Web Developers: Simple Ways to Streamline Your Business, Improve Productivity and Increase Cash Flow
If you are reading this article, you are probably overwhelmed not only with work for your paying clients, but the minutiae of running your business. What you don’t want is to spend more money to make it easier on yourself.
The bad news is that isn’t always possible. The good news is there are many free or almost free things you can do before you spend any money.
Clear, Written Expectations
My husband is a web developer, and I have been doing his bookkeeping and contract management for the last 15 years. He loves the work and he enjoys his clients. The problem is that new projects always arrive in twos or threes (maybe more) while he is knee deep in other projects. To manage this chaos, I create a clear and concise contract for each project and a method for putting it through the sales cycle.
Your contract must have clear responsibilities for your AND your client. If you have not outlined when you expect responses, for example, the date the client is expected to deliver their logo in a certain format, and your other expectations, then you only have yourself to blame for the misunderstandings and inevitable delays on the project – and on payment. If your client expects to hear from you within 24 hours but your normal turnaround time is 3 days, then that needs to be communicated as well. By being clear at the beginning as to what each party can expect, many customer service, bookkeeping and payment issues are eliminated before they happen.
That being said, if you don’t have a good contract, you need to take the time to draft one that you can modify slightly for each project (you can poach pieces and parts from other people – you don’t think lawyers draft everything from scratch do you?). It should have clear milestones and payment terms. Here are a few extra tips:
- Require client signature at milestones: Get the client’s signature at each milestone with terms that if they go back to the previous stage of the project to make modifications it may cost more money (at your discretion). You don’t have to charge more, but the sign off process makes sure that the client really is happy with the work product. If they do make major modifications at a later stage, you are not stuck footing the bill.
- Include a paragraph in your contract addressing scope creep: It happens to everyone, but deciding how you will address it will eliminate problems later, and you won’t be working for free.
- Add a cancellation clause: Make sure you have an out for those clients who drag their projects on forever with no intention of ever completing it.
- Update your contract: Your contract will not remain static. If the same issue arises more than once or twice, add a paragraph and address that circumstance in your contract. If you come across something really good in another agreement that you think is useful, modify your contract form.
A process for getting through the contract and project process is a must. The contract is a good start and outlines how you will work with your client and in what order. A checklist that includes the little details that you have to complete at each stage that are inappropriate to include in the contract is helpful, including items like preparing the invoice and receiving payment.
Most developers have clients for which they maintain or update sites regularly. If you have monthly clients, for goodness sake bill on the same day each month. Your electric company does not send your bill on the first some months and the 19th others. When you do not bill consistently, you run the risk of a client operating under the mistaken belief that they have no invoice for that month, and they may spend the money elsewhere. If you reach a milestone in a contract, you should absolutely bill for that payment within 24 hours of reaching the criteria for payment. I also recommend not continuing with work until payment is received.
Being consistent also applies to your books, receipts and received payments. Set aside 5 to 10 minutes a day to consider a few things: Who paid me today? Who did I pay today? Can I pass through those expenses to a client? Is anyone due for an invoice? Did I miss any time for which I should bill? When you have answered those questions, take appropriate action on each one. I guarantee you, if you take the time each day, it will pay off in more billed and billable time, more income and less stress.
As a developer you are selling your time, and you have a finite amount of it. If you are not using a timer, stop reading right now and find one. There are free and almost free ones options available. There are even timers that will invoice directly from your time entries. If you have not been using a timer or have just been keeping track on piece of paper, you have lost countless billable hours and lots of money. Sorry, there is no sugar coating it.
One of the biggest arguments I have heard (from my own husband) is that developers charge a flat fee so they don’t have to keep time. In almost all cases, your estimates are off, either over or under.
Overestimates are not a big deal, however, knowing that it takes you a lot less time to complete a project gives you wiggle room in negotiations (more work!). Underestimates have their own obvious problem. You are either leaving money on the table or working for a much lower rate than you think. Use your timer no matter what the project. I also recommend using the timer for your administrative non-billable time, but we’ll get to that later.
Doing the Books
If you are still using spreadsheets to keep track of the books, you are losing money and time.
I hear from so many web developers that they use a spreadsheet or a series of spreadsheets for their bookkeeping. They can usually tell me what they have spent in any one area, but a Profit and Loss Statement or a bank balance is beyond them. A lot of costs they could have passed through to a client are forgotten. If you are still using spreadsheets to keep track of the books, you are losing money and time. Bookkeeping is a relatively simple process, and while spreadsheets can keep track of information, they make it difficult to extract information, change it or otherwise use all that great data. Plus, they are ugly and time-consuming. There are so many good bookkeeping applications out there. Some are free, but the better ones are not. Almost all are better than spreadsheets which brings me to my next subject.
Technology is not just for the applications and sites you are building. It is for your administrative work as well. We are all loath to spend money on technology that isn’t going to actually make us money. What about technology that will save you money?
Good bookkeeping software can take the challenge and time out of keeping track of your money and make invoicing very fast (my favorite is Xero).
Contract management software (I like EchoSign) is an inexpensive way to keep track of contracts and milestone signoffs – and you always know where to find a copy in the event of a problem.
I am also a big fan of receipt storage software (again I have a favorite – Receipt Bank, it integrates with Xero). I snap a picture of my receipts at the time of purchase (using a smart phone app) and then throw them away. I will always have them for bookkeeping purposes and for the taxman.
Not once have I mentioned getting more education, learning about bookkeeping or spending gobs of money. However, if you are spending more than 3 or 4 hours a month doing your invoicing, contract management and bookkeeping, AND you have enough work that at the end of the day you could keep trying to get it all done, then it might be time to outsource.
I brought this up to a friend who is also a virtual assistant, though we work in different areas. I asked her how much time she spent each month invoicing. Her answer was too much, but it wasn’t too bad – she only has five regular clients.
Most people find that their billable time and cash flow actually improves well beyond the cost of the outsourcing.
I told her I was sure she spent more time than she thought (I also time my invoicing). She thought I was wrong but she ran a timer during her next invoicing cycle. She spent more than twice the amount of time she thought. That was wasted time for which she could have been working billable hours her clients. Most people are in the same boat.
If your hourly rate is $75 an hour and you are spending four hours a month doing administrative work and bookkeeping, that time is costing you $300. Bookkeepers and VA’s are good at what they do and are more efficient at it. To do what I do for my husband, I would charge quite a bit less than $300, including software for bookkeeping, timekeeping AND receipt storage. Investigating your outsourcing options is well worth it. Most people find that their billable time and cash flow actually improves well beyond the cost of the outsourcing.
All it Takes….
All it takes is a few tweaks to what you are already doing to bring in more money with less stress (if not, then it’s probably time to find some help!). Do you have any other business-boosting tips you’ve discovered?