How “We’re booked” was ruining our business(bigswing.squarespace.com)
bigswing.squarespace.com
How “We’re booked” was ruining our business
https://bigswing.squarespace.com/blog/2013/5/13/how-were-booked-was-ruining-our-business
16 comments
Great advice. I'd be interested in hearing more about Thomas's hack re: flexibility. tptacek - any chance you can weigh in here?
Awesome suggestions all around. We're definitely going to be trying out all of the above to see what fits.
If you are at the point where you are so busy working on your backlog that you can't build up your backlog, it might be worth it to pay a 'technical sales' person to build your backlog for you, and set expectations with the clients.
This advice is backwards. If you're so busy with the backlog, you should hire someone to work on the backlog and supervise them. If you're running the business, your job is finding work, then managing the work, then executing the work, in that order. Anyone worth their salt at selling technical work for a small firm would be doing it themselves, why would they even need the job? Better to hire freelancers who you know are great workers, but aren't as good at attracting them business, and having them help work through the backlog.
Would it be a full time employee? Where would you find such a person? How does a technical person who doesn't know much about sales evaluate potential hires?
I think the first step is to sell yourself to learn about sales. Then you'll know enough to hire someone. You find that person the same way you find clients.
I'm in a similar boat to these guys as far as biz dev goes and don't personally have a great sales track record having come from a purely technical background.
It seems like Sales as a service exists at least with Elastic. Does anyone have experience with how that works as a replacement for a full-time technical sales person?
It seems like Sales as a service exists at least with Elastic. Does anyone have experience with how that works as a replacement for a full-time technical sales person?
If you have any recommendation on finding/using a part-time sales person, I'm all ears! Dedicated sales would be awesome, but it'll be a while before we can hire this as a F/T position.
What you've described there boils down to two core concepts:
1) Curves of supply and demand. If your demand outstrips your supply, increase your prices until you lose ~50% of the pitches you go for, on the basis of price alone.
2) Sell. Sell sell sell sell sell. Don't worry about your capacity today. Worry about your capacity tomorrow. Give N month lead times for commencement (people will live with this if they want you badly enough), take a deposit, and use it to hire.
It's a bit of a razor's edge to run, as if you're not careful you'll find yourself under-resourced, delivering late, and fucking your reputation in the behind with a broomhandle. If you are careful, and you model out your resource needs based on past performance, you can anticipate your resource needs to fulfil your demand, and you'll grow like a whale on steroids.
I like obtuse allegories.
1) Curves of supply and demand. If your demand outstrips your supply, increase your prices until you lose ~50% of the pitches you go for, on the basis of price alone.
2) Sell. Sell sell sell sell sell. Don't worry about your capacity today. Worry about your capacity tomorrow. Give N month lead times for commencement (people will live with this if they want you badly enough), take a deposit, and use it to hire.
It's a bit of a razor's edge to run, as if you're not careful you'll find yourself under-resourced, delivering late, and fucking your reputation in the behind with a broomhandle. If you are careful, and you model out your resource needs based on past performance, you can anticipate your resource needs to fulfil your demand, and you'll grow like a whale on steroids.
I like obtuse allegories.
This is the fundamental challenge of all professional services businesses. It has a name: "Feast or Famine".
Raise your rates.
Another thing that is true of many professional services businesses: clients hate it when you say "No", and unless they have a process in place to balance work across multiple vendors, will prefer vendors that reliably say "Yes" to all their project requests.
Good luck, welcome to the big leagues.
Raise your rates.
Another thing that is true of many professional services businesses: clients hate it when you say "No", and unless they have a process in place to balance work across multiple vendors, will prefer vendors that reliably say "Yes" to all their project requests.
Good luck, welcome to the big leagues.
This was the biggest "oh crap, what did we do to ourselves?" moment. Effectively saying "no" took us off those people's radars permanently.
Have you tried recontacting them? A lot of people are open to a sincere mea culpa announcing a policy change. I suspect you'll win back more than 0% of those clients, on good terms.
This is great advice, AND it dovetails nicely with the advice I've been seeing here a lot lately: send more email to prospective customers :-)
In my experience freelancing, if you say "yes" to all new clients instead of "no" -- even if you're too busy and feel guilty for taking work you think you can't do -- you find a way.
When it happened to me, I went from solo freelancer to hiring 6 full-time engineers, which essentially means I created an agency.
It was great. The only challenge then, was convincing clients who'd hired me specially, that "someone else from my team may work on it, but the quality will be just as high."
The worst-case scenario: If you take on too much work, you may end up delivering late. Usually not the end of the world. But if that's not an option, you'll still manage to find a way.
When it happened to me, I went from solo freelancer to hiring 6 full-time engineers, which essentially means I created an agency.
It was great. The only challenge then, was convincing clients who'd hired me specially, that "someone else from my team may work on it, but the quality will be just as high."
The worst-case scenario: If you take on too much work, you may end up delivering late. Usually not the end of the world. But if that's not an option, you'll still manage to find a way.
This is the mindset we're trying to adopt now. Say yes, because too much work is a much better problem than not enough work.
This might be the wrong lesson to take. You CANNOT deliver quality work if you are over booked. To me, it looks like you need to raise your rates, not accept more work at the current rates, it wont be sustainable.
Well, it depends. I'm fully booked myself, but I hired a good programmer to take on another project. He's not as experienced but is a very fast learner (also he's diligent), so with a few minutes of extra work per day, I managed not to shut the door to am opportunity, and the deliverable is turning out very well indeed.
I used to work for a wordpress shop. All these other shops we're basically just a one-man show, but the one I worked for was flourishing, with 12 employees. When I asked why, the director explained that they used to only do business development when they didn't had clients, and stopped doing it when they did. The moment they hired a full-time sales manager, whom was doing business development constantly, the business thrived and grew faster than all the other shops.
This is another viewpoint to the same morale in the article...
This is another viewpoint to the same morale in the article...
Another benefit of hiring a (good) sales manager is that they have mastered walking this tightrope and know how to prioritize client requests and set expectations, both for clients (timelines) and you (expected capacity).
For what it's worth, we've been in the same position lately of being pretty booked up, but we took the approach they're suggesting from the beginning.
No matter how busy we are, I never say "no" to an opportunity to talk or sit down to coffee with new people, whether they be a potential client or just someone seeking advice. I'll even go through the discovery phase and estimate/quote out their project, and only after the quote do I bring up our timeline. Most of the time, they are fine with the timeline (though I've always found a way to make it sooner than "next year", usually a few months out at most). If they need it doen sooner, then I'll find a way to get it done with our partners by sub-contracting. The rest have been fine with that. If they weren't, then I'd simply help them find someone else who can do it.
It's worked pretty well so far. But I can attest, it is very hard to go talk with someone for an hour when you know there's actual work you should be doing. I feel the same way though when I'm doing taxes or keeping our books. They have to be done. You just do it anyway.
No matter how busy we are, I never say "no" to an opportunity to talk or sit down to coffee with new people, whether they be a potential client or just someone seeking advice. I'll even go through the discovery phase and estimate/quote out their project, and only after the quote do I bring up our timeline. Most of the time, they are fine with the timeline (though I've always found a way to make it sooner than "next year", usually a few months out at most). If they need it doen sooner, then I'll find a way to get it done with our partners by sub-contracting. The rest have been fine with that. If they weren't, then I'd simply help them find someone else who can do it.
It's worked pretty well so far. But I can attest, it is very hard to go talk with someone for an hour when you know there's actual work you should be doing. I feel the same way though when I'm doing taxes or keeping our books. They have to be done. You just do it anyway.
> I'll even go through the discovery phase and estimate/quote out their project
I've started charging for this process. Partly because otherwise I'd spend all my time consulting for free, partly because it's a huge value add to their business, and partly one-to-many "oh great, thanks for estimating this. I took it to your competitor and now they're willing to underbid you by $5K because all the hard work is done for them." scenarios.
I've started charging for this process. Partly because otherwise I'd spend all my time consulting for free, partly because it's a huge value add to their business, and partly one-to-many "oh great, thanks for estimating this. I took it to your competitor and now they're willing to underbid you by $5K because all the hard work is done for them." scenarios.
That's a very good point. We haven't had the problem of them taking our quotes to our competitors very often. We've had several people who took our quotes to our competitors, they undercut the quote, but then they ended up choosing us anyway even at the higher price, almost always because we "inspire more confidence than anyone else" in our ability to execute.
That being said, it usually only takes us another couple hours to quote a project once we've gotten to that stage, and we have started billing for it when it seems like it will take longer, or if they want more detail or revisions.
That being said, it usually only takes us another couple hours to quote a project once we've gotten to that stage, and we have started billing for it when it seems like it will take longer, or if they want more detail or revisions.
It seems like the bigger problem they will have in their business is that they are going to be continuously busy "doing work" instead of "building the business". Such is the way of consulting. If you can't take on more work by hiring more people, then you can't scale. If you can't scale beyond the team you have, you haven't created a business, you've created a job.
There's nothing wrong with creating a job for yourself, but know that it's not the same as a business even if you call yourself a business.
There's nothing wrong with creating a job for yourself, but know that it's not the same as a business even if you call yourself a business.
If you can't scale beyond the team you have, you haven't created a business, you've created a job.
This meme has little entanglement with reality. A one-man consultancy's chief concerns are almost entirely alien to a W-2 employee's chief concerns: as a W-2 employee your chief economic objectives are work-performance, as a consultancy your chief economic objectives are almost certainly external to the actual delivery of your professional skills. A one-man consultancy can unilaterally offer themselves a pay-raise of 25%+ every 6 months if market conditions support it; this happens in vanishingly few salaried jobs. A one-man consultancy can build intellectual and other forms of capital which are absurdly portable; this is possible as a salaried employee but their access to capital formation is markedly inferior. (For example, it is exceptionally difficult as a salaried employee to licitly walk away with your employer's take on your core job function and then implement it for competitors. That's pretty much the default in consultancies, and deviating from it costs the client extra money.) A consultancy has significant work-related expenses in a way that a salaried employee does not. A consultancy has a vastly more complicated tax, compliance, insurance/risk-mitigation, etc etc, situation than a similarly situated employee.
Perhaps most relevant to someone who thinks headcount is the only meaningful way to scale things: a consultancy, even a one-man consultancy, even a one-man consultancy which outside observers believe is impossible of maturity required to scale, has a permanent call option on growing headcount.
This meme has little entanglement with reality. A one-man consultancy's chief concerns are almost entirely alien to a W-2 employee's chief concerns: as a W-2 employee your chief economic objectives are work-performance, as a consultancy your chief economic objectives are almost certainly external to the actual delivery of your professional skills. A one-man consultancy can unilaterally offer themselves a pay-raise of 25%+ every 6 months if market conditions support it; this happens in vanishingly few salaried jobs. A one-man consultancy can build intellectual and other forms of capital which are absurdly portable; this is possible as a salaried employee but their access to capital formation is markedly inferior. (For example, it is exceptionally difficult as a salaried employee to licitly walk away with your employer's take on your core job function and then implement it for competitors. That's pretty much the default in consultancies, and deviating from it costs the client extra money.) A consultancy has significant work-related expenses in a way that a salaried employee does not. A consultancy has a vastly more complicated tax, compliance, insurance/risk-mitigation, etc etc, situation than a similarly situated employee.
Perhaps most relevant to someone who thinks headcount is the only meaningful way to scale things: a consultancy, even a one-man consultancy, even a one-man consultancy which outside observers believe is impossible of maturity required to scale, has a permanent call option on growing headcount.
I have a one-person company. It's a business. And a job.
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"We're booked until the end of the year" sounds suspiciously like "We're not charging enough money."
Charging more money doesn't create more time, especially if you're already solidly booked.
Now it's great to quote a really high rate when you're totally booked because there is almost no risk but then it can be challenge when the client then accepts it.
Now it's great to quote a really high rate when you're totally booked because there is almost no risk but then it can be challenge when the client then accepts it.
We've been overbooked for years and while it can be very stressful at times it is of course better than having no work. The reality is that we sometimes come in late on delivery but in the end our clients like us, stick with us and refer us because they like our work and the end-product is good.
Two points I would add to the discussion are:
1) that in addition, or in lieu of raising rates consider lengthening the project time-line. You can often push a project out further in time which both softens the expectations and gives you more time to deliver quality and deal with more iterations.
2) to take the time to feel out the client. If you are really in demand and becoming overbooked the LAST thing you want is a terrible client who can potential swamp your resources. Work only with people who will respect you and your team and never settle on this even if it means you can make more money. It can be worth the extra 2 or 3 meetings before a work agreement to see if you will have a productive relationship before committing to the project. Being over-busy is a great opportunity to be picky about the projects you decide to take on.
Two points I would add to the discussion are:
1) that in addition, or in lieu of raising rates consider lengthening the project time-line. You can often push a project out further in time which both softens the expectations and gives you more time to deliver quality and deal with more iterations.
2) to take the time to feel out the client. If you are really in demand and becoming overbooked the LAST thing you want is a terrible client who can potential swamp your resources. Work only with people who will respect you and your team and never settle on this even if it means you can make more money. It can be worth the extra 2 or 3 meetings before a work agreement to see if you will have a productive relationship before committing to the project. Being over-busy is a great opportunity to be picky about the projects you decide to take on.
You were basically being cocky saying: "We're doing fine without you and we don't want to work for you."
That's not how business works.
That's not how business works.
"We're booked" saved my business. I was taking on too much business and finally decided to make a waitlist. I would tell people what # they'd be on the list and about how long it would take until delivery. That way I was still adding about 50% of the prospects to the list, since they didn't mind waiting. Had I not done this, I would've risked all my clients -- and my reputation.
You need to charge enough of a overhead that you can afford to have a person or two that can handle all the impromptu calls, feeler emails, coffee meetings, etc.
When I signed a new game developer I always asked them, how do you "mind the gap?" The gap between projects is much harder for game devs than making a game. If I look back at all the devs, the ones that are gone had no gap financing.
Don't ever stop Biz Dev even if your publisher LOVES you.
Don't ever stop Biz Dev even if your publisher LOVES you.
This is 100% the reason that I haven't jumped on the independent contractor wagon. I know that's probably not considered very ambitious ... but I just know that I'm not the kind of person that can focus on bizdev while at the same time busy with shipping software.
It's not about saying "yes" or "no" per se but the terms of a "yes": "We have time for your project after the summer. If you want it sooner, I can look if that could be arranged but I'm afraid it's going to cost you quite a bit."
I did exactly this last year and ended up with no new for January-March. It was a terrible idea and I'm now operating with the 'Open for Business' mindset too.
There's a few other options, too. There is no zeronary Consultancy#are_we_booked? method. It's ternary: Consultancy#are_we_booked?(price, schedule, scope). For a price you can virtually always take on a new client starting tomorrow. (I mean, you can't physically be on two continents at once, but if you're scheduled in New York one week and a client in Germany wants the same week, if they're willing to pay 5X what New York is, then you call New York and say "Hey guys, have I got a proposition for you: how about we delay this engagement N weeks and in return I'll discount 20% off the invoice.")
You probably retain scheduling flexibility with clients unless they pay extra to get scheduling predictability (p.s. ask Thomas about this in more detail, it's a great hack), so if you're scheduled above 80% and a lucrative gig comes in, you might be able bump everything back N weeks without blowing any windows even without having to renegotiate things, especially if you are capable of hiring and ramping someone in that time. That is, of course, the ultimate consultancy scaling mechanism.
P.S. In parallel with any, all, or none of the above advice, if you find yourself above 80% utilization, raise rates.