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14
Nov 11

How bad clients drive out good clients – The Bad Client Series Part 1

Monster-men © by MShades

Have you ever said something similar to

  • “If only I had more time to work on that cool record store site before the deadline”.
  • “If only I had thought of that function before the client decided to buy that new software”.
  • “If only I hadn’t made all those stupid mistakes after working on that project for 20 consecutive hours”.

What causes all of these “If only” moments?  Bad clients.  How?  By taking up all of your energy so you can’t spend it on your good clients.

It’s a lack of energy, not time

You only have a limited amount of time per day -  24 hours worth per day.  You should be billing for your time, and you probably are.

You also only have a limited amount of energy per day – far less than 24 hours worth per day.   Probably far less than 8 hours worth per day (It is not easy to bill for your energy – if you have a good method, please leave it in the comments).

Happily no one needs to be “on” for eight or more hours a day.  All of us go through our working lives in  peaks and valley of mental exertion and that is the way it should be.  The real question is – how are you spending your peak energy?

Are you using that energy to produce something?  Or are you using it to stay awake while the client tells the story of his childhood trip to Michigan?  Or are you using your peak energy to create that new ticket ordering system or new logo?  Or are you using your energy to hold your tongue while the client goes on yet another political rant?

Here’s a hint – if you are expending energy for a client and you produce something, you have a good client.  If you expend energy for any other reason you have a bad client.

Warning signs of bad clients

You have a bad client if they

  • Yell, scream and throw things (No, this is not a myth, I’ve seen it)
  • Try to renegotiate the contract midway through project for no reason (it’s a unbillable use of energy to deal with)
  • Are eager to talk about religion or politics while at work
  • Answer every request for details by telling you how important the project is
  • Respond to every question over a period of weeks while not actually answering your question
  • Disparage and praise your predecessor in the same meeting.
  • Ignore the chain of command and lean on your subordinates directly
  • Have a methodology they created at their last job that they just assumed was an industry standard (and tell you about at the last minute)
  • And many others (please put them in the comments)

The above items are but a small sample, but even if (and you should be) getting paid for the experience of them, they still consume energy that you could spend making something wonderful.

An Example

My last real job had many talented designers.  The one who did the best work was not the most talented, but rather a designer who had a somewhat inflated but fanatically held belief in her creative prowess.  She carried herself as a breed apart, and above the corporate fray.

No one bothered her with excessive emails, distractions or temper tantrums because they knew they would not affect her, because she was so “creative”.  As a consequence, she could spend all of her energy doing great work, which she did.  The rest of them had to endure endless meetings, change orders and “branding discussions”.

I did not recognize the brilliance of this strategy at the time, but I do now.

How bad clients drive out the good clients

If you are spending all of your energy on unproductive work for your bad clients, what do you have left for your good clients?  Bupkus, that’s what.  It’s a horrifying investment of time.  Sadly they go away and find other vendors, leaving you stuck with the bad clients.

In economics, this is known as Gresham’s Law – where bad money drives out good money.  The same principles apply (broadly speaking).

This is part one of the series, the next will be on how to quantify bad clients.

PS – I love my existing clients,  I have had bad clients, and I have gotten rid of them over the years.  My current client base is small, but good.

 

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.


12
Oct 11

Project Length – Why you should measure the duration of your web development projects

As part of my series on simple business metrics, I write this elaboration on metric #6 – Project Length., to wit, how long should a project last from start to finish. This might sound like an odd thing to track, but hear me out.  And yes, I know that longer project lengths can be a sign of larger projects.

timeline draft © by neil cummings

I’ve found that I usually set (within certain limits) the duration of my projects.   The client then modifies the duration based on my starting point, and then the actual duration drifts in either direction.  I’ve found that I am well served by getting the initial project length right.   Here are some positive and negatives I’ve come across over the years:

Positives of a short project length

  1. You get paid faster
  2. Less time for scope creep
  3. Fewer chances for the client to shift project managers
  4.  The problem remains fresh and painful, so the client will be grateful when you deliver
  5. The assumptions you are basing your solution remain true

Negatives of a short project length

  1. They are much less pleasant
  2. You can’t time shift (for example if you get a change to bid on a new project, you simply can’t fit it in)
  3. Less room to adapt to sudden problems
  4. External disruptions are costly
  5. Less time to pay off your technical debt

Positives of a long project length

  1. A moderate project pace is pleasant
  2. You can be thorough
  3. External disruptions are more manageable
  4. You can work new opportunities into the project schedule

Negatives of a long project length

  1. You get paid later than you would otherwise be
  2. Far more time for scope creep
  3. Project managers can change  at the client
  4. New project managers can be added to the project
  5. The assumptions you based your solution on will get out of date
  6. If the project lasts for a sufficiently long period of time the client will get resentful of having to pay for something which is (sort of) out of date.

So, why is measuring project length important?  Since project length is largely a collection of trade offs, it’s best to get the trade offs you prefer.  If you find yourself never able to pay off any technical debt like you used to, or beset by problems with new project manages at the client, see if you average project length is increasing.

 

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.

 


3
Oct 11

What is the right size for web development projects?

As part of my series on simple business metrics, here is an elaboration on metric #3 – Project Size., to wit,  what is the right size for web development projects for your firm?  The answer is not necessarily “Larger”.

I’ve found that my projects consist of varying percentages of:

  1. Graphic design
  2. Client Management
  3. Project Management
  4. Web Development
  5. Estimating, proposals and accounting

Each of the above varies by client of course.

Each of the above tasks requires some overhead in terms of dollars, time and energy.  The cost of client management and project management will increase disproportionately with the size of the project.  Maybe you are an extrovert.  Higher amounts of items client management and project management will be easy for you.  If you’re an introvert you will prefer graphic design and web development.  Client management and project management will be draining for you.  The percentages that are right for you will depend on your skills and personality.

After a few years you will have some notion of what the right size is  for you and your company.  Too far below this size and you find yourself spending too much time and money on estimating, proposals and accounting for the project to be profitable.  Too much above this size and you find yourself outside your comfort zone and spending too much time and energy on client management,  project management, and one time capital items.  You can lose money on projects that are too small or too large.

However, one happy thing about doing multiple projects for the same client is that client management and project management will decline over time (as percentages).

So, in sum:

  • There is a right size for web development projects.
  • That size will vary from firm to firm
  • That size should vary by client.
  • The right size for web development projects should increase over time.

In closing – I ran this by several friends as I was considering the article and got a wide variety of opinions, some agreeing with me, some not.  This is only my experience, your mileage may vary, etc.

 

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.


30
Sep 11

How to raise your hourly rate? Start by calculating it properly

As part of my series on simple business metrics, here is an elaboration on metric #2 – which client has the highest hourly rate.  Calculating this seems simple, and for the most part it is.  You just have to make sure to include all time involved with the project.  It’s easy to omit non-billable time, hopefully you are including practicing  time tracking with some automated software.  You can only raise your hourly rate if you know what your rate truly is.  When calculating the rate, make sure to include all of your non-billable tasks.

Over the years, I’ve found non-billable tasks often include:

  1. Meetings
  2. Travel to meetings
  3. Phone calls
  4. Meeting prep (no one ever remembers to account for this)
  5. Pitch rehearsal
  6. Task disruption – on average, I have found it takes 15 minutes minimum to get back into psychological flow after a phone call or “urgent” email.
  7. Project research
  8. Client Research
  9. New software evaluation (ideally this should be spread out over several clients)
  10. Writing contracts and proposals
  11. Negotiating prices and contracts
  12. Consulting with outsiders (lawyers and advisers) about contracts
  13. Status emails

Have I missed anything?

Update: Bill From Coding Out Loud suggested the following points (which I have reworded slightly)

  1. Contract review and legal overhead
  2. Collections
  3. “Goodwill” support, i.e. items outside of the contract but needed to maintain the relationship (like when a client asks for the same file for the third time.).

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.


30
Sep 11

When should you invoice for web development projects?

As an elaboration on my simple metrics post from yesterday I’m sharing my personal experience with each metric.  The first metric is “How long do clients take to pay their invoices.”  Why is that important?  The main reason is obvious – your money is safer with you.  And to get paid you must first invoice.  I’ve tried several methods over the years and here are some thoughts on when to invoice for web development.

  1. Invoice at the end, Net 30.
  2. Invoice 100% at the beginning, starting work on the sending of the invoice
  3. Invoice 100% at the beginning, starting upon receipt of the first payment
  4. Invoice 50% of at the beginning, starting work upon receipt of payment, and invoicing the remaining 50% on the completion of the project
I’ve tried them all, and here is my experience
  1. Invoice at the end – It has worked worked, but avoid if at all possible.   On some projects the money only changes hands at the very end and it can be profitable to use this method.  Be warned though, I’ve found most client relationships will take a hit from this method.   This method will draw deadbeats like flies.
  2. Invoice 100% at the beginning, starting work on the sending of the invoice  - I’ve found that this bring out counterproductive perfectionism in clients
  3. Invoice 100% at the beginning, starting upon receipt of the first payment - I have had mixed results with this method.   Since the client has already paid for the work, he usually feels no need to make anything easy for you, and will never feel bad for endless phone calls and meetings (this happens in about 80% of cases).  Also, clients who agree readily to this usually have little experience in the web field and require a lot of handholding
  4. Invoice 50% of at the beginning, starting work upon receipt of payment, and invoicing the remaining 50% on the completion of the project – I’ve found this method to be optimal, you attract experienced, non deadbeat clients who are willing to pay for quality
That’s my experience with invoicing for web development projects.   What’s yours?

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.


28
Sep 11

Six simple business metrics for your web development company

After nine years in business at the best web development shop in Atlanta, here are the simple business metrics I wish I had kept from the beginning.

  1. How long do clients take to pay their invoices – it’s easy to overlook, bit if you don’t manage these they can creep up fast and it is hard to rachet expectations back down.  Read more
  2. Which clients has the highest hourly rate – Not always the easiest thing to track, particularly if you have a mix of hourly and fixed price projects, but you have to know who gets the extra effort – Read More
  3. Project Size – for all of the obvious reasons, and remember, a lion does not live on mice. – Read More
  4. Internal vs External Work – This metric has a host of obvious benefits, and it will usually show you where and what to outsource to outside services. – Read More
  5. Overall hourly rate over time – If it trends down for more than two consescutive months, you need to start retooling your business – Read More
  6. Project Length – How many days from start to finish?  It is easy to confuse this with project size, but how much time is lost in delays and approvals? – Read More

I track all of these simple business metrics in my Profit Awareness web app.  Indeed, I wrote the app because it is too much of a pain to do it manually, and QuickBooks is of absolutely no help at all with most of them.

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog – as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.

 


7
Jul 11

How much is a client worth to your business?

One feature of my new web app is the evaluation of clients. At the moment I have the following criteria:

  1. Effective rate on their projects
  2. Size of billing
  3. Payment speed
  4. Amount learned on their projects
  5. Fun had on their projects

Am I missing anything? Does anyone have any thoughts on how these criteria should be ranked?

Update: I have more thoughts about how much is a client worth in this newer post.

 

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog - as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.