Over the last week or two, I have been reviewing various aspects of my business and have realised that I've been making a glaring mistake. We're now well on the way to resolving the problem, but I wanted to make sure the same thing doesn't happen again.
In my spare time I dabble with share trading on the stock market. As well as actually buying and selling shares I sometimes place spread bets. Whilst there are a lot of similarities, spread betting can be much more risky. To help protect myself, I have written a list of simple rules. Before making a trade, I always consult my list of rules to make sure I'm not about to do anything stupid.
Over time, as I have made observations (and the odd mistake!) I have often changed these rules. And why not - after all - it's my game! The point is that the rules are written down, and always with me when I need to refer to them. It's difficult to say how much money they've saved me so far - but I certainly wouldn't want to be without them!
So - my plan is to put together a similar list of rules for running my business. I already follow a number of unwritten rules - but I can't help feeling that documenting them will help me keep focussed on what's important. Whenever I review the business, I'll be able to refer to my rules to make sure I don't make any mistakes twice.
Every time I recognise some important behaviour, or make a mistake that I can learn from, I'll either write a new rule or amend an old one. If one of my rules turns out to be wrong, I'll remove it from the list. As I said before - it's my game, so I can do what I like with the rules!
This does of course mean that I will be writing my rules as I come up with them - not necessarily in any particular order of importance. For my purposes, though, that doesn't matter. I'm not preparing a book on running a business - I'm preparing a personal list of guidelines for the governance of my particular business.
Rule #1: Never Neglect Your 'Bread and Butter'
There are two main aspects of the services my company provides - website design and bespoke internet software development. Recently, most of my sales activity has been directed towards the internet software development side of the business.
On the face of it, this makes a lot of sense. Software development generally attracts larger projects. Making one software development sale can generate as much revenue as, say, 10 website sales.
From a personal point of view, these projects also tend to be more interesting and challenging than designing websites. We often get to learn a lot about our clients and always come up with great ways to help them run their business.
But - there are also negatives. Larger projects occupy more resources, so you can only work on a smaller number of them at any one time. If a client decides at the last minute not to place an order, or to make a late payment, there is a significant chance it will severely dent the company's cash flow.
Larger projects also tend to involve more pre-sale effort. This costs the business more money and exposes it to even more risk (should the client decide not to proceed).
I have come to realise that by failing to promote and grow the website design side of the business in favour of the more 'glamorous' software development side, I am opening the business up to greater levels of risk.
Building a steady stream of website clients will provide us with a more consistent 'bread and butter' income. If one or two projects of this size overrun, the cash flow implications will only be small.
Traditionally, website development has also proven to be a good way to get to know a new client before selling other services to them. Our biggest software development client today first came to us to for a simple redesign of their website!