Time is a precious commodity. If you are now working remotely and saving minutes or hours each day that you don’t have to commute, it’s still important to make every minute, and every dollar, count. As business owners, we know that certain business goals are commendable, but often our efforts to see them through may be worthless. Identify actions that use up your time and that drain your energy without real productivity. Here is an update from a previous blog that identifies 5 actions you should not take, and better ways to achieve the desired results.
1. Making inaccurate estimates
When you’re giving a quote for a job, you have to estimate how much time and materials you’ll need to complete it properly. If you give a bad estimate—one that falls short of the actual costs for doing the job—customers may perceive that you’re not trustworthy. You’ll wind up losing money or a customer, which is not your goal.
Depending on the type of work involved, consider billing by the hour instead of charging for the entire project so you know you’ll be properly compensated.
If you must provide an estimate, then use software or apps designed for your industry to help you create better, more accurate, estimates so that both you and your customer are satisfied. For example, Software Advice rates the best apps for estimating in the construction industry.
2. Asking for something without any compensation
Want a referral? Want responses to your questionnaires? Merely asking for action likely will produce only a minimal response.
To receive a better response, offer compensation of some sort (e.g., a gift certificate, a future discount, a chance to win a prize). Make the compensation commensurate with the effort that you’re asking for.
3. Charging customers for breakage
If you have a bricks-and-mortar store, posting signs such as “you break it, you buy it” warning shoppers of their obligation to pay for items they accidentally damage or break may not be worth the paper they’re written on. To recover your loss, you’d have to sue and probably wouldn’t collect—an accident is merely a cost of doing business. Of course, if a remorseful customer offers to pay for the damage, accept it gladly.
Post a sign for customers to exercise care.
Make sure your insurance provides adequate protection for such losses. Any losses not reimbursed by insurance can be handled on your tax return (e.g., a loss deduction; an adjustment to inventory).
4. Charging interest for late payments
If you send invoices for goods shipped or work performed and aren’t paid on time, you could put a note on the invoice that there’s 1% late charge. But don’t bother; I’ve never heard of any customer paying the interest.
Get paid up front—via credit card, check, electronic transfer, or cash—so you don’t have to wait for payment following an invoice.
5. Continuing in-house collection efforts
When a customer is late in paying a bill, you may resend an invoice and then follow up with a phone call or email. After a couple of efforts on your part, further hounding by you likely won’t induce payment.
Turn significant delinquent accounts receivable over to a collection agency. While you won’t get the full amount you’re owed (the agency keeps a percentage of what it collects), at least you increase the chances of getting some payment. Or, depending upon the amount owed to you, have an attorney send a collection letter on your behalf with the idea that this will be followed up with legal action if payment is not received.
You can also pursue collection on your own through small claims court (again depending upon what is owed). The Civil Law Self Help Center offers an overview of small claims court procedure.
Even better than options for collections, follow the advice in #4 above so you’re not chasing customers for payment.
Think about the actions you take in your business every day and weed those that are wasteful of your time and effort.
As Seneca said two thousand years ago: “It’s not that we have little time, but more that we waste a good deal of it.”