1. Don’t explain your terms of business before starting work If you don’t explain your terms from the outset you leave yourself open to misunderstandings. If your terms of business are payment within 7 days then it is better to find out before you start that the client has no intention of doing that—especially if you need the cash flow and you haven’t made provision for the extra interest you’ll have to pay on your bank loans, or worse.
2. Wholesale your time We all of us have only 24 hours in a day, seven days in a week—we can’t manufacture more time—so be careful when a client asks you to wholesale your time. Consider the extra costs of being ‘out of the market’ for a while, and when the contract expires will you have a lag time before you pick up more business?
3. Don’t have a price policy in place, or do not stick to it if you do Imagine you are a river-raft operator and there are only a limited number of times you can go out a year. It costs you the same amount to take one person as it does a full raft. Three people book then show up with a friend—they argue that all four should go for the price of three because your costs haven’t increased. You agree with them but then what do you do next week when word has spread and only one person books, but three turn up? And what happens when you fill your raft with non-paying passengers, and just as you’re about to leave, a carload of customers appears, waving their credit cards at you?
4. Make spur-of-the-moment guesses instead of pricing things properly This is a terrific way to lose money fast! If you’re keen to get the business and you’re an optimist it’s very easy to underestimate costs. Don’t be hurried into guesstimating or you will end up paying the price!
5. Work for friends at “mates’ rates”
A lot of small business operators go slowly broke working for friends. Think about the concept of “mates’ rates”—is that really what a good mate asks of you? Wouldn’t a good friend appreciate your value and be willing to respect that in the customary way?
6. Don’t have any convincing sales reasons for not discounting Your customer may just be asking for a discount out of habit, or curiosity. Be prepared in advance. Is your quality so good, and demand so great, you don’t need to discount? What else can you negotiate—perhaps a longer guarantee, or a better product, a quicker response, an extra accessory?
7. Start work on the job before the client has confirmed terms and conditions This is a brilliant way to work for nothing! If you’re keen (or desperate) to do the work, resist the urge to start before all the paperwork is signed off.
8. Underestimate the amount of work involved If there are many parts of the project to consider, make sure you itemize each piece. It’s easy to underestimate the number of extra phone calls and running around that can occur when things don’t go according to plan.
9. Overestimate your ability If you’re confident in your abilities and inclined to think you are a Super Hero watch that you don’t overestimate your abilities, believing you can get the job done in less time than is practical.
10. Forget to write things down; keep poor records Another brilliant way to lose money! If there is a time lag between doing the job and the accounts you prepare at the end of the month, make sure you write everything down. If the client should phone to query an invoice it will be your attention to detail that will save you in the end.
Ten easy ways to discount and lose money, FAST! - To learn more about this author, visit Jane Francis's Website.
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