This Question Made Me $10,000 in 10 Seconds

Many service providers agonize over how to price their services. If the number is too high, it might scare away potential clients; if it's too low, you're providing your services on the cheap.

What's the solution? Ask about the budget before discussing the price.

Start the conversation by discussing the client's specific needs, and scope out, in general terms, the results that both of you expect from the service you'll be providing. At that point, ask, "What kind of budget did you have in mind?"

You'll get one of three possible answers:

1. "We don't have a budget yet."
2. "About how much will this cost?"
3. "The budget is around $xxxx."

Answer No. 3 means money in the bank, but before I explain why, let's go over how to handle the other two answers.

Answer No. 1: "We don't have a budget yet."

The potential client is not really a potential client. His company is not ready to buy, so it's pointless to talk about price.

Instead, turn the conversation to the budgeting process. Find out how budget decisions are made, how (and what) his company has paid for similar services in the past, and what you need to provide to help the client secure a budget, who the decision makers are, etc.

Work through the budget process until the client comes up with a number. Skip directly to Answer No. 3.

Answer No. 2: "About how much will this cost?"

In this case, the potential client already has a budget in mind and wants to know if you're in the ballpark of what he's thinking.

If you hear this answer, do not stonewall in the hopes of getting a budget number. You'll only irritate the client.

Instead, quote a range of prices, with the final price dependent upon the exact amount of work involved. This isn't ideal, but you're no worse off than if you had launched into a price discussion without trying the question.

Answer No. 3: "The budget is around $xxxx."

In my experience, Answer No. 3 comes up about 60 percent of the time, especially if the client contacted you rather than the other way around. In either case, that number reflects the value the client puts on the service you provide.

That's a really good thing to know, because if you know your service is top quality, you deserve top dollar, and top dollar is defined as the highest amount somebody is willing to pay for something.

When you hear Answer No. 3, respond as follows:

1. If the number is absurdly low, explain that your service is not in his company's price range and suggest an alternative.
2. If the number is anywhere within reason, your answer is always: "I can work within that budget."

In my experience, the client will often state a budget number that's bigger than what you were considering on your own. Sometimes a lot bigger.

For example, one time a major magazine asked me to ghostwrite a long advertorial over the Christmas holidays. (I won't say which magazine it was, but the name begins with a W, ends with a d, and consists of five letters.)

I was thinking about charging $10,000 but instead asked the magic question. The magazine's answer: $20,000. Which is what I got paid. Because the magazine probably charged the advertisers an order of magnitude more than what it paid me, I felt not a pang of guilt.

This is only one example of how this question has worked to my advantage. Over the two decades I've been an independent writer, that question has made me probably somewhere around $250,000.

From Inc. Magazine

5 Startup Tips to Avoid Cash Crash and Burn

No venture ever succeeds without confident, enthusiastic leadership around a mission that will attract employees, investors and customers. But this rosy outlook can become a liability – especially when dealing with financial projections.

Running out of cash is what ultimately kills eight of 10 businesses within 18 months of opening, according to Bloomberg. Here are lessons to keep your business from becoming a cash casualty.

1. Estimate the amount of time it will take to be profitable -- then double it.  This is a key area where optimism does entrepreneurs more harm than good. Five years ago I opened Stone Korean Kitchen, a restaurant in San Francisco. My partners and I all had serious financial chops and experience starting businesses. We put conservative assumptions into our financial models, but we were still nine months off in getting to profitability.  That’s nearly a year of cash flow we didn’t anticipate that we had to cover out of pocket.

2. Hiring must lag behind the need. Ecommerce site Fab.com was once valued at $1 billion. But since that peak, the company has struggled and recently entered another painful round of layoffs as it cut its staff down significantly.  

Same thing happened with humor-site Cheeseburger Network, of LOLCat meme fame. After it raised $30 million in venture cash in 2011, it had to lay off one third of their staff last year. This story is repeated time and again. “How did you think I felt? Shitty obviously,” founder of Berlin startup Glossybox told VentureVillage after it shuttered offices in seven countries.

Startups must stretch the capabilities of employees to the point of pain. That hurt then dictates where money should be prioritized with more hires. Believe me, the pain of layoffs hurts more than stretching the ability of your workforce. Growth should lead investment, not vice versa. The exception is when you have signals that you’re winning in your market and it's time to double-down on hiring to grow. Then it’s time to play to win -- but not a moment before.

3. Mind-meld with your CFO. While founders like to chase “shiny objects,” a gifted financial captain can help steer a course toward that goal or administer a needed dose of reality.

The key here is a relationship where the founder and the financial officer can finish one another’s sentences. Being lockstep with your head of finance helps make sure there is the right alignment around risk vs. rewards.  

4. Build a war chest. Just like you should have a personal emergency fund to run your home for at least six months without income, startups need to build a war chest of funds -- be it cash, venture capital or lines of credit -- to cover shortfalls. (And the best time to think about raising money is often when times are good, and you don’t necessarily need it -- because when you need it, it’s often not around.)

The economy could sour, the business may need to take a hard left turn, or you may need to make a market winning investment with a short -ime frame. Your war chest gives you freedom to maneuver.

5. Don’t be penny-wise, pound foolish. Bootstrapped businesses are great at growing lean. Yet the flipside is being consumed by worries about being cost effective rather than spending cash on things that will lead to topline growth.

Understanding the time horizon of an opportunity can be a little like reading tea leaves, but it’s important to know if you have a great opportunity in the market but a small time horizon before another competitor gets there. The risk of overplaying your buildup could be worth the reward of owning that space. 

From Entrepreneur

Why Dating and Building a Company Have a Surprising Amount in Common

I guess I should have anticipated the question.

I have written that serial entrepreneurs--people who have started two or more successful companies--are the masters of overcoming uncertainty. They have figured out what to do when you don't know what to do.

And, I added, their approach works in all situations.

"All situations," a friend of mine asked. "Even dating?"

Yep. Even dating, we told our friend who has been divorced for a while and unhappy with her social life.

Kathy, not her real name, was surprised and skeptical by that response, but we told her she shouldn't be.

After all, if you think about it, trying to find someone with whom to have a relationship is just another example of heading into the unknown.

And the serial entrepreneur's approach to doing that, when it comes to creating their companies, will work perfectly well for your love life.

Step 1 in either case is knowing what you want. The entrepreneur has a desire to build a successful company. Our friendKathywants to have a serious relationship.

Step 2. You take a small step toward your desire. The entrepreneur draws on the resources he has on hand--who he is, what he knows, and whohe knows--and begins talking to people about a potential idea. If he'sthinking about opening a restaurant, hecould show potential customers the menu he'sthinking of; if he'sthinking of creating a new product, hemight show a sketch of the prototype.

If you are trying to increase the number of dates you get, youcould do exactly the same thing. Kathycould conclude that there are a certain percentage of single guys who want to spend time with a woman who has no immediate expectation of marriage. As for what she knows, Kathy believes her education, training, experience, and expertise make her attractive.

And the question of who she knows has her excited. She is convinced that by telling everyone in her personal, social, and professional networks that she is going to use an entrepreneurial approach to relationships will improve her social life.

It turns out she was right. The people in her various networks knew lots of guys who might fit her criteria, and they were happy to make introductions.

Step 3. Entrepreneurs don't risk a lot as they go about creating the new ventures, and Kathy doesn't risk a lot either, as she considers all the names her friends and acquaintances have given her. She talks to each man by phone, investing just a small amount of time.

If the conversation goes well, she will suggest coffee. If the face-to-face meeting is promising, she decides she is willing to invest more time (a dinner date, perhaps). At each step of the process she is deciding whether it's worth taking an additional step.

Her new approach to dating isexactly how entrepreneurs build their companies.

• They figure out what they want.
• They take a small step toward it.
• The pause to see what they learned from taking that step.
• They build off what they learn.
• And then they repeat the cycle all over again.

The process continues until they have what they want (a successful company or a successful relationship); they decide that it is impossible;or that they want something else.

The key in either case is taking action. If all you do is think about starting a company, you might end up with a lot of thoughts, but you are never going to have a company (or start that new project or...) unless you do something about it.

It is thesame with dating. You can think all you want how nice it would be to have a relationship. But unless you do something about making it happen, there are going to be a lot of lonely weekends.

From Inc. Magazine

9 Productivity Secrets From Hard-Working Chefs

People who have to be creative and make complicated businesses work have something worth learning.

When you're in business, you can always use more productivity tips. It's easy to find the ordinary stuff you read in one article after another. Or you can seek out famous time management tools.

And then there are the tips that come from places you might not initially expect: a good restaurant. Chefs and their staffs must be creative, meet expectations under time-sensitive conditions, and all while keeping customer satisfaction up and costs down. Here are some great practices that I've seen used by fine restaurants over the years as a customer, a food aficionado, and someone who spent a fair amount of time working in the industry.

Set exacting standards

Being demanding may seem like the opposite of productivity. You spend more time trying to meet the standards. But it's like planning: The apparent loss of time up front is more than made up by the time you save. In a restaurant, it's bringing in customers, keeping them happy, preserving the brand, justifying higher margins, getting more positive organic PR, reducing waste, and fending off potential competitors. Just what you'd want to do in any business.

A warning, though: Most entrepreneurs haven't the slightest idea of how demanding exacting standards are because they're unlikely ever to have experienced them. Here is a trailer for a movie called Jiro Dreams of Sushi. It's about Jiro Ono, who is widely considered to be the greatest sushi chef in the world and the first whose all-sushi restaurant received three Michelin stars. For those who don't follow the food industry or fine dining, it means even restaurant professionals are in awe of what he's been able to accomplish with rice and raw fish. It's one of the more instructive works I can think of to show what the possibilities of greatness in a field can be.

Learn classic techniques

Want to know what happens when people untrained in culinary work decide to operate a restaurant? Watch episodes of the reality show Kitchen Nightmares with Gordon Ramsay. Good chefs and cooks learn how to master everything that most people might assume they already know. Think you can cut an onion? If you haven't learned the professional's approach, you can't--at least not at the speed and scale necessary in a restaurant.

But any industry has equivalent practices. There are professional practices that you and your staff need to know how to undertake, whether accounting, customer service, logistics, inventory management, or production. You may find better ways of doing things, more on that in a bit, but you need command of the basics. Any existing practice should be up for question, but only after you understand it and recognize the demands and benefits that might have brought it about after decades or longer of trial and error.

Find the right vendors

You're only as good as the people you deal with. Going back to Jiro Dreams of Sushi, the master sushi chef has specific vendors he deals with for certain ingredients. There's the guy who sells him rice (a variety that the person won't make available to any other restaurants because they wouldn't cook it right), the one who sells tuna, the shrimp vendor ... you get the idea. Any restaurant chef worth his salt is picky about who gets to supply ingredients, equipment, or supplies. You want someone you know will provide the best quality and who will make things right on the off chance that something could go wrong.

In one of his books, Anthony Bourdain told a story about a chef he worked for. A supplier gave him substandard fish. The chef put the screws to the supplier and forced him to make up for the cost and inconvenience until the chef was satisfied that things were square. That means you need to know as much or more than the vendor about quality and that you are adept at managing relationships.

Train your staff

No self-respecting chef or restaurateur would let someone step onto the kitchen or restaurant floor if they weren't properly prepared. Test people and provide training to get them up to snuff the way you do things. You might be tempted during periods of rapid growth to bring in new employees and immediately get them productive. If they aren't ready, their mistakes will force you to fix things and make good. I remember once taking an order for broiled sole--a no-no, because the sole shriveled up and it required more fish to fill the order than would have been necessary if it had been fried. I didn't know any better, but no one had thought to tell me what should or shouldn't be done because the restaurant was brand new and going through the pain of opening. How much money and time were wasted because others missed basic training for that operation?

Trust employees but verify

Micromanaging is a big mistake in any business. You waste time better spent elsewhere and demoralize the staff because they learn nothing and don't reap the satisfaction of accomplishment. Restaurant chefs have a general reputation of being tyrants and many are. They'll tell staff when things aren't right. But that's verifying standards are being met. Otherwise, staff members are responsible for their duties and are expected to fill them. The station chefs and cooks actually cook your meals. An executive chef doesn't have time to hover over every step of preparation. Learn to delegate and rely on training, and verification, to ensure that standards remain high.

Manage inventory

As Bourdain writes, fine restaurants need to triple their food costs in billing to be financially sound. They can't afford to waste food. It's one reason a good restaurant will run out of items. They won't keep too much of a perishable on hand only to send it to the trash. And yet, a chef doesn't want to be caught short-handed, because that means more customers are disappointed. It's a balancing act whose demands constantly change with seasonal availability of quality goods and consumer demands. Your company will need to find its own balance, recognizing that doing so is not easy if you are to satisfy customers but keep as much capital available for other needs.

Be innovative

Many people probably associate innovation by chefs with unusual flavor combinations or architectural arrangements of ingredients. All that is true. And yet, there is more fundamental creativity that goes into such a restaurant. I remember one chef who was head of operations for multiple restaurants in a major metropolitan museum. He constantly looked for new ways to efficiently prepare individual meals, as he was responsible for banquets for as many as several hundred people all of whom expected formal service. I remember a single length of sausage that ran at least six feet for a breakfast. It could be cooked all at once and then cut into individual servings. A cart was converted into a smoker to make smoked salmon for a third of the market price. These are great examples of someone who had mastered classic techniques and then improved upon them for a given operation.

Organize your workspace

National Public Radio had an interesting piece on using the restaurant concept of mise-en-place to improve productivity. (Hat tip to Twitter user Geri Seiberling.) The term, which translates from the French as "put in place," refers to having all the tools and prepared ingredients you need together in one place to do your work.

But it's more than an orderly arrangement of things. True mise-en-place means you know exactly what you have to accomplish and where things are. You arrange your world to work as efficiently as possible so you minimize what could go wrong and open time to deal with the inevitable problems that can arise. Clean your mess as you go to avoid distractions and improve focus. Strong focus and discipline can take your business a long way.

Leverage your brand

You know brand is important for marketing and customer relations, but there are practical implications for productivity. A strong brand gives you more leverage with customers and suppliers. There are expectations on what they can expect, but also what is expected from them. Top restaurants can charge top prices, and make top margins, because of their brands. Brand becomes synonymous with the high standards, trained staff, preparation, focus, quality, vendor relationships, and every other aspect of your operation. It helps define you, which makes marketing more effective and efficient. Improve your brand and it helps improve your productivity and operations, which in turn feed back into brand.

From Inc. Magazine

Since You Can't Manipulate Time, Try These 13 Time-Saving Tips

As an entrepreneur you have no limits or restrictions. There is nothing that you can’t achieve. Well, except for freezing time.

Time is the most valuable commodity to an entrepreneur. Most of us would do anything to have another hour in the day. But until someone creates an app to manipulate time, we are forced to manage our time extremely efficiently. Here are 13 tips to help make your days more productive.

1. Schedule “You” time. Set aside a block of time to get your personal stuff out of the way. Things such as paying bills and attending to personal emails can take away from your work.

2. Disconnect when you need 100 percent focus. Preparing for an important meeting or a pitch? Turn off your mobile phone, close your email and route your office calls to voicemail. You will be more productive without the distractions.

3. Maintain a “to-do” list. Keep an accurate list and cross tasks off as you complete them. Create your list at the end of each day for the next day -- this allows you to attack the tasks as soon as your start your day.

4. Don’t be scared of technology. Embrace technology. I’ve seen people at their desk waiting on hold, holding the phone to their ear. Throw a Bluetooth headset into the situation and you can answer emails or attack your to-do list while you wait.

5. Say no. You may hate to disappoint people, but for your own productivity, learn how to say "no" to people. It isn’t always the greatest feeling, but it is impossible to appease everyone. If you said "yes" to everyone and every request you would have no time to do what you need to accomplish.

6. Be ultra responsive. We all have iPhones and smartphones, so use them. If you are out of the office and receive an email that you can easily address on the spot, do so! The other day I received this email:

"I’ll email you when I get back to the office. 

Sent from my iPhone"

The response didn’t require this person to be in the office. It was a simple "yes" or "no" response that would have taken less time to type out than the response they sent. If you can reply while out of the office it eliminates wasted time when you get back.

7. Eliminate negative energy. Nothing can drain your energy or ruin your day faster than individuals with negative energy. Dating someone who is negative about everything? Have a friend that dumps his or her sob story on you daily? Cut ties. Don’t let negative individuals take time out of your day.

8. Don’t put off the non-glamorous tasks. When your “to-do” list has some unattractive tasks, they will consume your thoughts until they are completed. Knock them out first so you can have a clear head to plow through the rest of your tasks.

9. Address problems or issues immediately. In that same vein, waiting to fix a problem can be the difference between a 15-minute quick solution and a complete mess that takes you days to clean up. 

10. Get physical. Get 30-minutes of physical activity in every morning before you start your day. You will have more energy throughout the day and you won't feel sluggish. Feeling tired or lazy sucks up valuable time. When I hit the gym each morning it gives me the energy to focus on my brand the entire day.

11. Delegate. If you have a team or staff at your disposal, utilize them. Many entrepreneurs are so stubborn and think they can do it all. Delegating appropriate tasks will free up your time.

12. Write everything down. Use the "notes" app on your smartphone or use a traditional notepad and pen -- and make sure it is always next to you. Have you ever sat down and tried to remember something from earlier as the clock ticks away? Precious time wasted!

13. Keep a schedule. If you have tasks that require your attention each week, stick to a schedule. Things such as accounting, payroll and reporting can typically be done at the same time each week. Rather than scrambling to find time to get it done, establish a designated time and stick to it.

From Entrepreneur

5 Most Important Business Skills Every Entrepreneur Must Have

If you want to be a successful entrepreneur, these are the skills you need to have.

Running your own business means having to wear all different types of hats. Whether it's your marketing hat, your sales hat, or your general people skills hat, you're going to need to know how to court sales, and on the other side of operations, you are also going to need to know how to run a balanced account and continue to grow your wealth.

Though there are many business skills that a successful entrepreneur will have, the following five skills are the ones that you absolutely need to make your business successful:

1. Sales

This one is a no-brainer--of course you are going to need sales skills in order to run your business! After all, marketing can drive customers in to your business, but sales are going to be what keeps them coming back and keeps putting money into your pocket. It is no wonder why most entrepreneurs actually come from a sales background!

2. Planning

Taking one bad step can make or break your business, especially when it is still in the early stages of development. Entrepreneurs that are successful with their ventures make a plan and stick to it, thinking out every risk, benefit, and cost of an option available to them. They also make their plans realistic and factor in things such as time and budget in order to make their plans a reality.

3. Communication

Communication is an underlying skill for many others in business (sales included). Communication is how you will be able to cultivate loyal employees, charm customers into coming back time and time again, and court investors and other sources for increasing revenue for your business. This skill can also come in handy when dealing with vendors or any other necessary business services that may apply to your venture--being friendly in business-to-business relationships is a sure-fire way to be treated a little bit better, therefore making at least one aspect of your job a little bit easier.

4. Customer Focus

Successful entrepreneurs keep a narrow focus--on the customer that is paying their bills. They do not forget that everything that they do is for the customer, since the customer is the one that is allowing them to do anything in the first place. A good business owner will always have time for a customer, whether they have a complaint or praise. Having good customer focus will mean that you see every customer as an opportunity to do better and grow, versus an annoyance or a difficulty.

5. Curiosity

The best business skill has always been a healthy curiosity. This will lead you to look into what your competitors are doing, and it will also allow you to utilize new technologies to the best of your ability to streamline your business and even reach out to new customers. When the only limit you have is what you can imagine and apply, just about anything is possible.

From Inc. Magazine

7 Motivational Quotes Entrepreneurs Need to Live By

There are times when a little motivation goes a long way. As entrepreneurs, it’s easy to get discouraged when things don’t immediately happen.

Don’t give up! Anything worth doing is worth the work, so keep in mind these seven motivational quotes for entrepreneurs.