Duct Tape Marketing

As a business owner, you're no longer sitting in your too-small cubicle waiting to be called to HR for yet another downsizing in yet another company. No more being told when you can take lunch, make a personal call or, heavens forbid, go to the bathroom.

Owning your own business comes with lots of perks. One of them that is frequently overlooked however is that you now have the ability to fire a client.

Stop and think about that for a moment. As a business owner, you don’t need to take on every client that comes along and can *fire a client* if you want or need to. Isn't that liberating?

"I need all the clients I can get. Why would I ever want to fire one?" you ask.

In order to make your business as profitable as possible, you need to ensure that your client relationships are win-win for both you and the client. There are several reasons why you may want, or need, to fire one of your clients. Here are the top three scenarios in which you may want to consider firing a client:

1. They don't pay you on time.

If you have a client who consistently can't, or won’t, pay you on time, you may want to consider firing him. You are in business to make money, to provide for your family, to fulfill a need and be paid for your time in doing so. You are not in business to spend your time providing services for another company for free.

If they are having a tough time *right now* and you want to hang in there with them, be sure that it is worth your time and effort and that *right now* doesn’t turn into months. Remember that you only have so many hours in the day to work on your business, use them wisely!

2. You cringe when the phone rings.

Some clients can just rub you the wrong way -- often. These are the clients that, no matter what, drain you of your positive energy.

If you find you're cringing when that certain client calls, if he always wants something for nothing, or if his ethics aren’t up to your standards, it may be time to part ways.

3. You are ready to move up.

Have a client who refuses to pay you what you're worth while others are waiting in the wings?

If so, let him go and hire clients who are ready AND willing to pay you what you’re worth! I had a client back in the day who actually told me I should be happy he was paying me a small amount as he could give me *more* work that way.

Want to guess how long he lasted?

You want to work only with clients who appreciate you and know your worth.

You get the idea. Now that you are a business owner, remember that it goes both ways – not only does the client interview and hire you, but you also interview and hire him!

You can more efficiently manage your profits this year by spending the time to take a good look at your business and your clients and letting go of those who no longer fit.

For the past 5 years, Sandra Martini has been showing self-employed business owners how to get more clients consistently by implementing processes and systems to put their marketing on autopilot. Visit Sandra at http://www.SandraMartini.com for details, compelling client testimonials and her free audio series “5 Simple and Easy Steps to Put Your Marketing on Autopilot”.

You’ve done the marketing, you’ve filled your funnel and the phone starts ringing – you’ve got a new client! Now what?

Whether you are a consultant, coach, virtual assistant or other type of service provider, it’s important to insure you start off your client relationship properly.

You don’t want to let the exhilaration of signing a new (or your first) client get in the way of sound business practice. There are three ways I recommend you protect yourself when dealing with clients.

1. Have a contract or client agreement.

You should have some form of contract or client agreement which states, at a minimum, your work hours, your hourly fee (if you charge by the hour), payment terms, a statement regarding confidentiality, your status as an independent contractor, an “out” clause (e.g., either party may terminate the agreement with 14 days notice) and any other data that you feel pertinent (such as an arbitration clause).

If you choose to have a contract or client agreement, it is in your best interest to insure that your client signs and returns it before any work is performed – remember to send your client a signed copy back.

2. Create Client Service Plans.

If you’re not sure how many hours a client will require each month, you may want to consider creating “Client Service Plans” which allows clients to know they have purchased a certain amount of your time for any given month.

For example, if you are a coach, you could charge $X/month for three 30-minute calls and email support. Or $Y/month for three 45-minute calls and email support.

If you are a virtual assistant, you could charge $X per hour for clients who commit to using 40 hours/month and $Y per hour for clients who commit to using 20 hours/month. Each set of hours/pricing would be a separate plan – Platinum, Gold and Silver, for example, where Platinum clients commit to the most hours and Silver clients the least.

Don’t be afraid to tailor your plans to your specific business and your clients. It’s important that they know you can be flexible while still maintaining your internal standards.

3. Require a deposit or get paid in advance.

It makes good business sense to require a deposit before you start work for new clients. The deposit doesn’t need to be prohibitive, but just enough to guarantee that you are paid at least something for your work if the client decides to try and stiff you.

Most coaches I know are paid in advance of the month. For example, clients pay at the end of November for December’s coaching. Many virtual assistants require a percentage deposit at the beginning of each month and credit it on the invoice.

The above strategies are not mutually exclusive. I use all three to a certain degree in my business along with a “Client Intake Form” that I’ve created. This allows me to learn something about the client before we’ve had our first session.

I include all of this information in my Client Welcome Kit along with a one-page informational sheet indicating how I best work. This allows us each to determine if our work styles mesh – thus creating a win/win situation for both.

In the end, it’s about creating expectations and insuring that both parties are happy with the arrangement.

For the past 5 years, Sandra Martini has been showing self-employed business owners how to get more clients consistently by implementing processes and systems to put their marketing on autopilot. Visit Sandra at http://www.SandraMartini.com for details, compelling client testimonials and her free audio series “5 Simple and Easy Steps to Put Your Marketing on Autopilot”.

You’re psyched! You just landed a new client who is going to keep you busy with projects. Life is good.

You love the people, you’re really enjoying the work, things are going great. Everything proceeds along smoothly for several months until that fateful month where you submit a large invoice and payment isn’t immediate.

“No problem” you think. “Things are somewhat tight. It will just be paid a little late.”

What are your options when a client doesn’t – or can’t – pay you?

There are several things you can do when a client doesn’t pay you. Before you start down the path however, you need to think about what type of future, if any, you want with this client.

1. Gentle reminder.

Your invoice could have been forgotten, misplaced or buried in a pile on your client’s desk. If they have gone past your due date, email – or call depending on what is most comfortable for you – a gentle reminder asking them the status of payment.

If you use QuickBooks or QuickBooks Online, you can also email a statement directly from the system.

2. Be personal.

If you’ve reminded the client and no payment has come, it is time for either another email or a phone call. Your client may tell you that he is very busy and apologizes that he “forgot” again.

Explain that cash flow is very important to your small business and that you can not afford to carry the unpaid invoice any longer.

Always remember to make it easy for your client to pay you. Tell him that you are happy to be paid via wire, PayPal, credit card – offer him all the options and be sure that you have more than just “send a check” available. Make it as easy as possible!

3. Be the “squeaky wheel”.

If your client is having his own cash flow issues, he may need to make hard choices about who gets paid when. Send an email reminder or statement every other day or every week – take your comfort level and go one step further.

By being the “squeaky wheel”, you insure that you are at the forefront of his mind when he is paying bills.

4. Cut him off.

As hard as it is, sometimes you need to tell the client – even though you’ve become friends – that you can not do any additional work until your invoices are paid in full.

As a small business owner, you are responsible for the running of your business and, as a result, there are times when you need to make tough decisions that are best for your business. You can’t afford to work without compensation and your client should understand that.

5. Get tough.

You’ve tried being gentle. You’ve tried being personal. And you’ve squeaked so many times that you’re tired of hearing your own voice. Now it’s time to put that prepaid legal plan to use!

Have your attorney send a formal letter stating that if you are not paid, in full, within X number of days, that you will either take the client to small claims court (the normal limit is between $2,000 and $7,500 – it varies by state in the U.S.) or to arbitration. Whether you sue or go to arbitration depends on the contract you have with your client as some state that disputes will be arbitrated.

6. Bigger than small claims.

If the client owes you substantially more than the small claims process will allow you to sue for, you may wish to sue in a formal state trial court. Debt collection cases are usually simple and few collection cases actually make it to trial as most defendants either settle before trial or fail to show up for court (in which case you would receive a default judgment).

Chances are if you threaten legal action, your client will pay up. If he doesn’t, you may have to follow through on your threat. Just remember to make this decision taking into account how much you are owed, your time for the legal action and whether or not you ever wish to work with this client in the future.

Note that if the client never pays you, you *may* be able to deduct the amount as a “bad debt”. See your tax advisor for more information regarding the bad debt rule.

You want to take collection actions that you are comfortable with while thinking about how they will affect your future relationship with the client. Keep in mind however that you are a small business owner and should be promptly paid for services rendered and accepted. After all, you didn’t go into business for yourself to work for free!

While I’m a strong advocate of hiring virtual assistants, there are two things that no entrepreneur should ever fully delegate: marketing and bookkeeping. The marketing and the bookkeeping of your business can easily make or break you (just think “new” Coke and Enron). That said, if bookkeeping is not your forte, hire someone to do it – you will save so much in frustration – just be sure to keep your fingers in the books.

If you choose to hire a bookkeeper, keep the following in mind:

1. Get QuickBooks.

For ease of use, I highly recommend using QuickBooks and hiring a QuickBooks ProAdvisor. QuickBooks ProAdvisors have taken certification exams to insure that they know the system. I have used QuickBooks both for myself and my clients since 1996 and highly recommend it for its ease of use/understanding.

The online version is great in that you can see the latest version of your books at any time and eliminate the annoyance of emailing files back and forth and wondering who has the latest version.

2. She must see both the forest AND the trees.

You want your bookkeeper to be detail-oriented AND to see/understand the big picture. She needs to know what happens consistently – every month – and update your books without bothering you for items she should know about.

At the same time, she needs to be astute enough to see the larger picture and warn you of any impending problems before they happen. If you purchase a piece of equipment, she should know how to properly enter it into your bookkeeping software to avoid problems – and therefore save time and money – with your accountant (and the IRS) later on.

3. She must know your industry.

You don’t want to have to train your bookkeeper on your industry language, standard industry income or expense categories or other basics. The more up-to-speed she is, the faster she can hit the ground running and the sooner you will have good data. If she doesn’t know your industry however, be sure to give her a rundown of lingo and how you refer to your customers/clients/tenants in order for you to get the most meaningful reports out of the gate.

4. She must provide timely reporting.

In hiring your bookkeeper, insure that you put in a provision for when you want to see monthly financials. The date will depend on when your bank month ends – give her a few days after that date to reconcile your accounts and produce reports. At a minimum, you want to see a profit & loss, balance sheet and cash flow statement.

Take the time to review the reports so you can spot any irregularities before they blossom into problems. Not sure how to read a cash flow statement? Get a check/electronic funds transfer (eft or “auto debit”) transaction detail instead. It will help you see where the cash is going.

5. She must know accounting terms and still speak “English”.

Your bookkeeper needs to know the difference between assets, liabilities, income, expenses and equity and be able to provide your accountant with the necessary data upon request. At the same time however, if you are not “numbers oriented”, she also needs to be able to explain the financial statements to you in plain English.

6. She must be trustworthy.

Hiring someone to keep track of your bookkeeping requires a level of trust between you both. You need to feel comfortable that she will keep track of your information and maintain your confidentiality. At the same time, if she pays your bills and has access to your bank accounts, you must also trust that she will not abuse that privilege. And make no mistake, it is a privilege to have someone (particularly in a virtual relationship) trust you with their finances, their checkbook and their business.

Good business sense demands that you protect yourself “just in case”. I highly recommend that, in addition to a confidentiality agreement, you insure that your bookkeeper is bonded and you get a copy of that bond.

7. She must have great communication skills.

If your bookkeeper will be communicating with your clients and vendors, she must represent your business as you would. Whether virtual or in-house, it’s critical that your bookkeeper be a positive force that further enhances relationships. The question of money can, at times, be a sensitive matter. You need someone who recognizes that and communicates appropriately.

Always remember – these are your books and this is your business. While you may hire someone to manage the details of tracking your finances, and should do so if this is not one of your strengths, the ultimate responsibility for oversight is yours. Michael E. Gerber of the “E-myth” series said it best: “Delegate, don’t abdicate.”

One of the worst moments in a business owner’s life is that silent moment between when you quote your rate to a potential client and his response. True, that hardly a second goes by, but it can feel like an eternity.

“Will he hire me?”

“Did I go too high?”

And when he says “YOU’RE HIRED!”, a new set of doubts creeps over you:

“Should I have gone higher?”

“Did I lowball the price just to get a client?”

You know the feeling. You’ve got the job, the project, the new client and it almost always turns out to be more work than you thought when you signed up for the task. Setting your pricing and determining where you fall in the range of your competitors can be one of the hardest things for a small business owner to do. Be sure you take the time to know your worth and communicate it to the client up front to save frustration later on.

1. Know your worth.

If you charge your clients hourly, how do you know what to charge them? Did you pick a number out of the air? What was your rationale?

For those who choose to bill hourly, I recommend the following approach to determining what you charge (you may want pen and paper for this one):

(a) Determine what you want your salary to be. How much will you take out of the company?

(b) Add to that any subcontractor expense that you may have. This is your “labor total”.

(c) List out and then add all your expenses: advertising, promotion, rent, self-employment tax, supplies, etc. This is your “non-labor expense total”.

(d) Add your labor total to your non-labor expense total.

(e) Add in any profit goal you may have for your business.

(f) Bullets (d) plus (e) equal your Total Required Revenue.

(g) Divide your “Total Required Revenue” by the number of BILLABLE hours for the year. Remember that you will not be billing 40 hours/week. The result will be the amount you need to charge per hour to make your salary goal.

If you bill hourly, take the time to complete the above exercise and, if necessary, increase your rates accordingly.

2. No haggling.

It can be hard when you have few clients or need more money, but whatever you do, do not haggle with your clients/prospective clients over your pricing.

You can haggle at a flea market. You can haggle for the price of a house. You can negotiate (a.k.a. “haggle”) for a corporate job salary. As a self-employed individual, you must not haggle over your pricing. To do so immediately lowers your perceived worth with that person and will set you up for a relationship of nitpicking over every nickel and dime.

3. Provide a “solution” and not a “service.”

Insure your clients understand the benefits they will receive from hiring you. You are not providing them a service; you are providing them a solution.

The difference being that people value solutions more than they do services. Whenever discussing price with a potential client, focus on the benefits, the “solutions” that she will receive as a result of hiring you.

Will she have more free time? Will her business see an increase in profits or clients? Know the benefits and speak to them!

4. Be prepared to say “Goodbye”.

Not everyone is going to accept your terms. Deal with it. They weren’t meant to be your clients anyway and would have just taken up the time that you could use for a better qualified client. Save your time and energy for those who recognize your worth – you’ll both be happier and more productive.

Pricing your services is one of the most emotional things you’ll do as a business owner. Be sure to take the time to review the project at hand before just blurting out a price – doing so will save you a lot of time and frustration down the road.