If You Sell Your Services, You’re Getting Paid Too Little

If you sell services, you may be working for free. When I’m working with self employed business owners who sell services, I nearly always find that they are not billing for some part of their work.  That is, their invoices are missing what they could get paid.  These lost billings can be the difference between making a living and having money for business and family security, expansion, and retirement.

Here are the major ways self employed professionals and contractors are losing money in their invoices:

Not writing down your worked hours daily. Lax time tracking leads to missing dollars on your invoices.  If you are charging time and materials, your customer has already agreed to pay for this time.

Not billing quickly for work completed. When you wait a couple weeks to invoice, the ‘newness’ has already worn off of the wonderful job you did.  This leads to customers questioning the invoice more often, leading to slower pay and sometimes challenging the invoice.  Either way you’ve lost money.

Missed additional services. When you hear your customer say, “hey, could you fix this thing over here…”, that’s the sound of appreciation and opportunity.  If you discuss the additional cost as soon as the customer makes the request, their most likely response will be “That’s fine.”   If you wait till you later invoice, or worse yet miss it, you may be losing money on your invoices. Extras clients most likely knew they would pay for but now assume they won’t because you didn’t mention it at the time.

Multiplying these issues with employees. If you miss invoicing opportunities on our own work, I guarantee your employees are too.  They follow your example, pay less attention to the money than you do, and generally get paid by the hour (sometimes even if the customer did not get billed for that hour.)

When my clients find, systematically reduce, and capture these lost billings they find the money to build operating reserves, pay themselves more, build expansion funds, and increase their retirement savings.  This often happens without working extra hours. In many cases it also saves time.

So how do you do it?   That’s the part that takes a little time, thought, and process.  Here’s one new solution that I’ve seen work well.  There’s an iphone application that allows contractors to quickly build quotes either while on the customer site or shortly thereafter, such as during a coffee break.  This application quickly turns the quote in to an invoice after adjusting for the actual hours worked and materials used.  Thus both the quote and invoice can be done quickly, usually the same day as the job.  Since it is easy to add hours on the go, it can be quickly adjusted to reflect actual time spent.  Finally, since it is simple to use as well as economical, employees can use it as well.

If you’d like to discuss profits through better invoicing or to find other ways to build your own profits without working harder so you can build a healthier financial future, give me a call.

Now stop reading about Your Invoices and start doing! Let’s create YOUR personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

How many yellow sticky notes can you juggle before they mysteriously start crawling away?  In desperation, you start doing things the same way each time and voila you’ve developed a system! Let’s take it to the next level; actively search for routines you can systematize.

Save YourSelf.  It’s your business so the benefits of more saved time, energy, and money will flow to you.

Time.  By doing things the same way each time, you have the tools, forms, and answers closer to-hand saving you time.  You’ll spend less time tweaking the tools, finding the forms, and searching for solutions. Systems can be trained into employees, so you’ll be able to delegate confidently, leaving you to spend that time elsewhere.

Energy.  Let’s face it; it’s exhausting making dozens of decisions and creating new ideas every day.  Systematizing may improve those numbers to a more energizing level.

Money.  Also you’ll save money. When you’ve created systems, you can spend less money paying for customization, special skills, and training.  Starbucks delivers high quality, high value, high priced products, yet delivers it with minimum wage employees.  Using systems, you’ll be able to measure and fine tune your results.  Only through repetition can you hone your skills to see where faster, cheaper, better results can be achieved.

Here’s an example.   When I meet new people, I use a simple follow up system.

1)   I send them a hand written note card so they’ll remember me.  I have blank cards, stamps, and an assistant to help make this fast, easy, and meaningful.

2)   My intern enters them immediately into my contact management system.  So if I need to follow up by phone or email, they’re in my iphone quickly.

3)   I add details about their interests next time we meet. Thus, I can learn what they’re interested in, so I can make suggestions or referrals and remember what’s important to them.,

4)   I send them emails of my upcoming events, seminars, and socials; but only if I think they’d be interested.

5)   About the 4th or 5th time I ‘chat’ with someone, I have an idea if any of my services or products would make sense to them so I can make a helpful offer rather than an intrusive sales pitch.

6)   Once a week, I look for my ‘network’ of connected people using Internet social networking services LinkedIn and Facebook.  I get notices of their profiles being updated (new job, new project, new interest).  I compliment, congratulate, commiserate or contribute in a meaningful way depending on what’s happening in their lives.

7)   I use referral groups like PRE (professional Referral Exchange, LEADS and WIN (Women in Networking) to meet, connect with, and find referrals for others.

This system steadily increases the ‘connectedness’ I have with ever larger number of people. It becomes easier to spend my time and energy thinking of ways to really help people since my system handles the mechanical part of deciding when and how to connect and keeps the tools near to hand.

If you are looking for better systems to connect to more entrepreneurs in a meaningful way to build your business, ask me about the new Greater Reading Chamber’s LEADS program or a group in your area. Drop me an email or give me a call.

Now stop reading about Saving yourself Time Energy and Money and start doing! Let’s create YOUR personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

Okay, I admit it.  I don’t always follow up promptly every time.  And when I don’t, it ruins my whole week; I feel like a complete fool. I resolve to get better, put in a place a fail-proof, simpler follow up system and get on with my life.  So here are my pitiful, real life reasons for not following up and what I am doing about them.

“I lost your card.” Maybe men don’t have this problem, but I sometime have no pockets, my purse is not nearby, or my day timer has a loose sleeve and the cards fall out.  Maybe it’s just that I have too many places to put the business cards I receive.

So I bought a business card holder.  In fact, I bought 2, one for my purse for casual meetings and one for my carry-all, a bag that holds a laptop, notebooks, or folders, for business meetings.   If I receive a card, it goes into the business card holder, right after I write what the person was interested in and what networking event I met them at.  The card doesn’t come out until it’s ready to be put it into my sales management system.

“I forgot to call you.” We are all busy especially if we’re successful.  Yellow sticky notes no longer count as a reminder system.  And your memory is what you forget with. Let’s stop feeling bad about this and put in a system.

I started using Google Tasks <http://mail.google.com/mail/help/tasks/>.   It is always on, sits next to my calendar, and takes only seconds to add an entry. My iPhone can get to it and so can my assistant.  So I can enter tasks from anywhere as well as delegate simple tasks like sending information (if that’s what I promised you) or having her call to set an appointment for me, which I tell people if I promised to set up a meeting.

When I schedule my meetings, there’s typically a little time between them, so I can review my task list and make a quick call if that’s what I promised.

“It’s been too many days and now I’m too embarrassed to call.” My life is about paperwork, calling people back, and meeting with them face-to-face.  Sometimes with too many meetings stacked back-to-back, my task list gets too long to get everything done quickly enough to suit me.

First of all, get over it.  Many people don’t call you back for a week, and you forgive them, so forgive yourself.  Just be honest and apologize genuinely.

Now fix your system. Set a personal commitment that your follow up calls/emails/mailings will occur within 48 hours.  Then put it on your dashboard and measure yourself.  It’s amazing how focusing on and measuring a result will produce dramatic improvement.  Even if you don’t reach 100%, your success rate at prompt follow up will skyrocket.

Do I feel like a failure for exposing myself this way? No.  I work with self employed people everyday; they share their own foibles.  I’m not alone and neither are you. My clients and I work on easy, simple, no cost ways to measure and improve profits.  Follow up is free and profitable, so every self employed person should build their skill.

What have you done lately to improve your follow up?

Now stop reading about follow up and start doing! Let’s create YOUR personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

Many of the self employed business owners I talk to are skeptical about when, how fast, or how prolonged any coming economic recovery will be.  That leaves them reluctant to spend money right now when they are unsure of how soon they’ll be getting a return on that marketing or expansion investment.

I talk to dozens of self employed and small business owners every week in my client meetings, networking groups, and chamber functions.  Since my passion in life is to make my self employed clients more successful, I pay attention to the trends of the moment so they’ll benefit quickly

Here are 5 real-time ways my savviest self employed clients, friends, and connections are getting ready to reap results from the coming economic recovery but not yet spending a dime.

1) Get out there and network.  Traditional old face-to-face networking is on the rise.  Our chamber has increased its number of events and attendance has also increased.  People are having conversations, handing out their cards and meeting new prospects.

2) Get quotes. Some self employed business owners are requesting proposals for new mailers, new promotional items, new brochures, or new Internet methods.  Although they are taking longer to pull the trigger on starting the projects, they are gathering information so they can make an informed decision to spend when the time is right.

3) Get Ideas.  In my networking meetings, several times weekly, I am hearing discussions about what’s working and how to get started.  Again, the dollars are not yet committed, but new ideas are being discussed, weighed, and considered. People are talking to new potential vendors as well as old favorites.  Also, they’re talking to other self employed small business owners who have the same target market to get different perspectives.  For example remodelers are talking to real estate agents.

4) Stage your implementation.  Some of my network of business owners and others are starting small.  Several have discussed how to start remodeling projects and do it in phases because they are tired of waiting and still want the work done.

5) Get educated on Social Media, Internet marketing and unfamiliar techniques.  I hear conversations on who is using LinkedIn and how, who is using Facebook and why, as well as what’s not working.  My Internet-related business owners are hosting educational seminars and fielding a lot of questions, both in and out of the classroom. Several business owners I deal with have started new email newsletters so their names will be top-of-mind when projects come up.  Such techniques are extremely inexpensive and perfect for business owners with time available but few marketing dollars.

So that’s it.  Even if you are not getting big orders, large sales, or copious numbers of new customers, there is lots of pre-buying activity going on right now.  Don’t let it pass you by; get out there and get ready.

Now stop reading about Recovery Without Committing Cash Today and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

For many of my self employed clients, the sales cycle is already on an upswing.  Recovery recession has turned from a deep desire to a slow spiral of reality.  Now comes regroup, refocus and rebuild.  As you build plans for the rest of this year and into next, avoid these deadly financial mistakes that may kill your business during the next recession.  Yes, there will be a next recession; they’re a normal.

Waiting for the All Clear Signal – If you are waiting for headlines that say unemployment is falling, home sales are booming, and sales exceed expectations, you’ll be too late.

Focusing Solely on Debt – You have friends whose business lines of credit have been frozen and others just killed by debt.  Your own debt may be frightening.  As your income increases, don’t make debt reduction your only priority.  Build a stash cash for the next recession, even if you have to start small.

Forgetting Lessons Learned – Now is a great time to make a list of smart things we wish we’d done: saved more, put more away for retirement, researched more before spending, retaining marginal employees.  What did you wish you’d done?  Now don’t forget.

Old Thinking – No, we will not go back to the easy credit, easy sales, and easy growth of 2003 through 2007.  Just like the Great Depression, people’s buying habits have changed for a generation. You’ll need new sales techniques, new marketing techniques, and new customer service methods if you want to be a winner over this next expansion.

Competing on Price – Yes, most of us think Berks County buyers only care about price.  If that’s true, why is Wal-Mart not the only store in town?  Focus on value above price.

Ignoring Your Best employees – Many small businesses reduced employee work-week to save money.  In many cases, the work load didn’t decrease so employees took work home or even came into the office without pay.  If it’s too soon to put these best team player employees back on full pay, find some other way to show you value them. Otherwise, you risk them finding another job later this year.

No Plan for Next Recession – Hopefully we’ll have three or four years before another economic downturn.  Come up with a plan for getting ready.  What did you wish you’d done differently five years ago that would have made you weather this last recession better.  Then do that.

They say that which doesn’t kill us makes us stronger.  So here’s to the newly strong, self employed getting a whole lot stronger.

Now stop reading about The 7 Deadliest Financial Mistakes and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

If you sell services, you only get paid for the time you are directly working for clients. The trouble is, there’s a lot of time the client doesn’t see you working on their behalf. When pricing your services, these “extra” hours need to be considered.

Time you need to average across all clients (Start keeping track of these so your estimates get more accurate):

• Emails on their behalf
• Invoicing, collecting payment, and answering billing questions
• Writing the proposal and closing the deal
• Waiting and checking to see if the client is ready for the next step

Time directly attributable to the client and billed correspondingly:

• Traveling to/from their location
• Researching something specifically for them
• Building/delivering/doing/fixing their stuff (sadly, this is the only part they really “see”)
• Revising (usually at the request of the client)

Time that is truly overhead, not attributable to specific clients:

• Marketing
• Selling (in general, not a specific client)
• Managing your business finances (banking, taxes, management)
• Hiring, managing, and training employees
• Training to advance your skills and certifications
• Vacation, sick time, holidays
• Opening the mail including junk mail and spam email (yes sadly it takes your time)
• Waiting for the phone to ring

For example, when we hire a plumber who charges us $75 an hour, we know he’s not really making $156,000 per year ($75 x 40 hours x 52 weeks). For every hour he works in someone’s house, he spends time getting supplies, invoicing, writing an estimate, and collecting the money.

So remember when you are figuring your rate per billable hour, there is a lot of effort the client doesn’t see but needs to be incorporated.  Let me know how your billable hours are calculated in the comments below.

Now stop reading about your billable hours and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

In Your Self Employed Hidden Paycheck – How to Pay Yourself More with Less (Part 1), I showed that my 2008 hidden paycheck from being self employed was $23,606. Here is how the numbers add up. We’re talking about items my family gets direct benefit from, but can be attributed to the business and are taken as small business tax deductions. If you are self employed your family also gets paid in “stuff” that employees normally buy after they get their paycheck, but you can buy before you take your paycheck. The business purchase of this stuff, instead of you personally constitutes a hidden paycheck.

Most articles found on the web and elsewhere focus on self employed taxes and the tax savings aspect. Like the $6,610 savings I made last year in self employed taxes. But this article focuses on the hidden paycheck produced by legitimately buying goods and services used for you business that also has personal benefits.

Make sure you check with your CPA before you take any of these deductions since your situation is most certainly different.

My Self Employed Hidden Paycheck items for 2008:

Self employed health insurance – First, the big one. As an employee, it’s not deductible even if you pay the whole thing. Being self employed, it’s entirely deductible. I spent $5,068 last year.

Cell phone – I have five lines for my family. These cost $179 a month after subtracting the kid’s lines, although all are necessary to my business and my sanity.

Home/business phone – Working from home allows me to write off my phone ($45/mo) and my long distance VOIP line with BroadVoice ($35/mo).

Internet – My Internet at home costs $50/mo. Who could run a business without that?

Lunches/dinners out – Meeting with clients and prospects over lunch or dinner is a relaxing way to build business. Even after the 50% deduction, I spent $129/mo.

Party leftovers – My client party at my house had 146 clients and prospects last year. In Berks County, it’s a mortal sin to run out of food, so I ended up with a steak, shrimp, appetizers and alcohol left to freeze. Although extremely hard to estimate, I would say safely about $500 total was the value of what we ate later in the year with family and friends.

Travel – I have a lot of clients near San Jose, California where I used to live, many began as close friends. Traveling there three times last year to see them and the clients they refer is like a vacation for me. Since I stay with my mother-in-law (who I just love), I only spent $2,772 on three trips last year.

Vacation – When many people go on vacation, they work part of the time and deduct part of the cost. I didn’t last year, so my business deductible vacation was $0. This can be a significant amount as we will see in a future article.

Home office deduction – Working from home allowed me to take $3,484 last year off my taxable income. Think of it as the business paying part of the electric, mortgage, pool maintenance, and everything that goes into maintaining a house divided by the square footage used for your business.

Per diem meals – I found this little known tax deduction works for me because I stay at my mother-in-law’s house when I visit my clients in CA. Per diem meals is a daily rate based on where you travel allowed for deduction where you don’t need a receipt. California is $59/day and I spent 47 days there last year. So I get to take $2,802 as business expenses.

Office supplies – With two teenagers in school and various Boy Scout projects, we use extra office supplies such as paper, toner, and notebooks. Maybe it’s not worth mentioning at only about $200 a year, but it illustrates that there are probably things you haven’t thought of yet.

Auto mileage – If you routinely stop at the grocery store, department store, or friend’s house on your way home from a client or meeting, you have saved yourself a trip and pocketed the mileage. Make it a habit and it is money your household is getting without spending. With .55 cents a mile, that was around $1,294 last year.

Computer equipment – Who could run a business without a computer? It also serves as my personal entertainment, shopping aid, and correspondence tool. We tend to buy a laptop about every year for either my husband or me and give the older one to our kids or assistants. Patrick’s MacBook and all its software, cases and parts was $2,052. Yes, we bought other computer stuff, but I’m only counting here what we would have had to buy for the family (and unable to deduct) if we weren’t self employed.

Telephone equipment – Between dropping my Ipaq and being a woman with the ‘no pockets’ problem, I need to upgrade my cell phone nearly each year. Without extending my contract, it cost $299. At home we have a TalkSwitch PBX which died after 5 years and we replaced it for $826.

NOW, a big disclaimer, I do not do taxes! I work with an excellent CPA who specializes in self employed taxes. She is a tremendous help to me. I then pass onto my self employed clients whatever they are missing. So if you have any questions regarding whether something is business deductible in your situation, ask your CPA. I am only helping to stimulate your brain and get this stuff recorded in the first place. You can’t count it if you don’t track it.

How do you figure your hidden paycheck? Comment now.

Now stop reading about your hidden paycheck and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.