There's an elephant in the room during my business skills workshops these days. Countries around the world are starting to fall into recession, but the people I meet don't seem to be thinking very hard about how this might affect them.
The media have been focusing almost exclusively on the big picture (central banks bailing out retail banks) or defaulting to dinner party economics – the fall in house prices and rise in food prices.
So if you're just starting out as self-employed what should you do? Well it's not rocket science…
Here are my top tips for weathering a recession:
- Hang on to ready cash – don't assume you can borrow
- If you have an overdraft imagine what you would do if the bank withdrew it overnight – something they're perfectly within their rights to do.
- Make sure you know the minimum figure you can survive on – and your breakeven point
- Try to lower your breakeven point
- Make sure you know what your value proposition is. Why should your clients come to you, as opposed to anyone else?
- If others work for you, make sure they understand your value proposition too. You'll need them as your ambassadors.
- Don't kid yourself. Be realistic.
Actually this is good business practice in any circumstances. Doubly so when times get tough.
If you have any other tips on beating a recession I'd love to hear them.
Posted on 27 September 2008
The thing that gets me hotter under the collar than anything else is people not being paid for work they’ve already done.
It’s a common problem, especially for freelancers and consultants.
That’s why there’s legislation designed to protect small businesses. Read all about it on the Pay On Time legislation website.
You’ll see that the law states you must be paid within 30 days unless you have actively agreed that it will be longer. (And only an idiot would agree to that.)
My advice to anyone is chase a payment on the 31st day after you slung in the invoice. Use your politest voice and gently ask the accounts payable people to check your payment is going through the system. After all, they may never have received your invoice.
Give them another week – presuming they say the payment is on its way. Then call again – restraining your urge to shout down the phone. As soon as you’re aggressive you’ll just be put at the bottom of the pile.
I usually let them know I’ll call them every day to check it’s ‘going through the system’. That usually unglues the payment straight away.
I’m always amazed how few accounts people know what the law is. So I usually put the following paragraph at the bottom of my invoices. You’ll find it on the pay on time site:
Please note: David Thomas Media Ltd understands and will exercise its statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms. For more information on late payment legislation please see:
www.payontime.co.uk
Good luck and don’t let them get away with it.
Posted on 14 July 2008
One of the parts of my business skills workshops that people enjoy the most is a simple exercise called ‘match the expense to the tax return’.
OK – so it’s not exactly a catchy title for a game, but it’s more fun than it sounds.
This financial year the tax people (HMRC) have changed a few of the guidelines for small businesses, and even some quite hardened freelances are apparently unaware of the changes.
The good news is that there is a £50K allowance for small businesses to cover capital equipment this year. That’s different from previous years, where you’ve only been able to put 50% of the cost of a capital item down against tax.
That makes this rather a good year to buy kit, presuming you have any cash at all what with the credit crisis.
In fact that’s such good news I hereby predict that the rules will change again within a year or so. Let’s see.
HMRC have also clarified some of the allowances if you use your home for part of your business. Everyone knows about heating and lighting (percentage of), but there are some extras.
Read the updated guidance here – and make sure you bring it up with your accountant!
Posted on 09 July 2008
Yet another story from one of my former business trainees about the length of time it can take to get up and running.
This particular person said it was 8 months before she got any income from her new coaching business. And she wasn’t sitting around doing nothing in those 8 months.
This underlines the importance of having enough savings (or a big enough loan) to see you through the first year.
I always tell new freelances and small business people that it took me 9 months of hard ‘networking’ (ie coffees and chats) before someone decided they needed what I was offering.
A marketing person once told me to expect 7 points of contact (and about 6 months) before anyone trusts you enough, and has the right sort of project to give you some work.
Wise words.
Posted on 23 April 2008
It’s not often I get to feel smug – at least not with justification.
I’ve been mesmerised by the sudden realisation throughout the land that Gordon Brown effectively doubled the starting rate of tax in the 2007 budget.
Doubled?? Surely you mean "abolished"? Well don’t get me started (again). I went through all that a year ago.
It amazes me that almost no one saw this tax change as a problem a year ago. Even my most fiscally challenged trainees can spot this during our business skills training.
I have no time for Labour MPs who are suddenly feeling rebellious. Last year they either didn’t realise their Chancellor was pulling a fast one, or if they did realise, they thought they could keep it under the carpet.
Either way they look less than in touch with the reality of their constituents, and at worst highly cynical.
But that was before the election that never was, and plummeting approval ratings. Now some Labour MPs are worried about their seats. Surprise surprise.
As Polly Toynbee writes today, the problem is that people don’t seem to perceive a need for taxes at all. Although I don’t agree that New Labour never made the case for tax increases. Tony Blair did that in 1997, saying you had to pay for the services you want.
Perhaps a bit of honesty on taxes – and some fairness – is long overdue. And perhaps more journalists need to cover taxation stories in ways that make sense to their audience.
Posted on 18 April 2008
At this time of year it’s customary to look back and reflect on life while gazing into the middle distance (or into the bottom of a glass of mulled wine). But today I found myself nipping back about 15 years.
I was transported by a fascinating – if depressing – article in the Guardian describing BBC staff moaning about Mark Thompson, the DG.
The bit that caught my eye was the fact that staff are using the compulsory “Safeguarding Trust” seminars as an opportunity to do the moaning.
Years ago, somewhere around the Jurassic era, all BBC staff had to attend compulsory seminars about the new BBC internal market – part of John Birt’s Producer Choice revolution. Everyone was going to be a business unit and would sell their expertise to everyone else, even if they were sitting in the same office.
We all know how that ended in tears, but back then, being a naive young thing, I trolled along to these events looking forward to finding out about the brave new world and sharing views with my BBC colleagues.
I came away two hours later feeling like all my optimism had been sucked out of me. The seminar had become a conduit for all the bile that people were feeling about the new BBC, and the new DG in particular. I came from a relatively happy part of the BBC, and had never heard anything like it.
That was in the 1990s. I suppose nowadays we’d call is something like ‘viral whinging’.
It looks as if “Safeguarding Trust” has been acting as a similar conduit for all the discontent that’s been building up in the BBC over the last couple of years.
This is a shame, as there’s nothing inherently wrong with examining the best way to keep an audience’s trust.
So is it a problem? Well I suspect it might be for the sanity of BBC staff at the moment. Being forced to go on a seminar about trust when you’d rather be safeguarding your own job (or department) must feel like re-pointing the walls of Jericho – nice to have but ultimately a waste of everyone’s time.
I see that the Guardian suggests senior staff are joining in the moaning and not passing back the bad news to Mr Thompson. That happened with Producer Choice as well.
I suspect the difference this time is that Mark Thompson doesn’t realise how unpopular he is. John Birt was well aware and didn’t care.
Posted on 19 December 2007
I’m always on the look out for places that support one-person businesses and freelances. Working for yourself is hard enough so all tips and tricks are very welcome.
I was asked to supply some blurb for The Stage the other day, and their Dear John section is a wonderful font of wisdom.
Check it out.
Posted on 08 December 2007
It’s not easy to come up with quick and easy comparisons that make it clear how big, small, expensive, or devastating an issue might be. It’s something we often talk about during media training sessions.
Traditionally, burning trees in the Amazon are ‘roughly the size of Wales’, or perhaps ‘twice the size of Belgium’. A satellite is usually ‘the size of a freezer’ or weighs ‘as much as a London bus’.
These are brave – and probably doomed – stabs at the tricky task of grabbing the audience’s attention.
Yesterday two politicians used two different arresting analogies on BBC Radio 5 Live while describing prison policies. They caught my attention because they were both arresting and meaningless.
The first comment was:
"There are twice as many people in prison than there are in the Royal Navy."
The second:
"It costs more to keep someone in prison than to send them to Eton."
I haven’t got a clue how accurate these comparison are, but they are interesting because they have no relation to each other.
There is no meaningful link between the Royal Navy and prisons, so the comparison quickly breaks down.
The Eton comment was presumably used to show both Eton and the prison system in a bad light. At least that was the effect it had on me.
These phrases just made me want to find out how many people are in the Navy and (more intriguingly) how much does is cost to send someone to Eton. The fact that I haven’t got a clue about either of these figures underlines the weakness of the analogies.
At least I know the size of Wales. I used to live there.
Posted on 06 December 2007
There are any number of software providers who will sell you some clever widget that will alert you to outstanding payments. Personally, I prefer something simpler and much more low tech – a whiteboard.
I’m not talking about anything huge – just a small version. Mine leans up against the wall just to the right of my computer screen.
It’s so handy that every time I send an invoice I simply pick up the whiteboard and add the number, the client, the amount and the date. When I get paid I just cross out that line. When I get to the bottom of the board I rub everything out and start again at the top.
See if you can spot it:
It’s disarmingly simple and means I never lose sight of payments I should have received.
As for getting paid on time…that’ll be the subject of another posting.
Posted on 16 September 2007
In amongst all the very public soul searching by broadcasters in recent weeks I’ve been looking into my own dark past, trying to remember whether I might have misled any of my audience.
Of course I no longer broadcast for the BBC, but in the spirit of the age I thought I’d better check myself out.
One incident does spring to mind…
About a million years ago I was a breakfast show presenter on BBC Radio York. I remember meeting a fan of the programme who claimed I “wasn’t as tall as I sounded”.
Should I turn myself in?
Posted on 02 August 2007
