Monthly Archives: June 2014

Case study: Problems with small business cash flow

The first Flash Consulting problem I did was from a woman who runs a very successful small business. She initially phrased the question as an accounting question (cash vs. accrual, which I know enough about to be able to find problems in a financial statement but not enough to survive an audit, so don’t hire me as a bookkeeper). But as she explained it, it became apparent that the problem was really about cash flow and a need to reframe ideas about good service.

In brief: She’d booked over $250K in the previous month but had only seen actual cash payments of less that 10% of that. Her clients were on a net 60 (meaning the invoice she sent asked them to pay within 60 days), but she had an additional $300K outstanding that was past due from the 60 days.

OUCH.

Seriously, she was running a business that was doing so so well (and they’re great at what they do), but they were struggling because clients weren’t paying. Maddening.

I asked her if she’d built in a penalty for not paying at 60 days, like a 2% service charge for every 30 days past due the payment was. She said she hadn’t, because she wanted to give good customer service.

Aha! That was the core of the problem right there. She’d put herself into a position of weakness in an effort to be good to her clients. When, in reality, the best thing you can do for clients (and friends, and kids, and bosses, and vendors, and grandparents, and lovers, and pets, and ANYONE) is to create good boundaries and then enforce them.

Randi Buckley of Healthy Boundaries for Kind People always says that creating boundaries is a form of kindness. And it’s true. When you make good boundaries you’re being kind to your client by telling them what you expect (I bet some of those clients in the outstanding $300K had no idea my client was so annoyed at them for not paying), and you’re being kind to yourself by asking for what you need (she had a right to the money she was owed and it didn’t do anyone any good for her not to have received it). By creating healthy boundaries you get to put yourself AND the client on the same side of the line you draw, instead of making you adversaries.

So here’s what I suggested:

1. Offer the late $300K clients a percentage discount off what they owed if they got it in in 10 days.

2. For future transactions, create both a stick to prevent late payments (a percentage penalty for every 30 days late a payment was) and also a carrot for early payment (a percentage discount for payment within 10 days of receiving the invoice). Note: This is super-common in many industries already, in different configurations. (I didn’t create the idea out of my unicorn brain.) A big part of why it’s so common is that it’s great for both sides. It creates value for both of you—if the client can pay early, they save money and you get your payment faster. If the client can’t pay right away, they can still pay on time as per the original terms of the deal. If the client has to be late, they can pay a penalty which creates more value for you.

My client expressed trepidation about assessing anyone a penalty. “If you enact the standard penalty you will never once charge it, and that will be even better client service,” I said. Having that line in the terms of the contract means you can give them a call the day the payment was due and give them the chance to pay right away and offer to waive the penalty if they can get the payment in in three days. Setting up the terms like that means that you can make penalty exceptions for clients while still being paid in a reasonable amount of time, and make everyone happy at the same time. It frees you up to give great customer service while still being paid for your work.

My client was happy with the solution I gave her, and asked me to bill her. (I didn’t include either a stick or a carrot in my bill. She paid right away.)

I don’t know if she collected all $300K in ten days or not. Maybe if she reads this she’ll write in and tell me how it went. (I’d never ask about someone else’s business. But how awesome would it be to have given someone a 1,200,000% return on investment, if her $250 Flash Consult with me allowed her to collect $300K?)

tl;dr version:
Building in a penalty AND a discount when you bill clients lets you give fantastic customer service while still being paid.

Find your own solution with me. The how-to and details are at FlashCons.com.

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Case Study: Big family division of labor changes

A 30-something married mother of two came to me because her husband’s work situation was about to change, and it was going to radically change the distribution of labor in their house, and she was afraid they weren’t going to take full advantage of this change.

Her husband had been away from the house 13 hours a day M-F since before their kids (a preschooler and a baby) were born, so she worked her fulltime job and did all on-the-scene child stuff, too. When her husband was home he was super-engaged and a full participant with the kids and the house, but he simply wasn’t home most of the time. He was switching jobs to one that would keep him out of the house 7-8 hours per day (roughly the same amount of time she spent out of the house) with some work-from-home time that was flexible.

They were both afraid that they were going to screw up the change and not make good use of this new (awesomely flexible) job to divide labor fairly.

I was in love with this problem, because who doesn’t love designing an entire family life from scratch? So that’s what I told them to start with. Instead of thinking of it as “which jobs should I shift from Wife to Husband?”I suggested they look at it as a blue ocean exercise in which they questioned assumptions, then designed parameters, and then started from scratch within those parameters. (Blue Ocean Strategy is a business strategy that I think has a lot in common with Universal Design for Learning.)

I told them what I thought they should prioritize as the first decisions about parameters, based on their interests and personalities. (One of my solution-creating principles is to honor who people are at all times.) And then once they had those decisions made, I gave them a list in descending order of what to privilege when dividing up actual jobs (both physical and mental).

I sent her my recommendations, and half an hour later she messaged me that she was crying reading them, and that it was way more than she’d thought they could expect. Three days later she sent me an email saying that she and her husband had spent time talking about my recommendations, and had then started a shared document to go through and type in what was important to each of them in all life areas (!!), and had gone back and forth over two days coming up with how they wanted their life together to look once his new job started. They created an entire plan for not only who was going to do what, but how they were going to work together for the kids and home and to support each other’s individual and couple goals. A life plan.

That’s when *I* started crying, to see that they’d taken this idea I gave them and had gone so deep with it that it had become a mission for them as a family team.

Who gets to do something that honors people so much? And that honors *me* so much? I’m just so thrilled to be able to do this.

tl;dr version:
A client came to me because her life was changing and she was afraid she was going to miss the opportunity to make full use of that change. I designed a rubric and priority tree for decision-making, and she and her husband went way deeper with it than I’d imagined, and we were all kind of amazed by that.

Find your own solution with me. The how-to and details are at FlashCons.com.

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Case Study: Virginia Champoux

Virginia ChampouxVirginia Champoux came to me when she felt like her life was out of control.

She said, “I was recovering from breast cancer and I’d just closed the store I owned and ran for over a decade. I was at a total loss of what to do next, and was feeling so much fear that I couldn’t even make a plan for the next day, let alone figure out how to find a job.”

I took the case, promising not only to help Virginia find a direction for her career that excited her, but to create a plan for the next four weeks so Virginia knew what to do when she got out of bed.

I focused on several things: 1. Virginia is a do-er, who needs something to keep her busy, and will ignore her own emotional needs in order to be busy, 2. Virginia has extensive experience in creating and promoting events and organizations and leading teams, in the physical world and on the internet, but her experience wasn’t neatly corporate-focused. 3. Virginia is extremely self-directed.

The first and third points were why Virginia was feeling so scared, because she didn’t have the store activities to focus her. I knew that she needed some time to grieve the store, but that Virginia processes emotions by activity, so I prescribed a plan for the next month that I knew Virginia could comply with but would never think of for herself: 2 1/2 liters of water every day (Virginia’s in Canada, where water comes in liters), yoga every day or as close to it as she could get, and work on the charity online auction she was running to raise money for women’s cancers research as if the auction was her paid job.

The next phase was to look at Virginia’s resume and figure out what the through line of her experience was. Virginia’s concern was that no company would want to hire her because she didn’t have experience that neatly fit into a corporate structure. I thought that this was just leading to fear and paralysis and that terrifying cycle in which you rethink every decision in your life, so we needed to look at what was actually going to be important once Virginia did find a job: Did Virginia WANT to work for a corporation?

The truth was that she didn’t. Virginia is more entrepreneurial than that, and knows that her skills are strong enough that she can make big changes for smaller organizations and wouldn’t be happy making small changes for a big organization. So I came up with a couple of different career paths she could work on, and told her how to adjust her resume for each one. (I don’t tell anyone what to do, I just present the options and spell out the pros and cons of each, as I see them.)

Virginia’s reaction to these plans made me happy: She was pleased but slightly skeptical of the water/yoga plan, but vowed to try it. And she was relieved by the career paths, because the revelation that she IS employable (although probably not a great fit for a huge megalo-corporation, which she wouldn’t want to work for anyway) was a big exhale moment. She said, “Releasing my problem to you allowed me to have time to breath and think about other things.”

After a couple of weeks she sent me an update. She started drinking water and doing yoga, because it was on the plan I drew up for her, and it was helping with her physical healing and emotional focus. She threw herself into the auction and raised almost $9000 in five days. She put together her resumes and has started interviewing for both in-house (with small companies) and consultant positions to help her decide which direction she wants to go in. The fear is lessened because she has a direction and knows she just needs to put in the work of searching for a job and sorting through what will be the best fit for her. And she’s started developing clients for a business that she’s growing, and can decide as she goes if this will be a side business or her primary business.

tl;dr version:
Virginia had fear paralysis and was looking at herself as having limited options. I gave her a plan to diffuse the fear to allow her to act, and reframed her as the one who decided what she did next.

Find your own solution with me. The how-to and details are at FlashCons.com.

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