As I've noted in a previous entry, I sometimes post a message to the
Graphic Design Cafe mailing list that I feel would be helpful to others. In this case, I think my post applies across all businesses, not just the web and/or graphic design business. And I think it warrants repeating most of my message here. Perhaps others besides the members of the list will find it helpful.
The original post asked for assistance helping a partner who wants to do everything herself but is a talented yet timid designer. He asked about resources he could use to help her become a better business person, particularly to ask for work and ask for payment.
My Post (edited):
I'll chime in here with my experience, dealing with retail customers day after day after day, 62 hours a week. Most of you don't know this, but in addition to my freelance and personal projects, I help my brother grow and manage his retail used and new tire business. I manage his store for him every day, he does the other things such as source used tires, sell wholesale lots of used tires, manage inventory, order tires, etc. We've more than doubled our sales in less than 2 years (his business will be 10 years old in September 2006). Some of this growth is due to improved and choice marketing (I'm on this list because I spent 9 years as a graphic/web designer at
Koch Industries). But not all of it. Some of it is due to customer awareness, and in response, improved customer service. Customers are the same, no matter what the business. A broad generalization, but generally true. So my retail experience applies here, as well as my corporate and graphic design and web design freelance experience.
Your partner is going to have to buck up, or find someone (either paid or unpaid) to do the sales end of the business. Sales doesn't have to be cold calls (yuck!), but someone has to get the project defined and contract signed, and then ask for the money when it is due. It's that simple. If the money isn't collected, the business isn't a business, it's a hobby. Nothing wrong with that. But if a business is what is desired for the end result, it must look and act like a business. Which means...the sales end of the stick. And when a business looks and acts like a business, the customer expects to pay what is due, so it's considerably easier to ask for monies due.
I'm somewhat timid myself. In helping my brother, I've grown over the last two years as a sales person/business owner (since I act like the owner). Your partner can't be afraid to ask for what is necessary (project definition, contract, payment). If she is, then she REALLY isn't sure of the value of her work and probably doesn't believe that the customer values her work as much as she should get for it. All within reason, of course. She must leave this paradigm behind. Customers have always priced elsewhere, or will, and are usually familiar with appropriate costs. Those who do not wish to pay, do not wish for the business to survive and thrive, and do not care that they will need those same services again. They are short-sighted.
We have customers all the time who ask what kind of discount do they get when they buy 4 tires (used or new, doesn't matter), or if we can install the tires we sell for free. My brother responds, "Sure, we could install tires for free, but our doors won't be open tomorrow to help you when you need help again." He also explains similarly that he has 22 people that count on him for their living (employees and their immediate families...9 of those me & mine), so we charge what we have to charge. We also do not make apologies for our prices, as we know they are in makret. So we fully expect people to pay them, because they're the same they'll pay elsewhere. And they do pay, usually without question. As long as they know up front costs will be. No surprises.
Those that don't want to pay, we don't want them as customers, either. No business does. Businesses are not charities. Customers that don't pay are actually worse than having no customers: they consume time and materials (at an expense for the business) without any compensation. A lack of customers consumes nothing, but it does takes us away from doing other business-building activities (meeting with paying customers, for example), which we should be doing anyway when we're not helping paying customers.
I've dealt with angry customers, most who don't want to pay. Mostly when my brother is away from the business. I used to joke that he'd call these people when he was away and have them come in to giive me trouble. Seriously. And I think it would have been an effective training regimen if he had done so. It seemed that every time he was away, I'd have some run-in with angry customers. But these run-ins have battle-hardened me and taught me valuable lessons, which I am going to share with you (and everyone listening). But first, some detail about 3 primary experiences:
An older man (late-50s, mid-60s) needs a $25 used tire and that tire installed (mounted for $5, disposal of old tire for $2). He complains about these prices. I knock off $5. He reaches over and pats down my right side (where I where my cell phone). I back up, smile, and ask him what he's doing. He says he's checking for my gun, he calls me a fuc*in robber. I laugh it off. He leaves the old tire and wheel for the new tire to be installed, picked up later. We discover his valve stem is bad, the cause for the destroyed tire, and replace it in his absence, otherwise the new tire won't hold air. Simple, right? It costs $2. The new tire doesn't leak, etc. He comes back to pick up the tire. He is indignant about the $2 valve stem, though I explain that it is necessary for the assembly to hold air. He calls me a robber. I tell him that's the second time he's called me that. He corrects me: "This morning, I called you a fuc*ng robber." So I tell one of my employees to pull the new valve stem out of the customer's wheel. Of course, it won't hold air when we do that. The old man stops me and pays. He grumbles something about being glad when my brother gets back. I tell him, "Me, too."
A woman comes into the shop, buys a used tire. Leaves with it. Calls about 20 minutes later wanting to return it, distressed. I ask what the problem is. The tire has a plug in it. I explain our return policy (no refund, exchange under warranty only if the tire slips a belt, etc. before such and such time). A plug doesn't make a tire defective. The whole time in the background, I can hear her husband yelling at her. I feel bad for her. I tell her she can bring the tire back and we will put a patch over the cut plug (a common procedure in the business). She says OK. She comes in, still distressed. About 5 other customers are in the customer area, waiting for their tires and/or to have their tires replaced/repaired. I explain again the return policy so she knows I'm going above and beyond and breaking policy, then give her a refund. I tell her she has already had enough stress for the day. Then at about that time, her husband comes into the shop, livid, unglued, unbalanced, calling me a mother fuc*er, screaming that I sold him a bad tire, etc. Completely unreasonable and bordering on dangerous, I believe. I tell him I am in the middle of refunding his wife's money, though it isn't our policy to do so. He's still calling me four-letter names. I thank him nicely. "Thank you, sir." He's still rattling off. "Thank you, sir." "Sir, I have to ask you to leave..." He calls me another name. "Thank you, sir." He turns to leave, even steps out the door, then turns right back around, laying into me again. "Sir, you need to leave....Thank you, sir." He gives me the single finger salute. "Thank you, sir." He leaves. Finally. I'm shaking, I'm so pissed off. I give the woman back her money and wish her good luck. I am so upset, I have to go into the other room and pace for a few minutes, out of site. When I return, the customers who are present say they are impressed with how I handled the situation. We put a patch on the tire and put it back on the shelf to sell.
A woman comes in to have a starter put on her Taurus SHO. We price it for her. She doesn't like the price of the starter. She buys one at a parts store and brings it in. We install it. It fits, but the shaft isn't long enough to engage the flywheel to start the SHO. We remove it, test it, etc. Starter tests OK. Install it again. Same results. We put the old starter back on. It works (has worked intermittently). We call the woman and explain the situation. A rep from the parts store shows up an hour or so later, with another starter, exact same as the first. Though the starter is the right starter according to their computer system, he agrees it won't work, after we install the second new starter. He refunds the customer's money. She buys and brings in a used starter from a salvage yard. We put it in. It works fine. We call her, tell her the car is ready. She is surprised that she has to pay for installing the starter 3 times. I explain that we're not responsible for carry-in parts not being the correct parts, and since we installed a starter 3 times, we have to charge her for each time we installed the starter. I explain that if we had sold her the starter, we would have put it in a dozen times but still only charge her once because it would then have been our responsibility to make sure the part is correct for her car. Since she provided the starter, she's responsible for making sure she has the right part, not our technicians. She hangs up and comes down to pick up the car. She brings 4 or 5 young men with her, all belligerent, all loud, with intimidating attitudes, leaning over the counter, acting as though they don't understand the logic. In essence, trying to force me to release her car for the considerably lesser amount. It is a pack. Since our shop is in a less-than-desirable neighborhood, with many minorities (these customers were members of a minority), it is clear what they are doing. I take her money for the lesser amount and release her vehicle, but write on her ticket, clearly: "No warranty on used parts or customer-supplied parts" (our standard policy). Since that time, these same customers have been in once or twice, but at no point ever asked for another discount. The woman's husband, one of those who had come down to the shop, does manage to apologize when purchasing two tires for the same SHO. I accept his policy but don't offer any discounts.
I've had other similar experiences, almost legendary since our techs clearly remember and retell these adventures more than I do. All took place in my brother's absence. These occurred, I believe, because: 1) my brother, the owner, wasn't present, and they know he is the owner. 2) My behavior in these situations was uncertain, not confident, not owner-like, creating a situation which they felt they *could* manipulate, if enough pressure was applied.
So I learned the following:
1) Be confident, know what my options truly are, according to the law. If customers have signed a work order, we can keep the vehicle until their bill is paid in full, regardless of the contents or amount. I *don't* have to release it. The sheriff cannot make me release any vehicle for which we have a signed work order. They can't. It's a binding, legal agreement (this is in the small print on the ticket, legalese that I've only had one customer read, a law student).
2) Share costs with the customer as soon as the situation changes and costs change. Customers don't like surprises. When a change occurs, contact the customer, explain the problem (or problems), and communicate additional costs (if any). Stop the work where it is, be prepared to charge fairly for what *has* been done.
3) If possible, price the job several ways, usually with new or salvage parts, rebuilt or new, larger part containing smaller part replaced for less labor, etc. Customers appreciate this extra effort, especially if they are on a tight budget. People, in general, like alternatives, options.
4) Don't be afraid to lose the undesirable customer. Sometimes, we have to fire customers. For every undesirable customer, there are others waiting to pay us fairly and in a timely manner for our products and services. Some customers have developed the habit of being difficult, just as some people have developed the habit of self-defeat.
5) Don't be afraid to undo what has been done (i.e., dismount a tire, remove a valve stem, take out the starter, etc.) if the customer doesn't want to pay fairly and reasonably for it. We also have the right to charge for undoing what has been done as that is labor cost, while explaining that we *may* charge for undoing what we've already done. That also doesn't mean we have to make the vehicle serviceable. We don't. The customer can always have it towed if necessary, at their expense, if we remove what they don't want to pay for. The choice is up to them. We've never had to do this while I've been at the shop. But I know it is an option and that my brother will support me if I ever need to do this.
6) Understand the true value of my products and services, and charge fairly for that value. That may mean doing some research. Find out what others charge for similar service, similar quality. Charge similarly. Be confident you've charged market value for said products & services. They'd have to pay the same price elsewhere for similar products and services from similar businesses. If you add extra value, don't be afraid to charge for that, too. For example, we have a Wal-Mart less than 3 miles away. Competing with Wal-Mart is hard. But it takes Wal-Mart 2-6 hours to complete any tire-related task, including notifying customers that their tire is not repairable and must be replaced with a new one (which is not necessarily true but is Wal-Mart's policy for some punctures). Customers REALLY don't like to wait 3 hours to be told their tire must be replaced. Thus, our repair prices are a couple dollars more than Wal-Mart's, but in line with other independent and chain tire stores. We have customers in and out in less than 20 minutes for a flat repair. That's easily worth a couple bucks.
7) Asking for and accepting payment completes the transaction. The work is not the transaction. The payment is the transaction, the exchange of money for products & services. If that exchange does not occur, the transaction is not complete. It isn't complete until that exchange occurs. So it isn't a problem to ask for payment. The customer expects to finalize the transaction as much as you do, and be on their way.
8) Do not release any product or service until the transaction is complete. Don't even release part of it. Explain if necessary that the product/service will be rendered/released when payment (in full) has been received. This sometimes means that our customers have to call Mom or Dad down to show their I.D. so we can charge their credit/debit card. Or they have to go across the street to the convenience store and use the ATM.
I don't believe this information is available in any book, though it may be, but it is likely long and drawn out if it appears in a book (a book MUST be thick to have value, right?). This message, I hope, can help your partner with your business. It sure can't hurt.