Advice on how to break out of feast or famine situation. 3

[superslurpee]

Hi,

My business partner and I have been running an internet company for a couple of years. We do web design, e-commerce, and offer web hosting. We are professionals with years of schooling and a base of satisfied customers.

The problem we are having however is that we cannot make enough money to survive. With only the two of us, it becomes difficult to answer the phone, do accounting, complete maintenance on websites when clients request, address client questions, write emails, sell our services, develop and implement marketing strategies, meet customers one-on-one, develop proposals and contracts, model,
construct sites, maintain our website, contemplate growth etc. When we allocate a little time each day to everything, nothing gets done or it takes way too long. If we just do one thing, everything else grinds to a halt. It's a classic feast or famine situation.

The dilemma we are having is what to do to get our company moving forward. If it were just a case of high demand and too many clients, then hiring staff would be obvious. But when we are working on a project, we're not doing any sales so no new clients are coming in.

No person is an expert at everything so we recognize that there are going to be gaps in what we can do. We do things well but having to do them all really slows us down. Should we be considering outsourcing our projects? We do high quality work and that's what we're experienced in so it seems strange to send it elsewhere. Should we be doing more overseeing of projects and not so much of the work? Should we hire someone to do sales and bring us more work? Should we hire someone to complete projects while my business partner and I do sales, marketing, and contemplate growth?

I suppose this is a point that every business reaches. How do other web companies and software development firms break out of the 'home business' and move towards a growing company?

We would appreciate any advice anyone could offer.

Thanks for your thoughts!

Darth Slurpee

 

[tomed]

Are you making enough money to add staff?

If the answer to that is yes, I'd recommend hiring someone to handle the sales and general office operations. Answering customer calls and screening, making sales calls that sort of thing. I wouldn't think about outsourcing the programming. As you said, that's what you guys are good at and that's what you take pride in at your company.

If the accounting is too much, maybe think about getting an outside accounting firm to help with that also.

 

[superslurpee]

Thanks for your comments!

We're not making enough money to add staff at the moment. Should we consider a freelancer who works purely on commission?

Darth Slurpee

 

[mmorancbt]

Your situation is very familiar with independent and smaller consulting firms. The problem is largely self-caused - which is great because it means you have the means to correct it right now.

You mention that while on a project, you are not involved in marketing your business. That is one the most deadly mistakes a small company can make. The problem is, when we begin viewing all that potential billable work as more valuable than the other things we need to do to run our businesses.

As a one or two person company, first of all, billing and office maintenance should only take a few moments each week. Sales is another story. However, as a general rule, you should allocate 5-10 hours weekly for non-billable work. Depending on your marketing effectiveness, 10 would be more than enough and 5 is probably enough.

You need to treat billing, office maintenance, & sales and marketing as though they are billable hours - that they have value. That way, you won't bump them off the list in favor of your client's current emergency or the current project's task du jour...

As technology professionals, we take pride and place emphasis on our product - our solution - etc. This tends to make us bump the other, what we consider less tangible or valuable, activities off the schedule.

I allocate Tuesday's between 9-11 to makes sales related phone calls. Sales related activity, by the way, is not writing a new flyer or brochure - but must involve speaking with or meeting with prospective clients.

Allocate some other time (1-2 hours) for marketing related - which could involve a new brochure, white paper, or going to current clients to get referrals.

Allocate 1-2 hours for billing and filing.

And maintain that schedule. It removes mental noise and gives you energy and motivation when working on projects.

Finally, getting someone good at sales is probably not an option on a pure commission basis - unless you have some type of ownership stake in your company and a reason for them to incur that risk.

You are probably your best sales people anyway. If you are going to consider a freelancer, get to a point where work is lined up for 4-8 weeks that exceeds your ability to produce. Get someone who is good for 20 hours a week and you spend the time gained (let's say 10-15 hours) hustling to win a few additional clients.

Ongoing sales is definately the most important part of keeping your business profitable. That is why good sales people make so much money at a company. They lead to the work that pays our bills.

Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com

 

[superslurpee]

Wow!

Thank you so much for your beneficial post. You have definately given us something to think about. With regards to workload, what would you recommend to handle it - hiring staff (getting office space, etc.), getting a freelancer, or outsourcing the project or parts thereof to India or the like?

Your thoughts are appreciated.

Thanks!

Darth Slurpee

 

[mmorancbt]

If there are areas you do not have expertise in, find another independent or small firm that can do that work.

I would not hire someone until you have 26-32 hours of work for the next 3 months lined up. Personally, taking a hit on the rate of another consultant but not incurring the FTE burden, is well worth it.

Don't underestimate the emotional burden of letting someone go when there is not enough work.

I would not recommend office space. You are speaking about a financial challenge with hiring others and a time crunch - an office won't help either of those. Work out your home, virtual office online, run meetings via phone - short and with objectives.

In general, be very careful with your time and with your money.

Just my thoughts. I hope you find it helpful.

In the meantime, here are some of my blog post on consulting..

http://blogs.ittoolbox.com/pm/career/archives/categories/The+Consulting+Life

Enjoy!

Matthew Moran (career blog and podcast below)
Career Advice with Attitude for the IT Pro

http://blogs.ittoolbox.com/pm/career

http://techcareerconsult.blogspot.com