It isn’t easy to tell a potential customer that their ideas are terrible, or to try and make them modify their concepts in order to allow them to work better online.
Part of that is that developers and designers are by nature creative people, and we don’t like raining on somebody’s parade.
Part of it is also the risk of losing a possible customer.

This triggered a brief discussion in the comments about how to learn the skills required for dealing with [potential] clients. It’s not something covered as part of a standard degree in Computer Science or the like. It’s not part of a certification in web development for most colleges. As a result, many would-be web developers working for themselves fall into one of the following two categories:

Customer Management Chart

1. They treat the client’s opinions and ideas like gold, and implement them regardless of whether or not it’s a good idea. While this is good for getting work, it’s not good for developing a business, as you end up spending too much time dealing with the whims of ill-informed clients. This prevents you from developing your business of building quality websites that fill real needs. In the end, your clients are not happy because the site doesn’t live up to their expectations (regardless of whether those expectations were reasonable) and you end up losing the client.
2. You build what you like building, or what you think is a good idea, and if the client likes it, that’s great, and if not, they can go bother someone else. I don’t think this method needs much explanation as to why it’s a bad idea.

What’s needed here is to find a good balance between the two extremes, a sprinkle of tact, and some of your business experience.

Evaluate what your [potential] client is proposing, and try to figure out what the client is trying to achieve. Then confirm your guess with the client. For example, the client talks about creating a blog where every web developer in the world will spend all their time (not going to happen). But what the client really wants is a way to market their new product for web developers.

Now, rather than putting down the idea completely, gather some facts about what the client is trying to do, and what they’re trying to achieve. For example, you might collect some articles about how many web developers have A.D.D. or the fact that there are thousands of sites out there for developers, and the largest such site only has 200K members. Get some examples of how similar products are marketed (e.g. show Eclipse vs. Rational Application Developer for a Java IDE) and what their numbers look like. Try to gather as many quantifiable facts as you are able.

Next, present an alternative to the client, from the perspective of someone who understands what they are trying to achieve. “In order to market your software using various social media platforms, how about we run through some options, and what some companies which are similar to yours are doing.”

There, you’ve said it – what you’re trying to do (market software), there will be choices (some options), and where they came from (other companies). Now, outline the ideas clearly, and demonstrate the breadth and depth of your knowledge by having answers ready for common questions to each option. Don’t show off, just be knowledgeable, and if you don’t know, ask: “Can I get back to you on that?”

Knowledge is Precious

Not every client is reasonable, but then again, not every client is yours. The key here is not to attack their ideas, but to understand where they are coming from. Why did they choose you for the project? It’s because you know more than they do about how to do it. Share your expertise, use your special knowledge. Make sure your opinions are clearly delineated from the facts.

At the end of the day, you may be able to reason with your [potential] client and land a project that is a good idea, that’s well structured, and balanced.

Some [potential] clients will still insist on a bad idea, despite your feedback. However, you’ve already told them it’s a bad idea, just not in those words. You’ve outlined what they’re trying to do, and you got that right. You’ve outlined some real options that would reach that goal, and they’ve been turned down. What now?

Now you need to look at your business, and the impact accepting this client, and their bad idea, will have on the rest of your business. Will it help improve cash flow because it’s a short project (i.e. high profit margin for minimal resources)? Will this client refer you future business, thus making this a strategic move? Is this a client who has other projects with you, thereby putting pressure of losing other contracts?

Or will this project keep you busy, stressed out, and prevent you from pursuing better clients who will help your business reach its goals?

The answer to these questions will help you determine if you should be accepting or rejecting the bad idea. (Note that while you may refuse the project, treat the client with respect, and you may end up with a valuable connection as a result.)

Related posts:

1. The Customer is Always Right… Sometimes
2. Slow Economy and Developing a New Business
3. Customer Satisfaction

The book, according to its back cover, claimed to provide all the answers to build a successful web startup. Joel Spolsky, in his foreword, claimed he learned something new on every page (there are over 400 pages in the book, which works out to about 5 cents per lesson. Considering I’m in the middle of developing two ideas into potential businesses, I figured this was the book for me.

I’m now reaching the end of the first quarter of the book, and already I’ve learned enough to write a review. The book was worth the money spent, even were I to read no further. So far, I’ve learned something about the history of creating software companies, the various ways there are to start a company, and what the pros and cons of each are. I’ve learned some questions to ask myself when looking at a potential idea. I’ve learned to be critical of my own initiatives, and to separate emotion from keeping ideas alive long after they should have died.

Bob mixes his lessons with interviews with various people. Don Dodge, Director of Business Development at Microsoft, discusses the differences between starting a company now versus starting one ten or twenty years ago. Rick Chapman of Softletter discusses the business model of Software as a Service and various billing systems used. These are just a few of the many (I counted 36, but I might be off by a few) interviews and e-mail exchanges recounted throughout the book.

The book is divided into 10 chapters, each of which focuses on another idea crucial to the success of a web startup. The first chapter looks at the history, which has shaped how such companies are built today. The next chapter focuses on the ideas that build your company – filling a need (and where those needs come from), having a new way to solve an old problem. The third chapter looks at platforms, and the various places you can put your idea (SaaS, PaaS, Mobile, and so on).

The fourth chapter discusses support groups and tools for founders. The fifth looks at money and financing. The sixth looks at how social media impacts your business (and it does, whether you realize it or not). The seventh chapter discusses the importance of clarity in your business. Chapter eight is about how to get all the pieces in place, and how to turn an idea into a business.

Chapter nine suggests several people you should listen to, who provide advice that can be invaluable to a new business. Chapter ten is all about where to go from here, now that you’ve read the book.

I’m not done the book, as I pointed out above. But Bob manages to deliver his points about starting a business in simple language, with relevant examples scattered throughout the book.

If you are thinking about starting a company, or already have, which has as its business model the sale or distribution of software, whether you’re a site that facilitates the use of a service, or selling desktop software directly, this book is for you.

Oh, and I did find a book on PHP – it was called PHP, MySQL, and JavaScript by Robin Nixon, and seems to be quite a good book as well. So now I’m two for two on Friday’s book purchases.

Related posts:

1. Book Review – Once You’re Lucky, Twice You’re Good
2. Book Review – Trust Agents
3. A Novel Idea

Where and how do you network? Why do you network that way, and how could your existing networking be improved? What changes might you make to your networking activities, if you were able to?

To start, I will provide my answer:

I network primarily on a variety of websites, such as Facebook, Linked In, and Twitter. I try to participate in those communities, and interact with the people I’m connected with. I also have a regular networking meeting about once every 5 weeks with several people working in similar fields to my own. On occasion I will attend a business card exchange event. Ideally, I would like to spend more time in face-to-face networking, were time and distance not factors.

Related posts:

1. The Right Time to Network
2. Online Versus Face-to-face Networking
3. Using LinkedIn Effectively

There are multiple potential impacts to this, some for good, others, not so much.

First, I held a debate a while back over whether or not bloggers should be disclosing that they are being compensated for the reviews they give (which is the basis of the FTC guidelines). The conclusion we reached was that while bloggers should be pointing out somewhere that they receive compensation for their reviews, they should not need to disclose this on each individual review they write. This lets their readers be aware that they may be biased on this account, and to value the review accordingly.

Second, there are tax considerations – when you receive compensation for work done, you have to report that as income. Robb Sutton pointed out to me in his article, published yesterday, that in the U.S. this reporting is only required if the paying company provides the appropriate paperwork. I find this to be a little odd, since in general, you have to report income regardless of whether or not the employer is filing his paperwork correctly, and I therefore suspect that it is only a matter of time before this ruling is changed to match.

Jeremy Schoemaker writes about this as well, and points out who was the cause of such regulation. The regulation is aimed to prevent a company from creating a fake blog where they review their own products. Since they would now have to report the compensation taking place, readers would then be aware that the site is merely a front for the company itself.

Except the regulation doesn’t quite pull that off. The company can now pay someone to set up a blog for them where they review the product and admit that the writer was paid for the review. This will cost them a small amount per review. Alternatively, they can risk running afoul of the FTC regulation by not admitting the bias, and be fined $10,000.00 [per violation]. However, this sum is not enough to stop a company from using fake blogs to advertise their products – such a site could easily generate $100,000.00 in profits from sales to its readers. Combined with the fact that the FTC will be unable to catch every violator makes this risk acceptable to some.

In summary, while the regulation in general is a good thing, it is not clear that the FTC has a road to its goal (namely, getting rid of fake blogs reviewing products and making outrageous claims). As the regulations and guidelines are refined, we’ll see if the FTC can figure out how to get where it’s going.

Related posts:

1. Decision Making Process
2. When the Schedule Slips
3. Slow Economy and Developing a New Business

I have also been reading several questions on a variety of sites posed by people in a similar situation to myself – they have an idea, but no money to bring it to fruition in the real world. The questions tend to focus on team building and raising capital. The questions also indicate a lack of information on the process by which many start-ups have become successful. I am fortunate to be working with a colleague who has past experience in this field, and has been guiding me as I develop my own idea into a profitable business.

In light of the information I now have, I thought I would put up a basic checklist of steps to go through when developing a new product or service:

1. You think of a new idea for a product or service, so you write it down. Talk it over with someone else (be careful about confidentiality, and have that person sign an NDA if you think it is warranted) to make sure that you get an objective opinion about your idea.
2. Write down a short description of your idea. Explain what it is, who wants it, and who will pay for it. Do some basic market research to figure out what alternatives are currently available, and how much they are charging. What are people saying about your [potential] competitors? Briefly describe the business model for your new business (how will your business generate revenue). The entire description as outlined here can be short, perhaps a mere page or two.
3. Figure out what it will take to build your product or develop your service. Determine what the bare minimum is that you will need. Remember that if you believe in your idea, you should be prepared to take a risk, in that you will not be getting paid until your idea earns money. You don’t need a fancy office, or top-of-the-line equipment from day 1. This can be ramped up later. Work from your home on the old Pentium 2 that you never bothered throwing out. Buy equipment used when you need to.
   You need to remember that anyone investing in your idea will expect you to be responsible with the money, to save it when you can, and shop around for the best prices. You need to keep accurate records of your expenses and revenues. If you need some expertise that you personally don’t have (i.e. to hire someone) see if you can trade them equity to help you with the work, or accept a deferred payment.
4. Start building the product. Start writing a business plan (this can take over 100 hours to complete, and you will need it if you look to borrow money from the bank, or talk to an angel investor).
5. When you reach the point at which you need outside funds (for example, you have a legal bill for $5000 to incorporate your business and to handle your copyrights and patents, plus a $25,000 bill for equipment that is absolutely required, plus a $15,000 bill for marketing about to be incurred), figure out how much money you absolutely need, and add 20% as a contingency. Then use the following guideline to figure out who to talk to:
   • $0 – $50K: Talk to your bank, family, friends. Can you get a loan, or a line of credit? This will likely be the easiest and most cost-effective way to raise these funds. Beware of mixing family and business when borrowing from friends and family, though. You will be really unpopular if you borrow money from a friend and then your business collapses.
   • $50K – $500K: Look for an angel investor. You will have to give up equity in your business for this, and be prepared to have someone looking over your shoulder constantly to see how you’re spending the money. Also remember that this is the first round of investing. If you give up too high a stake in your company at this stage, you may face difficulties later on when trying to raise more money.
   • $500K+: You have entered the world of venture capital, and will need to read more detailed information on how to work with a VC. There are many excellent resources available online for the uninitiated.
6. Now that you have the money you need, finish the development, launch your product or service, and market it. Initially, take the revenues earned (all of them) and use them to develop your idea further, to improve your product, to increase your visibility in the market. Once you have a steady revenue stream, you can then think about hiring yourself to do more work on the idea, paying out a divided (which implies profitability) or upgrading your public appearance with fancy offices. However, before you do that, if you owe money for a loan or line of credit, make sure you pay that back first.

By no means are these steps to be taken as a bible. However, you may find this useful if you are thinking about starting your own business, or have an idea that you think might be viable as a means of earning money.

Related posts:

1. Clever idea… but are you the first?
2. It’s a Good Idea, Now What?
3. Slow Economy and Developing a New Business

Reading contracts and agreements can be like that. There are lots of sections, paragraphs, and clauses outlining the details of the document. The agreement is intended to sound great for all parties involved. But your gut keeps asking to figure out what the catch is, but you don’t see it.

Enter the lawyer. He or she has read and written many contracts, and can turn the confusing legal language into plain English for you. Based on their experience, they can point out to you what it is about the arrangement that it problematic. They can also tell you what to expect from the agreement as a result of the content of the contract.

Legal bills are expensive, and therefore, many small business owners will try to avoid making use of one. However, while retaining a lawyer may be expensive, be sure you know the phone number of one you can call before you sign anything. It may cost you $500 to make that call and get their opinion, but the risk you face by not doing so is to enter into an agreement that will cost you far in excess of that $500 insurance policy.

If funds are truly an issue, at a minimum, find a lawyer fresh out of school who may be willing to consult for a lower fee. While you will be giving up the experience that a more seasoned lawyer would bring to the table, you would still be sure that you understood the general content of the agreement.

Related posts:

1. A Preferencial NDA Clause
2. The Customer is Always Right… Sometimes
3. Contract Work and Contracts

“Is a recession, or slow economy, a good time to start a new business, and why?”

Before you attempt to beat the odds, be sure you could survive the odds beating you.

The first point to consider is illustrated in the image to the right. Starting a business is a risk, and you must first evaluate whether or not it is a risk worth taking.

Take, for example, an employee for a company who has fairly good job stability, a small reserve of funds in case he is laid off, and some money put aside for retirement savings in an RRSP. He is presented with an idea for which he has the necessary skills to turn into a successful business. However, in order for him to work on the project, he must quit his job so that he can devote all of his energy to developing the idea.

I will not attempt to answer the question as to whether or not he should quit his job. However, there are a few questions that the candidate should consider. Can he afford to quit his job? How hard will it be, should this idea be a flop, for him to find another job? Can his life tolerate the additional risk of working for himself.

Once he knows the answers to these questions, in addition to those questions which reflect his interest in the idea, he can make an educated decision as to whether or not he should take the risk. It should be noted, however, that in a slow economy, the likelihood of being able to find another job, should this business flop, is drastically lower than in a fast economy.

From a business point of view, someone who is starting his own business (that is to say, he has answered the previous question such that he decides to quit his job) will find that a slow economy makes for easy growth. Costs are reduced in such an economy, and being able to find cost-efficient ways of growing a business will be significantly easier. Operating costs will therefore be lower, and while larger companies use a slow economy to consolidate their operations, smaller companies can take the opportunity to absorb the cuts from their larger competitors.

The economy, in moving out of a recession, will benefit the bold. Those who used the time to perfect their product, to gain a foothold in the market, or to streamline their operations, will be far ahead of those who merely tried to cut costs and survive until the end. Such companies will find themselves struggling to catch up to those who innovated over the past year(s).

If you want to be on the leading edge of innovation, there is no easier time to get there than when the competition for the edge is relaxed.

Related posts:

1. Top Reasons to Work From Home and Make It Work
2. Business and Social Media – Part 4
3. Motivating Employees

Tradition: Just because you’ve always done it that way doesn’t mean it’s not incredibly stupid.

Change: When the winds of change blow hard enough, the most trivial of things can turn into deadly projectiles.

Both quotations are part of a series of posters I tend to call de-motivational posters. However, there is some truth in these statements, cynical though they may be. While my perspective is likely skewed on account of my cynical sense of humour, I would like to explain why I would seriously consider hanging both of these posters in a meeting room.

The two statements seemingly contradict one another. The first, regarding tradition, promotes progressive thinking and a willingness to embrace change. It encourages the reader to reflect on why things are done a certain way, and to think if it is possibly a stupid thing to be doing, or if it can be done better.

The second, regarding change, is quite the opposite. Change can bring disaster, destroy stability. According to this saying, it can be dangerous to change, and the risk is high.

In truth, the two statements temper one another. A person must reflect on what they do to determine if tradition, which is the status quo, is really the best way to do something, but at the same time, be wary of the potential scope of change and the destruction it can bring. Finding that balance between sticking to the tried-and-true methods and putting forward some risk in accepting change is what will make the difference between surviving and realizing your true potential.

Related posts:

1. Generation WHY
2. Slow Economy and Developing a New Business
3. The Customer is Always Right… Sometimes

Canadian businesses aren’t doing enough research and development, and that’s putting the country at a distinct global disadvantage…. despite substantial federal tax breaks and funding.

This article, while fairly short, was of particular interest to me, as this is what my business does. Optimal Upgrade Consulting is all about R&D for small and medium-sized businesses with a focus on technology. Other businesses exist with a focus on other issues.

My belief is that the problem with the lack of Research and Development in Canada is not the lack of companies doing R&D. While the industry itself is not large, it does exist. The problem is that clients are not abundant. While every small business looking to grow will eventually require the use of technology, that does not mean that every business will perform the research into that technology. Nor will they pay for professional advising, but will use their own understanding of the technology (or lack thereof) to make a decision.

Businesses which specialize in doing research, whether into technology, printing, advertising, or any customizable work, can contribute to the solution. Their marketing needs to target the small and medium-sized businesses, explaining why their expertise is needed. They need to educate their potential clients on the benefits of getting custom advise. Rather than focus on landing the few big contracts that are available, they should devote a significant percentage of their efforts to teaching small business owners about the benefits of professional advise.

Landing a small contract today to advise a small business on a common problem may not pay the bills. But if that client sees the benefit of your advise, they will return with a larger contract once the business has grown, and that is what will increase the volume of R&D business in Canada.

Related posts:

1. Business and Social Media – Part 1
2. Ongoing Projects
3. Business and Social Media – Part 3

There are, of course, several issues to be aware of.

1. Making the client happy – if you want this client to refer you to others, they need to feel that the service you provided was more than satisfactory
2. Your reputation – the solution you ultimately provide will reflect on your professional image
3. Solving the client’s true need – in conjunction with the first point, if you don’t resolve the true need, the client may eventually discover this (even though you did point this out several times during your negotiations) and this will reflect on your reputation

There are three stages of working with a client, and the truth of the saying depends on which stage you are holding at:

1. Before the contract is signed, when you are still working out the details of what needs to be done
2. While you are doing the work
3. After the work has been concluded

At the first stage, the customer is not necessarily correct. This is your opportunity to inform the client about what you feel the best solution is. While tact is required, you can disagree with the client openly. The client has approached you for your expertise, and that includes your opinions. The objective at this stage is to come to a common understanding of the need and the solution.

At the second stage, the customer is always right, as long as they are within the bounds of the contract. You have reached your common agreement already, and now your objective is to have a satisfied customer. Fundamental changes to what you have already agreed on will put you back into the first stage. Other changes, while you are entitled to an opinion, and should inform the client, will ultimately go the way of the client. Otherwise, you risk creating the impression that you are stubborn and difficult to deal with (which may or may not be the truth).

At the third stage, you are no longer doing work for the client. You are, however, trying to maintain a relationship with the client in order to generate leads to more business. At this stage, there is not much the client can ask for that was not covered during the first two stages. However, if the client does ask for something, you need to weigh the potential benefit of having an extremely satisfied client who may refer more business to you against the real cost of doing the work now. I’m not recommending that you give your work away for nothing, but it may be worthwhile to use your discretion to determine how to go about dealing with this request.

In summary, when the client asks you to do something, they are not necessarily correct, and you should feel free to discuss, respectfully, the issues involved in the request. However, once you have accepted to do some work, your power to disagree has diminished. If you don’t feel that the client is asking for something reasonable, perhaps you should not accept them as a client.

Related posts:

1. The Art of Customer Management
2. Customer Satisfaction
3. Top Reasons to Work From Home and Make It Work

The question small business owners need to ask is whether their decision making process works. The answer is rarely a simple yes or no. The following is intended to show the impact of a good or bad decision making process, and why it is in your best interest to develop a good process.

There are several issues to be aware of when looking at any decision:

• The impact to your business image and its ability to function. A $25 expenditure for coffee will be unlikely to change how your business is perceived, while a $25,000 investment in SEO can change your image and will affect your cash flow.
• The trust you place in your workers. If your workers have a vested interest in your business, which most workers do to at least some extent, they will likely want to be able to provide input to some of the decisions that are made.
• The amount of executive power any one person has should be limited to prevent bad or heavily biased decisions. This can be done by requiring a review of all decisions, with the size of the review dependent on the scope of the decision.
• The amount of time spent following the process relative to the significance of the decision. Spending 2 weeks deciding which brand of coffee to buy is a waste of time, spending 20 minutes deciding which SEO package to sign up for is not nearly enough time.
• Your time spent making non-business-critical decisions relative to the time you spend working on your business at all should be minimal. If you want your business to grow, you need to learn to delegate and provide opportunity for others in your business to gain your trust.

In a good decision making process, you should aim to balance the four issues above. Keep the process minimal relative to the size of the decision, and avoid getting involved in the small decisions (but do keep aware of what the decisions are). By monitoring the small decisions your employees make, you provide the opportunity for them to gain your trust and open opportunity for you to delegate more of the non-business-critical decisions, which allows you to focus on growing your business.

Related posts:

1. Decision Making
2. Business and Karma – An Ethical Decision
3. Top Reasons to Work From Home and Make It Work

1. Unlimited Income: This is often called the top reason to work from home. Unfortunately, it is not so much a reason to work from home as it is a reason to work for yourself, or in a profit-sharing organization. Be aware that to achieve unlimited income, you will have to give up reliable income. The greater the potential rewards, the greater the risk.
2. Getting Away from the Corporate World: This may be a plus for some, but if your home-based business really takes off, you may find yourself back in the corporate world. Only this time, you’ll be the CEO. Again, the issues in reason #1 still apply.
3. More Family Time: If you are truly working from home, then you don’t have more family time. In fact, you can never leave your job, since your office is where ever you happen to be at the moment. You gain time with the removal of commuting time, but if you want your business to be a success, you will have to devote all your energy toward that. However, you do have the flexibility to adjust your hours so that your free time coincides with when your family is around.
4. Wear Anything: While you can wear anything, it’s not a good idea. Sure, if your shirt is a bit wrinkled, you don’t need to go press it, but it’s hard to sit down to some serious work when your in a bathrobe and bunny slippers. My recommendation is to be aware of this option, but not to use it except in rare cases.
5. No More Negative Co-workers: However, there are also no more positive co-workers. Having other people around to bounce ideas off of, or to get outside expertise, is very helpful. Working from home makes it harder to find these people. If you’re planning on working from home, make sure you know how you’re going to find these positive people.
6. Do What You Like To Do: Of course, this assumes that your home-based business has figured out how to make money from your favorite activity. This is a big assumption, but even if it were true, you will soon discover that in addition to doing your favorite activity, you are also an accountant, lawyer, sales agent, developer, secretary, etc. The joys of some portions of the job will wear off pretty quickly. Be prepared to contract out that work when you no longer enjoy doing it (or don’t have time anymore to keep up with it).
7. Fewer Distractions: This is only true if you set aside a place to work and stick to it! If your home office is open to the family, they will distract you. If your business phone number is your home phone number, you will get countless calls from people who know you’re at home, such as relatives. Make sure your office can be closed off from the rest of your home (i.e. a door) and that you have a separate phone number for your business, with no access to your home phone number from within your office.
8. Work Anywhere: Yes, you have the option of going to the [noisy] coffee shop or the library. If you plan on meeting clients on a regular basis, however, you need some space to call your own. Either set up a space in your home or rent some office space and work there. You can work anywhere, as long as it’s always the same place.

This list is by no means complete. If you’ve heard another reason touted as to why you should work from home and can’t see it working, let me know, and I will see if I can help you figure out a way to make it work.

Related posts:

1. Mixing Work and Home
2. The Home Office
3. Working From Home… Again

There are two parts to this. First, locate your name as a domain name. In my case, that would be eliekochman.com. Make sure that if the domain name is available, you own it. That will prevent someone else from:

1. Buying the domain and trying to sell it back to you for a lot more.
2. Buying the domain and posting information in your name.

Next, ensure that you search for your own name on a regular basis. Go through the hits, and make sure information that is out of date is updated, and that your reputation is not being sullied by someone else posting negative information about you. While you can’t stop negative information from being posted, you can try to make sure it disappears under a mountain of positive information.

A domain name is cheap: about $10 per year. Buying back your reputation  is not.

Related posts:

1. Top Reasons to Work From Home and Make It Work
2. Business and Social Media – Part 3
3. Email Overload and Prompt Replies

I don’t always work under contract, although the exceptions to that rule are becoming few and far between. A contract is binding on both parties, and it is in your best interest to always have one. Here are a few examples of how you, as the contract worker, benefit from that piece of paper:

• Guaranteed rate: no more arguing about how much you are entitled to
• Guaranteed work: no more changing requirements and trying to claim you agreed to do so in the initial work agreement
• Guaranteed responsibility: no more wondering about who owns what at the end of the project

From the client’s perspective, a contract is likewise of immense benefit:

• Guaranteed rate: no more arguing about how much you owe for the work
• Guaranteed work: no more hidden fees for work you asked for initially
• Guaranteed responsibility: no more wondering about who owns what at the end of the project

Additionally, a contract can include additional information regarding maintenance costs, support after the project is complete, and dates for completion. As a client, you may want to include information about what happens if a date is missed. As a contractor, you may want to specify what happens if payments are late.

The reason I occassionally work without a contract is simple. Looking through dozens of templates online, it is difficult to locate the appropriate contract for your location and the specific work you are doing. However, recently, I was sent 6 contract agreements for my current jurisdiction (Ontario, Canada) which cover issues surrounding non-disclosure and release of information. These became the basis of what was to become my set of templates for all contracts.

If you are looking to put together some templates, locate a generic non-disclosure agreement for your jurisdiction. Add a section describing the work to be completed (your requirements section), fees to be paid (including maintenance and expense fees), and dates of all deliverables, and what they are. For each section, ensure you cover in detail what is included, and how changes to that section must be negotiated.

For example, you may be building a website for a client (note that I am not a lawyer, and the following is meant for illustration purposes only):

1. Requirements: To construct a 6 page website describing the client’s business. The information for each page will be provided in electronic form by the client. The text for each page will not exceed 750 words. There will be 5 e-mail accounts set up for the site. Hosting will be arranged by the contractor through SuperWebHosting.com and the client will absorb all fees associated with hosting the site. Images will be provided by the clientin jpg format, to a maximum of 4 images per page. Graphic design is not included, and all graphic design work will be done by the client.
2. Fees: The cost to set up the website specified in the requirements is $250.00 and is payable on delivery of the site. Once the text for each of the pages has been provided, one change to each page following publication will be included, provided the change is requested with 60 days of publication. 2 hours of telephone and e-mail consultation is included. Non-payment within 10 business days of publication of the site will result in a $25.00 late fee. Non-payment within 60 days of publication will result in a further $25.00 late fee.
3. Deliverables: The contractor will provide the client with all files required to publish the site, and all source material created for the purposes of creating the website. This will be completed within 30 days of the client delivering the final wording of all pages to the contractor. The client will provide this wording within 10 business days of the signing of this contract.

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The resulting code was not pretty, or efficient, but it worked. Since then (from the start of 2009) the client has been using it, and filing bug reports and change requests, which I have been chipping away at as quickly as I can.

Two weeks ago, with the number of bugs falling, I decided to clean up the program. Data access was spread all over the place, and needed to be consolidated, and field validation was minimal or non-existent. Mappings from the database to the screens was almost impossible to follow, as I used arrays and lists of values, and you had to follow the queries to figure out which array index corresponded to which field on the screen.

Once I started, I was committed to getting certain segments of the program cleaned up before I could publish the application again. Of course, that’s when another change request and bug came in, both relatively high priority. On the plus side, the bug was something that would be fixed during the clean-up process anyhow (an issue with saving certain characters, which would disappear once I rebuilt the data tier of the program). The change request, too, was a relatively simple change. The problem, however, is that the current state of the program was slightly unstable.

I have not yet heard back from the client as to whether they have noticed any differences in the application, and whether any new issues have cropped up. What I haven’t told them is that while I was refactoring the program, I located 4 bugs that they had not found, with certain fields from the database being mapped incorrectly to the screen, and that these issues were quickly fixed. Considering they’ve been using this program for over 2 months and haven’t noticed makes me wonder if they’ve even looked at that section of the program yet.

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Depending on the personality of the owner or manager, they will do one of a few things:

1. Go to their local software/hardware store and take the advice of the clerk and buy something off the shelf.
2. Call their cousin’s friend who once took a computer course and have them build a custom solution.
3. Ask a business associate for a recommendation, and use them.
4. Put out an ad describing part of the IT need, and sort through the responses.

Each of these methods has a problem, and in some cases, more than one. I will run through each, and then make a recommendation for how to acquire an IT solution.

In the first solution, the clerk in the store does not necessarily have the expertise to properly advise you. He or she likely does not understand your business, and so does not know what kind of solution you really need. As well, if he is on commission, then their recommendation will be biased.

In the second case, there are a few problems. The first is that you are mixing family and business. Each person has their own policies in this matter, but it should be acknowledged. The second problem is also the matter of credentials and expertise. What kind of experience does this person have? What do their previous clients say about them? Most importantly, though, is the question as to whether you even need a custom solution.

The third case has the fewest problems, but is not immune. You have a personal recommendation from another business, so the expertise has been vouched for. However, each business is unique, and unless you research the recommendation, you can potentially run into the issues from the second case.

The fourth case illustrates a problem with all the scenarios. While it will provide you with the largest selection of people to choose from, unless your business is in IT, you likely do not have the skills necessary to evaluate which of your applicants is best.

The following advice can be applied to any of the above scenarios.

1. Require references from any provider, much as you would ask for references from a job applicant. This will help you determine what their past clients think of them. If they cannot provide references, look for someone else.
2. Find out how much time they will spend evaluating your business before getting to work. The more time they will spend doing research, the more appropriate the solution will be.
3. Find out what their maintenance contracts are like, and how much it will cost you. This is often the location of the “hidden fees” in IT.
4. Request a time frame for delivery of the solution. Make sure that they provide a guarantee that it will be ready when they say it will be.
5. Find out (if you can) whether they are commissioned to sell certain products. Ask them to show you the various options, and the pros and cons of each.
6. When talking to them, ask for explanation of any technical term you don’t understand. A competent consultant will simplify their language to help you understand.
7. Get a contract, and make sure that all the fees are outlined clearly, as well as deliverables, dates and time for each stage, guarantees, and who owns each part of the solution. Depending on the nature of the solution, the consultant may own portions of it in terms of intellectual property, but it needs to be specified in the contract.

Following the above guidelines will help you evaluate potential consultants. Most of this information can be acquired before the work starts, and should not cost you anything. The time frame is the most difficult to provide, and you may not be able to get this in advance, but you should require it as part of the work.

It is worth spending the extra time and money to get an appropriate IT solution. A poorly done solution will have to be redone, and potentially at a much higher expense. As well, if the solution is right the first time, you will start reaping the benefits immediately, while if you start with a bad solution, you will waste time and money trying to make it work, after which you will learn that you need a completely new solution.

If you had time to do it twice, you had time to do it right the first time.

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Has your idea been done, or tried, before?

Often, when you think of an idea that could be turned into a business venture, the first step is forgotten, or given minimal attention. Before you go diving into the work and becoming emotionally attached to the idea, do your own due diligence. Try to locate your nearest competition, and find the pros and cons of their product or service. What advantage do you hold over them? If you cannot answer that question, then your entire idea may be flawed, or based off of out-of-date information.

A common response, though, is: “There is no competition! My idea is so unique and innovative that no one has ever tried it before!”

The answer to that, of course, is that you haven’t looked hard enough. If your idea has never been tried before, then what makes you think it is viable as a business. The competition may be distant, or impractical. It may be expensive beyond the cost of the problem it is supposed to solve.

But it exists.

To start yourself looking for the competition, think about the problem your idea solves. Then look at what other people faced with the same problem do. Do they ignore it? Do they use some roundabout way of solving it? Is their current solution expensive? What are pros and cons of the solutions that are already out there? How does your idea compare?

To make this a little simpler, suppose you had a potential client sitting in front of you. They will give you $100K contract on the spot if you can convince them that your solution is really the best. Of course, you can talk about the problem your idea solves. You can talk about your price versus the price of the competition. But what you absolutely must talk about is how is your product better than the alternatives. That means you need to know your competition in great detail, because if you don’t, you will lose the sale. If your potential client knows more than you about your competition, then they will ask you questions you don’t know the answer to, and then you lose the client.

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