Before officially closing down my online high-end resale boutique, I started the transition into running a consulting company. I had no earthly idea on how I was supposed to do this. My approach to business has always to get my hands dirty, and learn as you go. So, you can say I took all the mistakes I learned, and they were my guide for consulting. Today, I want to share five things I wish I knew before launching a service company. No matter if you’re a service business or product based business there is insight in here for you too.
Written + Signed Contracts
To be honest, I had maybe three nightmare clients in the past four years. I am very thankful that each one of them signed a contract that protected me. There had been numerous times I had worked with other service based companies and never signed a contract. There were times, I signed on clients, and they didn’t sign a contract or when they resigned on no contract in place. This makes things very sticky when it comes to business. If you are trading money for a service, there needs to be a contract. If you are providing a service for money or free, there needs to be a contract. It outlines all the details of the arrangement. My friend Amy talked about the importance of having a “kill fee” in contracts if you’re a service business. One of the best things I could have done is have my lawyer write out a legally binding contract. It saves me so much. I had nightmare clients wanting to end the contract before the term for whatever reason, and they needed to pay 30% off the remaining balance. Having contracts made it easier to break up with bad clients something that happens far too often in the creative industry, and most creatives do not know how to handle it.
Open Forms Of Communication
Yes, I talk to my clients one time a month for 60 minutes. That is what each one of them signed up for. However, the calls tend to go to the 90-minute time slot depending on what we are going over. One of the biggest things I should have put in play was boundaries when wanting to communicate with me. None of my clients are in the central standard time zone they are on the east coast. So, I would be getting a text before me waking up or even late at night. I had to finally put a policy into play about my business owners and communication boundaries. I wanted them to have a still means to communicate with me when they needed advice or insight, but a healthy work relationship matters. Making sure you communicate with others when it is okay to just text, call, or email is important. Personally, I have no issues with emails because they can always be responded to Monday-Friday. I rarely check my emails on the weekend.
When I first started consulting doing invoices was a lot of work. I wanted a system that sent out invoices to clients before the due date sent them reminders on the day of, no huge fees and so much more. For almost four years, I was having constant issues no matter the system I used. Their systems would be down; invoices would not be sent and all the other nightmare. Finally, I switched to Chase Quickpay option which is not fancy at all. It only sends them the invoice, but I have no fees. My fees could be $20+ per invoices losing hundreds of dollars a month for the payment to be processed by a third party. Switch to Chase Quickpay I have no fees, and my clients can enroll in the program. If my clients, want copies of invoices for tax purposes, because consulting is a write off for their business I create them in batches and send them to them. I was even losing money by splitting payments up for clients who could not pay the whole amount at one time. Once again, I was being hit with fees but they received the same service, and I received less money.
Another thing that was important was placing a late fee in the contract. If the invoices are not paid by the 2nd day before noon, there is a $75 fee attached. I added this element to the contract for the simple reason of teaching people responsibility. If you are late with your mortgage, light bill, car note or whatever you have a fee. You avoid that cost by paying on time for the service you are being rendered. I want my clients to understand the importance paying others on time. Would you send out an order without it being paid for? Would you provide services to someone without being paid? No one wants to be paid late either.
I would suggest if you’re a service-based business to find a payment option that works for you.
Creating Value With No Product
I receive countless emails and direct messages from people who would love to work with me, but my fees are little too pricey for them. First, let me say I love my pricing and its the right pricing for my business. When I first started my business, I had a plethora of clients who were willing to pay $85 an hour for services because it was affordable and they liked me. However, I realized I wanted clients who want to change their lives through their businesses, so my rates went up. I was able to retain 90% of my roster and bring on a couple more clients. This all happens by having value being seen in working with me. Once a week a blog post comes out showcasing my expertise. Once a month I am sharing insight with my newsletter. On any given day I am sharing my insight on social media. My expertise is my value. This is something I have to remember. Landing the right clients are important to me, I don’t want surface clients who are just in it to be popular. I want clients who want sustainability and growth in their companies.
Launching a service business is easier than having a product based company, but it takes just as much work to maintain. I am very thankful for what I have learned in the last couple years.