I would think the majority of our work should now be classed as “Web Application Development” but you try explaining what that is to your IT illiterate friends ;)

    I would be interested to know how many companies start out aiming to offer one service and then diversify into other more specialised areas –I would think it frequently happens after identifying a niche market.

    Identifying a source of quick (and if possible easy) revenue is a great idea, it doesn’t have to be something that you’ll continue in the longer term but this will ensure that the first few months while you’re establishing the company aren’t as hard as they perhaps could be. When I was setting up The Site Doctor I was prepared to take a part-time job to subsidise the business should it not generate enough income, luckily I didn’t need to but having a backup plan is always a good idea!

    The other advantage of doing i.e. contracting or freelancing is that you’ll be able to get straight into the market place, letting people know about your services and identifying potential markets. The sooner you can get your face known, the more likely you are to generate new business.

    I would recommend talking to an accountant to understand the pros and cons about each type of company. Setting up as a sole-trader or partnership is easier in the short-term but switching from a sole-trader to a limited company later may bring added complications and/or paperwork that could be avoided.

    If you’re starting out on your own, it’s probably worth looking into the option of setting up a networked business. I’m not sure if this is the correct term for it but it’s what I’ve been using for some time now to describe how The Site Doctor operates. The theory is simple, rather than having a load of in-house staff which will increase your overheads, make tactical relations with other companies offering complimentary services. As mentioned later in the series (see New Business –Networking) we have setup ties with design companies, mobile development companies and a variety of other complimentary services.

    The beauty of this form of co-operative business is it allows you to be a single point of call for more services than your core business which is more likely to keep you in the forefront of the clients mind. It also has the massive benefit of having back-up staff without the cost. If you’re planning on running a development company, why not find a couple of other local developers or development companies who can take on some of your workload? Initially you may not be making any additional income on top of their charges, but should the workload continue, you’ll be able to consider taking on an employee safe in the mind they’ll pay for themselves.

    Steve (my father-in-law) went on a local business course many years ago before starting his Birmingham couriering business and is forever spouting pearls of wisdom that came out of it. From what he’s told me, the course has helped on many levels when running his courier business from decision making to re-assurance.

    One point that Steve did pick up on from the course that I feel is relevant is the idea of listening. His course leader suggested that if you ever had the opportunity to take a successful business man/woman such as Richard Branson out for dinner, take them to a nice restaurant and pay for the dinner, not to impress him but to have a couple of hours of their time –something that you perhaps wouldn’t be able to afford otherwise. I think this applies to all business owners (I’m open to offers!) as you’ll have a great opportunity to learn from someone who’s been there and done what you want to do…

    As far as I know, he’s never got any sniff of business out of the course but I would suggest using the event as a networking opportunity as the attendees are most likely new to business and in need of some contacts.

    The business course should also expand on some of the points raised here. I’m not sure where the best place to look for one is, there are plenty available through Business Link but I would think finding one run by local business owners may be of more use.

    As with announcing your launch, get involved in communities, it does cost you in time but people respond well to you giving something back and it often results in more opportunities arising which more than cover the costs of participating. You also get a nice warm feeling from knowing you’ve helped someone else!

    There is currently a huge amount of information available on starting your own business and running your own business from the government as there’s a drive to encourage start-ups in the UK, pop down to your local business link and you may even find there are grants available to you.

    Identity

    A name is an important factor of your business, make sure it’s scaleable and something that you’re proud of. I came up with “The Site Doctor” as the business name primarily because (among other reasons) I felt the majority of our business would come through fixing websites.

    You should be proud of your name for obvious reasons, but remember that you’ll be needing to say it to people on a regular occasion. You’ll no-doubt also be frequently asked how you came up with your company’s name or as to its meaning as small talk at networking events and the like, so have a response prepared before the event (even if it was just something that you thought sounded cool!).

    The reason I say you should ensure your name is scaleable is because I feel “The Site Doctor” portrays an image of a one-man-band which is something that I now can’t get around without changing the name. I did think about re-branding the company as “TSD” but on discussing this with existing clients and friends we felt that it was somewhat impersonal, I’m inclined to agree and would steer clear of acronyms for your name.

    Remember that branding and company image is a profession itself and having a few quid to outlay on it won’t hurt. You can see the past incarnations of The Site Doctor [New TSD Design] which we’re currently trying to face lift but I would recommend having it designed professionally, not just to impress potential clients but also to give you confidence.

    Sean’s idea of having templates for your proposals is a great idea and one well worth passing by your designer. By all means have an idea of what you feel your company’s brand should look like/convey but remember to leave a little room for the designer to make suggestions.

     

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