the goose

You can recognise a successful business because it has

• at least a €500,000 turnover
• 3 or more employees (with preferably 1 managing the other two and so on)
• an operating margin somewhere between 50% and 10%
• a Christmas party
• HR contracts
• titles
• Hours of work

I admire these businesses.  They provide employment, structure and meaning to people and help the world go around.  The only problem is, I don’t want to run one.

I’m more interested in spending less than I earn while not selling any time.  With that in mind I’m dumping term building a business in favour of developing cash-flows.  As for a title, I tend to stick with programmer but privately I try to think along the lines of an investor.

@dcurtis made an excellent point this week on twitter.

People think Google is a software company. It’s not. It’s a services company. Advertisers are the customers; you are the product.

It got me thinking about how its easy it is to misconceive and how those misconceptions can be disastrous when it comes to nurturing your cash-flow.  Pricing is one thing that I’ve misconceived for years.

Supermarkets, shops, airlines and pretty much every consumer business sets the price for its products.  It might be easy to assume that they are in control of the price.  In reality  – they are not – we are. Read the rest of this entry »

There is nothing that drives me up the wall more than chasing money for which honest time has already been spent. I love it when I can get paid up front. The only trick is, especially in Ireland, people love to put payment on the long finger. So what is the secret to getting paid up front, in full?  I don’t fickin know, but here are three rules of thumb:

1. The customer has be able to see exactly what they are going to get before they buy.  Think about it.  You only pay for things up front when you are certain that the product is going to deliver what it promises.  A Sacha Barron Cohen film guarantees to gross you out.  A grocery store cookie guarantees to give you a sugar rush.  This is the biggest reason why you just can’t get away with charging up front for consultancy work.  It is hard to predict an accurate outcome.
2. Guarantee:  If the cookies don’t give you a sugar rush or moreover are out of date – you can get them exchanged or refunded.  I’m not sure if the same is true for a Sacha Baron Cohen film, but you get the idea.  There must be some kind of guarantee.  In effect this is why customers don’t pay up front.  Not paying before delivery is their own inbuilt form of guarantee.  If the service is that out of whack with whatever they expected, they can just withhold payment. Read the rest of this entry »