Business headaches

10 months into self-employment and find myself struggling (not with the tasks of a controls professional as much as with the tasks of business man). I sometimes find myself in the quandary of contracts. Shall I starve my family or agree to some terms that COULD end up biting my in the rear. I LOVE the freedoms and opportunities that come with ownership but I'm still learning that they come with a price (biggest of which may be stress).

I just wanted to vent. Do any of you have encouragement or discouragement to offer?

Shall I starve my family or agree to some terms that COULD end up biting my in the rear.

Click to expand...

Difficult to give you a one-size-fits-all answer to that question. If the terms are the hourly rate that the client is willing to pay, and you can justify your hourly rate, then you should be soliciting a better class of client.

If it's payment terms, that can get a little trickier. If you have to purchase hardware for a project, you're justified in asking the client to pay for it up front. The contractor who puts a new roof on your house won't start the job without a down payment, so why should you?

On large projects, you should be negotiating progress payments at identifiable milestones. That protects both you and the client. The client knows that progress is being made and that you're not running into any project-killing obstacles. You get to buy groceries and make your mortgage payment.

As difficult as it may seem, sometimes you have to walk away from a gig because it just doesn't smell right. There are people out there who will take the attitude that any contract they sign is a zero-sum game. In their minds, there is no such thing as a win-win, that if you made a dollar on the project, they should have paid you a dollar less. Networking with your peers to identify and avoid clients with that attitude is clearly worth the time.

Sir,

Have you created a business plan for yourself and your company? Have you identified where your focus will be?

Steve mentioned some very good points from the standpoint of contracts. There are times when you just have to walk away if it doesn't feel right or you can't negotiate a "win - win".

It is difficult sometimes to walk away from a contract that will pay you quite well...but at what cost (as you are realizing)? If you are stressing out over terms and worrying about the future you will crash. Remember no one can control the future and the bible tells us not to worry about it.

“Therefore I say to you, do not worry about your life, what you will eat or what you will drink; nor about your body, what you will put on. Is not life more than food and the body more than clothing? Look at the birds of the air, for they neither sow nor reap nor gather into barns; yet your heavenly Father feeds them. Are you not of more value than they?  Which of you by worrying can add one 1 cubit to his stature? “So why do you worry about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin; and yet I say to you that even Solomon in all his glory was not arrayed like one of these.  Now if God so clothes the grass of the field, which today is, and tomorrow is thrown into the oven, will He not much more clothe you, O you of little faith? “Therefore do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’  For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things.  But seek first the kingdom of God and His righteousness, and all these things shall be added to you.  Therefore do not worry about tomorrow, for tomorrow will worry about its own things. Sufficient for the day is its own trouble." Matthew 6:25-34

If you are concerned before you do the work, look at that as a warning sign. Wisdom goes a long way. From your brief post, it sounds like you have work to do but, it is a matter of selecting what is best for you, your family and your company.

What is important to you? Only you can answer this.

You can't be everything to everyone...a business plan will help you to focus. Once you have done one...you have to stick to your plan. If you don't, your plan isn't worth the paper it is written on. Take time to consider your strengths, weaknesses and any competitive advantages you may have vs. your competitors.

Business is all about relationships. If you focus on developing relationships with individuals (who make up companies) you will eliminate alot of stress, and probably end up with more business than you can handle. Being upfront and honest from the start will go a long way. It will help you make decisions about jobs (and people) that you may be uncertain about.

You have talents and knowledge that is of value to your potential customers...don't sell yourself short. Make certain that you are compensated for what you know, not just the components you supply.

Also remember you can't be a specialist in everything. Concentrate on what you know and hire the specialists. Lawyers for contracts, Accountants for taxes, etc... I graduated with a degree in accounting, but have an accountant do our company's taxes, because they specialize in the field and are familiar with current and new tax code.

Hope this helps you in some way.

God Bless,

Struggling Entrepreneur,

I check the help wanted adds all the time, and dream of what it would be like to be an employee. I've been and employee since '80 and the President since '89.

We all are in the service busniess. Just remember that you service your customers, and if you dont you wont have any. That means any time they need it; on weekends, Christmas Day, right in the middle of your vacation week, etc..

All the other headaches; insurance, benifits, union issues, cash flow, etc..will never compare to the stress placed on you and your family, by the demands of running a busniess of this type.

The first, and most important thing you must consider is weather or not you and your family can cope with the emotional roller-coaster that you are about to get on. If you are not absolutly sure that you and your family can properly deal with the idea of missing your childrens birthday, or having to cut out from vacation early etc.. I would respectively advise that you check out thoes want adds..or file for a divorce right now.

Good luck with it.

Mike

I am a self employed professional engineer. I love it, but the cash flow stress can be difficult to deal with sometimes.

In business today contracts are everything. As a sole practitioner what you do could cost you your house. An S Corp will limit your exposure in many cases. In many states licensed Professional Engineers can not hide behind an S Corp. You must have a good contract that limits your exposure to negligence on your part.

Get a lawyer to write up a good terms and conditions contract. I paid mine $1000 to get a good draft. Present this with your proposals. Make the customer negotiate away from what you have presented.

Be selective in your choice of words in proposals. Never guarantee, never give an unconditional warrantee. Never use words that have absolute meanings. Estimated costs, not costs will be. Best standards of professional or engineering practice. Never every use “supervise the job”. (You maybe assuming responsibility for someone else’s accident) (Look to the construction industry for good contracts- They charge for them, but there are good standard words available.

Be ready to walk if the customer wants you to assume responsibility for items out of your control, unchanging deadlines, and unreasonable cost or performance guarantee’s. It is the hardest thing in the world to walk away. Find out what the customers reputation is. If everybody around has had poor experience, then you will too.

If the customer wants you to assume ownership, then charge accordingly or walk.
Explain to the customer why what they are asking is not practical nor appropriate. Sell yourself, make the customer feel they can work with you. Some buyers are simply there to knock down your price. Ask them what service they would like to remove or limit. Remember they get what they paid for and they will look bad if their purchase fails.

Get upfront money to cover all you out of pocket expenses. Do not spend a dime until you have that check in hand. (I maid that mistake once1) Set reasonable performance limits with outs in the event conditions change.

And yes, make sure you are read for the ups and downs.

It is not easy, I am making less (in some cases a lot less) than I might because I avoid bad customers.

Might as well reactivate this thread a little...

Cash Flow IS EVERYTHING!

When possible, get weekly payments (not weakly payments).

Easiest way to pay bills is weekly checks. The longer the wait, the bigger the amounts that have to come from each check. Even though the numbers all add up the same, the more often you get paid the easier it is to pay bills.

Up front money is always good, especially if there is a lead time between billing and payment. Recently, I have been able to get paid some in advance. This is especially good when the customer wants your time "exclusively".

Always know when you will be paid, put on invoices >>> TERMS: or Payment is expected......

On one project I overheard someone in the office say to someone else "remember, we don't issue any checks in August". I think I was on a 2-week program there, which meant I would miss 3 checks that month, the way Fridays fell.

Here is a good starting point for a contract, I put it in MS-Word as an *.rtf file to keep the size down, and retain the formating.

http://users.rcn.com/weyand/weyand_assoc/contract/consult.htm

When discussing terms on several projects, I have been told "We'll pay you $xx.xx". Typically, It is considerably less than I wanted, but I jumped at it because of hunger. In contrast, on my first independant job I wanted $20.00, they said "We're paying our current guy $30.00, we'll give you $40.00. I TRIED to take three long breaths before I said okay. Rates are all over the place, unfortunately, there are too many hungry people out there. At present, I will work for wages, out of neccessity, the bills still come every month. I did find out when you don't pay them for a couple of months, the now offer payment plans with 0% interest, but thats another story (thread).

After 25+ years of off and on self-unemployment, I still wouldn't want to do anything else, except get a good salarary, benefits (whatever those are), vacation (I took one day off last year, 2 in 2000).

Anyway, enough for now.........casey