How do you determine how many contracts is too many when just starting out?
I'm starting out and trying to make my work load manageable without jeopardizing quality, customer service or turning down someone out of fear they won't ask again. How do you determine how much is too much; especially if you don't know what next month/quarter will look like?
The best answer for that is there will never be to much, I assure you of that, so take advantage of them that are coming in now, just manage them in a timely manner, and have a strategy in place that you can fill the gap of those days when there are not many coming in at all hope that makes sense. just don't get too overwhelmed, keep focus, and reinvest for the long term haul and gradually make internal adjustments to handle the workload no, but never go all out. because is may just be a huge need for your service or product now, but make notes of what you believe attracted the increase in contracts, very important to make note of these transitional phase, stages in your business Use as measuring tool to make appropriate adjustment that don't affect your normal flow.
Because you are starting out, you need to build a reputation for yourself/business and if you knock back contracts, you could lose future contracts and then be in the position of “how can I get more contracts”. It is a success to have “too many” contracts, if that happens then you need to look into expanding. To know what next mouth/quarter will look like is to know the future and so it’s a best guess and keeping eyes/ears on the market and trends.
Many comments here have valuable content. Alongside of these I would add that you can make intelligent use of your time by making sure you work on the contracts that make the most profit with the least resources. Profit keeps the business afloat as long as you get the money in from happy customers. Turnover is vanity - fools gold
Having enough business that you are turning some down is a good thing! The first thing I would do is take a hard look at the resource requirements for each contract (time, money, other resources) and map that against the resources you have. There are lots of great Gantt style tools out there (teamgantt.com is one I have used in the past) that will make it very binary on whether you can take on a new project. Making the decisions this way will also make it feel less personal for you, less like you are letting someone (or your business) down by saying no, or by setting an expectation that you can take the project, but can't begin until some specific date in the future.
Good luck, and please let me know if this was a helpful answer.
Like many have already said, the trick is how much work can you take on and still deliver a quality product or service? If you fail to meet the standards expected by your clients, the work will dry up. Better to do a few things well than to try to do many things and wind up not doing any of them well. Many new businesses make this mistake. Stick to your core competencies, beliefs, and values. It may be hard to say no in the beginning but it will pay dividends later.
I would recommend that you first assess the net bandwidth you currently have. Divide that with the sum of the size (efforts) of all the contracts. If the value is less than 1, you need to cut down on your contracts. If the value is greater than one, go ahead and start a detailed estimation. This is just a quick-check and not intended for actual estimations.
Without knowing what kind of staff you have behind you, Ill assume its just you. Basically the issue is time management -- which is something we all go through. Consider your daily routine for work at a normal pace. Map out every hour as per your average work load. How long do you believe a regular project will take you to complete? Are you factoring in everything that goes into it? Invoices? paper work? Customer calling? Production? Sales? marketing? etc...Think about your time budget the same way you do your monetary budget. Consider every detail and factor it in and then add 10% more..20% etc until you know your day/week/month will be filled up. If you find you're going to have some empty slots, use that time to do things like promotion and marketing so that are eventually filled with profitable returns.
I'd like to make a suggestion in how you choose to THINK about your limitations but first I'd point out that there are two really good answers that I feel deserve your special attention. THEN I'll make my suggestion.
First is the answer from Barbara Dennis. Your reputation is, (or at least should be) far more important to you than contracts.
I'm in an industry that is rampant with cheats, liars, over sellers and a huge trust objection that has to be overcome every single day. SEO. Yet after 20 years in the industry I am one of the very few SEO providers that has not one negative comment in search or social media. I am proud of that and I owe that reputation to a single philosophy I was lucky to discover when I was just a teenager and it changed my life. Its called the DO philosophy and I've had it framed and placed in my office and my living room for almost my entire career, online and off .
I DO the best job I can DO
I am proud of what I DO
I Do what I say I will DO
Most people will SAY they do what they say they will do but few actually do and that is why anyone that actually does stands out.
The second great answer was from Valerie Perlowitz, (we're seeing Girl power in action here and I LOVE it!). The "trick" to actually doing what you say you will do is NOT saying you will do something when you can't. Overselling is NOT good salesmanship. It is simply lying.
Understanding that your biggest threat to keeping your word is the limitation of your resources with your time being the MOST limited of your resources, especially as a start up. It is absolutely crucial, and as Valerie pointed out, that you are always keeping track of your scheduling, your expenses and the boundaries of your assets. With no excuses !
Now the suggestions I would make is to change how you "see" a contract and your limitations. I don't believe there is any such thing as too many contracts. Those are about the best asset you can acquire as they are lead generators, reputation builders and can even be used for cash flow and to secure capital which expands your resources.
It's not about taking on too many contracts, its about looking at the amount of time and resources it will take to deliver on time and then scheduling the job.so you can do what you say you will do.
I realize every client is in a hurry and will pressure you to do their job right now by threatening to choose a different provider. BUT it's important to remember they are in a hurry to get the job done correctly and not in a hurry to lose money or their reputation by paying for delays, broken promises and/or inferior product or service. You will find many clients who appreciate your honesty and will wait for you to do the job because they trust you rather than risk losing with a different provider. You may lose some contracts BUT will profit from doing what you say you will do and the key is knowing what you actually can do.
In conclusion, I would remind that you can easily over pay for free advice. You are the one responsible and at the end of the day it is you who has to decide who and what makes sense to you and is in sync with the way you do business.
You already know it's a juggling act.
Getting work done. Quality work. It should be about delivering a quality service, day in and day out. That's the number one priority. The most important thing is old business before new business. You can look at some freelance with your heavy supervision.
Your question says month and quarter. But if you lose the business you have by looking for new business that influences your month and quarter and year. Hiring more and the right people takes time too.
With the 9P's of Marketing (nineps.com), be sure your company is taking good care of its customers (People), and having the right Planning and targeting (People), the right Product, right Place or distribution, right Price, right Promotion, right Partners, right Presentation, with the right amount of Passion in the 9P’s.
Hope this helps. Good luck with the juggling. It's not easy to project into the future.
i have led 11 startups of which one was acquired by a large company. My experience is that each startup is different and similar challenges actually may require different solutions. Having said that, the focus always have to be on delighting the customers and the employees. Depending upon whether you are in early stage or growth-stage, delegation of work to employees or contractual workers may be one solution.
In one instance, I had referred a prospect to a competitor who I respected! In the longer term, I not only gained that customer but many more because my competitor did the same to keep his/her customers satisfied.
Will need to know more about your business and the environment you are operating in.
In addition to understanding the levers of prospecting to delivery and back around again is the scheduling of that work. Knowing that you need to manage your workload, even a simple calendar that shows the work and the amount of time the work will take in a snapshot (I am a very visual person so this works very well for me). When another client and/or potential client calls, you determine how long the effort will take, you can then tell them when you can start their project. One lesson I learned a little too hard was not scheduling networking and prospecting into the schedule. Burnout comes quickly, even to the most optimistic and enthusiastic entrepreneur!. BTW, my experience is if a client doesn't want to wait a few days to get started, they most likely aren't going to be a good long term client.
This is a great question. One that not enough business owners ask until it's too late!
You want to apply the concept we call "tuning your revenue engine." There is a video that introduces the concept here on MosaicHUB at: http://www.mosaichub.com/member/p/dino-eliadis/portfolio/tuning-your-revenue-engine.
The basic idea her is determining you operational capacity. http://yoursmallbusinessgrowth.com/knowing-your-operational-capacity/ .Then you plan your growth based on this information by balancing your sales and marketing against how much your operation can handle.
Additionally, you now know when you need to add more capacity. So you can plan the necessary capital to accomplish your expansion. Going forward you just continue repeating this process over and over and your business grows organically each time you repeat the cycle.
I hope this is helpful. Let me know if you have any further questions regarding this process. I'd be happy to help out in any way that I can. – Dino
As a start up on the most important things to focus on is your reputation for delivering. If you say yes to every job that comes your way and fail to deliver, this will definitely be damaging to your reputation. It may be best to focus on quality rather than quantity in initial stages. That way you can assess how much you can manage and deliver you can make sure that it is a high quality service. You also need to have time to work on as well as in your business and if you're too busy doing, you won't have time to develop your pipeline. Don't forget to ask for testimonials and make sure that you include these on your website, LinkedIn profile or marketing materials. Good luck
Do you have friends in the industry? Ones you trust? I've frequently put on "some else's shirt" to help them manage overflow work. Others have put on an HDWP shirt and helped me. Something to think about.
A startup worries no enough sales, hardly hear startup wants to stop getting sales.
I had calculated a total contracts' values as a trigger point all my clients of mine as their optimum point of business operation - from strategy view point further expansion increase their companies' inability to react market turbulent; tactically, the middle management team are occupied about 80% of their capacity; operationally, quality not jeopardize and used around 70%-80% of capacity so that they can react to sudden increase of short-term demand.
Most of my clients still cannot achieve that minimum, I am not sure why you start worry at the start. If I was you, I will just get contracts as much as possible, and if there are too many for me to choose, I will choose those higher profit one first. When I am going to be overall loaded, I will know myself on capacity, than I start worrying how to handle the problem.