Tag Archives: consulting

Why I ask clients for a deposit

Editor & writer in friendly dialog

Join 25,000 others and follow Sean Hull on twitter @hullsean.

1. It indicates both parties are serious

A common refrain when discussing terms of a project, and reviewing statement of work – “when shall we get started?”. The answer should be, “I’m ready to get started anytime you like. Would you like to use paypal or ACH for deposit?”.

The deposit signals to the vendor that it’s time to get working. This client has the budget and is serious about moving forward today.

Read: Why Fred Wilson is wrong about Apple

2. It protects against scope changes

Startups & seasoned businesses alike have changing needs. That’s why they may choose a situational resource to begin with.

If the winds change, and we don’t need you tomorrow, a deposit defrays the final invoice, and or discounts you may have applied.

Related: Is Dave Eggers right about risks of social media?

3. Insurance if business fizzles

Fizzling business, is a nice way to say the market has changed. Perhaps the startup has decided to pursue other opportunities. In close to twenty years of business I’ve only had this happen twice.

Once I was working with a rewards card business. They were already having trouble meeting payroll. Turns out businesses have a legal obligation to meet payroll. That’s another way of saying they’re at the top of the who-gets-paid list. And vendors may be closer to the bottom. They owner went back to being a lawyer, his profession before the startup.

All in all, a deposit provides some insurance in these cases.

Read this: 5 cloud ideas that aren’t actually true

4. Signals your maturity to client

This is a hard one for some freelancers and consultants to stomach. “I really want to get going with consulting, and don’t want to turn away this client.” The thinking goes. But consulting is a peer relationship, where vendor and client need to be on an equal footing.

Your need for a deposit, and willingness to walk away without one, says to the client you are professional and have been in business for some time.

Also: If you’re using MySQL in the Amazon cloud, you need to ask yourself this question

5. Protection from early termination

That sounds ominous but it doesn’t have to be. In the world of freelance and consulting, a client can decide they no longer need your services tomorrow.

Why? Perhaps they hired a fulltime resource? Perhaps their needs changed? Perhaps the storm of site outages have passed and the urgency has changed.

Whatever the reason, projects change. If you’ve offered a discount for three months of work, but only end up with one month of work, your full fees may apply. In that case, the deposit should be the discount amount.

Check this: Do managers underestimate operational costs?

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When You're Hired to Solve a People Problem

Also find Sean Hull’s ramblings on twitter @hullsean.

A good five years ago I worked for a firm in online education. Among various products they provided through their website, they were struggling with a process to get content churned out more quickly. The bottleneck was slowing down their business, and limiting the new products they could offer.

Help Us Publish, Please…

Among a number of things I was asked to look at, one particularly vexing problem surrounded publishing. Adding new products had become a cumbersome & difficult process. It took days sometimes weeks. For obvious reasons the stake holders wanted to wrestle this process out of the hands of engineering, and place it were it arguably belonged in the hands of the business units.

[quote]
When you’re hired to solve specific technical problems it only figures that you go looking for software solutions. But sometimes the problems turn out to involve the people and processes of an organization. Getting them unstuck is one of the biggest challenges an professional services consultant can face. But it is also one of the most rewarding to solve.
[/quote]

Bumping into Fear, Uncertainty & Doubt

As I dug into the meat of the problem I began to work closely with the database administrator. He was a very smart gentleman & friendly in his own way. But he also spoke with a very thick accent and brusqueness about his manner that proved difficult at times. After working together for some awhile, however I began to win him over, and he started to trust me.

Looking for a top-flight database administrator? Here’s our interview guide for recruiters, managers and candidates alike

It became apparent that he was rather resistant to handing over the keys to the publish process to non-technical folks in other departments. Having handled his share of outages, and bungling screw ups, which sometimes fall on operations during some of the least hospitable hours on the dial, I could understand his concern. What’s more he knew the code which had grown unwieldy.

If I were to use a polite euphemism I would call it spaghetti code.

Management, Managers & Trouble Brewing

Around then the CTO decided to send a manager to sniff around. Unfortunately the manager in question was a very hands off type. His edict was simply to get this done in two weeks, and proceeded to go on vacation. Upon his return when things were still hitting snags, things started to go south.

Despite AWS failures firms like AirBNB and Reddit didn’t have to go down.

Though some of the process had been automated, I refused to move the changes into full push-button automation without first testing on dev environments. Of course those requests had fallen on deaf ears.

Problem comes to a head

Next the hands off manager escalated things upstream, of course adding his own spin on the situation. Shortly thereafter I’m called into the CTOs office only to get royally chewed out. A serious smack down which I’ll admit came almost out of nowhere.

A related article which readers also found quite popular: A CTO Must Never Do This

Oh, honestly I’m not complaining. On some level this is the job of the consultant. To act as the third party, wise or unbiased second opinion, and even punching bag at times.

Once things calmed down, I explained the situation from top to bottom. Yes there was messy code, and yes the process was complex, but it could of course be automated. What really stood in the way was a very resistant engineer who currently owned the process.

As much of the Sandy recovery continues, Devops can learn real lessons from the hurricane.

The CTO for his part concurred, having had trouble communicating with the engineer himself, and really not liking him much. He then appointed a proper project manager to oversee redoing the publish process from scratch.

A Plea for Cooperation

If I were to do it all again, for my part I’d sniff out the people dynamics more carefully. It’s often the case the companies have the engineering talent in house to solve a particular problem, but not the will or knowledge to put it into play.

Is your business growing? Having trouble scaling? Here’s how we do a performance review. It’s the first step on your way to hyper growth.

To managers & CTOs I’d encourage where possible to look for people, process and communication issues. Try to ferret out when something is an engineering problem, or whether it is one of people, silos and territory.

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When Clients Don't Pay – Consulting War Stories

Also find Sean Hull’s ramblings on twitter @hullsean.

It’s a cold cold winter out there, so as they say you need money to keep the lights on? Yep, that’s true whether you’re a small business or a consultant. Everyone has to pay their bills. Or do they?

It’s an unfortunate fact of life in business, but sometimes there are differences. Disagreements about deliverables, timelines, milestones, and deadlines. But when all the work is done, there are still sometimes differences over dollars.

Over the years most of those I’ve managed to work out with clients, but there were a few that went sour. One case was with a large entertainment firm. The music business is one that I hadn’t interacted with much before. For these guys I’d done a few days work in the past, and was paid promptly. Now they were in a bit of a jam. They called me up and asked if I could help.

Related article: A CTO Must Never Do This.

These types of emergencies often come at the worst times, and I explained that I was already juggling a few other things. They pleaded for help, and I relented. I carved out a full day of time for them, explaining the day rate and so forth. While on the phone though, I expressed caution.

[quote]I understand that your issue is urgent now, what happens if your needs change in the next 48 hours, I asked? Not a problem they replied, we can use your help anyway, so we’ll book you either way. Fast forward 48 hours, work canceled & client won’t take my call.[/quote]

Great I thought, verbal assurances. That works for me, I thought.

Fast forward 32 hours, and I receive an email saying the problem is resolved, and offering a “kill fee” of which I knew nothing, and which was never negotiated or discussed.

Along comes the day of reconning, and I call the client. They don’t take my call. Shortly there after I receive additional emails. I reply and explain we should talk on the phone. Still the client can’t find the time to pickup the call.

So I judiciously put together an invoice for the work. I email it directly to finance, and CC all parties. From there I get responses ranging from disinterest to denial. Over the coming months I periodically resend the invoice, but to no avail.

Or was it? I actually feel that this experience is to great avail.

1. Small disagreements foreshadow larger ones down the road
2. A relationship between client and vendor is a mutual one. If parties can only pickup the phone when they need something, then things are out of balance already.

Sure I lost a day & the fee associated. But I gained a lesson.

Patience and polite persistence

I firmly believe that being patient and persistent wins in the end. Sometimes clients have hiccups in payroll or budgets. Keep communication lines open.

Freelancers & consultants: Grab my Consulting 101 Guide.

Appealing to fairness

If you maintain a healthy relationship with your client, then appeals to fairness are normally heeded.

Appealing to promises

Emails are important to keep a paper trail of agreements. Communicate clearly and often so you know when you get derailed, and can refer back to what was agreed previously.

Popular: AirBNB didn’t have to failed – AWS hosting outages.

Setting precedents & expectations up front

This is an important one, that freelancers and consultants alike sometimes forget. Setting and agreeing on expectations is key. Often details are in the fine print or left out completely. So ongoing communication can iron out those differences or bring them to light.

Want to hire the best? Read our DBA Interview Guide.

Getting a protective deposit

If you haven’t worked together before, a deposit makes a lot of sense. Executing on this is more than a show of faith. It underlines that accounts payable is on board with your hiring, and you are now in the payments system.

Related: Hiring is a numbers game

Sizing each other up

Websites provide the first representation of you and your client to each other. How you carry yourself and how they feel meeting them face to face is important as well. Ideally you’ll meet each other at the client’s offices, where you may meet others on the team, and put names to faces. At the very least a skype call will go a long way as well.

Managing spend – communication along the way

Keep a close eye on invoices. If a client is getting behind, resolve it before continuing to work. Deadlines are mutual in a business relationship. Yours to complete work by a certain date, and theirs to pay by an equally agreed upon time.

Read also: Real Disaster Recovery Lessons from hurricane Sandy.

Never go to court – defer to the handshake & gentleman’s agreement

I know the lawyers out there may think I’m naive. But I’ve been in business a long time, and I believe a handshake means and says a lot. Also common sense language & contracts, in the form of emails and so forth are better than heavily legalese ones that no one but a lawyer can understand.

What’s more going to court has a huge cost in time & stress. Don’t go that route. I also think it appeals to clients knowing that you’re not the litigious sort.

Want more? Grab our Scalable Startups monthly for more tips and special content. Here’s a sample

Going Solo for Fun or Profit?

Sara Horowitz has serious chops. Independent herself, she started Freelancer’s Union way back in 1995. Back then it was tougher as a freelancer. Through her great efforts, we’ve all benefited.

So when I saw she’d published a guide called “Freelancer’s Bible”, I was quick to grab a copy. And the book doesn’t disappoint. I wish this book had existed when I got my start way back when I first moved to NYC in 1996.

A budding freelancer

As a budding freelancer, you’ve got a ton of new skills to pickup, where to start? Flip to Part 1 and you’ll get a quick hitchhikers guide, with advice on setting up your office and organizing your time, to pitching to prospects, networking, and building a portfolio of different types of clients to keep your workflow steady. You also learn how to package your services, and the myriad ways to set fees from hourly, to project based and day rates to packages.

[quote]Network & market yourself, package & price services, communicate well and manage timelines, deliver, bill and finally get paid. Each step is outlined here in easy to read bullets, and helpful “Ask Sara” sections. Easy layout, and a pleasure to read.[/quote]

As I was reading these early chapters, I thought it would be nice to have a chapter on social media. Turns out I spoke too soon, as I flip through the pages, chapter 9 is all about marketing and social media, online tools to build your reputation and influence. Also I like that she appeals to the practical approach. For example Sara emphases that you let go of strategy, and experiment with different options, and methods. This is exactly what I’ve done over the years, and it’s the best way to find out what works for your personal style, as well as your industry. Trial and error!

I’ve written a guide on this topic myself. Take a look at my three part Guide to independent consulting 101.

Advice for Seasoned & Growing Operations

I’ve been working as a freelancer for 17 years now, and I’ve certainly learned a lot. So when I flip through the book, it confirms many of those lessons. But I also found material that I could use. For example chapter 7 Troubleshooting she has examples of situations where you and your client are out of sync, and offers “triple-a communication” solutions to those problems. This is the type of advice you’ll definitely need, as these scenarios are inevitable in freelance work. Also I found Chapter 10 Ways to Grow very helpful. Her list of “How do you know it’s time to grow” outlines some surprising and helpful thoughts on what to do if you have too much work. I’ve started dabbling with subcontracting and hiring additional help, so these chapters I’m finding very helpful.

Criticisms

There are a few things that I’d differ with Sara slightly on. Here are my thoughts.

Avoiding Contracts and Lawyers

I don’t get to heavy with lawyers and contracts. I know I know people say this is crazy, but over the years my method has served me well. It starts with a simple premise – I never intend to go to court. What do I mean? It costs too much, both in real dollars, time spent, but most of all stress. If you’ve ever been on jury duty you know what I mean.

With that, you pull the perceived safety net completely out from under yourself. So I am careful and cautious as a result. My *contracts* are simple emails, in which I outline what I’ll do, what the client will do, and who will do what when. I do all this in plain language, without any lawyer-ese. What I do get though is a confirmed *yes* in an email. This email thread is above and beyond verbal conversations and phone calls. It allows clarification down the line if you and the client have differences.

I also insist on a deposit of some kind. It doesn’t have to be a lot, but it is a hoop that you ask your client to jump through. This is very important. So-called dead beat clients will fail this test. If they are very very hesitant to provide a deposit, they are either uncomfortable with you, or are short on budget. Either case should be a red flag. Managing this relationship is very very important, when you plan never to rely on legal recourse for differences.

Who’s Played? Get paid!

On page 195 she talks about the Freelancer’s Union Client Scorecard, and “outing” clients who don’t pay. I personally think this is a bad road to go down. Why? Well there are a few reasons.

1. There are two sides to every coin

When a company hires an outside resource, they don’t have control over day-to-day operations, and overseeing what the person is doing. And yes, sadly there are many levels of work quality. So there can be differences. In my experience all those differences can and should be worked out. Communication is key and I think if you follow all of Sara’s advice on triple-A communication, you’ll avoid these situations. I do feel though that these ***

2. You can ask for an insurance deposit

Asking for a deposit from a new prospect is an important step. Without a past history of paying, and paying timely, this is a hoop you’re asking them to jump through. It proves that the budget exists, it proves that the team or director that hired you has communicated that to AP, and simply that you’re in the system. In my experience after the first check, things tend to go smoothly. If you’re experiencing trouble with this step, ask yourself – Are we on the same page? Where is the disconnect? Is the client confident you’ll deliver, and complete? Where is the hesitation?

3. It could hurt you in the end

Lastly these type of “outing” boards might hurt you in the end. If you gain a reputation for creating bad publicity or press for one firm, others may not want to work with you. I also think they are a distraction from communicating and resolving issues, and/or finding other work.

[quote]Apply all of Sara’s advice, especially those around Triple-A Communication, and you’ll likely do very well as a solopreneur. Let’s avoid becoming part of the 44% of freelancer’s who’ve reportedly had trouble getting paid![/quote]

Don’t undercharge for Services

Another point I’ll underline is charging for services. There is some talk in the book of wage wars, and 44% of freelancers not getting paid. In my experience being a freelancer is more like being another corporation. Corps fight with each other all the time. They have differences, and duke it out. It’s a bit dog eat dog out there. If you’re not prepared for that, you may be in for an uphill battle. Over the years I’ve certainly had differences with clients, but I’ve never not gotten paid. I *have* however turned away work, if I got a bad feeling about the client.

I wrote a critique of John Greathouse’s Beware the Consultant that might interest readers here. Take a look at my article Beware the Client.

That said you should be charging more than your fulltime brothers and sisters. Let’s give an example. Say your fulltime job would pay 75k/year. This theoretically is about $37.50/hr (40 hours x 50 weeks). However as a freelancer you must also pay for benefits like health insurance, retirement funds, downtime when you’re not billing, overhead of networking and meetings. You also have some additional taxes to pay. I my experience at minimum you should be charging roughly double this amount just to break even. If you’re not, it simply won’t make financial sense to stay freelancing. More likely you should be charging roughly 3x this base hourly amount. If you’re not, you may over time drift back towards fulltime employment.

I wrote another article on this topic Why do people leave consulting.

All of this should be part of educating the client. It’s often forgotten when firms look at outsourcing to get projects completed. So you should explain all of these costs clearly, and compare yourself to larger firms and agencies. These folks tend to be a *LOT* more expensive than a solopreneur.

All together now…

Sara’s bible is one every freelancer should have a copy of. It is the most complete book for a solo operator I’ve seen. Besides a few criticisms I have, it is a superb book and sure to be a reference you’ll turn to again and again.

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You're Too Young To Be My Boss

About a year ago I engaged with a firm to do some operations work on their site. They provided services to colleges and universities.

When they first reached out to me, they were rather quick to respond to my proposal. They seemed to think the quote was very reasonable. I also did some due diligence of my own, checking the guy’s profile on the about page. I noticed he was 25, rather young, but I didn’t think much else of it.

We discussed whether they wanted fixed hours. Since those would limit my availability we both agreed a more flexible approach made sense. This worked well for me as I tend to shift and schedule time liberally, so I can be efficient & flexible with clients, but still have a life too.

Trouble Brewing

As we began to interact the first week, I sensed something amiss. My thought was that the first week you work with a client, they feel you out. They see how you work, when you work, how much gets done and so forth. This provides a benchmark with which to measure you. If either party is unhappy with how things are going, they discuss and make adjustments accordingly.

What was happening in this case was the guy started pestering me. I began to get incessant messages on instant messenger asking for updates. I had none. I explained that I would contact him as things were completed, or if I had questions.

This was only two days into the project. I’d barely gained access to the servers!

The Fever Pitch

After discussing my concerns on the phone, the gentleman kind of glossed them over. From there the pestering continued. I explained that I could not be available to him any hour of the day, while the engagement only provided for one half of a week. This began to interrupt me from other client work, so I had to signoff of instant messenger. Not good.

The Pot Boils Over

We spoke again on Monday briefly, and decided to connect the following day. From there the pestering began anew, and I began to lose my patience. I insisted that we speak on the phone before work would continue. I felt the problem was deteriorating and discussing over text would only make things worse.

He emailed me back as I was then offline. In his email he ordered me to come online. While he sat in a meeting, he explained, he could not take a call! Nevertheless he insisted we resolve it during the meeting. Distracted no less.

[quote]It was then that I started receiving text messages on my personal mobile phone from the guy, pestering me to get online so we could resolve our communication problem! You can’t make this stuff up![/quote]

The Fallout

Eventually we did both get on the phone, and I explained I had reached wits end. After only ten short days of working together, we had both set strong precedents and they were obviously not compatible. He asked if I would stay on longer, and reconsider working together, and I said I would think about it.

I chose not to dig a deeper hole, and let him know I wouldn’t be invoicing for previous the weeks work.

The Lessons

o beware age differences – in our case an 18 year gap
o pay attention to management styles – self-starters don’t need micromanaging
o be patient & keep communicating
o allow for an exit strategy that is amenable to both parties

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Beware the client

Recently I was searching Google for “startup consultant” to see what I might find. I came across this article by John Greathouse titled Beware the Consultant. No self-respecting, hard-working consultant would sit back and take hits without defense, so in true poetry slam style I thought I’d write a quick retort.

Beware the Client…

  • The one that asks for the world.
  • The one that wants everything done yesterday.
  • The one that drags their feet paying bills or loses your invoices.
  • The one that moves the goal posts halfway through a project.
  • The one whose left hand doesn’t know what the right hand is doing.

 

 

Truth is often stranger than fiction

Of course in the real world things are much more nuanced than this black and white picture. Certainly there are probably some consultants that fit John’s description, but there are others that are loved by their clients.

  • There are tons of “little guys”.
  • There are freelancer’s that do a thankless job.
  • Consultants provide much needed plugin solutions for firms.
  • They work as long or as short as necessary.
  • They’re available, when you can’t find anyone!
  • They’re often self-taught – maintaining skills on their own dime.
  • BYO laptop, they’re plug-n-play.
  • They’re communicators – or they wouldn’t succeed in consulting.
  • They are small business owners – so they relate to your real business pain.

 

As far as performance based compensation goes, I would say two things:

  1. It’s always performance based because in my experience the startups I work with are usually bigger than I am. So if they decide not to pay being unsatisfied with the work, there’s little I can do about it.
  2. I do believe in being open to different types of arrangements, sometimes day or week based on time and materials, and other times project based. However the devil is very often in the details with regards to “quantified, clearly understood results”.

 

Although Mr Greathouse may describe *some* real-world or big-corp consultants, they are by no means representative of the lot of us.

Consulting essentials: Managing & Completing Engagements

This is the second in a series of three articles on Consulting Essentials.
Read the previous post, Consulting essentials: Getting the business

Communicating well and knowing when to step in or stand back is the linchpin of successful consulting.
Some people have natural charm. If you’re one of these people you’ll find consulting is definitely for you. You’ll use that skill all the time as each new client brings a half dozen or a dozen new people to interact with.

If it doesn’t come easily, practice practice practice. Try to get out of your own head space, and hear what troubles your client, and what big business challenges worry them.

Be ready to help but don’t try to be the hero


A decade ago I worked for an Internet startup. They were having serious performance problems which was slowing down the site, and turning users away. When digging into the systems I found serious security issues besides the performance ones, and got distracted trying to wrap up those lest someone break in and destroy or steal their business assets. Communicating the situation to the client, they looked aghast. After explaining the situation to them, they understood the risks and explained that the current priorities were to get users back online.

The technical problems I saw may not have been aligned with the business priorities. Your job is to make your client happy. Provide your professional opinion and advice whenever and wherever your skills come into play, but let them run their own business.

If you’re focusing on one area, and you discover other problems or things that may need resolving going forward, bring this to the attention of the client. Allow them to prioritize for themselves. It’s their business not yours. Your job is to give your professional opinion, raise concerns that you see, but most importantly solve problems they want you to solve.

Project Your Personality

Smile a lot and listen to people. Make sure you’re talking less than half the time. When you first engage with a client, they should be speaking more like two-thirds of the time. You want to get in the habit of listening, and stepping in your clients shoes. You want to understand their pain, their business concerns and how to satisfy them.

Manage Time Efficiently

Get things done. Everybody talks about it, but not everyone does it. I personally avoid all the faddish tools for this, and use a simple checklist. Focus on the task at hand. Give yourself a doable list of tasks each day, and check them off as you go. Try hard to avoid working on things not on that list. The last point relates back to the principle of solving only the problems that you’ve been asked to solve.

Communicate Successes & Progress

In many engagements you’ll come upon struggles and get blocked by situations that seem intransigent. I can’t emphasize enough how important it is to communicate with the client during these situations. Don’t get stuck thinking it will make you look weak. Communicating with the client has a number of surprising advantages.

For one sometimes they’ll have a solution, such as a different angle on the business problem, or insight and details that just simplify the problem you think you thought needed to be solved.

Second, it allows the client to adjust schedules in advance if something will take a little longer. You’d be surprised how often a client will sympathize with a difficult problem.

Lastly, involving the client intimately allows them to enjoy the triumph when you solve the problem. This helps morale, communicates more about what it is you do day-to-day and how you work through a problem. And overall it helps them appreciate the intrinsic value you’re providing.

Consulting essentials: Getting the business

Over the years, a lot of people have approached me asking how to become a tech consultant. What do I need to do to get started? How can I take my first step?

I also hear from managers and CEOs that have asked how I got my start, and how I keep the business running. What lessons from consulting can be applied to startups and small businesses? Having worked independently for many years I’ve built up my own cache of strategies and methods which I hope can be helpful to anyone looking to strike it out on their own.

This is the first of a series of three articles on consulting essentials. Part two covers managing engagements and part three: Building your business.

Networking to avoid the feast or famine cycle

If no one knows about your services, it doesn’t matter how good you are, you won’t have regular work. Some consultants get involved in a regular full-time engagement, and after a year or more experience a lot of down time when that gig ends.

Want to avoid the feast or famine cycle? Get out there and meet people. Go to meetups, and exchange cards. Go to startup and venture events such as Ultralight or The Hatchery. Participate in General Assembly  and related incubators. Start a newsletter, and say something interesting and useful every month. Add every professional colleague you encounter to your list. A newsletter is an invaluable way to keep in touch with folks in your professional world, and the value keeps growing over time.

Build your network, connect people together and keep in contact with people. This makes you a focal point, and that will bring business to you.

Proposals & Meetings – Always be Closing

  1. Take many meetings and interviews
  2. If you’re drawing a wide net, you should have tons of opportunities to meet prospects. Sometimes these may be framed as interviews, while other times a meeting of peers. Ultimately as a professional services provider, you should think of it as a partnership where each party contributes to solve a business problem. Hone your speaking skills, compliment people, smile, listen carefully to people’s concerns and try to frame answers in language that works uniquely for each person.

  3. Talk with Economic Buyers
  4. In order to get hired for your services, ultimately you’ll need to be talking with the person who manages the budget for such hiring. However often there are gatekeepers or even human relations folks between you and that person. If you’re being asked for a resume you’re probably going down the wrong road. Typically a stake holder will ask you about solutions you’ve provided for other customers, how you executed, and what were some of the highlights. They won’t be giving you a test, or asking you to solve a riddle or coding problem.

  5. Send quotes
  6. If you are active in business, networking regularly and reaching out to new contacts and colleagues then you should find many asking for advise and expertise. Always be sending out quotes. Sending out a quote is not a do or die arrangement. You should be sending out many many more than you expect to win. By continuing to pitch, you test the market for the demand of your skills, package your services in new and creative ways, and frame solutions that should hopefully resonate with your prospects.

  7. Cherry Pick the Best Clients
  8. All clients are not created equal. Some are trying to get a lot for less than market value, and will try hard to micromanage and squeeze value out of you. This isn’t personal. Business is about maximizing value for a given price. It’s important though to qualify the client, make sure they have the budget to be worth your while, and do your due diligence. Better to have a half dozen to a dozen projects in one year, than fifty tiny projects.

  9. Give Audience to fulltime offers
  10. If you’re good at consulting, you’ll gain a lot of experience, exposure to many types of businesses, many technologies, and many environments. This is valuable experience, and business owners and startups will try to hire you. As part of the *listen* part, it’s always ok to hear out a prospect. Leave the “door open” as they say. Provide real explanation for what appeals to you, from independence, freedom of schedule, choosing projects, and compensation. Creative discussion about budgets and pricing options can well turn such a discussion into how you might work together on a situational or project basis.

    Although independent consulting isn’t for everyone for those who’ve made a career out of it, taking a fulltime opportunity is a step away from that freedom unless you’re making a deliberate career change. Doing this can be a signal you don’t have a full stream of work, that you’re experiencing the famine cycle, and you’re looking for safety and security.

    Consulting services cost more hour per hour than a fulltime resource. But typically you work in shorter bursts or stints. What’s more your availability is always a business value. Lastly because you can ride the crest, stay in demand, stay relevant and stay fresh, you’ll continue to command top dollar.

Price Your Services Properly

I’ve met many freelancers over the years who struggle to get paid, or struggle with cash flow. If this is happening you’re either not keeping the pipeline full or not charging sufficiently for your services. What exact price is right for you of course will vary. My personal recommended method is to research the large firms in your services space. Find out what their junior and senior folks are billed out at. These firms of course have a lot of overhead, so 50% of those rates should be a good base number to work around. Furthermore these calculations can be used in discussions with prospects to sell your services. Remind prospects that they’ll be getting the same professional experience, more customer focus because you’re a one man shop, and pay half the price for it. A proverbial win-win.

  1. Discount by Reducing Value
  2. Beware taking too much pro-bono work, or giving discounts at the outset of an assignment. This signals to the savvy firm that you’re keen to close the deal, and will probably negotiate further. You’ll have little room to renegotiate rates higher, once the engagement has begun. You’ve already set a precedent.

    So if a firm asks for a discount, be sure to reduce the entire package in some way. Total number of hours, on-call coverage, amount of software or widgets delivered etc.

  3. Experiment with Different Billing Models

Hourly billing is not the only model in town. If you’re finding it’s a lot of work to keep track of hours, or you and your client are staying unduly focused on these details, consider other models. Pricing by the day may work, for example. Further options may include billing by the week or even by the month. Chances are you’ll want to discount somewhat for larger incremental steps in pricing. Keep in mind that with monthly billing for example, your project cannot end on June 10th or July 5th. It will always roll forward to the end of a month. So offering a discount for larger billing periods may even out in the end.

In the next post: How to manage and complete engagements.

iHeavy Insights 75 – Recognizing Quality

Finding good vendors who provide professional services may have a lot in common with finding good restaurants.  There may be an abundance of them, while the best ones remain difficult to find.

A long line does not mean quality food

Some restaurants have a long line because they have slow service.  If that’s because you’re getting quality personalized service, great.  But if it’s because of incompetence and general disorganization or because they can’t keep quality help, that’s another story.

Hype and marketing can bring a lot of customers to a new restaurant.  Sometimes it’s a celebrity chef or architect.  If that’s what you’re after then you may be at the right place.  If you’re looking for the best home cooked meal, you may have to keep looking.

Convenience and location can also bring long lines.  Finding a restaurant on the main street or square is usually not the one with the best food.

A better way to find quality

Take a look at how long the restaurant has been around.  A service provider who has been in business for a long time has obviously been successful at acquiring customers, solving their problems, and charging a fee that matches both their needs and those of their customers.

Check the testimonials of your provider.  If their website doesn’t list some, ask for one or two customers that they’ve worked with recently.

Pay attention to service.  If you are a small fish for your vendor, it’s likely that service will be affected.  If you on the other hand are one of your vendors bigger clients, they’ll likely give much more attention to you.  Notice how regular customers at a restaurant or lounge tend to get the best service.

Book Review:  The Power of Pull by Hagel, Brown & Davison

A lot of really influential people like this book.  Joichi Ito, Richard Florida and Eric Schmidt to name a few.  Enterprises are faced with a bewildering array of challenges from finding good people, to retaining them, and putting them to work in the most creative ways.  This book brings another new and welcome perspective on the future of building and growing successful organizations.