Doing business on your own terms
By Jon Bergan (@jonbergan) in Workflow » Starting Out
We’re business owners and we’re damn good at it, right? We love what we do and we pour buckets of blood, sweat and tears into our businesses each and every day, right? We feel so confident about what we’re doing that we wouldn’t change it for the world… well, mostly.
But what happens when you have clients or questioning the way you work? Do we falter and try to do everything we can to make the other party smile or do we stand up for ourselves for a change to do what’s right for us?
Sitting down and clearly defining your official terms, conditions and policies is a very smart way of running a business. It ensures that you have an answer for everything and gives you clarity and focus on how you, as a business owner or freelancer, want to work. Nobody should be able to bend these rules – not even you. These are the building blocks to a successful and well structured organisation.
Define your Process
The absolute first thing you must be able to clearly define is how your sales and solution delivery process will work. This includes everything from a basic quotation through to the completion of a project. Consider factoring in some of the following elements:
- Quotation formation and approval
- Bookings and Schedule
- Invoicing and Payments
- Project stages and approval processes
- Project implementation and completion
- Relevant documentation to support the above
Getting the above down on paper is a sure fire way of having a crystal clear view of how you want every single project to flow. There are no deviations from your plan. There are no exceptions. Defining such a clear cut process will streamline your business, simplify things for new staff members and ensure that clients have a clear understanding of what to expect from you and when.
Set your Payment Terms
So, you know how you want your projects to roll but you still need to work out how you’re going to get paid for all of that wonderful work. This is where payment terms are necessary.
Defining rock solid payment terms is crucial to the success of any business. It also ensures that there is a firm understanding between client and supplier as to how things should be paid and when. Less confusion will result in less frustration (from both parties) down the track.
These questions should help you jot down some fairly solid payment terms right off the bat:
- What are your payment terms in days (COD, Prepaid, 7 days, 15 days, 30 days etc.)?
- Do you have different payment terms depending on the product/service they’re purchasing?
- Do you require deposits, payments throughout large projects or final payments as part of your solution delivery process?
Who owns what and when?
When it comes to service-provision type businesses, it’s important that both parties completely understand who owns the IP/copyright for the goods provided and when this copyright is transferred from one party to another.
In many instances, people will just assume that if they’re paying for something, they rightfully own it, however this is not always the case. A good example is Microsoft and their licensing scheme behind Windows. When you purchase a copy of Windows, you don’t actually own it. Instead you’re paying for a license to use their software. They still own the software. You just have access to it as well.
For designers, the end of the project usually signifies the transfer of IP from designer to client, however for developers, this can often vary. Similar to Microsoft, developers may want to retain the IP to some portions of their code or even the entire codebase itself. If this is the case, make sure your client reads and signs something that clearly outlines this.
Bring it all together
Grab a blank sheet of paper and start throwing all of the terms, conditions, policies and appropriate procedures into one big document. This will become your Terms and Conditions of Service and will act as a blueprint when it comes to interacting with clients.
Make sure this document is available on your website and is also shown to the client during your sales process. Don’t leave your client in the dark. Make sure they clearly understand what they’re getting into. This way there will be no grey areas and everyone will know exactly what to expect.
Don’t budge!
Finally, don’t spend hours and hours putting all of these terms and policies together to just watch them go out the window for an unreasonable client. Stick by your policies and stand up for yourself. How you operate might not be how “Joe Bloggs” runs his workshop but this is your show. They chose to use you for a reason. If it’s a good enough reason (and your terms aren’t ridiculous) they should be happy to agree to them.
If you’re feeling a little unsure about your process or you frequently have to determine how you should act under certain circumstances, maybe you need to revisit your Terms and Conditions. Anticipate every scenario and have an answer for everything. By doing this, you’ll instantly feel more confident about the way you run your business, you’ll improve the way you provide your services to your clients and you’ll always be prepared. And that’s how a real business is run.
By Jon Bergan
Jon is a passionate web designer, developer and blogger from Australia. Whilst online, he spends most of his time knee deep in PHP code or blogging about good design and business advice. He is also a movie lover, guitar fiend, tea drinker and serial entrepreneur.
You can find out more about Jon here or you can catch up with him online via Twitter or Facebook.
Show us some love and bookmark this post on your favourite social bookmarking sites!
Great post, JB. Don’t think we would’ve gotten far without doing the above.
Why thank you, M
Fab points, Jon.
Sticking to your guns is one of the hardest – yet most crucial – point in the process. I used to find it so difficult and after being bitten in the bum one too many times, everything changed! I wrote a similar article on Flying Solo on managing client expectations, based on the many difficult lessons learnt during the process: http://www.flyingsolo.com.au/p316859524_The-nine-keys-to-managing-client-expectations.html.
Keep up the great work!
Great post, Jon.
You raise a lot of good points to be considered in building a sound foundation for a successful standardised business.
Policies and procedures are a MUST and, of course, if they are not being adhered to, what’s the point of having them?
That said, I do feel that one of the key advantages small business has over its larger competitiors is the ability to be flexibile in order to best serve individual client needs. Now, that shouldn’t mean we are letting clients dictate our terms, but I have seen some small busines owners take it too far so as to inadvertently create a bureaucracy (which ultimately results in inefficiency for the business and a frustrating experience for customers).
@Amanda, Without a doubt. In the beginning, I think you just want to please everyone and make all transactions/interactions as smooth as possible. When I look back though, I think it would have been better if I had stuck with my guns the entire time. If you break them with some clients early on, they won’t be too happy when you actually start enforcing them.
@Christie, Great response! I’m 50/50 on your point though
I think some rules can possibly be bent a little, but core procedures/policies and especially those that define your core solution delivery processes shouldn’t be broken. Even though we’re in small business, I think we should still think big if thats where your sights are set. My concern is that if I start changing policies for individual clients and then I do grow (and start hiring more staff), I’ll almost need to be advising to each of my staff members which clients get what deals etc. etc. Could get messy real quick!
It does come down to industry in some regards though. For us, we’re booking projects that go for 8-12 weeks 2-3 months in advance so if we bend our rules too much, things can quickly snowball into something we cannot handle. Our processes allow us to stay efficient and to keep our projects on track and within scope so its utterly important for us to stick to them as much as possible. Thanks for the comment though – was awesome! It got a rant out of me
JB
“If you break them with some clients early on, they won’t be too happy when you actually start enforcing them.”
So true. Definately a biggie. Couldn’t agree more.
“It does come down to industry in some regards though.”
You’re right. I think being a little more rigid with the rules is a necessity for most service professionals. Inflexibility can be a death knell for many small retailers though.
“It got a rant out of me”
LOL! You can always count on me to play Devil’s Advocate. It’s like a hobby of mine.
Christie Lewis´s last post: MYOB Software Has a New Name
I don’t know why but it took me long enough to start using contracts for my clients but I never gave much thought to using a TOS which makes complete sense.
While the TOS does cover similar points as a typical contract, it definitely rounds out your working terms with a client. Plus, I can see it preventing even the slightest possibility of a dispute.
Awesome post Jon!
Johnny´s last post: Why You’re Not a Better Freelancer