If you run or are starting a design or content business, you’ve probably learned, or WILL learn, that being talented is not always the most important part about keeping your firm’s doors open.
Talent is great for a business. Cash flow is better.
To remain a viable content studio, you have to learn how to manage the finances and cash flow of your business, not just produce work. That means acting more like a business that needs revenue than being artists and consultants performing on the street with an optional tip jar.
This matters. When I ran a marketing firm for over 12 years with bills and people to pay, so much of my time was spent chasing down receivables. Often to find that instead of using their funds to pay my business on time, clients often used it to fund their next initiative. While they had our work product in hand right now, they’d expect my business to wait patiently.
Pay me now.
I understand that desire to firmly say, “pay me now” seems in direct conflict with pleasing the client. It’s not. Especially if you clearly set the terms of your working relationship (including fiscal).
That requires an attitude, process, and discipline that sets and keeps boundaries. Particularly in getting clients to pay in and business culture where clients are extending the age of receivables to fit their cash flow instead of yours.
You deliver on time. Clients should pay on time.
Letting them slide too much can make you more valuable to your client as a line of credit than the work you deliver for them. Also depending on the client, they may just hope you give up and walk away, betting that you’ll find paying legal and court fees to get the money back might outweigh the original invoice cost. Or you may decide to settle, which to a client is like getting a discount.
In payment, contracts and action, set boundaries.
This from a person who as lost hundreds of thousands from clients early on my business by letting aging invoices slide and continuing to do more work. While sometimes it was because a client tried to get out of paying, more often it was clients mismanaging their own money. Too much debt or not getting their own customers to pay on time.
When it comes to payment, your hairdresser won’t let it slide. Nor does the grocery store. What should make your business any different?
This presentation by Mike Monteiro, the co-founder and design director of Mule Design, is very enlightening on the mindset to have in order to run a business and have a professional fiscal relationship with clients that can avoid problems, including making sure you have the money to pay to keep the firm’s lights on.