Elie Kochman on Business and Networking

Look at a typical business, and you will see that they have multiple clients active at any point in time. This is nothing unusual – few jobs allow you the dedication to focus completely on a single client or project for any length of time. When you’re working for yourself, though, you need to be careful that all your clients are getting your attention, while at the same time, ensuring that none of your clients feel they are not getting your undivided attention when you work on another project.

The reality is that if you have 10 clients running simultaneously, (and we’ll assume that the amount of work for each is equal,) then you’ll be spending about 8% of your time on each client. (The balance of 20% is for your overhead of administrative work and locating new clients.) You can’t give any one client more than that percentage.

To handle that, I suggest you adopt some of the following strategies. If you have other ideas, please share in the comments.

1. Keep a list of what needs doing for each client, so that the time you spend on that client isn’t wasted figuring out what to do next. Just select something from that list and do that. This will help you be better organized with your time, which may end up freeing up more of your time.
2. Don’t answer the phone if you can’t give it 100% of your attention. Let the client leave a message, and use that to determine if you should call back immediately, or if it can wait a bit. Book some time in your daily calendar to make that call, when you don’t have something else to keep you busy.
3. With e-mails, split your incoming messages into 2 groups (if you feel it necessary to constantly watch your mail) – one that can be answered in a sentence or two, and the other to be dealt with later. Sending off an e-mail that doesn’t address the questions the client was asking properly can generate negative feedback, which you can easily avoid by taking the time to read the questions slowly.
4. Publish your calendar online so your clients can see when it’s best to get in touch with you. Sure, emergencies crop up, but if you allocate specific times each day for phone calls, you should see the number of calls at other times go down significantly. (I didn’t say your calendar has to be accurate, or even fully published – just a list of times that you have booked for meetings/phone calls and a list of available times would suffice.
5. Block off time to work on each client’s projects to the exclusion of all others. Treat that time as if you were in a meeting, that is, only be disrupted if it really is urgent.

Do you have other suggestions for balancing multiple clients and projects? Please let me know of your ideas in the comments below.

When I first started working at a large corporation, I was fresh out of school, where my life ran on minimal scheduling. I went to class, studied, and worked on my projects. Work was completed in time for when it was due, and I showed up to my classes (most of the time). I followed whatever few rules there were, because there weren’t very many.

Process by Ivan Walsh on Flickr.com

At my company, however, there were rules for everything. Want to make a small change to some text in an error message? Make sure the change was properly requested, documented, signed-off by the appropriate person, and only then can you check it into a test region. Want to put it into Production? Be prepared for a few days of paperwork and waiting for approval. Want to make it simpler to make small, routine changes? There’s a process for making changes to the process too.

I don’t question the need for process in any business – in fact, without any process at all, a business is doomed. Did you get a new client? Make sure you’ve documented that in your financial statements. Did you buy a new computer? Make sure you list it in your expenses, as well as in your company’s assets. Trying a new marketing strategy? Prepare some metrics to assist in determining how successful the strategy is.

On the other hand, as a company grows, it becomes increasingly difficult to remain both flexible and in control. That is, you as the owner are ultimately responsible for the success or failure of the business. You’re responsible for the image your business has. If someone in your company makes a blunder that costs you a customer, you have to absorb that.

At the same time, you want to trust your employees, and to give them the flexibility to get the job done, to take initiative for the benefit of the company. You don’t have the time to micro-manage (a topic of its own that I won’t get into here).

The end result is that your risk increases, because you can’t know everything that’s happening in your business, much as you would like to. As a result, your processes must adapt to changes in how your business operates, but at the same time, not become bloated to the point that your employees are either gaming the process, or ignoring it.

To do so, what I would recommend is that you take a look at the processes you have, and make sure that it is proportionate to the task to which it applies. For example, the same standards should not apply to which brand of coffee is used as applies to making a decision to hire someone.

Look at any process you have in place. The purpose of process is to reduce the risk associated with having multiple decision-makers. If a given process does not reduce that risk, then it should either be replaced, or eliminated. If the decision to be made does not expose your business to a risk, then the process should be dropped.

Time spent on dealing with process is wasteful, and yet, many companies find that they spend more time with the process than they do with actual work. Make sure you’re not one of those companies!

One of the main focuses of my company, Optimal Upgrade Consulting, is to look at the core problem our clients are trying to solve. This may or may not be the same problem as the one the client thinks they have, simply because they are often unaware of available solutions to the real problem they have.

This is not to say that I argue with my clients about what they really want. Quite the opposite – I want my clients to be happy, so I give them what they ask for. However, by understanding the problem I’m being asked to solve, I can ensure that I provide the best service possible.

There’s another benefit as well. If I am asked to do some work for a client, and I understand the nature of their business, then I can possibly find other opportunities to help them. This in turn helps me – it’s what drives my business.

If you're not a part of the solution, there's good money to be made in prolonging the problem.

There’s an expression I liked the first time I saw it, and I’ve seen it come up several times since. It’s best expressed in the poster on the right – If you aren’t part of the solution, there’s good money to be made in prolonging the problem.

Naturally, this is poking fun at consultants, who can often charge exorbitant fees and produce no real results at the end of the day. But there’s truth here as well. As a consultant, you can either solve a problem, or further complicate a problem. One solves the need of the client, the other solves the need of the consultant.

As a business, you want to be solving the problem of the client. I prefer to be known as someone who solves problems, not as someone who makes a killing developing complicated solutions to problems that didn’t exist before I first showed up.

How about you? Whose problems are you solving?

When working on a large project, there are generally two ways to bill for the project – by the hour, or by the project. In an earlier article, I discussed the system I use to determine a price for a project. My hourly rate is determined based on how much I want to earn, and how much I can charge and still get a sufficient quantity of work.

Ideally, as a contractor, I would prefer to work by the hour. While I need to keep track of exactly how much time I spend on the project, I can also earn significantly more at the end of the project, since all time spent working on the project is billable.

On the other hand, billing by the project allows me to budget going forward – I know that I will be paid $1,000 per month by a given client for each of the next 6 months.

From the perspective of a client, there are pros and cons to each system as well. When billed by the project, the price tends to be inflated because the contractor is absorbing the risk of overruns, so the project could end up costing more than it needs to. On the other hand, when billing by the hour, it’s close to impossible to budget accurately for the cost of the project.

The other factor to consider is changes to scope, and how that’s handled. With hourly billing, it’s not relevant to the contractor, and the client saves times discussing whether a change request is required and if the price is going to change. The contractor simply bills for another hour (or 10, or 100). With project based billing, this can be an endless source of frustration as various items are declared to be out of scope (and therefore not covered by the original quote).

As a small business owner, I am in general willing to absorb more risk  on each project in terms of scope and price. Giving a larger bid for a project helps alleviate the risk, and with changes to scope, I can choose if it’s worth negotiating the point or not. I suspect, however, that as the size of the projects I work on grows, I will become less willing to bill a flat rate, since it will become harder to estimate the real cost of the project.

Perhaps not, though, and that can help other businesses save their money to grow their business instead of their IT bill.

To anyone who thinks that I am referring to something they said or did, be aware that the incident triggering this article did not, in fact, involve me in any way. A story was told to me in which some of the topics in this article were brought up, and I therefore decided to write this.

It’s been a crazy week, and not just for me, but for many of the people with whom I have contact with on a daily basis. One of the common themes of this week made me think of a saying: Business is business.

Courtesy of T-KONI on Flickr.com

I suppose what that saying is to be interpreted as is that when it comes to business, it’s not about the people involved. What matters is the context and the content – the participants, however, can be swapped around without any implications (okay, maybe not, but you get the point). We’re told not to take such things personally – it’s about business.

In reality, few people can actually deal with business this way. At some level, there is still personality involved – and there needs to be. A motivated and driven person will interact differently than someone complacent. If you compare two such people in similar situations (professional of course) you will see them act differently. The personality of the people involved is what makes and breaks deals.

What this also means is that what is said in a professional environment will ultimately be taken personally. Whether that impacts the context is not relevant – regardless, it has had an effect on the two (or more) people involved and their ability to interact.

For this reason, it is crucial that despite the saying that business is business, one needs to be cognizant of the potential ramifications of the things they say, and how they might be perceived by someone else. This is the reason that we are also told to act like professionals – always be polite (even, or especially, when we don’t want to), always stick to the subject at hand (even if the person did talk about you at the water cooler last week), always give the benefit of the doubt.

A while back, I wrote an article about Managing Accounts Receivable, focusing on management from the perspective of growth of a business. In today’s article, I’m going to discuss collections and getting paid for the work you’ve done.

In order to give yourself the best possible chance of being able to collect, you need to ensure that you have a clearly worded contract, in which it is outlined what you are to deliver to the client, the amount to be paid by the client, and how and when that money is due. In case of dispute, such a document will play a crucial role in determining whether or not you can collect your money.

Assuming you have such a document, and the client is not making the proper payments, you should attempt to open communication by asking the client, politely, why the payments have not been made.

It may be an honest error (in one case, the client had assumed an invoice I sent him had been copied to his bookkeeper, when in fact it hadn’t been). In that case, the question regarding payment can be quickly resolved.

It might be an issue of timing – the client was deferring payment for cash flow reasons, and had forgotten to inform me that the payment would be late.

It could be related to cash flow and ability to pay – the client might not have the funds to pay the invoice, and is embarrassed to discuss it. In that case, by opening conversation, you can work out an alternate payment schedule to ensure you get paid.

Last, it could be that the client has no intention of paying. If this is the case, regardless of the reason, you need to look to other options other than merely talking to the client. (You also need to get rid of the client – read my article Firing Customers for more information on that topic.)

First, you can choose to write off the money owed as a loss. While this doesn’t regain any of your money, it does keep you from having to pay taxes on that money, which at least keeps you ahead of any future expenses on that particular account.

Second, you can hand over the funds to a collections agency. The cost here is usually a percentage of the money recouped by the agency, often as high as 50% of the money paid. Going this route is often not worthwhile to small businesses, as it generates very negative views of your business in the eyes of potential clients.

Third, you can sue the client. Here in Ontario, if it’s a relatively small amount (as of this writing, the maximum is $25,000), then you can sue them in Small Claims Court, and you don’t need a lawyer. In this case, you may be given the option of seizing the assets of the client to pay for the amount owed. However, the amount of effort involved is significant, although the direct cost is not, since the client may be ordered to pay the court expenses if you win the case.

Whatever option you choose, and each case needs to be handled on its own, you need to remember to always act professionally, and to assume that every document and e-mail that you handle may end up one day in court. If you treat the client with respect, and give them alternatives to defaulting on payment, you may find it easier to get your invoices paid.

Several months ago, I wrote an article The Customer is Always Right… Sometimes in which I discussed many of the reasons a business should be listening and obeying its customers, even when it seems to go contrary to what the business stands for. However, there are times when not only is it inappropriate to listen to the customer, you should also get rid of that customer as fast as possible.

The first example is where you sell a product, and on occasion, will be asked for a refund. While you need to have a clear refund policy, you also need to know when to give in and issue the refund anyhow. A customer who won’t be happy, and is out of pocket because of your business (whether reasonable or not) is capable of generating a lot of negative attention for your business. Issuing the refund to get the customer to leave you alone will often not only rid you of an annoying customer, but also generate positive feedback for good customer service.

OK, so the first example wasn’t really about firing customers, but about having good customer service. Here’s another example.

If you do work for a customer, and they don’t pay – get rid of them if you can. A good customer who can’t pay will be upfront with you about their situation, and try to arrange alternate payment schedules. A bad customer will keep taking work, thereby driving up their balance, and not mention that they cannot pay the bill. The problem with such customers is that many of them try to justify their position and explain that they don’t actually owe you the money. In other cases, they will ask for special treatment to get their bill reduced.

It is not in your best interests to do either. When you are out of pocket on a customer, and realize that you will have difficulty collecting, you need to stop. You need to stop working for the client, you need to stop arguing with them (and yes, such situations usually end up with grudge matches, often held through long sequences of e-mails) and you need to just issue a notice that payment is due.

Be polite. Tell the client that you will not be doing any more work for them until full payment is received. Give the client any outstanding material of theirs that they may not have (for example, if you’ve collected data as part of the project, send them the data – even if that’s not part of the contract). Tell them when you expect payment by.Tell them what’s going to happen if they don’t pay (for example, I’ll sue you for the shirt off your back!).

Here’s another example where it’s wise to get rid of a customer.

Sometimes the issue is not that the client can’t or won’t pay, but that the work being done does not match the work requested originally. In that case, if discussing with the client to resolve the differences doesn’t improve the situation, you may want to stop the project. If you do, then you can try referring them to someone else who can better serve their needs. As an example, if you run a business doing SEO and SEM work, but the project turns out to be website development, then you may want to refer them to a web development business.

Sure, you may lose the project as a result, even the parts that were your forte, but at the end of the day, you’ll have less aggravation as a result.

This week’s feature article is about a great business resource that I use time and time again – SCORE. The basic description of SCORE comes from their site:

SCORE, the “Counselors of America’s Small Business Owners”, is a national association dedicated to helping small business owners form and grow their businesses.

Unfortunately, their own description of themselves falls well short of reality, although it is everything that they claim to be, but also so much more.

I first came across the site when browsing through the Answers pages on LinkedIn where it would be listed on occasion as a resource for small business owners. After that, I started noticing references to the site on a variety of websites I frequent, and decided to check it out. My delay in looking at the site stemmed from the fact that I am in Canada, and the organization is clearly an American organization.

I was delighted to find that, while I could not take advantage of the various counseling and coaching opportunities (extra for all you American readers), there were still many resources that I could make use of.

The one feature that I found most useful, however, was the resource section, which includes dozens of document templates, from business plans to sales forecasts, balance sheets to board of advisor drafts. There are also dozens of podcasts on a variety of topics, and I’ve started listening to them as often as I have time. For days when you need some extra motivation? Check out their success stories.

All in all, this site provides many excellent resources for small business owners, regardless of whether or not you are able to make use of the advising facilities offered.

In any endeavor, it is of critical importance that you be able to communicate clearly, and that you exercise that ability as often as needed. There are two parts to good communication, and either without the other can lead to avoidable problems.

The first component is the ability to clearly express ideas, concerns, requests, or questions. While this skill is needed in both the oral and written form, it is possible to develop one without the other, and have it suffice.

The second component is the ability to deliver communiques as often as necessary, and to be available to receive and respond to such communiques when needed. Within an organization, this extends to knowing who to send a particular request or piece of information to. The chain of command needs to be known, and each link in the chain must be able to access the surrounding links whenever needed.

Where these two components become particularly important is when the various people communicating are not located in close proximity to one another. The more difficult it is to establish a line of communication (point two), the more important it is that what communication does occur be particularly clear. As the clarity of communiques decreases, the frequency of communiques, or, more particularly, the ability to request clarification, must increase.

I have witnessed one business suffer because of a failure in this area – with an absentee decision maker, the chain of command began to fail. While everyone in the business knew who made certain decisions, they were unable to communicate with him easily, and often significant amounts of time were lost just waiting for a response. Additionally, some of the communiques were difficult to understand, leading to mixed messages being sent, and many people in the business unclear as to their duties and responsibilities.

If you want to ensure that this doesn’t happen to your business, ensure that you know who is ultimately responsible for each segment of the business. Next, ensure that all communiques issued are clear and sufficiently verbose to avoid mixed messages. No, you don’t need an essay to explain each decision, but don’t assume that “sure, okay” means the same thing to the person reading it as it does to you.

The owner of a small business posted the following question earlier this week:

My partner and I have established an LLC as an umbrella company for two online retail companies. One of the companies will be drop shipping products from various suppliers. These suppliers require a credit card since we are a startup company. What is the best way to go about acquiring a line of credit without using personal credit cards? Also, my credit score has taken a beating over the past year.

First, the individual posting the question mentioned as an aside a very important point about running a business – you need to keep your business finances isolated from your personal finances. What this means is that not only do you need to keep accurate records for your business, but you also need to keep separate accounts for your business, separate lines of credit, separate loans.

In answer to the question asked, however, it is important to know how credit is given. Credit is issued either because the creditor trusts the person borrowing the money (where the borrower has a good credit rating) or because the creditor can collect from the assets of the borrower (where the borrower has something of value, such as a house, that can be held as a collateral on the loan).

A good credit rating takes some time to establish, especially if there is a negative rating to begin with. Additionally, with a small business that does not have many assets or a strong revenue stream, financial institutions will look at the owners of the company when deciding whether or not to extend credit. Often, financial institutions will require one or more of the  shareholders to personally underwrite any credit extended – which overrides any buffers of liability created by having a corporation in the first place (although there are other reasons to incorporate).

For that reason, as the owner of a small business, it’s important that you be prepared to underwrite the loans your business requires, at least in the early stages. Once your business is established with a history of making profits, the corporation may be able to borrow money on its own. In the meantime, however, you will either require an asset of value to back the loan, or a good enough credit rating on your own to acquire the loan on behalf of the corporation.