Public Enemy Number 1 for A Small Development Shop


Net-30, Net-45, Net-60.

If you’ve been working as a freelancer or run your own development shop, you’re familiar with these terms. They are the terms that many businesses leverage for paying invoices. They exist because of Accounts Payable.

What these terms mean is from the day you issue a client an invoice, they will pay it in 30, 45 or 60 days.

Seems normal, right?

For small businesses, one man shops, freelancer… this is hell dressed up as heaven for the client. You get to do the work and sometime in the future they pay you.

As a small business owner, you have much tighter margins than clients who are bigger organizations and let’s be really blunt… the system wasn’t built for you. It was built for them. They hold all the cards and you get to operate at their whim.

Sucky life and a sucky way to build a business, right?

It serves your client’s Accounts Payable department but it’s anti-competitive. Bigger organizations can go “at risk” and eat costs up front. You? You cannot. You have to pay your employees. You have to incur operating costs that should be paid for.

What’s more, many companies won’t pay for code until they receive it… and then Net-30, Net-45, Net-60.

In almost all cases, as an independent, I structure deals with a deposit (another thing other companies don’t want to pay) and with stipulation that code is delivered upon receipt of payment. It’s my insurance policy against clients who would run with my intellectual property (it’s happened quite a bit in the past!).

As an independent, I almost always reject Net-30, Net-45, Net-60 terms. It does not work for me, and if you’re an independent or a small business owner… it probably doesn’t work for you either. So stop playing that game. Just say no. They will stomp their feet. Sometimes you won’t get the business. But when you do get business, you will be paid promptly for the work you did and the playing field will be leveled.

The Most Expensive Question

What's the Point?

The most expensive question you can ask a consultant is, “What else do you recommend?”

This seems like a simple thing. At least if you’re a consultant. Potential clients approach you and they know they need something done. They may have a good idea of what that something is and they may even be able to provide a wish list of things to get done. However, for all that preparedness they ruin it all for their budget by asking, “What else do you recommend?”

Now some consultants do business this way. They are paid to help the client understand their needs and map out a solution. However, understand that this is a very expensive proposition in most cases. Hours of meetings and calls and emails exchanged back and forth can go into defining the scope, as we call it.

What's the Point?
Image by skipnclick on Flickr

We’ll usually approach the client with open ended questions to get a high level view of the client project.

  • What are you trying to accomplish?
  • What is your ideal end result?
  • What problems are you trying to solve?

Once I get a broad picture of the project, I can schedule conference calls with relevant parties to discuss each answer to each question. This is for the purpose of defining the details. Each call could take an hour or more and might span more than one call. This is all billable.

At the end of these series of calls/meetings, we still might have a bunch of email exchanging to do. This is even before we begin doing actual work. You can easily rack up thousands of dollars during this process.

The next phase of the project involves deliverables. Having defined all the scope details, the project probably goes on Basecamp or some similar project management service. Most consultants have a “floor” that is a minimum threshhold. I know people who will not work on projects below $50k. Others won’t work below $25k.

At this point, if the client is still not mentally committed to a path, there can be a lot of potential for “Scope creep”. That is, when the scope of the project slowly expands to incorporate other areas not defined in the agreed upon scope. Good consultants see this coming and can either agree to it pro-bono (bad policy), agree to it as an added service/feature (billable) or convince the client the idea is bad (it might be).

Scope creep is rarely good for the client, though. You’re definitely going to get billed for it when working with most consultants.

Bringing this full circle, however, you can mitigate your costs when dealing with consultants by having a really firm idea as to what and why you want to do from a high level. Leave the details to the consultant to work out, but strategically know where you’re going. If you can define the scope (wireframes are always helpful), you can lessen your cost even more.

The more we as consultants have to do, the more you’ll pay. We don’t mind helping, but if money is an issue, be careful and come prepared.

And for God’s sake, don’t ask “What else do you recommend?” We can make a mint off that question.

Yeah it’s cheaper, but what are you really getting?

I’ve gone round and round about what to talk about this time and, after many heated battles with Nerf balls and Twinkies, a phone call gave me the solution.  I recently spoke to a gentleman who decided that, rather than create a visually appealing website; he was going to spend as little as possible on his website, marketing material and promotional items.  His reason, you might ask?

“œI don’t expect to get a lot out of them so I’m going to go somewhere cheaper”.  He also said something to the effect that if the visual aspect of the marketing materials sold the product then he felt his product wouldn’t appear that strong. Oh, and let’s not forget the ever popular reason “œI don’t want to spend too much money”.

So let’s take a few to address why sacrificing your marketing material for a lower cost to you is a bad idea.

Here’s a visual test for you.  Forget you own/work for a company and come to the visual standpoint of a consumer.  I want you to picture two companies. These two companies sell the same Whatchamacallit, they are in the same area, they target the same demographic, but there is a large difference between them.

Company A invested in creating a strong professional image. They invested a few dollars into coming up with a strong brand identity. They invested in two or three visually strong advertisements that they place in their windows and news papers. They invested a few extra dollars in paint and nice displays and they invested in a website that customers can learn about them and what it is they sell. (This word investment keeps coming up”¦must be something in that, eh?)

Company B decided they needed to spend as little money initially as possible to cut costs.  They had a friend’s kid that’s interested in drawing come up with a logo, they printed a few flyers on their home PC and reproduced them on a library copier in black and white, they brought in used displays they got here and there and they got the same kid that had an interest in drawing create a simple web page that has their contact information, a small blurb about the company and doesn’t visually display the visual message or feel the company is trying to convey.

Now if you saw a running theme with Company A, then you noticed the theme of what I’m saying here.  Your marketing material (brochures, business cards, website, advertisements and etc) are an investment in future success of your overall visual brand.  Not I said the visual brand of your company. No marketing material out weighs the value of a superior product, staff or service your company provides. They are simply tools that tend to reach your potential clients before you or your sales person do.

The minute your marketing materials go out, you are establishing a strong presence, or expectation, positive or negative, in the customers mind and the mind of businesses in your area. You are giving potential customers reasons to take your business seriously by saying without words “œI care about my own product”¦so I will take the same care with yours”.  Or you are giving potential customers reasons to say “œthis company can’t even be bothered invest in themselves”¦so how can I assume they will provide a good service for me”.

If you say “œI don’t want to spend that much money” on your own marketing material, you run the risk of getting exactly what you paid for.  Clients who want to spend very little on your product to get the biggest bang for theirs.  Very rarely, do you get something for nothing.  You also run the risk of a potential customer saying the same thing about your service or product.

There is an old adage that stands true no matter what business you are in “œyou have to spend money to make money”.  A better one, in this case, is “œyou get what you give”.  Before you break out the pitchforks and torches to come after me for suggesting you break the bank and spend everything you have on amazing materials.  That’s not what I’m suggesting at all.  What I am suggesting is that you should look at what marketing materials you will need and budget accordingly.  Plan out what you need in the order you will need them; for example identity (logo), business cards, website, advertisements and so on.  Work closely with a professional firm, or studio, that you have talked to in great detail and compared prices to get the best value.  Or better yet, Steven Fisher is doing a great Marketing Plan Series in his little slice of heaven. Take some time and follow some of his advice.  Between the two of us you may come up with some ideas you hadn’t thought about before.

Once you look at your marketing materials, from your logo to business cards to even your website, as an investment in future profit then “œI don’t want to spend too much money” will be replaced with “œwhat I’m putting out now”¦will come back to me with interest later”.  Here’s a thought I’m going to leave you with, have you ever gone to a networking event and been handed a business card that you found it difficult to keep the expression off your face that would let the person you met know they just handed you something that looked like it was just printed seconds before they met you? Were you ever handed a business card that immediately had you showing it off to someone near by because it was that impressive? Where between the two do you think your business card, or any of your marketing materials, falls?