Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Fri Aug 24, 2012 10:14 am

Having a system.
Today I will talk about using a system to protect yourself, and give an example of one of these systems.
Michael Gerber in the emyth hammers the point- work out what you do that works and then systemize it so everyone in your organization does it that way.
Protecting your business income is one area that it’s absolutely essential to systemize.

Sharks are a rare animal, but there are also plenty of piranhas out there taking little bites off you, and regardless of being eaten by a shark or a school of piranhas you are just as dead.
The piranha is someone who takes a little bite at your profit.
Here’s some examples:
The never give up negotiator- They have a price in mind they want to pay and they will keep coming back with counter offers and other quotes until you give in. so not only do you make no margin on the deal, you have also just burnt 10 times the time it normally takes to do the sale
The Perfectionist. Some people are never happy, there will always be something wrong with the job that needs fixing. They buy a cheap car and complain the paint finish is not like a Mercedes.
Please help me I’m stuck. Mechanics often see these as breakdowns, and even after being informed its COD still ask for credit, and of course their credit card is maxed out. These people believe the world owes them something.
The problem is these are often one off customers- how can you protect yourself and still welcome the good customers?
The answer is the same: look for the pattern. Who are the customers that take the little bites, what are the common behaviors and signs? Figure out the answers and put together a system that protects you and your business.
Taking the breakdown example above there turned out to be 3 questions that identified those that would avoid paying/ had no money.
Is this a regular customer? If no it was found that this was usually because the customers normal mechanic was owed money: Solution; pre authorization on credit card
Does the car look like it’s looked after? Looked after includes unrepaired damage , but also washed, full of rubbish, bald tyres, cracked windscreen etc. People who don’t take pride on their cars don’t usually want to spend money on them: Solution; pre authorization on credit card
Is the likely cost of repairs more than the value of the car? In this case its substantial deposit up front.
Strangely enough the people who are happy to pay understand and pay without objection. The piranhas and sharks are the ones that get upset.
So it takes just 3 small steps that eliminate the payment problem. It’s simply a matter of process. If they can’t/ don’t want to meet the prepayment and leave in a huff- BE GLAD!
The important thing to know about systems is this: Systemize the things that cause you headaches first, and if that’s collecting cash or loss of time, then the longer its left, the higher the risk of more problems.
There is another down side to tolerating piranhas: word gets around and more arrive- just like the real ones.
Tomorrow: Getting Paid
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Barbara Gabogrecan » Fri Aug 24, 2012 5:41 pm

Let me tell you this story. A customer owed me a fairly small amount of money (about $200) but just refused to pay it. Every time I asked, it 'was in the mail' or it 'was coming next week'. Finally I called into their shop and asked for the money. After some haggling they wrote me a cheque. By the time I returned home, I had a message on my answering machine telling me not to cash the cheque as it would bounce (fraud?)

I rang them and told them that I was coming back to their shop to hand out flyers to all those entering their shop saying they were not to be trusted to pay their accounts. They were hopping mad and told me they would call the police if I dared to do that. I replied "that's OK, the police will send me on my way and I will come back the next day and you will never know when".

As far as I know my threatened action would probably be illegal, but I had no intention of doing it - I was bluffing - sort of!

The next day I retuened with a bunch of papers in my hand and made sure the shop staff could see me. The first person to ewnter the shop, I habded a page to (there was nothing on it) - the manager came racing out with a handful of money out of the till and paid what they owed me, so I went on my way.

But the really funny think was, the next day they rang up to place an order. I burst into laughter and said "you have to be joking!" They weren't and got quite huffy. Now I do not know how many people are aware of this, but it is illegal not to provide a client with product that you have available for sale - so I could not just refuse to sell to them. Instead I said "I am very short on stock at the moment, I will ler you know when it is available". Of course I never contacted them and never heard back from them either!

My 'shark' ended up closing their door as they probably had tried to attack just too many 'small fish'.
Barbara Gabogrecan assists HBB's to market their business online
http://www.HomeBasedBusinessAustralia.org

Barbara is an artist specialising in silk painting; her video is on page one of You Tube http://youtu.be/1ZA9HObN_Go
http://www.SilkPaintingByGabogrecan.com/

Having survived a stroke and a brain tumour, Barbara wrote a book titled 'Thank God I Had a Stroke' to motivate and inspire others suffering from similar afflictions.
http://GabogrecanStrokeRecovery.com/
Barbara Gabogrecan
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Sat Aug 25, 2012 10:37 pm

A good story Barb, and you have highlighted a couple of important points.
The first was that you made it more desirable for them to pay than not pay, well done for your courage.
The second is that the goings on that happen with a shark are not personal, as shown by the fact that despite the action you had taken they still expected you would still be happy to sell to them!
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Sat Aug 25, 2012 10:51 pm

Collecting the money.

Today we will look at some strategies to collet what is rightfully yours- the cash.
For many businesses the gap between purchasing the goods and the payment for the sale can be many months, running the business dry of cash.
You have to pay staff overheads and suppliers, and meanwhile you act as an overdraft account for your own customers. Even an account customer that pays on time will take 45 days on average to pay, a shark may never get around to paying.
Your overdraft costs you 1% even if you are paid on time. Late payers may be costing yu 4% if they pay at 6 months. A 1 in 100 account default is another 1% Add book keeping and account chasing and it may be costing 5% just to collect payment.
What to do?
• Make it easy for customers to pay immediately.
– credit card, cheque, cash, bank transfer- make sure they are all easily available.
Remember the 1.5% saving of not taking card will soon be gobbled up in overdraft interest in less than 60 days
• Have a system that allows immediate invoicing. In a shop that’s easy. For a service sale do a quote and have an invoice based on that quote– the customers will like it as it takes the risk of an unexpected bill away, and you can charge a little more.
• Have incentive to pay If you must give an account offer a discount for payment within 7, 14, 28 days, whatever works for you. I have seen discounts as low as 3% and high as 80% work.
80%?? Yes, they loaded the price, but it’s amazing how quickly people pay when they are looking at a 5 fold cost increase if they pay late. When quoting mention the high price, but emphasize the low price.
If they do pay late?– well, discretion is up to you, but the extra gives you something to make it worthwhile chasing them.
• Make sure you are at the top of the to pay list, follow up unpaid accounts early, and often- it’s said that chances of being paid drop rapidly as the debt ages.
• Ask for a part payment, if they claim they have no money ask for several small cheques you can cash over the next few weeks. Then call the accounts department regularly to ask if they have funds to cover a cheque today- don’t ask if you can cash the cheque, ask if they have the funds, otherwise its likely you will just have a bounced cheque. Being a smaller amount, and with you already holding the cheque often the easiest course is to say it’s OK. Remember the accounts dept is not always in agreement with the business practices of the boss, and are often happy to help.
• Alternately set up a payment plan via credit card, (so you are in charge of making the payment), even a few dollars a week is better than nothing and will eventually pay off the debt.
• Insist on sizable deposits, or preferably payment up front.
• Only work on their job when they have met their payment obligations. They may complain and threaten to go elsewhere. I used to keep a few cards from my opposition for such occasions, figuring it was to my benefit to hand the problem on.
• Debt collectors can at times be effective as they are persistent and show you are serious. Some people will not pay until you show you are serious, and I did hear the comment one day- “oh he’s a good regular customer of ours, he will pay as soon as we send him a letter”
But remember Sharks almost always dispute accounts, and this will short circuit using Debt collection.

• Legal action is expensive, but most solicitors are willing to have an initial discussion free of charge where you can get an idea of likely legal and court costs. Then you can make a judgment regarding if you want to take the matter further, or write it off and get on with your life.
I have heard of some situations where accounts are never paid until the solicitors letter arrives, but then they do pay, figuring only half their creditors will go that far. This initial letter is not that expensive and maybe worth a try.
The key is find a way to make payment more desirable than not paying, Barb and Peter have mentioned some strategies that worked for them in their posts.
Jim Boyer
 
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Location: Bendigo, Victoria

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Geoff Haw » Mon Aug 27, 2012 5:53 pm

Hullo Jim. I had hoped to respond earlier, but with a funeral on the horizon, my best laid plans went awry. I've been reading your daily comments, and they are quite intriguing. It seems to me that we have to out-smart the 'smart' clients who think that payment is not that important.

When I first started out in business, I really had a very positive image of my clients. They were virtually all professionals, mainly working in education and business, and given my positive upbringing and general good will, I took the view that as they were professionals, payment would not ever be a problem. So keen was I to get work and spread the word, at first I was willing to do work without a deposit. It took almost a year before I had any problem, and admittedly it wasn't for a huge loss, but from that day I determined that I would never take on new business without a deposit. Most of them in the first few years were via credit card details given to me, but of course now it is more common for people to pay directly into our account online.

I explain it in simple terms that are mutually beneficial. Some of my wording is: Before I commence work on your request for our services on new applications, we always ask that clients pay a deposit of $xxx, please, as a demonstration of commitment to our work together. Of course, it will be deducted from the final invoice amount. Thank you. If you can do that promptly (even after hours), I will start your work immediately payment is processed and then send you a first draft. I look forward to working with you.

I offer a range of payment options: credit card, payment of cash at bank, Internet banking, etc. People also realise that until they pay their deposit, I don't do any work for them, but as soon as they do, they have reserved a spot in the queue. Tax invoices are always provided for your tax purposes.


This practice has worked very well. In addition, if I have their credit card details, I tell them on their final invoice that unless advised to the contrary, we will apply the same card to pay the balance of the invoice.

Someone once told me that if you thought people were all nice, get into business, and you'd find out a lot about how dodgy many people are. Of course, it's not a case of labelling as a potential swindler, but the onus, as Jim has clearly illustrated, is on us to be very astute. In our case, it's "let the seller beware"! Yes, prompt payment is important to the cash flow situation, and when you are selling services (i.e. your valuable and finite time), I feel it to be doubly so. If goods are returned in some way, you can always re-sell them, but you can never get your lost time back!

Jim, thanks for some practical common sense!
Dr Geoff Haw, MD, Sagacity Services
Geoff Haw
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Mon Aug 27, 2012 9:02 pm

Hi Geoff, thanks for the comments and congratulations for doing what most people fear doing, being clear that you are supplying your service to make a living.

Yes keeping a tight rein on the payments is a great way to look after yourself. Interestingly when put the right way, like you do, the only people it puts off are those you wouldn't want as customers any way.

Sometimes I do relax the rules a little, and in these situations its because I wan't to help someone who is in a difficult situation, I have accepted that I may not be paid from the start. I take the attitude that I'm backing my judgement of them and they will pay me when the funds are available.

I think that the business success is very much about common sense, unfortunately its not that common. Most of the articles I used this week are from my newsletter, the theme of which is sensible - short- simple tips for small business.
Jim Boyer
 
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Location: Bendigo, Victoria

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Barbara Gabogrecan » Fri Aug 31, 2012 8:43 am

You obviosly have a great newsletter Jim, I would love to get it and to use some of your articles from time to time (with full recognition to you, the author, of course).....if you are comfortable with that.

You have given some really sound advice and pointed out things that we need to take into consideration when running a business (and getting paid); frome recognising a shark, to uncderstanding what and why they act in such dispicable ways and then, how to deal with them (or better still avoid them as customers altogether).

I thank you most sincerely for sharing your valuable information with us. I know many have enjoyed your comments (you have had over 70 readers to date and this number will grow as more and more people find the Forum and read the posts), even though not too many wrote questions - it seems to be the way of those using this Forum. Time poor I guess, or they just don't have to ask questions because you have given such 'full on' information!
Barb
Barbara Gabogrecan assists HBB's to market their business online
http://www.HomeBasedBusinessAustralia.org

Barbara is an artist specialising in silk painting; her video is on page one of You Tube http://youtu.be/1ZA9HObN_Go
http://www.SilkPaintingByGabogrecan.com/

Having survived a stroke and a brain tumour, Barbara wrote a book titled 'Thank God I Had a Stroke' to motivate and inspire others suffering from similar afflictions.
http://GabogrecanStrokeRecovery.com/
Barbara Gabogrecan
 
Posts: 341
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Mon Sep 03, 2012 10:14 pm

Thanks for the invitation to participate in the forum Barb, I will add you to my mailing list, let me know any time you wish to use an article- you are welcome.
Jim Boyer
 
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Joined: Fri Aug 17, 2012 9:05 am
Location: Bendigo, Victoria

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Kathie Thomas » Sat Sep 08, 2012 1:38 pm

Interesting discussion to read through. I'm sorry I didn't realise this discussion was on.

So many of my team could do with reading this and I think I'll highlight it to them. We have had a few discussions online about when to fire a client. Sometimes even if they do still pay, some clients can be extremely difficult to deal with and take up so much time and you're left in a quandary as to whether you should be charging for all that time.

I've recently parted ways with a client who I took on as a favour to another client of mine, early this year. At first the new client was fine but as the months passed he became more demanding and more difficult to deal with. Several times he requested I do things I knew I wasn't experienced at and I would tell him it would be better to find someone else to assist. He would always respond "I have confidence in you and you can do this". At first that would work but then I'd get frustrated with not being able to complete things as quickly as I should and I had other clients to look after too. Then just over a month ago I contacted one of my team who did have the skill set required (web programmer) and asked her to look over the work I'd been doing and could she do what the client needed? She checked it out and responded yes so I connected her with him and she took over the project, with his permission. He then demanded I do other stuff for him but I refused, told him I'd help find others to help him but that I wouldn't be doing any more. He was not happy with me. I doubt I'll see payment for my last bill to him although he's always paid his other bills. The web programmer has since parted ways with him. She's completed the work she was engaged to do but now he's demanding she does other stuff and is being very difficult about it. She has other existing clients to look after and has flat out told him she won't be doing any more work for him. I should add this is a man that likes to have hour long phone discussions about the work and goes off on tangents about other things. I always told him he was on the clock when we had phone meetings and I warned her to do the same.

But, you know what? These past two weeks I've felt so much free-er (if there's such a word) and I've gained three new clients doing the same type of work I was doing for him - but without all the complications. He was wanting me to do something that was very out of the box (website design with WordPress but wanting so much more than the program could do). And if I still had him on board I wouldn't have felt I was in a position to say yes to them. I've already completed one of the sites and look forward to getting stuck into the other two this coming week.
Kathie M. Thomas, AFAIOP, MVA, ASO, Author, Speaker, VA Coach
"A Clayton's Secretary"®, Award-winning Virtual Assistant Services and Network, Est. 1994
Web: http://www.vadirectory.net
VA blog : http://www.vadirectory.net/acsblog/
VA Training: http://www.vatrainer.com
Kathie Thomas
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Barbara Gabogrecan » Mon Sep 10, 2012 8:45 am

Wow - Kathie - what a bummer! Just one thing, if you want anyone to do work with Wordpress I have seen some exceptional results done by member Charly Leetham (Qld - winner of the HBB Catewgory in the last MCEI Marketing Awards) and have a look at this design she did for Claire McFee (Vic) http://www.organizeyourlife.com.au

I am no programmer and I use Wordpress for blogs - I had no idea that Wordpress could be used to produce a website like this - I was most impressed with the result!

I note that it has been recently updated - I wonder if that is because of 'Panda' or 'Penguin'?
Barb

PS. You can check the profile and contact details of any of these members in the Membership Directory at http://tinyurl.com/9nfl3yh
Barbara Gabogrecan assists HBB's to market their business online
http://www.HomeBasedBusinessAustralia.org

Barbara is an artist specialising in silk painting; her video is on page one of You Tube http://youtu.be/1ZA9HObN_Go
http://www.SilkPaintingByGabogrecan.com/

Having survived a stroke and a brain tumour, Barbara wrote a book titled 'Thank God I Had a Stroke' to motivate and inspire others suffering from similar afflictions.
http://GabogrecanStrokeRecovery.com/
Barbara Gabogrecan
 
Posts: 341
Joined: Sun May 03, 2009 12:57 pm

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