The Sale ain’t made ’til the bill is paid!

The Sale ain’t made ’til the bill is paid!

It’s funny, almost every one of us would celebrate making a sale – and so we should, it’s a big thing, but it’s not the whole deal and never forget that!!! Strong opening statement? It’s probably not strong enough…

You only have a complete deal when you’ve made a sale, done the work and then collected the readies. Don’t disillusion yourself into thinking that you’re doing amazingly well just because sales are being made – getting the money in the other end is just as critical and sometimes just as tricky :)

Its very easy when you’re new to business to let your clients get away with not paying you very quickly – don’t worry I’ve been there and done it myself. This, however is not a good strategy and will only leads to problems, here are just a few of them:

  • The time you’ll waste chasing debts can become ridiculous – taking you away from your day to day work
  • Clients can begin to ‘expect’ better terms
  • Many companies have a ‘don’t pay until questioned’ policy – if you don’t ask, you simply won’t get
  • As you get more established, older clients that have been with you since the early days will continue to pay you on the old terms you let them get away with – this is very hard to change down the line
  • Clients will know those suppliers that are less likely to cause them problems when it comes to asking for money – you’ll be further down their priority payment list
  • An aged debt is more likely to turn into a bad debt

If you’re about to start a business or are still fairly new to it all, make a strict policy for how you’re going to deal with the collecting of monies and stick to it.

Here are a few quick suggestions:

  • Create regular statements – At least once a month – send your statement in the middle of the month when most other companies send theirs at the beginning or end, it’s more likely to get noticed.
  • Try and make your statement stand out – We have a stamp with a picture of a man crying, saying ‘please pay this, it’s overdue’
  • Keep a close eye on your aged-debtors list – At least  once a month
  • Don’t be afraid to ask for the money – after all, you did the job, you deserve it
  • Have a process in place for chasing debts that are older than your terms
  • Consider if you can minimise your risk of bad debts and cashflow issues by putting in place deposits or at least stage payments
  • If the debt gets really old, don’t be afraid of losing a customer by passing it to a collector, are they really worth having as a customer if they are putting you through this? I hear you thinking, ‘but yes Al that’s fine but they are so important to my company, I can cut them a bit of slack can’t I?’
    NO
    Seriously, it’s not worth the agro – get yourself a policy and make sure you stick to it religiously, whatever the size or importance of your client. No exceptions.

One last tip, if you employ sales people who are have any sort of commission, make it a condition of that commission that’s its only paid when the money owed from the client is in the bank. Give them the responsibility of getting the money in – this will make your life easier in keeping on top of aged debts.

How have you found getting money in? Do you have any further tips for business owners regarding this tricky issue?

p.s. If you like what you’ve read here then you should sign up to my RSS feed and every time I update this site the post will be sent to your reader automatically

7 Things a Startup Company Should Think About

7 Things a Startup Company Should Think About

This morning I was thinking back to when I started my web design business in Exeter and how much both the business and I had changed. Back then, there were three of us, all very wet behind the ears (that’s a really odd saying isn’t it!). We were at University at the time (Exeter) and all studying computer science. We had made a conscious decision to start a business but to be honest not really thought much about how or who we needed to talk to. We were lucky to have my Dad around who acted as a mentor and pointed us in the right direction but it got me thinking about other people not lucky enough to find good, trustworthy advice, so easily. There must be lots and lots of people in the same position as we were, at University or leaving school, thinking about starting up and having great ideas but not knowing where to start. I’m sure there are many great fledgling businesses stifled at this point which is a real shame. In this post I’m going to skirt over a few things we did when we started up – I’m hoping this will be useful to some of you out there in a similar position to me, 10 years ago. In future posts I may well delve deeper into certain areas but if you know of anyone thinking about starting a business from University or School then please send them in the direction of this post. :)

1). Come up with a company name – Might sound obvious but when you make a success of it then this will stick and be quite difficult to change. A lot of people ask me where the name Optix Solutions comes from and to be perfectly honest here is the answer:

  • 4 guys sitting in a university bedroom chatting about setting up in business
  • Probably a few beers had been sunk (we were students after all)
  • One said, ‘Web Design is quite visual’
  • Another said ‘Optical – that’s visual’
  • ‘Optical Solutions’ someone shouted out
  • ‘How about Optix Solutions – that’s a bit more street!’

So there you have it – easy as that! Now as it happens I quite like our name and its worked well for us but given the chance again I probably would have put some more thought into it and considered the future when it started to become a known name in our town – I’d urge anyone going through this process to do the same.

2). Register your domain name – I pondered over which should come first – this point or the next. I decided on domain names because of the difficulty of getting good ones these days. In an ideal world your domain name would:

  • Be Short(ish) – although almost every permutation of 3 and 4 letters have been taken
  • Protect your brand – register .com / .co.uk / .net and any other relevant endings for your type of business
  • Try and avoid hyphens where possible – they are difficult to spell out over a phone and confuse people
  • Not point traffic at competitors or unsavoury sites – If you can’t get all the endings for a domain you want, make sure you check what is on the ending that’s already registered. Users make mistakes and you want to see what site you’ll be sending traffic too – I’ve seen some terrible examples of this happen to people I know

If you’re not sure on domains then take advice and talk to people that know about them. At Optix we regularly advise on domains and register on our clients behalf. Give our office a call on 01392 667766 if you want some friendly help.

3). Register your company name – Once you have the name you should probably do a few things based on where you want to take the business. I’m a firm believer in starting by creating a limited company where you’re protected as the business owner. You probably don’t know if you’re going to make a success of it, so the more protection the better. If you’re on a shoestring, then you might not be able to afford to speak to Solicitors at this stage, but in an ideal world you’d want to check there are no trademarks or other legal issues you could come up against later, when you become well known. A solicitor will be able to run quick checks on names to let you know whether this is likely to be an issue. As a startup I never saw the importance of this but as I’ve become more business savvy and seen examples of people having to change brand and company names that they’ve poured thousands and thousands of pounds into, because they never made these checks, I now understand the need for it. Registering a company name is something you need to do at Companies house – there are plenty of agents out there that will do it all for you for about a hundred quid – We used a company called Jordans who were excellent.

4). Find a good Accountant/Bookkeeper – The number of small business owners that I meet that try and do their own books and accounts is unbelievable! Why would you do that? It’s hard enough running a business as it is without then having to work out a whole new world of numbers that go with it. Oh, and then there’s the small point about getting it wrong as well. You don’t want that to happen or you could end up with all sorts of problems to deal with. There are plenty of fantastic bookkeepers and accountants around who are setup to help start-ups. You won’t need someone in full time, you’ll probably only need that person one or two days every week/month at first, to enter data and help with things like Tax and VAT. For under £20 an hour (bookkeeper) that is money well spent in my opinion and one I truly feel any small business needs to budget for. Accountants are more expensive and I would advise trying to find one you can pay for monthly rather than getting lumbered with a large bill when accounts come round each year – this will help cash flow and save you from a yearly heart attack each time you file your accounts.

5). Find a good Solicitor – Like Accountants, Solicitors are a necessity for some things. You can probably word your own terms and conditions and contracts if you want but you’ll be on thin ice if anything happens and you need representation. When you get into the world of leasing or buying, you’ll have to employ a solicitor to assist you anyway. My advice is get in with a firm early. There are lots of firms out there who will offer you 30mins to an hour free and my advice would be to go and speak to a few and choose someone you like and has a good reputation. We work with a firm call Ashford’s whose head office is in Exeter but they work all around the world. The guys at Ashford’s are fantastic and I can recommend them wholeheartedly – They’ve acted for me on a number of things, all business related.

6). Talk to local business advisors – Some love em, some loathe them, but my experience of organisations like Business Link has been relatively positive. Find a good advisor at this organisation and they will really help you succeed in business and here’s the best thing for you start-ups – its FREE! Yes the magic word! Because of the fact its free they are usually stacked out which is why I always recommend you find yourself  mentor as well and pay them (See this post about mentoring). Give Business Link a call and they will help signpost you if they can’t answer questions themselves.

7). Find a good Bank Manager – Notice how I say Bank Manager and not just Bank? Your relationship with your bank manager will be critical to your success. You never know when you’ll want that overdraft extended or perhaps the limits on your card increased, or even just a better rate on something. Well this will almost certainly come down to your relationship with your bank manager. Go to each bank and spend some time with the commercial managers there and choose on relationship and gut feel (throw in some sense on what they are offering too of course). We love our bank manager at Optix (bet you don’t hear that said very often!) – If you’re in Exeter then I would be delighted to make the introduction to him should you so wish.

It’s funny how things flow back to you when you start writing about the past. Start-up can be a really exciting time – just make sure you’re not too proud to get as much advice as possible and soak it all in. As ever, I wish you the best of luck.

Recession – Cost Cutting Exercise or Opportunity to Make Your Mark?

Not a long post today but it’s about a topic that I’ve discussed a lot of over the past six months so I decided today to put pen to paper on it just in case it can help any small to medium sized business owners out there.

Recession or any kind of slack economy is, in my opinion, a real chance for clever businesses to really lever themselves into an industry leading position. This is of course as long as they can keep cash flowing themselves!

The main reason I believe this, is that many of your competitors are cost cutting, thinking that’s the answer to the dreaded ‘R’ word. So while they are less prominent, you need to step up and take advantage. You’ll almost certainly be able to get better deals on marketing opportunities at these times too so make use of them. Get your name out there more than they are, and get ready to clean up on the business that is still looking for your products/services.

Another reason it’s a great time to ramp everything up is because some of your competitors will almost certainly disappear completely so make sure you’re ready to pick up some customers from those businesses that found things too difficult when they are looking for a new supplier.

A quick word of warning – recessions mean more new start-ups as people who are made redundant take the opportunity to set up new businesses, so just make sure your business is lean and ready to take opposition from younger, hungry companies. Just work out what differentiates you and be ready to tell everyone from the roof tops.

A slow economy is an opportunity for us entrepreneurs – work out how you can take advantage now :)

Business Mentoring and its Importance

Apologies for the time its taken me to write this post. Moving house has been my priority this last couple of weeks and left me very little time to sit down and think about this important subject.

This post deals with the role business mentoring plays in successful businesses. It can be lonely at the top! :) OK so maybe that’s a bit dramatic but in all honesty when you are at the top of your business there is often no one to turn to, no one to ask whether you’re doing the right thing and if like me, you’ve not worked for anyone else (I started my business at University and am still running it 10 years later), no precedent has been set for most of the situations you come across. The learning curve is unbelievably steep, especially at the beginning and a big factor for why something like four out of five start-ups fail. This, in my opinion is why its so important to find yourself a business coach/mentor.

In Optix (my web design business), I’m lucky that I have my business partner James to bounce off. I’m sure that many of you reading this will not have anyone else because you’re running things yourself. If you’re in that position then I’d suggest a mentor is probably even more important for you.

James and I are extremely lucky that my father Jamie doubles up as our business mentor. Having run businesses with more that 150+ staff and now running his own consultancy in Essex, he is perfectly placed to offer advice to James and I as and when we need it. I’m big enough (well actually if you know me you’ll know I’m quite small!) to say that without Jamie’s help I don’t think James and I would be here today.

So what do you need to look to a mentor to help you with and why? When you find someone you get on with, trust and respect (this is critical), the sort of things you might want to talk to them about include:

  • Regularly looking at cash flow (the lifeblood of any business)
  • Profit and loss
  • Contracts (both ones you’ve been asked to sign and ones you need to draft for other companies)
  • Personnel issues
  • Financial decisions
  • Company strategy and Goal Planning

We have a regular monthly board meeting with Jamie and stick to a structured agenda with many of the points shown above discussed as a matter of course, even if there is nothing to note that month. It’s great practice to get into this routine so you always have a grasp on where the business is at that moment in time and where its going. It’s also a good time to report back to the board on issues that only you have been dealing with.

One thing I see a lot of is people who act as business coaches. Business coaching is a different kettle fish. Many coaches have developed their own models which can help you focus on your business goals and not get sidetracked by the day to day runnings of your business.

So if you’re reading this and saying to yourself, ‘yes but I don’t need a mentor/coach because I know my business and am successful in it’ then let me make a quick parallel for you:

Just think about sport at the top level – If you’re a premiership football club at the top of your game you have coaches, similarly if you’re a top ATP tennis player you will have a coach. Sportsmen and women all over the world have coaches and I believe in the business world its sensible to do the same.

Quite often as a director you’ll find yourself too ‘inside your business’. By this I mean you’re blinkered by the day to day goings on. Someone with experience of business outside can often break things down for you and help you make the best decisions for your business. A good mentor/coach in my opinion doesn’t make decisions for you, they merely pose the right questions that help you get to the right conclusions. You may find that these ‘answers’ often seem obvious but it’s this kind of mentoring which is fantastic for any business which wants to grow and go places.

I’ve met a lot of directors that have said they don’t need mentors/coaches and in my opinion some of these have let thier egos get in the way of good solid business sense.

If you’re wondering now how you can find a mentor, I’d suggest networking your local area and asking around – make sure you get recommendations for the person you’re thinking of getting in and of course, it goes without saying that if you’d like to talk to my father Jamie about what he can offer your business (anywhere in the UK), please contact me and I will happily put you in touch. I can put my hand on my heart and say that he is one of the biggest reasons that Optix is still around now, ten years after our incorporation and doing so well. :) Thanks Jamie!