Understand and Respect Boundaries

I attended a lecture recently in which the concept of boundaries came up, and how some people have a good understanding of other people’s boundaries, while some people do not. Naturally, when dealing with other people, knowing what boundaries exist is incredibly important, but unfortunately, finding those boundaries can be quite difficult.

As an example of this difficulty, someone showed up at the office about an hour later than expected. Asked for a reason, the person responded that it was personal. Later on, the boss found out that it was because of a dental appointment. Not terribly private, one might think… except the employee thought that it was.

This is a case of not knowing someone else’ boundaries. I might not think a dental appointment is a big deal to be talked about by others, but that’s just me. My lines, in terms of what’s okay to discuss in the open and what is not, lie in one place, which are unlikely to coincide with the boundaries of the people I talk to on a daily basis.

Additionally, complicating this is the fact that over time, people move their boundaries. Someone I met yesterday might have one set of boundaries now, but a year from now, topics that are currently taboo may be part of our normal conversations.

In the case of working with the boundaries of other people, be aware that if you aren’t sure if you might be going over the invisible line, that you might be, and adjust your conversation accordingly. Tactful people in general are more sensitive to the subtle (and sometimes not-so-subtle) clues people emit when lines have been crossed. But anyone can learn to turn on their radar, simply by understanding that their boundaries are not the same as those of other people.

Appropriateness of conversation is not dictated by one participant alone – it’s dictated by the boundaries of all the people involved, relative to all other people involved. The strictest rules apply – if one participant would find the conversation taboo because of a single other participant, then that subject is off limits.

If you’re not aware of what boundaries exist between two other people, then holding a three-way conversation can be difficult. If potentially sensitive subjects need to be discussed, try discussing them one-on-one first, which will assist in detecting the lines that have been drawn. Additionally, if personal issues are to be discussed, they should never be brought out in public unless you are absolutely positive that no boundaries will be crossed.

Documenting Business Plans

I’m in the midst of attending a workshop that was titled “Starting a Business”, but which I’ve learned would be better titled “Writing a Business Plan” since that’s what is being focused on. This raises at least one question, which is how fundamental is writing a good business plan to starting a business?

This came up during one of the sessions, when one attendee asked what it would cost to get a business plan written professionally, and the instructor replied that it cost about $3,000. However, he added the caveat that he would not recommend that an entrepreneur, or, as he called the class, micro-entrepreneurs, have someone else write the plan for them.

This evolved into a quick discussion about the fact that there are actually a few types of business plans, and the course is focused on one in particular. There is the plan that you use to show bankers or investors, for which you might pay someone else to write it to be sure it caters to the expectations of the readers. There is also the formal plan which may be several pages long that you use internally to help you manage and grow your business. Last, there is the brief, informal plan that I feel is the most important for people starting out in business.

The formal business plan has many guises, but it essentially runs through all aspects of any business, and summarizes them as it pertains to your business in particular in a single document. Starting with an Executive Overview, running through Market Research and Cash Flow Analysis, it brushes Marketing, Development, Sales, Distribution, and a variety of other topics. It is, all in all, a fairly detailed and comprehensive piece of documentation.

For many businesses, this document is much more than they need.

That’s not to say there isn’t value in it, but that for starting a business, you don’t need this much. What you really need is the much shorted business plan, the one that can fit on one or two pages. You need to know what it is you’re selling, an example of someone you might sell to (or already have), and a vague idea of where you would like your business to go.

In the class were a few people who had already started their businesses. Some of them described the fact that their business evolved as they found new customers. I don’t think anyone in the room already had a business plan, but I think that some of the people in the room would have been misled into believing that they needed a plan to be successful.

You can be successful running things by the seat of your pants. It’s been done before, and it continues to happen all the time. However, if you don’t run through the exercises that writing a business plan forces you to do (how can you fill out the Market Research section if you don’t know who else is in the industry, and what they’re doing to be successful?) then you strongly hinder your own ability to succeed.

The catch is to not get hung up on the document itself, but all the questions and answers it generates. If you choose to write it down in long-form, it can help you when it’s time to look for outside capital, or if you are trying to get a partner to join you. But it’s not a requirement.

Answering the questions, or at least identifying which questions need answering, is absolutely crucial.

Show That You Care

I placed an order a few days ago for an item listed as next day delivery. A few minutes after completing the order on the site, I got an email that read as follows:

Thank you for ordering with Business X Delivery! Your order has been received and is being processed.

Your order is scheduled for delivery on the following dates between the hours of 9:00 am and 5:00 pm, pending credit approval and inventory confirmation. A contact person must be available to accept the delivery by signing for and confirming the items you have ordered.

Below please find the items you have placed on this order and the corresponding delivery date(s). If there is a problem with your order, you will receive a follow-up contact.

Below listed the details of the order, including the fact that I had requested an alternate delivery address, since I did not intend to stay home all day, and could not recieve the package at work. I took this to be a confirmation that the delivery would be made.

A short while later, another email arrived:

Hello,

Please be advised that we are unable to deliver your laptop to an alternate location other than the billing address. If this is not possible we can have it delivered to a store location so you can provide photo id and credit card. Please advise how you would like to proceed with the order. Your order will remain on hold for 48hrs. Please reference order 1234567890.

Thank you

I was somewhat confused, as I had ordered a desktop, not a laptop, and it was the only item in the order. That is, the store should have known when I placed the order that alternate delivery locations were not supported, and informed me then.

I resigned myself to sitting around all day, and replied to the email that it would be okay to deliver to the billing address. I waited for a confirmation that the package would be delivered, but nothing came. However, past experience told me that deliveries in my area are usually made around 7:30 AM, so I hoped I would be able to go into the office in any case.

When 11:00 came around, and still no package, I began to wonder. The store had not confirmed that my package was no longer on hold, so perhaps I was waiting in vain. However, a quick call to their service line reassured me that it was showing up on their system as “On Delivery”.

The package did arrive eventually, but it also convinced me not to order from this store online anymore. The experience was too broken for me:

  1. I should have been told about the issue with delivering computers to anywhere other than the billing address when I placed the order;
  2. The email confirming the delivery time should have indicated this as well;
  3. The email informing me that the delivery would have to be made to the billing address should have provided information about how to confirm the delivery (there was nothing else in the email, so I assumed I could reply and that would suffice);
  4. There should have been a follow-up to my confirmation that delivering to the billing address was okay to reconfirm the delivery date;
  5. There should be a service on their site to enter an order number and see the status;
  6. The delivery window should be a lot smaller than 9 to 5 – at a minimum, choose morning or afternoon.

Any one of these items on its own would not have been a big deal, but the experience worsened at each turn. Other sites have learned how to make the ordering process as customer friendly as possible, providing information whenever appropriate, and making it easy for people to look up status of their orders, and being clear in all communications.

This company has a lot to learn about caring for its customers.

Pay Back the Founders

One of the commonly misunderstood components of an investment in a growing business by people who have not been there before is the concept of paying back the founders. That is, the company has a value, and people sacrificed in some way to help the company get to where it is today. That might have been money, connections, time, or pretty much anything that can be valued.

When the potential investor comes around, the question arises as to how to place a value on that form of equity.

First, though, what has to be realized is that technically, the founders are not entitled to anything. Strictly speaking, the investment is a purchase of shares from the company, usually done by issuance of new shares, for a stated price. The founders are not the sellers, they are merely authorizing the corporation to create and distribute new shares according to the terms of whatever deal it is they made.

However, the founders may have to be convinced of the value of gaining the investment, and the company may owe some debt to the original founders (depending on how they structured the startup investment). As well, the investors may want to show some goodwill toward the founders by alleviating some of their contribution in the form of a payback.

As a buyer, though, the amount to be paid to the owners will be somewhat a function of the amount of real value that the initial brought into the company. If it’s merely time, that can be priced at a known rate (discounted by the amount of ownership the founders are retaining). Often, though, there’s also some form of IP (intellectual property) which, not relating to whether or not it is protected by the company, was provided by the founders.

At the end of the day, though, the amount to be paid to the founders is more a function of goodwill than of concrete value. The numbers may fluctuate wildly, and may have limited relationship to the value of the company as it stands in the accounting records. It is more of a bribe to the founders to convince them to part with a piece of their company than a part of the purchase.

It Pays to Give Away

A few years ago, when just starting out in the consulting business, I would have been reluctant to give up any business at all. If someone asked me to write them a tiny script, or a massive desktop application used by thousands of people simultaneously, I would have been eager and raring to go. The bigger the project, the more likely I was to take it on, and I would convince myself that I was actually the right person for the job.

Fortunately, that didn’t ruin my business, but in hindsight, I was running a huge risk. There were certainly projects that I should have turned down for a variety of reasons.

What I discovered during the growth of my business is that there are really only a subset of projects that I personally should be getting involved with. For the rest? I have a nice Rolodex with names of businesses that would love to have those projects, and would do a fantastic job at them.

It’s not that I couldn’t do those projects, but rather, that I shouldn’t be doing those projects. While the short-term gains for me I perceived to be significant, in truth, they probably weren’t nearly as important as I thought at the time. What gains I made through those projects I could have made elsewhere, or made irrelevant through other projects I did.

In any business, it can sometimes be difficult to look at the current situation, and the latest opportunity, and determine whether or not the gains from that option are worth pursuing. What can help with this determination, though, is the presence of a clear goal, and you can look at the opportunity from the perspective of how much closer it gets you in reaching those goals.

For example, a project recently arose in which a client required a fairly complex web application to be built. This isn’t my area of specialty, and it’s not where I would take my business. Reflection told me to pass it on to a friend, who’s business does exactly this type of work.

The return benefits are often late in coming (I rarely take a referral fee directly from handing over a project), but can be more significant that what I’ve given. In this particular case, I landed a dream client I would have never met without this friend.

In other words, giving away a project or client now can have bigger returns. I consider it to be an investment in the relationship I have with the client and the company to whom I pass on the client to.

The client is happier because I forwarded them to someone more qualified. They trust me to tell them about my own expertise, because I’ve already proven that I’m not afraid to say that this isn’t what I do best. Forwarding them to others within my network increases the likelihood that if this client ever has a project that does fit my vision of an ideal project, it will be sent my way.

Likewise, the company who is being referred appreciates the business, and when they come across a project that suits my business more than their own, it too will make its way to my desk.

Oddly enough, this exchange is actually measurable in terms of pure profitability. I try to determine with every project that comes my way how the client found me. Once I do that, I can actually balance the project I got against those I gave away.

To date, I’m still on the leading side of this overall. Sure, there are a few relationships weighted in one direction or the other, but the benefits have far out-weighed the costs overall, and that’s why I will continue to pass along on projects that don’t bring me any closer to my goals, because passing those along is bringing me closer to my goals.

How well do you know your own business

When Carl and Maria Griffin entered the Dragons’ Den to showcase their business and hopefully land an investment, they were awakened as to the true nature of their business. Their business, LiteLocker, makes it trivially easy to install and remove Christmas lights, by installing the system alongside the eaves of a building. The units can be painted to blend in with the rest of the building, and a handy contraption means that ladders are no longer needed either, once the system is in place.

The price, however, is what hit the business hard. A typical home would cost about $500 to get set up with the system, significantly more than what the average homeowner would pay. While cheaper that hiring someone to put up and take down the lights each season (which was estimated at about $750 for the same home), most homeowners are hanging the lights themselves to save the money.

However, one Dragon saw past that flaw, and focused on a market that would be only too happy to pay for such a product. Stores and offices, which typically do hire people to hang the lights, would see this product as saving them money. While in the first year the savings might be relatively minimal, by the second year, the savings can be quite significant.

Jim Treliving, with 350 branches of Boston Pizza to outfit with lights, calculated the savings in his first year at about $80,000. The following year, this number would triple with no more outlays needed. The money for the investment ($200,000) could come directly from the savings in the first two years of using the product.

The problem, however, was valuation. While the product was clearly good, sales were still non-existent. The million dollar valuation had to go, but the question remained how to balance out the $200,000 with the company. On air, the counter offer of 35%, which converts to a valuation of about $570,000 was accepted. The premise, of course, is that the business can do quite well.

It’s unclear from the site whether or not the deal has gone through. While they are clearly celebrating their airing on CBC, there is no indication that they have actually adapted their business model to approach businesses rather than homes. Why they would choose not to target stores is, to me, a mystery, since those are the customers who can afford their solution, and are likely willing to spend it to save in the long run.

However, more interesting is the fact that Carl and Maria learned on the Den that the focus of their business, or the market they should be aiming for, was not the same as what they came on the show airing. The question, though, is how well they learned that lesson, and whether or not it will translate into a stronger business, with or without dollars from the dragons.

Are You Magnetized?

Over the last few years, I’ve begun to suspect that in some sense, I’m a magnet, and I’m not sure why. Not that I’m complaining – on the contrary, this magnetism has brought me large amounts of business, but I’ve tried to understand how this can be replicated.

First, though, I should explain what I mean by being a magnet. If I attend a networking event, I’ll meet people with businesses larger and smaller than my own. Chances are, at least a few of these encounters will result in second meetings over a cup of coffee. Or, I’ll hire someone on contract to do a bit of work for me, and the next thing I know, we’re sitting down to discuss opportunities for development.

It’s not just that I attend these events, though that does lend itself to making it easier to meet people. I think it’s more about the attitude toward meeting people at an event.

At this stage of my business development, I will often have more to gain from a networking associate, who may be more established in their business, and therefore able to offer more. However, one of the things I’ve learned is to never ask for the help, but rather, educate your network on what you do and the types of people you would like to meet, and the introductions will follow.

The second part of this is how conversations flow at these events. I try to express a genuine interest in what other people are doing with their businesses, and what they might need. This knowledge helps me in that for most of my business needs, I can find an answer with a couple emails or phone calls. I know who’s out there, I know what they can and can’t do, and much of the time, I also know who they know, or are connected to.

This ability to link people together makes people want to be in your network – they want to know you, and are happy to share their network, because they are aware that I do the same in return. The benefits are rarely aligned, but it is a large cycle, and most people intuitively know this.

Apparently, they’re also good at spotting such people. I can think of several people who would likewise describe themselves as a magnet, and I’ve discovered that they are taking the same approach as myself toward meeting people.

That, I believe, is one of the cornerstones of building a solid network.

When You Work for Yourself

Perhaps one of the factors of life as the self-employed freelancer is in regard to what happens when you get sick. Or, if it isn’t you who gets sick, a family member who you have to care for. Even for those under the impression that they rarely get sick, it tends to happen, as Murphy’s law dictates, at the least opportune time.

There are a few factors to consider here, and unfortunately, few solutions offered. However, bearing this in mind, it can help in alleviating client concerns when planning is done for this dreaded eventuality.

First, many clients will be reasonable if you get sick – it’s a risk they take working with a freelancer, and therefore they have already accepted that this may happen. As such, for non-urgent requirements, a quick email letting them know that you’re ill will usually suffice to remove the mundane tasks from your schedule as you recuperate.

Second, since you may get sick, it is prudent to avoid working to deadlines. With being ill occupying up to 2-3 days, a wise approach would be to target all deadlines to 3 days prior to the client-designated deadline. If you finish early, you can fine-tune for the last few days, or give the client the work ahead of schedule. If it requires an extra few days of work, you’ve built that into the schedule. And if you get sick, that’s okay because you still have some time for that.

Third, when emergencies come up, be prepared to work despite being sick. You might not be able to get out of bed, but your laptop may join you there as you log in remotely to the system and do what needs to be done.

Alternatively, have a network that you can fall back on in case you are unable to work. This network may not be able to help you for major projects, but if you are in a support role with fairly standard emergencies arising from time to time, then if you can find one or two people you can call on in a pinch to backstop you, it would help you in reassuring your clients as to what will happen if you should suddenly be unavailable.

In short, don’t wait for the inevitable to happen to start your planning – as the expression goes, an hour of planning can save you weeks of work.