Running a Business is Hard

Our Workshop on Bootstrapping and Accounting for Startups

2013-06-17T00:00:00Z

On Friday I put on a workshop about bootstrapping and accounting for startups and small businesses. The workshop was hosted by the awesome folks at Office Nomads. As usual I was prepared to talk about a lot different topics:

Photo taken by @OfficeNomads

Starting
Raising money
Transitioning to products
What’s most important
Work/life balance
Marketing
Partnerships
Sales
Hiring
Managing clients
Managing projects
What to spend money on
The payroll monster
One big client
Taxes
What your books can tell you about your business
And many others

Since we’re limited on time I start by asking the folks what they want to hear about, so I can make sure to cover those things. I was surprised, this time, by how many people wanted to hear about starting, picking a business type (LLC, LLP, S-Type, etc), insurance, the corporate veil, and how to do bookkeeping for a tech business.

We stopped after two hours, advice was given, knowledge was shared, friends were made. It was a great time, and I’m looking forward to the next one.

Allan and/or I will be doing these workshops all across the country, all summer long. It would be great if you joined us for one or more of them. Or please invite us to speak in your city and we’ll try to make a special trip.

LessConf The Musical

2013-06-17T00:00:00Z

LessConf is a sorta of conference-party-hugfest-mutant-baby. This year we flew in a circus act from NYC, we had Jack Passion with his greatest beard in the world, hosted a huge party at my house, with a tight rope, moonshine and knife throwing lessons. Oh and dune buggies plus a rope course and more food than you could eat…and speakers too.

In the late summer of 2012, I discover a kindred spirit. His name is Andy D. I listened to all his songs, Andy and Vic are pure magic. We emailed Andy, asked for a custom song that talked about all the things we had planned for LessConf 2013.

He wrote a love rap-ballad to our superfriends.

We brought Andy and Vic into town for LessConf, meeting them was like seeing old friends, they’re even more awesome in person. Our video production team shot a music video, during LessConf about LessConf with super friends involved… they created something that can only be explain as legendary.

LessConf, The Song

Some other LessConf summaries…

Collecting Unpaid Invoices The Easy Way

2013-06-13T00:00:00Z

The purpose of this article is to help you when get paid when a client isn’t paying their invoices on time.

Get Your Facts Straight

Before you send a nasty email open your calendar, get your copy of the invoice you sent, and get your facts straight. (Your LessAccounting invoice dashboard has all this information.)

Don’t embarrass yourself by jumping on a customer without knowing what you’re talking about.

The invoice was correct.
You sent the invoice.
The due date has passed.

Set aside the factors that are beyond your control. If the post office lost your invoice, or the customer’s spam filter ate your email, that’s not your fault. Stick with what you know and what you can control.

How long will I wait before I contact the customer?

Some businesses give a customer two weeks past the due date, while others give them one week. There are even those that contact the customer before the due date, just to remind them it’s close.

Pick what you think is reasonable. Test it on your customers. Tweak it if necessary.

Making Contact

As the first means of contact, most businesses start with email. It’s a low stress solution and it might be a quick fix. After all, your email may spur the customer into action. Maybe it is something simple like a spam filter issue. The customer reads your reminder, feels bad, and sends you the check that same day.

So don’t go into a rage on that first email. In fact, don’t rage in any of your contacts. Be cool and professional. Anger and threats won’t help what is already an awkward situation.

Let’s look at some email examples:

Unpaid Invoices Collection Example Emails

Here’s an example of an email that’s clear yet friendly:

Dear ----,

I hope this note finds you well. I want to follow up on an invoice I emailed on April 1. I haven't received the payment yet, so I wanted to ensure the email isn't lost somewhere in depths of cyberspace. Would you please check to see if the accounts payable department has received it? I'll be happy to resend if necessary. Otherwise, I look forward to receiving payment within a week.

I really appreciate your help! Thanks!

Chelsea Adams, Creative Director and Owner
Blue Sun Public Relations
423-737-6818

See what Ms. Adams does here? She states when the invoice was sent, but takes into account that accidents happen. Maybe the original email was lost?

Also, note that last line in the paragraph: “I look forward to receiving your payment within a week.” This is a classic “Call to Action.” She makes it clear she expects the payment, and she expects it within a certain time period.

Here’s one from Patrick Coombe of Elite-Strategies that uses subtle but effective tactics.

Dear ----,

We wanted to touch base with you about your account here with us. We hope that you are satisfied with the services that we've been providing over the last 4 months, and based on your feedback on our last phone call we've noted that you are satisfied based on the amount of return you've been getting on your investment with us.

As of last week, your account is past due. We are a small business and each payment is necessary to fuel our operations, which includes the in-house technicians that we pay to work on your campaign.

You can pay us by check, credit card, or PayPal.

If you have any questions, please let us know and we'd be happy to respond.

Thank you for your patronage.

Mr. Coombe reminds the customer of their past satisfaction with his service. He goes on to explain why payments are vital to a small business, and he gives the customer three options for payment. If you’ve had problems with a particular customer in the past, you may want to take a more direct tone.

When Unpaid Invoices Become Very Late Invoices

Depending on your plan and your patience, Very Late can be two weeks late or two months late. But you know the statistics now, so you realize that the longer this drags on, the less chance you will be paid.

The very late email is the last one you will send. Some people skip this step and go on to the phone, but maybe you’re not ready for that uncomfortable conversation quite yet. So here are some examples you can use to write your own very late email.

This first example maintains a friendly tone, but has several points we can learn from:

Dear ----,

I hope you have are enjoying a productive week.

Request: Payment or a phone call today to discuss payment options.

I noticed that your invoice is overdue by 25 days and wanted to reach out to make sure that you received our original invoice and my reminder email on 5/15.

I'm concerned that you may not be aware that your invoice is 25 days overdue to reach out to you immediately before a late fee of X% is added to your outstanding balance.

.. I have included it here just in case you hadn't received it or misplaced.

Could you please reply to me via email or call me directly at 800-908-1568 by the end of the day and let me know you received this?

As a reminder we do take payment by CC, direct deposit or with a check.

If you have any questions or concerns regarding the service we provided on 5/1 or on your outstanding balance please call me personally so that I can make sure that you have an excellent experience with us.

As always we are grateful for your support and loyalty.

Warm Regards,

Garrett Miller of cotria uses the format above. He points out exactly how late the bill is, and mentions a possible late fee. To make sure the customer read his email, he asks them to email or call by the end of the day. This model is warm, but still calls for action.

What Just Happened?

You took control of a bad situation.

The customer didn’t pay, and that sucks, but you did something about it. The information above gives you a lot of options, and concrete examples of how to carry them out.

Take what works for you, use it, and teach it to others. The next time a customer doesn’t pay, you won’t panic because you’ll be ready. You have a plan.

How I'm Facing My Fears

2013-06-06T00:00:00Z

I have fewer fears now. I don’t fear Less Everything failing, and being unable to find work. Years ago, I feared that every day.

But I still fear speaking in public, on a stage, with hundreds of faces pointed at me. I don’t fear the actual talk–I know I have amazing talks inside me. I fear the anxiety of the nights and days leading up to the talk. The pressure I’ll put on myself to deliver an impactful speech.

I’ve never put myself out publicly and said, “I speak,” so I rarely get asked.

I’m ready to conquer this fear. It’s time.

If you run an event, or if you know an event organizer, I am looking to speak at events.

I like to write about the psychology of a sale, running a business, marketing, how to build a service-based business, etc. If you need someone to speak on these topics let me know, I want to face my fears.

So event organizer, if want me to come bring a completely honest gut-thunderous talk for your next event let me know.

What are you scared of? Let’s face our fears together.

How to avoid cashflow issues

2013-06-04T00:00:00Z

Running a service-based company is about effectively managing your time, your employees’ time, your stress and your company’s cash. Running out of cash, having a cash flow hiccup, is deadly to a service-based company. But stop thinking cash flow has anything do with accounting or bookkeeping formulas. It doesn’t. It’s simple to understand but hard to avoid.

Here are examples of mistakes we’ve made as a former web consultancy.

Seasonal Income Trends

If you look at thousands of service-based companies’ financial books, you’ll see spending and income trends. These businesses are seasonal and they don’t realize it. These design and development firms don’t close new business from mid-November to mid-January. Let’s think about it, that’s 60+ days of little or no income! This same hiccup often happens from mid-May to the end of June. This cash gap is usually when their customers take summer vacations. So be super careful, watch for seasonal trends, and inflate your cash pad in the fall to ensure a less stressful business during the income drought.

Start Strengthening Your Cash Pad

New businesses aren’t usually created because the business owner enjoys the “business side” of a business. They’re usually started by someone who might be a good chef, someone who loves to cook. So this chef thinks, “I’ll open a restaurant,” but they probably know nothing about running a business. Soon they realize running a restaurant is much more than just cooking great food.

So heed my warning…save money…start storing it away for emergencies. This is Priority #1. Your business should have a cash pad of at least three months of business expenses. Now this amount might be larger if your income fluctuates month-to-month.

Better Client Management

This section has nothing to with saving or spending, but only about how you manage your clients.

Never Wait on a Client

Example: A web shop might design a website for a client. The invoice and contract say something like, “When your website is launched final payment is due.” But stop and think about this. The project finish line is contingent on the client adding content to the website. The issue happens when the web shop has to wait weeks or months to get the content from the client. Never set a final payment after your client’s responsibilities are met. Be very clear in your proposals and contracts, you get paid when your work is finished. Rule #1 of a service -based company: Don’t let your clients affect your cash flow.

Get a Deposit

You must insist on a deposit to start a project, or even better, get the client to pay in full first. Never do work before getting paid. Never, never, never do this.

More Effective Billing

At one point as a freelancer in 2005, I was Net 90. Which means to a client, “Hey, you can wait 90 days to pay me. Well, if you remember if I was of value and still have money.” What was I thinking? Forget Net 60 or Net 90, those are death traps. Use “Net 0”…this money is due right now. Remember Rule #1? Want even quicker payments? Put a way for your clients to pay you via credit card on your invoices to them, and do not wait on checks and the mail system. Just wait until you hear, “Oh, the check must have gotten lost in the mail.” Get paid fast, chasing checks is stressful and a time suck.

Stop the Bleeding Fast

Okay so Rule #1 is huge, but the additional statement to that is: Don’t allow your clients to get behind. By having outstanding invoices, you’re basically lending the client money. You are not a bank. Well, maybe you are. But never allow the client to get behind. Repeat after me, “I stop working when the client gets behind on payments.” Very good, now go back to work.

Smaller Payments, Smaller Gaps in Cash flow

Many times when we have a large project we get a big payment up front and then another payment weeks or months later. This causes us to be, at the end of the project, desperate for the money as we’re running out of cash. Steady cash flow in small sized pieces is probably even preferred by your client. Think about breaking down these large payments into small payments. Maybe a bi-weekly or monthly invoice/payment. But do not do this at a large admin time cost. Your job is not to chase checks.

In Conclusion

Don’t let your clients affect your cash flow and cripple your business. Get a deposit, bill effectively, and don’t let them fall behind. And remember to build that cash pad to protect your business when the check gets “lost in the mail.”

Why Greenville Grok was a Great Tech Conference

2013-06-03T00:00:00Z

When anyone asks me why past LessConfs are “successful” I tell them, an attendee will leave an event happy if the following is met.

New Relationships: Attendees need to meet and consider 2+ people as new friends.
Past Relationships: If this is your second event, bring together old friends and past attendees.
Speakers: Attendees should remember 3-5 inspirational moments or quotes.
Free time: Attendees should have enough down time to have a deep conversation with a few fellow attendees.

Most conference organizers haven’t figured out how to encourage relationships among attendees. Event organizers cram as many tutorial-based talks as they can into the allotted time. Attendees end up struggling to meet speakers. Parties are loud, crowded and attempt to feel “cool” instead of helping attendees interact and mingle.

The vibe of Grok comes down directly from the top. Main organziers Peter Barth, Eric Dodds & Erin Godbey are the friendliest people you can meet. This friendly vibe trickles down to the attendees.

Greenville’s Grok event met all the creteria for a successful event.

Grok didn’t take itself too seriously.

Fun graphics, odd prizes…

Photo credit: MarcoSuarez (@MarcoSuarez)

“Make a mess” by @bryanrmartin

Speakers gave attendees a real inspirational take home.

Photo credit: Matt D. Smith (@mds)

There was Kickball.

Photo credit: Andrew Ramos

Grok attendees had shared experiences.

Example: screen printing at parties. Grok’s side activities gave attendees a shared experience which gives attendees additional courage to mingle.

Photo credit: Justin Gammon (@WeirdoToys)

A conference shouldn’t be a tutorial event.

I can read blog posts or take Code School courses if I want to learn a technical skill. Grok has beer brewing classes.

Photo credit: Brett Mascavage (@savagecorp)

Oh there was cooking classes too.

Photo credit: Chris Rackley (@ChrisRackley)

Adam Spooner broke his wrist. Having injuries isn’t a requirement for a successful event, but a growing trend. All the “cool” events have casualities, just saying.

I can confirm I will attend Grok 2014 and bring as many people as I can. The next hurdle for Grok will be keeping this event small and intimate, because the word is out, Grok is an amazing event.

Hat tip to really amazing people pushing the Greenville tech community.

See amazing pictures here

Day 2
Day 3

Running a Business is Hard

Our Workshop on Bootstrapping and Accounting for Startups

LessConf The Musical

LessConf, The Song

Some other LessConf summaries…

Collecting Unpaid Invoices The Easy Way

Get Your Facts Straight

How long will I wait before I contact the customer?

Making Contact

Unpaid Invoices Collection Example Emails

When Unpaid Invoices Become Very Late Invoices

What Just Happened?

How I'm Facing My Fears

So event organizer, if want me to come bring a completely honest gut-thunderous talk for your next event let me know.

What are you scared of? Let’s face our fears together.

How to avoid cashflow issues

Seasonal Income Trends

Start Strengthening Your Cash Pad

Better Client Management

Never Wait on a Client

Get a Deposit

More Effective Billing

Stop the Bleeding Fast

Smaller Payments, Smaller Gaps in Cash flow

In Conclusion

Why Greenville Grok was a Great Tech Conference

Grok didn’t take itself too seriously.

“Make a mess” by @bryanrmartin

There was Kickball.

Grok attendees had shared experiences.

A conference shouldn’t be a tutorial event.

Oh there was cooking classes too.

See you next year at Greenville Grok!