There’s been much talk about strategies for businesses to survive the uncertain economic climate. The media every day are reporting massive layoffs and industries in turmoil. In these times, it’ll be all too easy for most businesses to feel the effects of the crisis, so what can we do?

One of the major scenarios we’re already seeing in some industries is the domino effect of a large company hitting the wall; this in turn affects their suppliers, who then suffer, affecting their suppliers, and so on down the food chain.

What is immediately obvious here is that there are two actions we need to take. I also note that these should be part of standard business practice, not just for uncertain times.

The first one is control costs. Most organizations can identify a few areas where some small cost savings could add up to a sizable percentage of their bottom line. Look for savings in bank fees, transport costs, telephone and bandwidth, office supplies, and the like.

Secondly, manage cash flow.

If your clients hit hard times midway through a project, you could be left wearing the debt. Make a habit of invoicing smaller amounts more frequently, based on project milestones or calendar months. Keep on top of recalcitrant debtors — if you start chasing them the day after the bill is due, it trains your clients to know that you mean business.

Chasing your debtors consistently means you’ll have their payment sooner, and it’ll be less likely they’ll become a bad debtor.

This post first appeared as part of Issue 428 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.

Should you offer services or products?

The old phrase, The grass is always greener … is often heard when discussing the merits of services versus web-based products. Listed below are some of the advantages and disadvantages of both models. Which ones apply to you?

Products — Advantages

• gives you unlimited income potential, because time constraints are minimal (unlike selling services)
• enables lower prices for the consumer, as costs can be amortized over more customers
• allows you to concentrate on building one main project, rather than several small ones
• presents a choice of different revenue models, which are simpler to modify over time
• affords a better opportunity for residual income, in continual license fees
• provides an easier option to sell as an ongoing concern than a small web service does.

Products — Disadvantages

• requires more upfront investment in time and possibly money, especially the marketing aspect
• presents the possibility of competitors creating similar products and competing directly with you.
• necessitates market research to avoid ending up with little or no customer base.
• runs the risk of fielding more support queries than anticipated
• may delay long-term growth because of the lack of immediate cash flow

Services — Advantages

• generates income faster, because it’s easier to sell your services than a brand new product to the marketplace
• provides scope for a variety of projects, maintaining your interest in each new project
• offers more versatility in meeting market demands, rather than having to rebuild a mature application

Services — Disadvantages

• reduces your capacity for income, because it’s based purely on how much you can charge and how many staff you need
• limits short-term growth; for example, hiring staff is more time-consuming than bringing a new server online
• makes you more vulnerable to market buoyancy than product licenses

Also remember, as Dave mentioned, that it’s very simple to have a hybrid model of both: sell your current services while developing and offering products as well. This is similar to how businesses may sell hosting, stock images, and CMS licenses.

This post first appeared as part of Issue 424 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.

The time between Christmas and New Year’s Day is an ideal opportunity to take a break and close the office down for a few days; this gives both you and your staff some time to relax and enjoy the fruits of all the hard effort you’ve put in throughout the year.

This sounds easier than it might be in reality, however there are a few tricks to help pass that message on to your clients:

• Give plenty of notice. Email clients with active projects now, letting them know that you’ll be closed over Christmas. Encourage them to provide everything they need, in order to wrap up the job, or alternatively, ensure you have enough leeway in that project’s plan to allow a week’s delay.
• Reassure them about emergencies. A client’s first thought will often be “what happens if my web site goes down?” In the same notice above, confirm that while closed, someone will be keeping an eye on the web servers, just in case. That’s assuming, of course, you’ve delegated that to one of your team.
• Encourage your clients to also take the time off. People burn out — it’s a fact. We all need a break once in a while to perform at our best. Not only will your clients be refreshed, they can’t criticize you for doing the same!
• Point out that this is the only office closure each year — assuming that’s the case, of course. Most offices, you’ll find, only ever close down during the Christmas period. Easter consists of public holidays, yet those eight or so days over Christmas and New Year’s Day are a fantastic chance to really unwind.
• Remind your clients closer to the date again. People forget, things change, and although six weeks out is a great forewarning, you need to follow this up again. I suggest about a week before closing, send out an email to say Merry Christmas, and let them know your official closing and opening hours.
• Provide any emergency numbers they may need as well, however I’m a big believer in just diverting the office number, if you can manage it.

This year, for example, Christmas falls on a Thursday. My business is closing shop entirely from that day through to January 4th, making a total of eleven days off from work! This equates to only four actual business days, taking out weekends, and public holidays in Australia. Our clients won’t even notice, but my staff and their families sure will!

This post first appeared as part of Issue 422 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.