Solo in Business

This past weekend, I spoke at Freelance Camp TO, whose tagline was:

Be in business for yourself, not by yourself.

Perhaps one of the most difficult things for a solo business owner is the fact that while they know a lot about their own business, they have a limited perspective, that is, they are stuck with their own. At times, another perspective can make things easier by seeing opportunities or solutions where they see difficulties and obstacles.

Events such as Freelance Camp provide a recourse for such business owners, giving them the opportunity to meet others in a similar situation. If there was one piece of advice that the organizers of the event should be stressing, it’s the expansion of a professional network over the course of the day.

Yes, each business is different, and has its own set of challenges. Yes, your business doesn’t work the same as the business next door.

However, many of the issues faced by all businesses are really the same, and have the same general approaches for solutions. As an example, I was asked during my presentation on Time Management and Procrastination on a solution to dealing with invoicing, something this audience member did not enjoy doing, though she knew it was necessary for her business.

The answer provided was one of options. She could use a service such as Freshbooks, which would allow her to invoice and collect payments fairly easily. As her business grows, she may look at a full accounting system, such as Quickbooks or Simply Accounting. She can continue to use a home-built solution using Excel.

The point, though, is that other businesses have gone through the same thought process, and come up with each of these solutions. A friend running another business might have been able to make all these suggestions. While I was able to answer this question, I may not be reachable when the next question comes up.

If you’re running a business alone, find one or two other business owners, and arrange to get together on a monthly basis to discuss the challenges you’ve each faced, and some of the solutions you’ve come up with. It may be the best investment of your time you do for your business.

Time Management and Procrastination

This article is based on a presentation I gave at Freelance Camp TO on Sunday, October 3, 2010.

Hi, my name is Elie Kochman, and for the last four years, I’ve been working as a freelancer.

When Rachel asked me to present this session, I was amused. I had, after all, missed the deadline for submitting a proposal for a session. When we couple that with the fact that I was still making revisions to this presentation last night, well, I guess that makes me an expert on procrastination.

Before we proceed into the presentation, I have a question for you:

Why are you here and what are you hoping to gain from this presentation?

To begin, let’s dispose of the misconception that there are some hard and fast rules that can solve a time management problem. There aren’t any in particular to time management. There is one rule, though, and it has nothing to do with time management in particular, but still relevant.

Only you can bring about your own success.

That is, you cannot solve any problem, and time management is one such problem, until you recognize that you are capable of bringing about your own success, and that no one else is likely to do it for you.

Einstein said, and I’ve seen this quoted in a variety of ways:

You cannot solve a problem with the same level of thinking that created it.

The issue of time management is no different. While you can, and likely already have, identified the missed deadlines and the late nights working to finish projects at the last minute, you might not be able to identify why. Procrastination is merely a result of poor time management – it’s not a cause.

Most of you will be familiar with the following statement:

It is human nature to be able to easily identify problems in other people while failing to recognize our own.

As we are notoriously bad at recognizing our own problems, or the causes of our own problems, the solution becomes quite simple. Find someone who can recognize our own failings.

If there’s one thing you take away from Freelance Camp TO, I would suggest that it be a new friend, or group of friends with whom you can share your experiences. Meet with that person on a regular basis and talk about the issues your businesses are facing, and how you’re dealing with them. The best source of ideas and suggestions are often from those people who are going, or have gone, through a similar situation to what you’re facing.

Going back to time management – what types of problems are you looking for? Some of my own that I’ve learned to deal with are a predisposition to spend time playing solitaire when I could be working, and failing to write down important pieces of information.

Both problems were pointed out by someone working in the same office as me. It wasn’t something I didn’t know, but it was something I was subconsciously blocking out.

Who can you turn to that might be able to identify such time-wasters for you?

Okay, so you’ve managed to identify some portions of your day that could be utilized more effectively. What do you do next?

The reality is that you’ll need a change of perspective, as the quote from Einstein implies. In this case, though, I’m more open to taking the approach from a large business:

Just do it!

Nike has it right when they say that there are times when the best course of action is to act. You need the mentality of success, but if you convince yourself that you can succeed, you will find the rest of the suggestions over the next little while not to be solutions per se, but rather tools in your arsenal to help you accomplish what you already know to be possible.

What is it that you’re doing? You’re taking control of your schedule, and you’re starting right now. Not later, when there’s a lull in the work. Not next week, after this emergency project gets sent to the client.

Today. Before you get out of your seat.

Recognize the power of a schedule, and make it work for you.

Big companies spend significant amounts of time and money on management, because people are more effective when they are working with a schedule. A good manager will have their team working effectively by scheduling their time for them.

When you’re working for yourself, there really isn’t anyone to do this for you, so you need to do it for yourself.

Steven Covey, author of Seven Habits of Highly Effective People, describes the progression of time management techniques under the heading of one of the habits. I don’t agree with his list completely, but the first three of the following tips I discovered yesterday as I was reading his book overlap exactly with 3 stages of the progression, though in a different order.

Get a daily planner.

First, if you don’t already have one, go out and invest in a daily agenda. If you use a smart phone, there’s probably an app already on it that can do the job. You need to commit to using it, and the best way to do that is to write EVERYTHING into the agenda.

For each item in the agenda, make sure you put on appropriate reminders. For example, you might enter all your bills from vendors that need to be paid. Set the reminder for a few days before the bills are due so that you don’t miss deadlines because you forgot.

Use to-do lists.

Second, make your schedule for each day in terms of what you are going to accomplish before the end of the day. Balance the need to finish projects to get them out the door against the excitement of working on the next big project.

The way I do this is with a large whiteboard, on which I’ve written a detailed list of things I need to do. Each morning, I spend a few minutes marking which items I’m going to finish today, and over the course of the day, I tick them off. At the end of the day, I erase all the completed tasks, and fill in any new tasks that came up that day.

Prioritize daily.

Schedules change constantly, because what you need to complete changes constantly. Clients come and go, emergencies arise, scope of projects expand and contract. You need to recognize that this means priorities are likewise changing. By combining the previous two tips, you can take control of your priorities by always knowing what you need to do, and when it needs to be done.

Each day, as you set the priorities for that day, remember that you are dealing with both the priorities of the here and now as well as the future. Try to set some time every day for the low priority items, because otherwise they will never get done.

Think tasks, not time.

Here’s where I digress from Covey’s progression. In my experience, I’ve found that thinking about work in terms of tasks makes me much more efficient than when I focus on time. When I decide which tasks to work on today, I think about completing those tasks, not how much time I’m going to spend doing that.

The problem, of course, is that with larger projects, it might not be possible to complete them in a single day. So break them into smaller pieces, and make a deadline for finishing each piece of the project.

Use artificial deadlines to assist scheduling.

An artificial deadline is one created by yourself, over which you have absolute control. Once you’ve set that deadline, though, it needs to be considered as rigid as if a client assigned it.

What this lets you do is to create a to-do list that has many manageable tasks in it, and to schedule each of those accordingly. Your schedule doesn’t look like blocks of time assigned to various tasks, but a list of tasks that you’re going to do on any given day. Some tasks might have specific times assigned to them, such as meetings with clients, but others will only specify what, not how long.

Last, I want to talk about interruptions, or, more specifically, phone calls and emails.

You don’t have to answer right away.

While many people find a ringing phone to be an irritant that cannot be ignored, the truth is, you don’t need to pick up every time. Look at your call display quickly to see if it warrants an immediate pick-up. If you do pick up, change your answer to something like,

Hi, this is Elie. I’m just in the middle of something right now – can I call you back in about 20 minutes when I’m done?

Most people would rather talk to you in 20 minutes and get your undivided attention than have a conversation with someone who just admitted their mind is on something else. The same applies to email. While we’ve been trained to respond quickly to emails, the truth is that most emails are not urgent, and can wait an hour for a response.

What I would suggest, then, is that making phone calls and checking emails become a task you do several times a day, perhaps between all the other items from your to-do list that you’ve chosen to do.

Success breeds success.

What you will discover is that each day you succeed at managing your time will result in making it easier for you to manage your time the next day. By constantly looking both ahead and behind you, you will find that you do, in fact, take control of your schedule. Your success, in short, will make it easier for you to continue to succeed in the future.

Solid Business Wheeled Out of the Den – With an Invitation to Return

When this trio of entrepreneurs entered the Den last week and presented their business, it was more than a little surprising that they did not leave with a deal, despite being one of the best businesses to appear on the show.

Christian Bagg, Michaud Gearneau, and Jeff Adams of Icon Wheelchairs entered the Den asking for $500,000 for 20% of their business, giving themselves a valuation of $2.5 milion. With no sales to back up the valuation, the trio was in for a rough ride.

First, however, they demonstrated their product – an affordable wheelchair that’s fully customizable, and is more comfortable than traditional wheelchairs. As one of the trio is a Para-Olympian, and another is also a wheelchair user, they understood the need for their product, and spent significant amounts of time developing it right.

When questioned about barriers to market that would prevent competion, the three were open in that there really aren’t any. Not really a problem, as long as it’s acknowledged and prepared for. Marketing? They knew how to go about doing that.

What they lacked, though, were sales. They had none, just a prototype. No production lines, but aggressive sales projections.

Therein lay the problem. The valuation was so high that at a $500,000 investment, the equity to match would have cost them the company. When asked about that, they responded about future value, something investors don’t want to hear about. When they put money into a business, it’s at the current value, not a future projected value – even if that projection is accepted to be fair.

All five dragons agreed that the product was good. All five agreed that the valuation was way too high. Some offered their contacts, because they believed in what the trio were doing. The business was asked to return at a later date, when the money and valuation agreed.

The problem, though, is that the business needed the money to get into production, but not in exchange for equity. Without being able to reassess that, there was really no way for the dragons to treat it as a serious business. As a charity, it might have gotten the money, but as the solid business idea that it is, it was over-rated – for the time being.

Small Business and Small Business

A conversation recently with my insurance broker had me highlighting a problem in the economies of Canada and the US, to which policy is seemingly being addressed, but in reality is not. We are aware, of course, that small businesses play a significant role in our economies, employing large numbers of people and contributing in various ways to research and innovation.

However, what the policies fail to address is the fact that there are two types of small businesses, and their needs are not the same.

On the one hand, there’s the small store which has been operating for many years, employing a dozen people, and churning over annual gross revenues of $2,000,000. Certainly small when compared to large corporations who measure annual revenue in the billions of dollars, these stores are actually not the real small businesses in the economy.

The real small businesses are those built of a couple people just starting out. These are the people who are funding their business out of their savings, perhaps starting with as little as $100 to their name. They grow organically, slowly building up revenues while trying to keep costs down out of necessity. The per capita revenues in their case is often higher after an initial growth stage, since they are forced to keep costs down to hiring people, not buying things. Click here if you need money for investment

These companies look at an expense of $1,000 as being a lot of money, and are conceived under the umbrella of austerity. Government funds for growth and development? Sorry, these guys aren’t big enough. Bank loans? Sorry, we only need $50,000 and the bank’s minimum loan is $100,000, which we can’t afford.

If the governments really want to help the economy by helping the small businesses, they should be looking at how to help businesses calling themselves startups, not businesses labeled as small businesses.

Dragons Flush a Good Idea – Bad Business Down the Toilet

Further to my recent post about a successful deal on Dragons’ Den which was the result of good marketing for the business as a business, this article highlights a pitch which was quite the opposite. Reminiscent of Clair Copp and her accounting software, this pitch left a sour taste in my mouth, but for slightly different reasons.

This time around, it was Roslin Stewart and her side-kick Ralph Angotti who were the subjects of the disbelief in the den. They demonstrated their product, a disposable toilet seat cover, which had the Dragons somewhat interested, as it provided good value. With the addition of a plastic, yet bio-degradable version of the cover, they seemed poised to garner interest at the least, though an investment would have been difficult on account of their completely inappropriate valuation and request.

Asking for $2 million for a 30% stake in the company put the value of the company at approximately $6.5 million. The catch, however, is that they had no sales to back up that valuation, despite being in the business for 20 years. What made the five dragons shudder, though, was when they heard the amount of money put into the business – a staggering $1.5 million with no sales to speak of. Not only that, with an expensive product ($2 for the plastic cover, $0.40 for the paper) they were too expensive to become a standard, and the most they could hope for would be to be carried around in case of an emergency.

What Roslin and Ralph failed to hear, though, is that although they have put a lot of themselves and their finances into the business, it does not mean that the business retained that value. Since all the business has to its name currently is a pair of patents, the only value the business has is the cost of those patents, perhaps as much as $100,000 though likely lower. The other factor that could increase the value of the business – sales – was sorely lacking.

That’s not to say the product is bad. Quite the opposite, there are many public restrooms which keep a supply of paper covers next to every toilet, displaying a real market for their product. A plastic version which can be flushed is a step up, though the price would have to be lowered to keep it affordable in bulk.

However, competition does exist, and that in itself should not be taken lightly. Likewise, the fact that Roslin and Ralph would spend 20 years without sales shows that they don’t know how to run a business, and the dragons are not there to do that for them. The dragons will help finance businesses that are being run well, by a capable team or individual, but they are not interested in stepping in to run the business. In this case, other people might be able to turn the business into a success, but that chance will not appear on the den.

Lowering Prices Can Increase Profits

A service provider recently sent me a bill for some work she had done for me. The job was not large, but I had requested a quote for the work before approving it, and when the invoice came, the price was slightly higher than had been indicated in the quote.

I debated the merits of questioning the bill, since the dollar amount in question was only $15, but I decided that it couldn’t hurt. So I sent off an email including the original quote, and asked for an explanation of the price discrepancy.

A few minutes later, I had my response. A new invoice was attached for the original amount, and an explanation of the difference between the two invoices. Apparently, there was a slight difference in materials used which resulted in the surcharge. However, she wrote off that surcharge once I pointed out that I had a quote for a lower price.

She didn’t have to write it off. She could have said that the change in materials justified the higher price. The material change was initiated by someone in my employ, and so I was actually responsible for that.

However, because she wrote off the $15, she made me happy. As a customer, I would now be happy to use her business once again, and to refer her to others. She made a solid business relationship that will ultimately bring her more business. The next time, the margin on the project may be larger, or the volume of referred business may justify the write-off.

Sometimes, the bird in the hand is worth less than the two in the bush. Releasing the one may result in two more coming days, months, or years down the line.

Sometimes, you really do need to pay attention to the big picture, and realize that what’s being debated isn’t worth the time, effort, or dollars you’re putting into it.

Failure to Charge Costs More than Dollars

Over the past few years, I’ve done a variety of small jobs for a variety of clients, with the size of the projects varying in size. A friend of mine with a similar, though significantly larger, business, is in the same situation. A recent conversation regarding pricing of our services made us realize something, when I got a bill from my graphic designer for my new business cards and was well aware I had been given a fantastic deal.

Jeremy and I have been forwarding business to one another for the last few years, and so when it comes to doing work directly for each other, we consider it part of a trade. Since the work we do directly for one another is generally a matter of minutes at a time, it’s rarely worth our while to actually bill one another. Instead, we stack it up to maintaining our reciprocal relationship.

This trading of services is useful for both of us, as it allows us to share skills where it would otherwise be extremely costly to get specific bits of work done. When it comes to charging for that work, though, we both take a different attitude, as it has the potential to seriously affect our individual businesses.

Quite simply, we have to charge a minimum amount to make it worth billing. That is, a $100 or even $500 bill is not likely to motivate either of us to perform at our best. With tiny projects, the margins are generally small to begin with, and if we have not estimated the size of the project accurately, can actually end up losing us money. As such, the motivation to work on the projects, and to complete them, are reduced significantly.

Once we get to the larger projects, this becomes a smaller issue. With larger buffers in place to allow for changes in our understanding of the scope of the project, we less likely to lose money by completing the project. With a larger payout at the end of the work, we’re more motivated to complete the work.

Realizing this made both of us come to an understanding about what we need to do – we need to charge more for the smaller projects, even if we leave the price for larger projects the same. That is, it is no longer effective to take on tiny projects under a certain minimum, because we’re not likely to shine there due to a lack of motivation.

When you’re starting out, the small projects can be really useful by getting your name circulated and build out your portfolio. But as your reputation grows, you need to start cutting the small projects with the non-existent margins, and start focusing on the bigger things.

Investor Takes a Bite Out of a Business

Last week was the premier episode of Dragons’ Den, the CBC show where entrepreneurs pitch their business ideas to five investors. The point of the show, from the perspective of the entrepreneurs, is two-fold. First, there’s the exposure on national television and the chance to get a fair bit of marketing value with minimal risk. While I don’t under-rate this purpose, though, there is another which is the topic of this series of articles.

The second purpose of the show is to land an investment, and to that end, the pitches are meant to showcase the business as a lucrative investment. As a result, there are many lessons to be learned from the show for any business owner looking to attract a bevy of investors over to their company.

When the father and son walked onto the Den to talk about their business, they were introduced as running a waffle business. From past observation, food generally does not perform well on the show in terms of garnering an investment, for a variety of reasons. Part of this is the fact that one of the five investors is Jim Treliving, owner of the Boston Pizza chain, among other businesses. He knows about the difficulties in selling and marketing food, both at the wholesale and retail levels.

Renaat Marchand of Wannawafel, however, wasn’t pitching food. He was pitching a franchise, something else that Jim Treliving knows about. But in order to get Jim and the other dragons talking, he fed them the product.

The unit looks much like a hotdog stand, which can be hitched behind a trailer or car and set up pretty much anywhere. Capable of serving about 100 waffles an hour, the business is intended to operate as a franchise, with the owner of each unit operating in a certain area independantly of all other units.

Renaat served the dragons a sample waffle, and they were all hooked. Using a Belgian recipe that results in a recipe that had all five dragons smacking their lips, he was able to convince the dragons to listen to the idea for the business. As he runs a successful unit in Victoria, BC which has gotten favourable reviews, Renaat didn’t need to go any further than explain why he was talking to the dragons in the first place.

As it turns out, Renaat needed the money to enter the franchise business, to set up the legal side of things, and to get more branding that would be recognized everywhere. While the cost of the trailers is not insignificant ($20,000 each), that money was to come from any potential franchisee.

The dragons saw that Renaat knew what he was about, and once Jim Treliving expressed an interest, there was little the others could do to become involved. While Jim asked for 50% of the company for his money, he made it clear that he wasn’t planning on running the business.

Although, with 50%, he can exert significant influence on the company if necessary. But he’s coming in as an investor, not a business manager.