Tag: freelances

The taxman cometh (1)

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Happy new year

Today is the first day of the new tax year (it runs to 5 April 2013). As of today you can earn £7,440 over the next 12 months without paying any tax.

But that is £7,440 after expenses. That’s after you have deducted the cost of travel, of equipment, of any studio time or other professional services you might have needed during the year. It’s after you have deducted the cost of working from home (if you do). It is even after you have deducted the costs of being a member of the appropriate union.

So April is a good time to start thinking seriously about how you keep your accounts, how you organise your financial affairs and how you operate as a business. That is key: as freelances, we are small businesses. When it comes to money we need to think of ourselves not as creative people but as businesses that provide creative services or products.

By the end of April I hope to have given you plenty of ideas about how you can make more of the money you earn yours by keeping better records and using the full range of tax allowances and benefits available to you.

Creative selling (8)

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Post-match analysis

Analyse in detail how you succeeded when you were successful, and what went wrong when you failed - learn from your successes and your failures.

Before calling a potential new customer - a prospect - or an existing supplier, we should have in our mind a sequence of logically progressive steps that lead to a conclusion that can only be a sale – a close.

We should, therefore, decide:

  • What do we already know about the buyer and his/her business?
  • What else do we need to find out?
  • How can we find this out?
  • What benefits are most likely to appeal?
  • What is the most effective way in which we can present these benefits?
  • What problems, snags, objections are likely to arise?
  • How can we deal with them?
  • What sales aids, literature, examples of our work, do we need?
  • What is the specific objective to be achieved on this call?

Our checklist for successful creative selling is:

  • Focus - we must focus the attention of the customer on what we want to talk about.
  • Involvement - we involve the customer by asking questions.
  • Need - we must identify the buying motives of customers.
  • Suitability - we must match the benefits of our products or service to the buying motives of the customer.
  • Objections - objections must be handled.
  • Action - remember to ASK FOR THE ORDER (we're bad at this bit).

Good luck.

 

Creative selling (6)

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Coping with rejection

First, think of it as an objection, not a rejection. It’s not that final yet. And let’s embrace and welcome objections. Points of disagreement help us to know that the buyer is at least interested.

An objection at this stage means:

  • We have not chosen the right benefits for that particular buyer
  • We have failed to get full agreement at each stage

It means that we have failed to sell effectively.

Objections should not come as a surprise. We need to anticipate objections and plan how to handle them. If possible, we need to build the answers to objections into our sales presentation.

We also want to keep objections small. That means checking continuously that the buyer understands and agrees with all points made so far, so they can raise small objections or ask minor questions early on rather than save them all up to the end. A good salesperson asks for the order, sale or commission early and often to see if any objections remain.

When an objection is raised, we must first of all decide what sort of objection it is. Ask yourself:

  • Is it a real objection?
  • Is it an excuse, a smoke screen?
  • Is there a hidden objective? Are they really just trying to barter down the price?

The smoke-screen

Confronted by a smoke-screen objection our objective should be to get it out of the way as quickly as possible.

There are various techniques that enable us to do this:

Simply repeat it (with a slight tone of astonishment) and pause. We should at this stage be in control of the situation, and able to be frank, without being belligerent. In effect, we are throwing out a challenge to the buyer to substantiate the objection. If it is really only an excuse, it is likely to evaporate.

Switch immediately to another topic, and ignore it. By ignoring it we are saying that we recognise it to be an excuse and we hope it will not be raised again. If what we thought was a smoke-screen is in fact a real objection, you customer will repeat it. In either event we will have made progress.

The stall

Confronted by a stall, our objective should be to prove that nothing will be gained by delaying but that something will be lost. We need to confirm with the client that there are gains that have been discussed. We then need to get them to accept that a delay will be costly.

The price

Confronted by a price objection, our objective should be to get agreement that what we are offering is value for money and that the client’s need for our product is greater than the need for the money or for some alternative. One options to propose reducing your offering in order to cut the price and ask which bit of the service they want you to drop to come in at the price they seek.

Use "yes, but" to agree that you may seem expensive but there are excellent reasons for you being value for money, and why the client, in particular, would benefit in important and specific ways by using you rather than someone cheaper.

What about hidden objections ?

Ask whether there are any other objections. Ask whether the objection raised is the only objection. Above all, listen to every single thing the customer says. The customer is certain to give hints if there are hidden objections.

The most effective way to handle objections is to anticipate them and to tailor your presentation so you overcome them step by step.

Creative selling (2)

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What motivates your client?

In order to sell you have to think the way your client is thinking. When customers buy a product or a service they are buying what the product or service will do for them - not what it is.

When you buy a car you could well be buying a status symbol, or you might be buying the freedom to go wherever you like without the limitations of public transport. You are not buying a metal box on wheels. When you buy shampoo you are not buying a container full of oily liquid. You are buying beauty, cleanliness and admiration.

Advertising is based on the theory that people buy what things do for them - not what they are. What the product is is a feature. What the product does is a benefit.

Why do you buy?

Think about what you buy, why you buy that product at all and why you buy that particular brand. You then need to apply the same rules to selling your services, skills and products.

The main difference is that the motive of the buyer is usually less obviously emotional. The benefits you need to get across to your customer are usually related to the success of your customer’s business.

The customer is asking the question: "What’s in it for me?". To answer this question we have to tell the customer not what we will do but how what we will do helps meet their needs.

And a customer’s needs may be very different. An acting role may require a Deep South drawling accent but that may not be the key motivator of the director. If the director has just had a nightmare dealing with an actor who turned up late or who could only work mornings because he was drunk after lunch, then a prime motivator might be an actor who turns up on time and will work all day. Dick van Dyke didn’t get to play Bert the chimney sweep in Mary Poppins because of his perfect London accent.

Getting a job just because of punctuality may sound daft but you’d be amazed how many freelances are regularly late and miss deadlines, in all walks of life. Helping your client get over their deadline problem is a benefit. For that benefit they will be happy to pay.

Know your customers

To work out what benefits they would appreciate, you need to build a picture of the buyer and the business. Take every opportunity of learning as much as you can. Ask your agent about them, ask other freelances. Google them and read about them in the trade press or on industry websites and blogs.

Keep your eyes open when you visit. Talk to employees if you meet them. Get to know the buyer as a person and, if she or he is already a customer, study the buying record. Why did they buy when they did and why did they not buy everything you offered them?

The object is to decide whether your potential client is most concerned with quality, price, service or ease of operation. You will then know how to target your sales pitch.

 

Getting paid (5)

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Using the law

In theory, the law is on your side. In reality, the law sees you and the giant corporation you are freelancing for as two equal bodies. It does not recognise that the bigger organisation has more power and influence, can hire expensive lawyers and can bully you just with the threat of making sure you never work again.

Having said that, there are times when using the late payment laws can be very helpful.

Proper name

The full name for the late payment legislation, which you should make clear on the invoices you will use, is: the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.

This means you can charge a fee for any invoice not paid on time, plus interest at eight percentage points above the Bank of England’s base rate. Interest rates are currently very low so the interest does not add up to much but the penalty charges are worth it.

For bills of less than £1000 you can charge £40. Between £1,000 and £9,999.99, you can charge £70 and for invoices of £10,000 or more you can charge £100. So even if you only invoice for £10, if it is paid late you entitled by law to a £40 compensation fee.

Do the Maths

Calculating the interest on top of the fee gets more complicated. First you need to know the current interest rate. This has been simplified and for the purposes of this legislation, only changes twice a year. The Bank of England rate on 31 December is used for the first six months of the year and the rate on 30 June is used for the next six months. The BofE rate has been 0.5% since 2009, making the amount you can charge 8.5%.

You take the amount of the debt (including VAT if you charge that) and multiply it by the interest rate (8.5% is 0.085) This gives you the amount in interest for a whole year. You divide that by 365, which gives you the daily rate. And then you multiply that by the number of days the invoice was paid late.

So, a £100 invoice paid ten days late is £100 X 0.085 = £8.50 ÷ 365 = 2.3p per day X 10 days = 23p. But add that to the £40 fee and the total you can claim is £40.23. There are many interest calculators online that you can use (see links below).

 Template letter

All you need to do to claim is write or email setting out that you wish to claim, giving the invoice and payment details.

Here’s a draft you can copy and adapt:

I am claiming late payment fees and interest on the invoice detailed below under the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.

  • Invoice number: XXX
  • Dated: XX/XX/XX
  • Amount: £XX
  • Invoice due date: XXX
  • Invoice paid date: XXX
  • Days late: XX
  • Interest rate: XX
  • Interest charged: XX
  • Fee: XX
  • Total amount due: £XX.

Please make payment immediately.

If you have several invoices you might be best to produce a table of them – but you can include as many as you like in a single demand.

The key here is that you can use this as a lever to get customers to pay on time. The law allows you to wait six years before claiming your late payment charges and interest but if you keep pointing out that paying you late is incurring these charges, it can put pressure on firms to speed up payment. And you can, at the end of six years, claims for the whole lot in one go.

This might be particularly relevant if you work for one organisation for several years that paid a few invoices late. Once you have ceased working for them, demand your late payment entitlement.

Links (new windows)

Getting paid (1)

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Be careful about who you work for

Check out all new clients before you start working for them – avoid the pitfalls of working but not getting paid.

What could be better than getting a new client, you think. Maybe someone rang out of the blue, or emailed, or even called. They saw your name, liked a piece of work or yours, or you were recommended by a colleague – they can even tell you their colleague’s name and you are proud of the connection.

You’re chuffed, flattered, grateful. You could do with a bit more work right now, or you were wondering what you’d do when the current project comes to end. Here’s the answer and you haven’t even had to go looking for it.

But wait. It might be great news, but it might be more trouble than it’s worth. If this is a fly-by-night outfit on one on the verge of bankruptcy, you could be about to commit to working for free with no prospect of ever getting paid.

Credit checks?

Big corporates do credit checks and due diligence before accepting clients. For most of us freelance professionals buying credit reports and seeking references is not realistic. But we can - and should - check out customers before we sign up to work for them. If they don’t pay, or go bust on us, we will have lost out.

Google is your friend. A few minutes should find out a little about this potential new customer. What are people saying about them? Are there any complaints? Check forums, chat rooms, any websites criticising them for not paying their bills or trying to cut down agreed fees after accepting similar work?

Personal contacts are even better – do you know anyone who has worked for them? What were they like to work for, did they pay well and did they pay promptly? Are people still happy to work for them? One reason organisations are often looking for new talent is because they have alienated their old favourites who will not longer work for them – if not, warning bells should sound. Check with your union – have they had to help members squeeze money out of them?

Pay close attention to quickly growing companies or companies that have been, or are being, taken over.

Sooner, rather than later

Do all this before agreeing to work for them – afterwards will be too late. A sensible freelance will also monitor existing customers and review them twice a year. You need to spot if a client is getting into difficulties and adapt accordingly, perhaps billing smaller amounts more often so that, if they do stop paying, you’re left being owed less. Better still, cease working for them before they get into difficulties.

Grade your customers by risk levels and set credit limits and terms for each customer. You might normally expect to be paid 30-days after sending the bill but not every customer has to be treated the same. You might offer to bill monthly instead of weekly, for example, but only if you can be paid within a week. That might save both of you the hassle of dealing with lots of invoices.

There may also be times when you have to ask for payment up front – before you start. This might be part payment in advance and the rest when you finish the job, or, if you are worried about the client, you might ask for full payment in advance. You might even ask clients to apply for credit terms – a child entertainer or magician, for example, might do many jobs based on payment with the booking but have a corporate client that provides regular work who pays on invoice after each performance.

It’s a case of horses for courses.

Finding your way through the jungle – the different types of social media

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Whether you're a big fan or a 'rabbit in the headlights' when it comes to social media, the phenomenon is here to stay and developing apace.

For freelances, it can be a productive and cost-effective way of marketing yourself - especially as many of your target audience will be using this form of communication. This means it's worth trying to get your head around the possibilities and keep up with the changes.

So, what about an overview as a starter for ten?

There are varied types of social media and it's become an umbrella term for a wide variety of online platforms and ways of communicating.

Wikipedia’s entry on Social Media is helpful here as it cites Andreas Kaplan and Michael Haenlein, who created a classification scheme for social media types in their article, Business Horizons (2010). The grouping of the different forms into types is particularly useful in thinking about social media platforms.

According to Kaplan and Haenlein there are six different types of social media:

  • collaborative projects (e.g. Wikipedia)
  • blogs and microblogs (e.g. Twitter)
  • content communities (e.g. Youtube)
  • social networking sites (e.g. Facebook)
  • virtual game worlds (e.g. World of Warcraft)
  • virtual social worlds (e.g. Second Life).

Technologies include: blogs, picture-sharing, vlogs, wall-postings, email, instant messaging, music-sharing, crowdsourcing, and voice over IP, to name a few.

The following clip gets a little deeper into the idea.

If you are reading this and would like to comment, please let us know which types of social media you're using and which ones you would like to learn more about so that you can use them for your business? If we get feedback we can look at scheduling Lunchtime and Twilight training sessions.