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Crunchers Accountants

Crunchers Accountants

Feast or Famine – how to break out of the cycle (pt3)

Archive for September, 2011

Feast or Famine – how to break out of the cycle (pt3)

Following on from taking control, the other main aspect is dealing with the fear that there is not enough work out there.

4.  Ditch the mindset of scarcity.  In famine, it can feel like there is never going to be another job or another sale.  If you have done your planning, you should have reasonable confidence that the actions you are taking will produce a sale or a job at the right price.  Learn to say no to the ones that do not have the right price.  In our example above, our hero / heroine (see blog pt1) could have saved a lot of heartache and stayed in control of their marketing if he /she had said no to that first job and maybe even the second.  This is not about having a positive attitude or having an ego trip that you are worth more.  You can say no because you have done your planning. You are confident that your plan will produce work at the right price.

If that feels too much of a leap, you can at least start with negotiating your work.  For example the situation above would look completely different if our hero / heroine had put some conditions on taking the first job on at a reduced price.  What if she /he had said “I usually charge double for this work.  I am willing to look at it if we can come to an agreement about the deadline.  I cannot agree a firm deadline because if a job paying properly comes up, I will need to fulfill that first and this job may get pushed back.  I will compromise on price if you will compromise on this aspect of the work.”

Also know when you have enough work and resist the temptation to accept more.  If you accept more, other aspects of the business will suffer.  What is more when you say no in this kind of situation you begin to establish the idea in the mind of your clients that your service or product has more value than your competitors.  In the mind of the potential client, they are thinking “This person is turning down work.  They must be in demand.  They must be good. Damn, I wish they were available.”  Then they will be prepared to pay more when you are available.

5.  Use pricing to control the flow.  Large companies do this all the time, so why not you?  For example if you book your plane ticket with CheapPlanes.com five months in advance you pay £30 but if you book one week in advance it is £130.  Offer your services at different rates according to the timescale.  Make clients pay over standard rate if they want the job delivered this month but tell them that if they are prepared to wait for three months to do the work you will reduce to below standard rate.  Even if they can’t make it work for this job they will remember for the future.  Imagine the difference it would make to have half the work you need for March already booked by December.  Get a retainer upfront and earn interest on it.  Charge regular work at a different rate to one-off work.

6.  Find ways to charge more.  Really this is a combination of items 2 and 3 above.  The more you charge, the more resources of time and money you can devote to your marketing.  I know it feels like we are in a recession and the market place is competitive.  All the same, the more creative ways you can find to charge more the bigger impact you will make to this cycle because you will need to do less delivery work or sell less product to maintain your income and this will leave you with more time and money to do your marketing.  This is a whole topic to itself and worthy of another blog at another time.  All the same, here are some ideas to start thinking: offering added extras; becoming an expert in something; having a really strong brand; charging for changes to your contract or the job specification.

7.  Explore employing people or outsourcing your work.  Are there aspects of your work you can get someone else to do in times of feast?  Be careful to factor in time to manage these people if you do go down this route. Nevertheless bringing someone on who can take care of some aspects of your business is worth exploring.  It has the added attraction of allowing your business to grow.  If you are serious about your business growing significantly you will need to address this at some point anyway, otherwise your business will always be limited by your time.  Be careful to know when this turns into employment from a legal perspective with Inland Revenue.

If anyone out there has experience of putting any of the above advice into action, it would be great to get your feedback.

Feast or Famine – how to break out of the cycle (pt2)

Here are some suggestions on how to start breaking out of the cycle, with more to follow in my next blog.

1.  Take control.  It is important to switch your mindset from being a victim of the situation and seriously make plans for dealing with the situation.  Many people simply think it is beyond their control.  I am not suggesting you will ever totally control all the events and the environment that surround your business but you can make a huge difference to this problem.  In particular as a business you need to start to take control and ownership of the flow of work to your business.  By the way, you may not have thought of your work as a business.  I highly recommend you do.

2.  Plan the flow of work to your business.  There are many ways that revenue comes to a business and the field of marketing is huge and varied.  Many self-employed people and sole trader businesses view marketing as an added extra to doing the work, or worse.  Bringing income to the business is really a core part of the business and needs ongoing and consistent time, energy and thought.  In the story above, the flow of work to the business was controlled by calling contacts, networking and attracting people to the website.  It appears from the story that in times of famine when our hero / heroine (of pt1) gets into marketing mode, their actions are effective.  Work starts coming in.  What doesn’t work is that as soon as work arrives, the marketing stops, it appears to be haphazard.  As a business owner you need to identify what controls the flow of work to your business.  Is it referrals?  Is it tendering proposals?  Is it networking?  Is it advertising in Yell.com?  Then you need to sit down and plan the actions you need to take to keep the flow going consistently through the year.  Let’s say you identify cold calling as creating a flow of work to the business.  Let’s say that the process of getting work proceeds from cold call to email, to follow up, to meeting.  Your planning should then go something like this:
  • How much work do I want each month?
  • How many meetings do I need to set up to get that work?
  • How many emails do I need to follow up on to get those meetings?
  • How many cold calls do I need to make to get enough people to request an email from me?
 

This needs to be done for each flow of income to the business.  The planning will look different according to each flow.  A newspaper advertising flow is different to a networking flow.  At the start you will have to make some assumptions about how effective each of your actions will be.  For example you may not know how many emails you need to follow up on to get one meeting.  You will need to make your best guess.  As you go forward you can see if your assumptions are right and amend them.

As you go through your planning, you will start to get an idea of the resources you need to devote to the plan.  These will include time and money.  You will start to see how much time you need to put in to achieve the flow you want and how much money.  The time left over can be used for servicing your clients and your other admin.  You will start to see if the amount you charge allows you to devote the time and money you need into marketing.  This is a key moment!  If you find the amount you charge for your product or service does not cover the cost of your marketing, then your business has a fundamental problem.  You cannot ignore this.  Of course times of start up and expansion are times of investment and you would not expect the marketing to produce the income you require straight away, but if it does not balance over the medium term you must re-think some part of your business.  It is better that you find out now than in six months time when you are broke.

3.  Stick to your plan.  The marketing work is just as important as the delivery work.  It is never as urgent because the effect comes one or two months down the line.  Unless you break out of the temptation to ignore the marketing work in order to deliver the job you will never break out of the cycle.  Imagine you are a computer programmer and you have two jobs to finish.  You can finish one on time but not both.  What could you do to keep the relationship sweet with the client you are going to let down?  You could call your client, apologise and make contingency plans for completing the work to a new deadline.  It’s not ideal, but it happens.  Start doing that with your marketing work.  After a while it may get painful enough that you will make sure you can fulfill both the delivery work and marketing work together before you accept a job.

Get someone to hold you make sure you take the actions in your plan.  It could be a friend, a spouse, a mentor.  Maybe you cannot stand to do marketing or sales.  You could get an agent, a freelancer, a partner or even a spouse to do this.  If you do, make sure you plan time to manage them.  You will want to engage them and then forget about it but remember this is your business and you are taking control!

Maybe your plan turns out to be impossible to put into practice because your assumptions were wrong – the delivery of your service takes longer than you thought; the cold calling produces less results.  Re-work you plan with new assumptions so that you have a plan that you are confident of.

In other words do whatever it takes to stick to your plan!

Next post will deal with the mindset of scarcity.

Feast or Famine – how to break out of the cycle (pt1)

It’s famine. You need work.  There is rent to pay, children to feed, car to tax – you are worried.  You phone around your contacts.  You network. You work on your website.  Days and weeks go by.  Nothing.  Then thank heavens – someone offers you a job.  It’s not well paid, in fact it’s half what you usually charge.  Then again it’s something.  It would at least pay half next month’s rent.  Maybe it won’t take so long…you hope – some jobs go really smoothly!  You take it.  Phew at least I’ve got some work.  The moment you do, someone else calls.  Another job – not brilliant pay, but better.  Great, the work is starting to come in! I’ll take it, I’m on a roll!

The first job starts.  Oh dear, it isn’t going to go smoothly, you can tell straight away.  Oh well you think, I had to take it, I had no work.  Now your networking pays off.  Someone calls with a great job.  It’s good pay and the right kind of work.  The only trouble is that with job one and two, you know it’s more than you can handle really, not with the deadlines people have asked for.  Then again, can you afford to turn it down?  The first job isn’t well paid so you could still really do with the money.  Plus, it was really scary for a while back there in famine, you definitely don’t want to go back there.  You take it.  You’ll have to work weekends and evenings but hey, it’ll work out.  You strategise ways of breaking this to the family.

Then would you believe it, someone else calls.  You’re annoyed.  Why couldn’t they have called last month you ask yourself?  It is now feast. You have more work than you can handle.  You tell them you’ll call back next week to see if you can squeeze it in.  Maybe if the other jobs go super quickly, you could do it.  You work twelve hour shifts.  You know there are people who might be emailing you but you have not a hope of doing your emails as well.   Even phone calls get in the way, you start to hope it never rings.  The weeks go by.  You forget call number four that you were going to call back, you couldn’t even think about another job.  You battle your deadlines.  You win, you do a good job.  Finally job number three is completed.  They are delighted. You are delighted.  This is surely the big break.  It will just naturally flow from here.  Your family have hardly seen you.  You spend some time with them.  You check your emails… at last.   There is nothing in the diary again, but hey you just worked your socks off and finances will handle it for a while so the first week you’re not too worried.  Then your tax bill arrives.  You need work.  There is rent to pay, children to feed, a tax bill to pay.  Yes – it’s back!  It’s famine!

Sound familiar?  There aren’t many self-employed people who don’t recognise that pattern.  In my next blog I’ll be suggesting some ways to start to address the issue.