The Capacity to Have

The Capacity to Have

Sep 26, 2020

If I gave you a million dollars and told you to hold on to it for a year, could you?

 

 So first and foremost, hat tip to Brooke Castillo for the concept of capacity to have. 

With that out of the way, let's start at the beginning.

Imagine I came to you with a goldfish and asked you to hold the goldfish for a year and then give it back to me.  Could you handle it?

There might be some immediate panic – I don't have any fish food, I don't know how to take care of a goldfish – but with a quick Google search and a trip to the pet store for food you could probably figure it out, right?

Now, what if I gave you a puppy?  Or a baby?  Same thing, right?  Some immediate panic, a bit of research, and then yeah, sure, you could probably hang on to a baby for a year without giving it away, right?

 

What if I gave you a million dollars?

 

What if I said, hey, here's a million bucks, hang on to it for a year, take care of it, and then give it back to me.  Could you handle it?

 

Would you know the tax implications?  How to invest it?  Where to put it?  You know, you can't just stick it in a savings account, because it exceeds the amount of FDIC insurance, so if the bank shuts down, it could get wiped out.

 

More importantly, would it bug you?  Would it be like an itchy sweater?  Would you want to use some of it to pay off debt?  Maybe just $10,000 to pay off your credit cards?  And then you could put that $10,000 back before I notice at the end of the year, right? 

Do you have the capacity to have a million dollars?

If you wanted a puppy, I would hope that you'd start doing some research.  You'd think about what kind of dog you want and why.  You'd think about where the dog would sleep and if you need to fence in your yard.  You'd call a friend who has a dog and ask for advice.  You'd start looking in to it, because you believe in your capacity to have a puppy.

Do you believe in your capacity to hold a million dollars in your hand and not immediately spend it or pay off your debt or give it away or do something else to relieve the itch – the discomfort of having it?

Oh, you think, it's not right to have a million dollars, so I don't need to develop that capacity.  I don't need to learn about investing or how to reduce my tax burden or how to hold money without blowing it.

But actually, you DO need to have the capacity to hold a million dollars in your hands and not do anything with it, if you plan to retire.

Based on the 4% rule, you'd need to have $1,000,000 in your account for that to translate to $40,000 in income per year – the most you could take out and know that it would last you through a 30 year retirement.

This feels weird and awful and uncomfortable because it is not something that our ancestors had to do, so we don't know how to do it.  In the past, older people would just live with their children when they got old, or they would get lifetime income from their former employer.  As long as their former employer had the capacity to have $1,000,000 on their behalf, our ancestors did not have to deal with the discomfort of having it.

But the financial rules have changed.  This is something we must learn how to do, if for no other reason than to teach the next generation.

Work on developing your capacity to have a million dollars and prepare for it to come to you just as you would prepare before getting a puppy or having a baby.  It's within the realm of possibility for you.  Beyond being possible, it's actually necessary.

 

Getting Paid On Time Starts Before The Engagement

Getting Paid On Time Starts Before The Engagement

Sep 19, 2020

One of my current clients has a customer who owes him $125,000.

Yikes.

Everywhere but California that's a HOUSE.

Needless to say, no one puts in all the hard work of becoming an entrepreneur, starting a business, finding a client, winning the business, starting the contract, and working for several months to just labor for free. 

Side note: I always find it fascinating how blase employees are when you ask them about getting paid.  How long would they stick around and work for free if their company didn't pay them?

While there's no way to 100% control what someone else does, avoiding this sort of situation starts early in the client relationship – before any work has been done for the client.

Here's my first tip – did you know that YOU should anchor the expectations for when the client pays you? 

For our IT consulting practice, our contract says we invoice weekly and that the terms are net 15 (meaning the check is due to me 15 days after the invoice is sent). 

Now, many clients will balk at this and want to negotiate (or just ignore the net 15 and pay net 30).  But it's worth having in that contract anyway.  Because by anchoring at weekly invoicing and net 15 terms, when the client comes back requesting monthly invoicing and net 90 terms… well, we have room to negotiate now.  We can meet in the middle rather than them dictating that I work for free for 4 months before I even send an invoice.

In case you missed it, yes, you can negotiate terms with even big clients.  Maybe not all the clients all the time, but yes, some of the clients some of the time.  You'll negotiate more often if you try than if you don't.

Once the contract is signed and the client sends it to you, you can send them back a countersigned version or at least an email acknowledging receipt.  I suggest when you do this you include your W9 with a suggestion that your contact go ahead and send it over to accounts payable to get them in the system and asking if, when the time comes to send invoices, you should send those to your contact or if there's a contact in accounts payable you should use.  This goes ahead and gets your contact thinking about the fact that yes, just like them, at some point you will want to be paid by their employer, and hopefully gets the ball rolling to connect you to accounts payable.

The advantage of going ahead and connecting with AP is that often clients use a pile of paperwork as a way to hang on to their money longer.  Instead of sending you payment, they send you paperwork.  By getting this out of the way when the contract has just been signed INSTEAD of waiting until the work is performed, invoiced, the terms time has past, and now the payment is past due, you (hopefully) accelerate the process of getting paid.  Basically, at that point they can't pretend that you are the reason you are not getting paid.  🙂

Along those lines, be sure you invoice in a timely manner with the frequency you promised.  While usually our focus is on delivering the services (as it should be), the faster you get that first invoice to the client the faster you work out any kinks in the process and start the flow of money.  And be sure to build an hour into your calendar each week to work your past due invoices so clients know you are on top of things and not to be ignored.

By anticipating what homework you will need to do before accounts payable sends that first check and by being extremely prompt in your invoicing you help to set the expectations that they will also be prompt in paying you.

 

 

Getting Paid On Time Starts Before The Engagement

Why You Don’t Have Clients

Sep 7, 2020

Someone as sharp as you should have some #$%^ clients, right?

 

If you are in the process of starting your business, you've probably realized it's not as easy as you had hoped.  So why don't you have enough clients? 

We start a business with optimism and confidence.  Lots of people have done this – how hard can it be?

We get to work on all the trappings of business – the cards, the website, the logo, the EIN, the business card – and wait for all the cash to roll in.

Then, it starts.  The business becomes not fun.  It's all expenses and no income.  What the heck?

So we start looking for the reason.  It can't be us.  We are working our a$$es off – reading articles, getting trained, taking courses, hanging out with the old guys at SCORE (who by the way never actually started a business) – that can't be the problem.  It must be time.  It's probably time.

So we quit our jobs, thinking that will make it better.  But it's made it worse.  SO much more worse.  Because now we have all the time in the world, and it is still not happening.

So what to do?

Most of us start our businesses with the wrong tasks.  We start with setting up the stuff of business, without testing the most important part – do clients want to pay for what I'm offering?

What's needed is what those of us from the IT world call a proof of concept.  We need to start offering what we do and see if anyone wants it.

The most important part of doing this successfully this is credibility. 

Let's say I meet you at a networking event.  I'm not totally clear on what you do (because you aren't yet totally clear on what you do), but it sounds interesting, so I hang on to your card and check you out.

Except according to the internet, your business doesn't exist.

There's no website, or it's so full of stock photos and copy someone else has written that there's no soul to it.  Your Facebook business page has been filled full of meaningless articles written by the social media savvy millennial you hired to “handle social media” because you read a book saying you need to outsource stuff. Your personal page is full of your personal drama and bears no sign of you having experienced the transformation you are offering clients.

Imagine a brick and mortar store who pays a ton of money for advertising, bringing you in to the shop to browse.  When you get there, the shop doesn't have anything on the shelves and the windows aren't decorated.  You'd leave confused and conclude that they must not be serious about their business or must not be ready for customers.

Credibility.

Before you spend a dime on lead generation or appointment setting or inbound marketing or anything else, you must be crystal clear on who you are and what you do and it needs to be on your website, your LinkedIn profile, your business Facebook page (if you have one), and at least periodically referenced on your Twitter and IG accounts (if you have them). 

Marketing and sales are going to be the very last things you outsource.  No one can sell you as well as you.  Paying someone to try to do so is throwing away money.  And as a money coach for entrepreneurs I'm going to recommend you not do that.

If you notice at the big law, accounting, or consulting firms, the highest paid people are the partners, and they are the highest paid because they are the rainmakers – the ones who can bring in the clients.  These are your role models. 

If you are going to outsource initially, start with things in your personal life.  Hire someone to clean your house, use Instacart for groceries, buy prepped meals, have a neighbor mow the lawn.  No one cares who does these things.  They are invisible.

The same rule stands true for your business.  Outsource bookkeeping and other administrative tasks.  Find someone you can hand a stack of business cards to who will key them in your CRM.  Hire out the functions that are invisible to your clients.

The interaction with clients and potential clients is the most precious aspect of your business.  It's where the money comes from, it's where you will find a sounding board for the ideas you have, and it's where you will refine your pitch.

It's where you develop your credibility.

 

*Have you reviewed your internet presence to see if it represents you well?