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: Web Pro Business BlogIt’s That Time Again
When I first launched Outlook this morning I was greeted with a reminder that I’d just as soon forget - tax time is coming.
Because I deal with so many new/growing web development groups in my consulting practice, I spend lots of time talking about taxes, tax reduction, corporate entities, and bookkeeping. I’ve come to enjoy this because so many of our clients can get major tax advantages simply by employing some basic bookkeeping and tax reduction techniques. We also make an effort to improve our own tax situation each year, which helps us to manage growth and preserve our profits as the business grows.
This year is no exception. While we expect to pay more taxes than ever in actual dollars, I am hoping to reduce the percent of net profits that we pay in taxes if at all possible. Around this time last year we added three new ingredients to the tax-reduction mix:
1) Health Savings Accounts
2) Individual 401k’s for principals
3) Conversion to American Express for all expenses
The Health Savings Account (HSA) is a relatively new form of health care plan in the US, and is not to be confused with the older …
2007: Beginning with the End in Mind
With just one week of vacation remaining, I’m beginning to consider both my personal and business objectives for 2007. The beginning of a new year is, of course, a great time to look at last year’s progress and make a short list of objectives for the coming year. It’s important that such a list be short, achievable, and for (small business owners) geared towards our personal satisfaction rather than simply an increase in revenue or profits. Two or three main objectives is more than enough, and any more than that will most likely result in the list being forgotten early in the year!
Looking back on 2006, the primary business objective was to improve our marketing strategy. It was quite a lot of work, but this objective appears to have been fulfilled. We’ve sharpened our marketing message, adjusted our pricing, renewed our website content, and established a new mailing list system.
My primary personal goal was to ‘disconnect’ a bit, and better separate business time from personal time by eliminating points of contact between myself and the Internet during non-work hours. This has also been successful – I’ve cancelled my mobile phone’s connection to the internet, stopped …
Unexpectedly Handy
Over the last few months I’ve received a surprising number of requests that involve integrations with Paypal, especially integrations between Joomla/Virtuemart and Paypal.
For the most part, Paypal integrations tend to be fairly easy to configure. The fraud department at Paypal, however, recently made our lives more difficult by tightening up the fraud prevention rules so that a single login from a ‘prohibited’ country causes the entire account to immediately go into a restricted mode. Once the account is restricted, transactions are limited and the account owner has to go through a painful series of validations which sometimes include waiting for a PIN to be delivered via postal mail.
Fortunately, we stumbled into this problem while working on our company website rather than a client site. Our team that handles Joomla/Paypal work is based in Romania - a restricted country according to Paypal. Although we’ve never had a problem in the past, a single login from Romania caused our entire Paypal integration to become crippled. To make matters worse, we have a 6-week backlog of Paypal related work that needs to get into production immediately, and we couldn’t risk causing a client’s account to be spontaneously restricted.
How could our Romania-based team …
Publishing for Success
This week I’m happy to announce the publication my first e-book, “Outsourcing Web Projects: 6 Steps to a Smarter Business“, now available here at SitePoint. The book provides a winning strategy for anyone who needs to outsource web development work to a domestic or offshore provider, and provides all sorts of tips to help the reader find the right vendor, get a great price, get the job done right, and form long-term relationships with reliable vendors. I sincerely hope that this book is beneficial to the readers, and I encourage any feedback or suggestions which might help to make it as clear and useful as possible. I’d also like to thank the SitePoint staff for being so supportive and pleasant to deal with.
Since the launch of the book I’ve received a variety of inquiries about it from SitePoint users, mostly questions about my motivation for writing the book. In short, the primary motivation was exposure, publicity, and to help my ongoing effort to position myself as an expert in the world of outsourcing and managing web projects. In keeping with Andrew Neitlich’s ‘become an expert in your field’ approach, I am hoping that the e-book will ultimately serve as …
Pop Goes The Client
For the last month or so, I’ve been working with two particularly great prospects from our sales pipeline. Both potential clients are right in our target market and need substantial amounts of lucrative services, so we’ve been motivated to get them signed.
We had the usual exchange of e-mails, phone calls, and questions with both clients but in the end we signed one of the clients and decided to pass on the other. Simply put, one of the clients began to look less and less attractive as negotiations unfolded while the other proved to be easy to deal with in just about every way.
Both ‘Client A’ and ‘Client B’ both started out as strong prospects – established, substantial companies with good credit and lots of work. When we first sent out the contract, however, the differences became apparent.
Client A asked for some small and routine changes to the contract, mostly over the arbitration rules and some non-disclosure language. The changes were very reasonable so we were happy to comply. Meanwhile, Client B accepted all the terms of the contract but suddenly asked for a reduction on the hourly rate! This was a real shocker because the client had …
Handling a Resource Crunch: A Lesson Learned the Hard Way
The first Friday of every month is always an interesting day for me. I review all of the timesheets and invoices for the previous month, approve the payroll, initiate wire transfers to pay offshore vendors, and get a clear view of how business went during the previous month. I’ll also see how things are shaping up for the following month and look for ways to avoid any imminent problems or conflicts.
I was pleased to learn that both December and January will probably be record months for our offshore development group, with 100% increase in revenues over the same period last year. This is terrific news, but it’s not as easy as it seems. First, our resources are effectively at 100% allocation for the next 12 weeks. This is great for profit margins but also brings the risk of having to say ‘no’ to a client with an immediate need, or have clients waiting weeks for simple services. We’ve worked hard to gain our clients’ trust so either of these options is unattractive.
To make matters even harder, my wife and I spend January at our place in Southeast Asia and there’s almost no Internet (or even phone) connectivity there. …
Managing Client Expectations: User Acceptance Documentation
A common question on Sitepoint’s Business & Legal forum is, “I’ve delivered what I promised but my client keeps asking for small tweaks, support, and advice. How do I determine when a project is over, and how do I communicate this to my client?”
Most web developers have experienced the ‘never-ending project’ and can sympathize with a developer in that predicament. It’s not easy to balance great service with the need to put some boundaries and limits on what you are willing to do for your client, and it’s especially tough when you are just starting out and you need to have 100% client retention!
The good news is that there’s an easy and simple way to prevent this problem: the User Acceptance document.
User Acceptance is just what it sounds like - an acknowledgement from your client that you’ve fulfilled your part of the deal (as set out in the original contract) and the project can end. User Acceptance is commonplace in the software industry and usually consists of a User Acceptance (UA) document which the client signs and returns once the work has been completed
to their satisfaction. In addition to putting some legal structure and accountability around the …
The Art of Giving
One of the things I find interesting about my business model is that I get to see how other web development companies operate behind the scenes. When it comes to charitable giving, I’ve noticed a clear pattern – most freelancers or small web shops make a donation to charity when tax time comes around (at the end of the year) or when they get a big check in and are feeling generous. Invariably they feel proud and positive about their donations, and express a desire to give more and more as the business grows.
Such generosity is a wonderful thing! Even better, however, is to make charitable donations an integral part of your business, rather than an occasional event. Here some simple ways to increase your overall benefit to charity by incorporating a few simple concepts:
1) Give on a schedule, preferably monthly. Choose a small donation (by dividing last year’s total donations then dividing by 12, perhaps) and schedule a monthly donation as an automated credit card charge. This way, you give the same amount of money, but you are reminded 12 times a year that your business can benefit others and is an asset to the world. Having a monthly …
True Business Success: Giving More Than Just Thanks
This week, many of our US-based readers celebrated Thanksgiving with their family and friends. Thanksgiving is a time to appreciate and be thankful for what we have, and of course to indulge in the obligatory turkey and stuffing dinner. As web professionals, we certainly have much to be thankful about these days. The roller coaster of the dotcom-boom is far behind us, our industry continues to experience steady growth throughout the world, and the technologies and standards that define our business continue to advance at a rapid pace. Many web developers find themselves in a position to work from home, set their own hours, and make more money then they imagined possible. Things are never easy, but life is good!
As for me, the thing I am most thankful for is that my company was able to make substantial monthly donations to charity throughout 2006. To earn a healthy income is certainly something to be thankful for, but to earn enough to donate money (and services) to those in need is even better! The donations aren’t huge, but something is better than nothing and I intend to increase the amounts as the company grows.
Here on SitePoint, we spend lots of time …
More Hourly Rate Magic…
I thought one last post about hourly rates might be worthwhile, since there seems to be plenty of interest in measuring and ultimately raising the amount of profit that we make with each hour we invest in our businesses.
Many of the hours we work are dedicated to non-billable activities such as marketing or administration and it’s not easy to measure the return on that investment as a ‘dollars per hour’ figure. However, when it comes to the hours you devote to a billable client there are lots of ways that you can increase your profits. In my business, I do it in two primary ways:
1. Upsells
2. Billable employees or contractors
Upsells are simple enough to understand, but highly underrated. Just by adding a small upsell to each client, it’s amazing how much you can increase revenue. For example, I don’t sell hosting to the public but we always reserve space on our servers for existing clients who need hosting services. We charge an annual fee of $250/domain for hosting, which is higher than the industry average but since our clients already trust us they are happy to pay it. We also offer advisory services (tax, legal, bookkeeping, etc.) to known clients …
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