On The Cover Of The Rolling Stone

There’s no doubt about it—your business will benefit from well timed and placed media exposure in outlets that your clients trust and follow.  If you’ve come to the realization that you want fast,  effective action and you lack the time and the connections necessary to generate the kind of publicity that will raise your profile, then it’s time to hire a professional.

Buying advertising is usually a good move, but PR looks more objective and hence,  is more credible in the eyes of many.  But what should you expect from a PR firm? How do you make sure they do what you pay them to do?

Unfortunately,  many PR specialists are experts in taking client money and little else.  You must do your homework and interview 3-4 firms before signing a contract.  Contracts usually run for 6 months,  with a review at 3 months that will allow you to cancel if not satisfied.

Your objectives and budget

First,  consider what you would like to achieve in your PR campaign.  Are you launching a new product/service,  selling a book,  seeking lucrative or prestigious speaking engagements,  positioning to land important clients,  enhancing your page placement on search engines or communicating your brand?  Plan to spend from $500 – $2000 /month for an average  small business campaign.

Which firm for you?

You’ll have the choice of hiring a large firm,  small firm or Freelancer,  an industry specific firm or generalist.  Each option carries advantages and disadvantages.  I recommend that Freelancers and small business owners  avoid big PR firms because they are not designed for us.  Big firms cost more money and may not give appropriate attention to smaller clients.  Smaller firms and Freelancers are likely to be within your budget and more sensitive to your needs (in theory, at least).

Industry specific PR specialists  are known by the media players in that industry and are more likely to have calls returned and requests for clients  reviewed.  The downside is,  they may simultaneously work for your competitors. They may also run a one size fits all,  cookie cutter promotional campaign.

When interviewing PR agencies,  ask to  speak with the person who will work on your account.  That will not necessarily be the same person who shows up for the meeting.  Make sure that your agency contact will give your account the personal attention that you will pay for.

In the interview,  highlights of a strategy that was devised for a client similar to you in budget and needs should be presented.  Be very clear about your objectives and listen well,  take notes,  ask questions and get specific answers.  Do not be fooled by anyone who promises you x number of exposures per month or quarter.  That is the promise of a scam artist.

References and results

When an interview goes well,  ask to speak with 2-3 clients like yourself,  who are willing to discuss their experience with the firm.  What kind of media placements and exposure were achieved for clients with a similar  profile and objectives? How long was the campaign,  how long to achieve the desired results,  which agent managed the account, what  would they change about the process if done  again,  which additional services or quality controls might be written into the contract?

You will speak only with the firm’s most satisfied customers,  but the conversations will help you to form  expectations and learn what it’s like to work with a PR specialist.  You will also  confirm whether you should launch a campaign at this time.

Your story

Once you’ve signed on,  adequate time should be devoted to learning more about you and your business,  so that  story angles can be perfected and a strategy developed.  This is the REAL  reason to hire a PR specialist. Your story might focus on personal or business challenges you overcame,  your exceptional or innovative products /services/expertise, or your tenure and activity in a community that is meaningful to your clients.  You do not hire a PR specialist to merely blast press  releases all over the place.  You can  do that yourself.

A star is born

Events you might sponsor,  awards and special recognition for you to receive,  community and charity events you would be wise to attend,  television and radio appearances and articles in blogs, magazines and newspapers are all potentially part of  a promotional strategy that can be developed for you,  at a price.  Whatever it takes to position you well and generate  interest, confidence and excitement in you and your business should be done,  limited only by your budget.


Finally, you must understand how your PR firm demonstrates the work done for your account.  Make sure that you receive weekly or monthly activity reports.  Which organizations or media outlets were contacted,  for what purpose and what was the outcome? Compare the achievements of  your PR specialist  to your objectives  and make sure there is alignment.  You are paying for results and not excuses.

Thanks for reading,



Build Your Self-Promotion Strategy

I modestly propose several tactics that you might use to build a subtle,  yet effective, self-promotion strategy that will deliver not only name recognition and hits on your web site,  but also paying clients and enthusiastic referral sources.

Online Tactics

  • Set up a website that describes your services in language that clicks with your clients.  Demonstrate your understanding of what clients need when hiring for your category of services  by highlighting the solutions  you offer and problems that will be solved or avoided through your expertise.
  • Include website features at your discretion.  If a  ‘call to action’  that clients value can be devised, then use it.  If you are a public  speaker and can pinpoint what clients typically want to see and hear when a hiring decision about speaking or teaching is made,  then add a video of you meeting those expectations.  If you’ve written  ‘white papers’  that address topics known to be of interest to clients, then add them.  If you want to add your public appearances calendar to demonstrate that you are in demand by reputable organizations,  by all means add and keep it updated.
  • Establish a LinkedIn profile and use it as your adjunct web site.  Complete your profile and periodically add updates to showcase special achievements,  good business books you’ve read and professional events you will attend.   Join a group or two and stay up to date with what is happening in communities that impact or interest you,  whether alumni or professional.
  • Start thoughtful discussions in your groups and add comments to others’ discussions to build a reputation as a good resource. Visibility in your groups may lead to online relationships that can yield off line results like referrals or maybe even a client.
  • Set up a subgroup in Huddle Workspace for more specific  in-group discussions.   When it seems appropriate,  reply privately to a discussion and invite that person for coffee if the geography is convenient and it seems like a face to face could be mutually beneficial.

Off-line Tactics

  • Join or visit networking organizations affiliated with your profession, where you can meet industry peers and stay current with industry trends, challenges and business growth opportunities.  Join/visit additional organizations where you can meet prospective clients,  referral sources and perhaps find speaking opportunities to showcase your expertise.
  • Prepare a short narrative about a recent achievement:  an interesting project,  a marquee  client,  how you solved a vexing problem that stymied others,  how you brought something to the next level.  Write down your story and practice and perfect the language,  so you will have instant recall and be able to trot it out when necessary.
  • Do some public  speaking and establish yourself as an expert in your field.  There are numerous (alas, often unpaid) speaking opportunities at business associations, professional groups, colleges, adult learning centers and nonprofit organizations. Figure out a topic or two that you can authoritatively address and put yourself on a couple of calendars.  Referral sources/potential clients may be in the audience.
  • Volunteer for a cause that has meaning to you.  This can present a golden opportunity to meet movers and shakers,  potential clients/referral sources, demonstrate leadership and expand your skill set into areas that enhance you professionally.   You might chair a committee  or even propose a high profile event (I’m in the midst of both) and benefit not only the organization but also spice your CV.
  • Become a mentor to someone who will receive a much needed career boost when you share  your knowledge, insights and relationships.  Not only will you receive great satisfaction from guiding someone along the path of professional growth and success,  you will also gain an ally and will learn from the person you mentor.  You’ll benefit from the perspectives of another,  perhaps younger,  person who can broaden your sights and could also  reveal new business avenues for you.  Important benefits accrue to mentors,  including expansion of one’s professional network and renewal of  managerial and coaching skills.
  • Maintain your personal life.  Stay in touch:  send Christmas cards,  remember birthdays and congratulate friends’ accomplishments.  Go to your school reunions.  Go to the flower show or go hear your favorite blues singer.  Go away for the weekend or a week.  Learn to dance the samba or resurrect some long neglected talent like playing the xylophone.  Have things to talk about besides business!

Thanks for reading,

The Subtle Art of Self-Promotion

There was a time,  not terribly long ago,

The Diarist

when one’s accomplishments pretty much spoke for themselves. If you performed well in your chosen profession and discreetly let a few of the right people know, you were often rewarded with the promotion you deserved or the clients you coveted.

The pay-off sometimes took longer than anticipated, but eventually many of us got there, or at least reasonably close. The adage about the rewards of hard work offered numerous confirming examples to back it up. But that was then, my Freelancer friend, and this is now.

Today, the sizzle is worth more than the steak and appearances count more than capability. Exposure is no longer something that you die of, but will die without. Everyone is out there putting on a show, from politicians to athletes, corporate leaders and entertainers, Supreme Court justices, organized crime figures and a platoon of self-created “celebrities” like Paris Hilton and her BFFs and frenemies.

Shameless and relentless self-promotion in the pursuit of visibility/attention/ branding and image enhancement is rampant and sadly, has become an expectation. Average citizens are not immune and have been dragged into the fray by MTV Real World, FaceBook and Twitter, enticed to divulge and disseminate personal information such as who one drank with on Thursday night.

The advent of first websites and then social media platforms have forced Freelancers and business owners to establish brands for our products that are as strong as those created for Proctor and Gamble soaps. The choice and management of promotional strategies can be exhausting and bewildering. Several of the typical options can also be a waste of time, because visibility and noise level do not necessarily yield billable hours.

“What, you don’t have a ‘call to action’ on your website?” “You really should write a blog. And a newsletter.” “I have 500 + LinkedIn connections!” “I have over 2000 names on my mailing list.” “Absolutely, you should be tweeting about your business and letting people know what you’re up to.” “I go to at least one networking event every day. It’s what I do.” Aaarrgghh!

I propose that it has become necessary for the savvy Freelancer to devise a self- promotion strategy that achieves the following:

1.) Showcases one’s expertise

2.) Resonates with clients and referral sources

3.) Delivers desirable tangible results

4.) Does not consume an inordinate amount of time

5.) Preserves one’s self-respect

Next week, I’ll suggest tactics that you may find useful to include in your self-promotion strategy.

Thanks for reading,

IT Update: What A Freelancer Needs Part II

Communicate with clients in your office or from anywhere in the world with practical IT tools that will help you do business effectively and efficiently.  Freelancers must strive to create and reinforce an impression of capability and professionalism that inspires client confidence and trust.  Some clients may doubt our ability to take on the most important jobs and instead may elect to call in a big consulting firm.  Savvy use of selected IT tools may enhance your image and reassure clients.

The Computer, or Mission Control

Your first decision will be PC  vs.  Mac.  Graphics gurus,  photographers and marcomm writers choose  Macs for their sophisticated color and font style options.  The rest of us gravitate toward PCs, which work well for standard business functions.

Your next decision will be desktop vs. laptop vs. netbook.  Desktop units have  larger screens,  making them suitable to function as mini-home theaters.  Laptop units are smaller and portable  and for most of us  have excellent functionality and memory.

When you need a computer for the road,  a netbook is the smart choice.  Smaller,  lighter and less expensive than a laptop,  netbooks can run on battery power for long stretches.  Pick up free wifi internet access in schools, cafes, hotels and other office buildings while you’re there.  The trade-off  is netbooks don’t have much memory and they’re primarily suitable for web browsing and word processing.

A printer is standard,  even if you don’t print often.  You can find a  reliable inkjet color printer for under $200.00.  A scanner is also useful hardware to own.  The ability to convert hard copy documents into electronic form,  including a nice photo of yourself to upload to your social media profile (or blog!),  is beneficial.  You can have documents scanned at Staples for a quarter a page and  photos at CVS or Walgreens for about $1.00 – $2.00,  but if you can budget the price of a scanner (around $175-$200),  I recommend you do so.

You’ll also want to have a couple of portable memory devices,  i.e. flash drives,  in your possession.  When you go to Staples to scan documents, that’s where the data is transferred.  My flash drives are important storage units for me as my laptop runs out of memory.  They hold many of my files.

When I have a speaking engagement,  I transfer the Power Points to a flash drive and plug into the A/V equipment at the venue (if there is good A/V equipment).  That’s so much easier and safer than dragging around my laptop.

Cloud Computing

Processes that are usually performed through software running on your computer,  but are instead accessed directly via the internet,  is an elementary definition of cloud computing.  The cloud allows you to perform all manner of functions from anywhere there is internet access and a keyboard.

Service providers like Amazon,  Google,  Yahoo,  IBM and Microsoft maintain the servers, provide the content and charge customers  according to the services accessed via the cloud.  Flickr,  Office 2.0,  Googleapps and Googledocs are examples of how you may already use cloud computing.

Network storage that backs up and archives data,  application hosting and virtual IT that acts as an extension of  a company’s in-house IT network are other functions available through the cloud.

There is a perceived threat to the security of documents stored via the cloud, however, and sensitive documents perhaps should not be stored in that manner.  Archives and sensitive data can be safely stored on portable memory devices.

Whether or not certain of your IT functions are in the cloud,  your computer still needs operating system software.  My tech expert colleague Craig,  owner of Roan Solutions roansolutions.com,  likes Windows 7.0.  Bookkeeping and financial statements can be handled with  Intuit QuickBooks Simple Start or Microsoft Office Accounting.  Another nice software feature is Microsoft Fax or other online faxing services that allow you to send and receive faxes directly from your computer.


Voice-over-Internet Protocol services like Skype and Vonage allow you to make calls directly from your PC.  Local and international calling will be either free or cheap.  You can even get VoIP for your cell phone.  Voice,  video  and conference  calls,  voice mail,  faxing,  instant messaging and caller ID are all available through VoIP.  Use the video calling feature to set up a real time virtual face to face  meeting with team members based in various locations around the world.

Land Lines and Smart Phones

Let’s start small.  Get your phone company to add conference calling to your land line, because every once in a while you need to have a 3 or 4 way conversation to hash out an issue.

Now on to the smart phones,  which join together the features  of cell phones and personal digital assistants like Palm Pilot.  Smart phones provide you with a date book,  contact list,  to-do list,  email and internet access.  You can even create and edit Microsoft Word documents,  edit photos,  access  GPS  assistance  and create a play list of your favorite songs,  depending on the unit you purchase.

There is a standard keyboard for ease of typing.  You can text,  have voice mail and yes, make phone calls.  If you are away from your office for long stretches and would like to have internet and email service plus a telephone,  you’ll need a smart phone.

Hope I’ve helped to untangle your technology options.  Thanks for reading and have a great week.


IT Update: What A Freelancer Needs Part I

I am not the techie type.  I don’t own an iPhone or BlackBerry and I may never own an iPad.  Cell phones with app attitude are not on my must-have list and they will not be,  unless my business changes and I find myself away from the office for long stretches and unable to respond to emails on time.

I’ve lived and worked on both sides of the technology divide.  I have typed on an IBM Selectric.  I remember mainframes and teletype (the first fax machines).  I am not a Luddite and I’ve never completely eschewed the many technological advances,  but neither am I enamored of them all.  I have never played a video game in my life and have no plans to do so.  I prefer the low tech life,  yet I spend lots of time online.

Around 1986,  my employer decided that its entire workforce would receive computer training.  Region by region,  department by department,  each employee in the white collar workforce and managerial level employees in our blue collar workforce,  spent 5 days from 8:00 AM to 5:00 PM in computer skills training classes.

It was a massive undertaking.  Businesses the world over had no choice but to provide such training for their employees in response to a paradigm shift that was as powerful as the transition from the farm economy to the industrial age.  Small businesses struggled to  not only finance  the significant cost of  purchasing computers for many of their staff,  but also the cost of training staff.  Freelancers eventually had to enroll in training classes that seemed to average around $300.00 +.  Typewriters were out and word processing was in.  DOS ruled the day.

I was happy to receive the training.  Computers were the wave of the future and I was grateful to develop a vital skill set on the corporate dime.  Scott,  my manager, was thrilled that I was a fast learner and did not rebel against the training.  The same could not be said for several of my co-workers.

I’ve been able to recognize which tech tools are essential for me and I have acquired them.  I was an early adopter of fax machines and have owned a phone / fax since at least 1995.  We rarely fax now, but they’re still good to have around.

I also had an electronic date book in 1995,  pre-Palm Pilot.  After the memory ran out in ’97,  I switched back to paper date books.  For some things paper and pencil are easier, cheaper and more reliable.  Paper and pencil never crash or freeze up.

Like every Freelancer,  I maintain a home office.  I write to you on an aging laptop that’s real short on memory.  I need to buy a new one very soon—come on, clients!  I dislike spending money on that kind of stuff.  I’d much rather buy designer belts and bags, or  art,  jewelry and vacations to the world’s great capitals.  If I must spend a thousand-plus bucks on something,  I’d rather it be on what I enjoy and not on electronics that may be nonoperational or outmoded in 5 years (or less).

But Bill Gates and Larry Ellison have us by the short hairs and they will not let go.  Cloud computing is here to stay until the Next Big Thing overtakes it.  Plus,  some of that techie stuff is quite useful—when it works right.

So what are the must-haves for the average Freelancer in the office and in the field? Next week,  I’ll present an overview of the basics that will keep you and your business up to code,  technologically speaking.

More later,

Feng Shui Your Office

Wind, water, qi.  Can you feng shui your way to prosperity? Maybe.

Back in the mid-90s,  I hired someone to work on my (previous) apartment.  I did not become wealthy, happy or fortunate.  In fact, I was laid off from my corporate job.  Nevertheless,  about 7 years ago,  I decided to give feng shui another chance and called in a consultant named Mary Roberts to work on my current apartment, which includes my home office.

Clutter management was high on the list,  because  feng shui demands order.  What I wouldn’t do for one extra room!  Feng shui also demands cleanliness,  so weekly housework became a must.  I figured if the system really worked,  I might be able to afford a maid.  But I am not there yet…

Feng shui will perhaps yield more of its promised benefits of harmony, health and wealth if you pay an expert $150-$500 (depending on the size of the space and the going rates in your area) to visit your home / office and make specific recommendations.  Alternatively, you can buy a book and a compass and DIY.

A compass is recommended because the feng shui system divides the space into directional quadrants and works with properties and energies that are assumed to be associated with each.   Beneficial objects and colors, along with objects and colors that guard against negative energy,  are placed in the quadrants (wherever practical).   Further refinements are made when northeast,  southwest, etc. subsections are defined, so that auspicious and protective objects and colors can be added there also.

So let’s get you started with feng shui! Since this blog is about business, I will provide some general tips that may help attract prosperity to your business center.  We will begin with the shape of the room.  Ideally, all rooms should have a regular shape and four 90 degree angles.  If the room does not have a regular shape,  you may “correct” the room with a faceted,  round,  clear crystal that will be suspended from a red silk ribbon (good luck color) and hung from a hook placed high up on the wall.  If you can’t find a crystal with a notch to thread the ribbon, then plants—no cactus or sharp leaves!—can be placed in front of the jutting walls,  either on a table or on the floor.  Immediately replace any unhealthy plants.

Here are a few more things you can do to attract feng shui benefits into the space where you conduct business:


-Place your desk at a diagonal to the office door. This gives you the “command” position.

-Let your back face either a corner or a wall. This will give you support (the wall will “have your back”).

-Have good lighting (natural and artificial) and air quality in your office.  Plants are good to purify the air and provide oxygen.

-Place your computer in the north or west quadrant of your office,  to enhance your creativity.   Place your computer in the southeast if you use it to generate income (online business).

-Treat your business files with respect. They represent your past,  present and future business.  Store files neatly and keep them organized.

-Keep the electrical cords in your office well hidden. This diminishes clutter and allows for the free flow of qi, or life energy, throughout the space  (I just moved the tangle of cords that are attached to my power strip from a place where I tripped over them repeatedly to a less intrusive place.  Not only does my office look better,  but I feel SO much more relaxed).


-Hang any mirrors in your office,  unless placed to deflect negative energy.

-Sit in line with the office door,  since that puts you in the path of negative energy that may cling to passersby.

-Face a wall when sitting at your desk.  If you have no choice in the matter, “correct” with vibrant art and/or lots of your favorite photos.

-Have your back to the door in an office where you are conducting business.  Opportunities  symbolically flow in through the door,  so do not turn your back on them.

-Arrange your office so that you look straight out onto a corridor,  staircase,  storage rooms,  closets,  elevators,  escalators or rest rooms.

I have incorporated several of these elements into my office.  Billable hours are not rolling in like a tsunami. Would I have even fewer active clients had I not used feng shui? Who knows? Still,  I feel happy in my environment.  Maybe we can just call this stuff  spring cleaning.

Thanks for reading,

Referral Etiquette Part II

There are three groups where one can find and groom good referral sources:  clients,  colleagues and friends/family.  Good referrals begin with good relationships.  In addition to providing excellent services that fulfill client expectations, developing and maintaining solid professional and social relationships is paramount. The ability to clearly and succinctly describe the services you provide,  your typical clients and the problems that your services solve is also important.  Finally, be willing to make the first move in the referral game.  If you initiate referrals,  you are likely to receive them in return.

Know what you want
Before going off in search of referrals, think about what you’d like to achieve when meeting prospects.  You’ll want more than some fuzzy idea of how you like to meet people in a particular industry.  Clarify which job title is likely to be the hiring decision maker for your service and the usual goals or business challenges that drive the need for your category of service.

Then you can be clear and precise in your referral requests and will be able to craft the right introductory pitch.  Moreover, clarity will help associates to think of you as they themselves network.  You and your friends and colleagues  can then function as a referral network  for one another

Know who to ask
If you’ve worked for a client on two or three projects and have developed a comfortable relationship with your contacts, let them know that you are always looking for new business and can they recommend someone with whom you can follow up? You may not receive an immediate answer, but the seed will be planted.  Also, there will be no pressure on the client to give a name if they prefer not to do so.

If a referral is made, be sure to get approval for using that person’s name and confirm that if asked, that person feels they know you and your work well enough to provide a good recommendation.  Make it easy and comfortable to refer your services. This approach also works for obtaining referrals through social relationships.

Follow up within one month
While your name is still fresh within the mind of the referral source,  make the call or send the email and get the ball rolling.   Do not let the trail go cold and squander the opportunity.

Failure to appropriately follow up on a referral is deadly.  It happened to me a couple of times and I shall not forget it and I certainly will never refer either of them again.  In fact, I severed ties with both parties.

In one case,  I referred a young lady who launched a bookkeeping business when she was my student at the Center for Women & Enterprise business plan writing course.  A restaurant owner friend of mine  was desperate for that service and I was happy to make the connection.  For reasons that will forever baffle me, the bookkeeping entrepreneur was always too busy to follow up, despite confirming that she looked forward to meeting a prospective client. The young lady was unmoved by urgent emails sent to her by both the restaurant proprietor and myself. The restaurant owner forgave me, thank heaven, and we remain on good terms.

In the other case, a woman with a 20 year career and an MBA called a potential prospect too hastily, before I could confirm the other party’s interest in her services.  I suggested that MBA lady check out the website of someone whom I had literally just met and let me know if she saw some alignment.

If things looked promising, my plan was to invite the prospect to likewise peruse the website of MBA lady.  If all agreed,  I would make the connection. Unfortunately, MBA lady took it upon herself to contact the prospect, whom I had met a mere three hours before,  claiming that I had made the referral! I was furious. The prospect did not love it and has been cordial but cool to me ever since.

Thank your referral source
Remember to thank your referral source ASAP. Even if business is not done,  it is wise to let your source know that you appreciate their confidence in you and respect their generosity. Whatever happens,  let your referral know the outcome.  Referrals are vital to the survival of your business. They are a special favor and should not be taken lightly. This simple courtesy will encourage more good referrals for you.

Thanks for reading,

Referral Etiquette Part I

I love to connect people.  If I can bring people together and set them on the road to doing some business, then I am a happy girl.  Just last week I was able to connect Dave and Denise.

Denise was my former student in the business plan writing course that I teach at the Center for Women & Enterprise cweonline.org.  Denise is a smart cookie:  a  no-nonsense, ex-Lotus,  seasoned professional who was savvy enough to see a need within the small business milieu for the competencies she had honed in the corporate sector and disciplined enough to successfully transfer those competencies into her own business venture.

At CWE,  Denise wrote the plan that launched her tele-sales call center business.  Denise sets up permanent or temporary call centers for organizations that require an inside sales force.  She works with business owners or department managers to discuss the product/service that will be sold,  works with that person to articulate key selling points and benefits,  advises the owner/manager on how to run the call center, trains the tele-sales staff and is available for follow-up advice.  She has a good business.

Dave is a colleague in a Cambridge Chamber of Commerce sponsored networking group cambridgechamber.org.  Dave works with businesses that are looking to upgrade their telecommunications systems,  or better integrate those systems with other IT functions. He is often brought into a workplace that is relocating or making space changes within its current location.

Dave’s challenge  is lead generation.  Experience has shown him that personal outreach, rather than direct mail or email campaigns,  is the best way to find prospects.  He had wondered if  it would be more efficient to hire one or two part time sales people to make calls and pre-qualify prospects for his follow-up.  After pondering the notion for a few months,  he announced his intention to pursue that strategy at our monthly networking meeting.  I immediately suggested that he speak with Denise and sent him her contact information, urging him to use my name.

Dave contacted Denise a few days later. They met for coffee and discovered that they know a few people in common.  They also confirmed that Dave’s inside sales force plan is likely to reap the desired benefits.  Both parties emailed to thank me for the referral and let me know that they will work together on the lead generation tele-sales project.

So  my referral was successful.  You can do that, too.  Next week,  I’ll give a few useful tips that will help you create winning referrals,  whether you give or receive (the idea is to do both!).  Until then, remember that  people do business with people they know and like.  They do  more business with people they trust and respect.

Thanks for reading,


Survive and Thrive—Price to Profit

Let’s segue into the pricing thicket,  which is where accounts receivable begin,  if you think about it.  I confess that I struggled with pricing.  I offer an intangible service and I knew of no way to find out what my competitors charge for similar services.  Clients pay what they think we are “worth”, but how is that determined?

The received wisdom is that clients are very price sensitive  and that they are more so in this economy.  Fear drives many Freelancers to price conservatively,  yet experts advise against that practice.   Many of us need a smarter pricing strategy,  because we’re probably  leaving money on the table.  We  just don’t know how much.

Pricing that is based on what competitors charge,  hoping that number will allow  you to cover costs and turn a profit (“cost competition”),  is what almost everyone does when they can figure out their competitor’s prices.  However,  pricing specialists  warn that this is unwise,  because that price will not reflect your value to the client.  In fact,  prices that fall below a certain threshold can even steer prospects away from a business.

If prices are perceived as too low, clients will suspect that the service delivered must be inadequate.  In a service business,  delivering the service and meeting (or exceeding) expectations are the overriding factors— not money.  The money is always negotiable when it is demonstrated or perceived that the service will deliver the desired results.

What competitors charge is important,  but that should not overwhelm your pricing strategy.  Ideally,  price should accurately reflect the client’s perception of the value of  the deliverables.  But what might that be? Different customers can have very different ideas about what a service is worth,  sometimes based on their ability to pay.

It is therefore worthwhile to develop pricing strategies,  rates and service packages for different categories of clients,  e.g. corporate and nonprofit rates,  with service packages tailored to meet each group’s typical needs.

Think counter-intuitively.  People pay for what they value.  They pay a premium for what is perceived as high quality,  expert,  reliable and trustworthy.   A good reputation, excellent credentials,  impressive client list and referral from a trusted source also influence the price that clients will pay.  If you are holding several of these cards,  you can charge more and clients will be happy to pay.

A useful counter-punch for gaps in your bona fides is your marketing message.   Make your intangible service appear tangible to clients/prospects.  Describe your service as providing deliverables that will produce measurable outcomes.  Make it easy to understand what you do,  so that clients can relate your value to their business problem and can picture themselves as the beneficiary of your unique solutions.

When setting prices,  it is better to err on the premium side.  This will position you as higher quality and will support profitability.  Furthermore,  clients probably don’t know what your competitors charge unless they’ve hired for your category of service recently.

So what if you’re totally in the dark about your industry pricing norms?  If you have money to spend,  hire a pricing consultant.  If you don’t have money to spend, visit gsa.gov/mobis.   Click products & services,  choose a category,  find a vendor,  click terms & conditions and peruse price and service lists used by firms that bid on federal contracts.  Also, you can learn what clients think of your pricing,  scope of services and delivery of services with a follow-up evaluation survey.  You may be surprised to learn that if you tweak a couple of things,  clients would be willing to pay more for what you do.

Thanks for reading,

Wheel and Deal—Fast Cash

I recently heard about a company called The Receivables Exchange.  The company hosts an online real-time auction of accounts receivable and invites businesses to sell outstanding invoices to raise money quickly.  The auctions enable businesses to sell their  receivables to bidders in the global institutional investor market.  Sellers are paid the auction value of the receivables and thus gain access to working capital.

According to The Receivables Exchange,  typical sellers have more than 60% of their working capital tied up in accounts receivable and are therefore limited in their ability to take advantage of important opportunities or otherwise expand their businesses.

Collecting receivables has become an adventure for many business owners and Freelancers,  as we all know.  Customers may be asking for extended payment terms.  Big corporations that can well afford to pay on time have sometimes adopted the mean-spirited practice of paying their small business vendors in 45-60 days,  or even longer.  This can put businesses  in an ugly cash flow bind.

The Exchange can make available  badly needed capital to (certain) businesses that cannot obtain traditional financing or cannot wait out a credit approval process.  The Receivables Exchange can give access to a quick  infusion of cash when it’s needed most. The process is similar to factoring,  that old-school trick used to raise cash fast.

In factoring,  receivables are sold to a financial institution at a pay-out rate that is usually between 75-80% of  face value.  The 20-25%  held back is called the reserve. The quality of receivables determines the reserve amount,  as does the historical average turn-around time of invoices.  In other words,  if big companies like Verizon or CVS are the receivable accounts and they tend to pay within 30 days,  the reserve percentage will be lower.

Cash is usually sent in 5-10 days.  There is no credit check.  Once the receivables are paid up,  the business owner is paid back the reserve,  minus a factor fee of 2-5%.  Additionally, there is a fee of 1/8 to 1/15 %  assessed for every day past 30 days that the receivable is outstanding.  It’s a heavy hit to take,  but money is quickly raised and with few questions asked.  Moreover,  the factoring company assumes the risk of customer default.

When evaluating whether or not factoring makes sense for your business cash flow challenge,  do your homework.  Ask your accountant for a recommendation and then check references.   Make sure you understand those numerous fees.  Liquid Capital liquidcapital.com is a well known factoring company.  You might also visit the websites of the Commercial Finance Association or the International Factoring Association.

But now there is a marketplace where receivables are sold to the highest bidder.  As a result,  it is often possible to obtain more favorable rates than factoring.  This option is not available to everyone,  however.  To be eligible for membership,  the business must have minimum annual sales of $2 million,  must have operated for at least 2 years,  must be registered to do business in the US and can have no tax liens.  The app. fee is $500.00. Sign up online to become either buyer or seller receivablesxchange.com.

The Exchange is no scam.  In January,  Bain Capital gave the New Orleans based company $17 million in financing.  In our credit challenged business environment, there is plenty of upside potential for the company.

Thanks for reading,