Tuesday, January 5, 2016

Professional Rules For Success

I have learned a few things over the years.  When I started out, thinking I could easily make a living working for myself, I was optimistic and confident that everything would be easy.  The first few years included some real setbacks and quite a learning curve, but I managed to keep it together and build a foundation for a business reputation which has served me well.

I thought it might be helpful to pass on some basic rules of the business for those who expect to follow their own path to success.  I have no illusions that I am like Steve Jobs.  I never had a desire to build the richest corporation on earth.  I just want to be paid for my talents.  Work with my hands.  Enjoy the days at the bench and go home satisfied.  Simple goals.

First of all, you need to know what your talent is.  That means there must be some inner desire to accomplish a task.  Following that impulse you should read books, search the internet (not possible when I was young), visit others in the same trade, and in general gather the basic information needed to execute the job.

From that position you can look for work which you are confident you can do.  Never practice on the job.  Practice on similar work you own.  In my case, I bought broken antiques and fixed them for myself.  In essence, I became the client.  When I was satisfied, the work was done.  Later, as I worked on the property for others, I followed the same goal: do the work as if it were for me.  Never cut corners or try to hide problems.  Do it right the first time.

If you don't have time to do it right, when will you have time to do it over?

There is one important point about this idea.  Do not price it for your self.  In other words, do not lower the price because you think you would not pay that much.  Remember, you have the talent to do the work.  Your client has hired you because they can't do it themselves.  They have other talents, like making money.  What they think is a "lot" of money is probably not what you think is a "lot".

Learn which clients to avoid and which clients are important by subtle clues.  Obviously, the zip code and neighborhood provide clues, as well as the kind of car parked in the garage.  But, more importantly, listen carefully to their comments and expectations.  Try to hear what they know about the work and what they say about other work they have had.  Are they happy?  Do they have problems?  Are they complaining all the time?  Are they just looking to sue someone?

Seriously, I had one client in the beginning who exhibited all these symptoms and I ignored it.  My job was to repair a broken back on a sofa which was covered in tapestry.  It was a bad copy but I was young and needed the work.  I took the sofa to the shop, pulled back the upholstery on one side and repaired the arm.  It looked perfect and I carefully tacked back the material.  It was one of those difficult deliveries where I had to carry the sofa up a cement stairway two flights around tight landings.  No elevator access.  With some help I managed, except at one point the wood touched the stucco and left a white mark about the size of a pencil eraser.  The client was watching me the entire way.

The next thing I know he refused to pay me.  I took him to small claims court where he won and I owed him a thousand dollars.  The bill for the job was less than $250.  I thought it was a bad decision and appealed to the Supreme court (not the Federal court).  When that case arrived I met him in the hall where he was standing next to the naked frame of the sofa and a black bag full of the stuffing.  He had taken the sofa apart!  He had brought "experts" to testify that I had destroyed the valuable antique.

I knew he was a lawyer, and when I stood up to present my case, I simply said, "Your honor, this plaintiff is practicing law using me as a test case."  The judge looked at him and asked, "Are you a lawyer?"  He said, proudly, "Yes!"  The judge said, "Then I will settle this case in your behalf.  Judgment is for the plaintiff in the amount of one dollar."

I paid him the dollar.  Lesson learned.

When pricing new work, be honest to yourself about how long it will really take.  Use increments like hours, half-days, weeks or months to create a price, using the hourly rate you need to survive.  Include a percentage of surplus time for your profit.  Not much.  Just in case.

I like to compare my hourly rate with that of a Mercedes mechanic.  Their rate is clearly posted in the shop and most of my clients have Mercedes.  They expect to pay that rate to have their car fixed.  They usually do not complain if I charge the same rate.

If you charge a proper rate for your time, include basic materials in the rate.  In my profession the cost of materials is small compared to the time.  Sand paper,  stains and finishes, glue, screws, wood and other materials represent a small percentage of the total bill.  I pay the tax when I buy the materials and I simply charge a labor rate for the job.  That way there is no tax to the customer.

Of course, if the job requires some special material which is expensive, I add for that.  For example, horsehair is costly, so I add that, as well as the final fabric, which is normally supplied by the client.

I always discuss in exact detail what the job requires with the client.  I take the time to explain carefully each step, essentially teaching them how to do it them selves.  After that lecture, they are happy to pay me to do it.

If the project is valuable, I insist gently that they visit my workshop.  I explain that they should know where the work will be done and what kind of a worker they are trusting with their object.  Quite often they don't want to take the time and just trust me, but I still recommend it.  Once they see my work shop they are clients for life.

Unless the job is quite expensive, I do not take deposits or payment in advance.  I need the motivation to do the work and get paid.  I tell them to pay me when they are satisfied.  If they are not satisfied, don't pay me.  I have seen jobs which were ruined by poor workers, and when I ask the client what they did, they always say, "I just paid them."  That is wrong, but people are too embarrassed to say that they are not satisfied.  By telling them not to pay me if they are not happy, I eliminate that concern.

I get paid in full upon delivery.  I accept cash, check or all credit cards.  It is a business.

Give a conservative time frame.  Normally I put on the invoice something like "2-4 weeks" or "6-8 weeks" or another date which we can agree to.  Establishing a working deadline notifies the client when to expect it back and when to pay me.  If I am earlier, fine.  The most serious problem in my business is when pieces sit around for a year or more.  That is never profitable and just bad business.

The invoice is a contract between the client and the worker.  It must clearly define the details of the job and the price.  If you do more work then on the invoice fine.  The price doesn't change.  Never do less than the agreed work.  Pay attention to small details and listen to what the client wants.  If you see a scratch ask them if that bothers them.  If not, why worry about it?  If they point out a small defect, note it on the invoice so that you can repair it.  It might not bother you but they will instantly look for it when you deliver the job, since it is a problem for them.

Pay attention to the placement of the furniture in the home.  If a highly polished table is directly in front of the window, every imperfection will be seen.  Charge more to do a perfect job.  If the rest of the furniture in the house has a dull waxed finish, recommend the same.  Try to restore the object, within reason, to meet both the expectations of the client as well as respecting the original intentions of the maker.

I do not charge for delivery within 150 miles, and I do not charge for estimates or written proposals.  I consider that part of the business service.  If I do not get the work, that is a learning experience.  However, I always get the work.  As far as deliveries, I can bundle most of my deliveries into one day a week and do them all at the same time.

Buy a good delivery truck, which is enclosed, like a van or Sprinter.  Buy lots of moving blankets.  Wrap the furniture carefully in blankets and tie securely.  You do not want to be responsible for causing damage.  Your job is to repair the damage caused by other inconsiderate movers who are careless.  When I was young, I had the great idea to approach moving companies and offer my services as a repairman.  I thought they would happily pay me for a couple days of instruction to their men so that clocks, display cases, highly polished furniture, and other pieces could be moved without damage.  Even though it would mean less work for me, I was idealistically thinking that I could reduce the amount of damage to fine antiques which was happening on a regular basis.  In every case they refused.  They considered damage a "cost of business."

Imagine if your bank lost some of your money and considered it a "cost of business?"  I mean it's one thing to ask a kid with a pick up truck to move your Hepplewhite dining set, but to pay a professional company to destroy it?  I am not making this up.  I was asked to repair the top of a period dining table in Newport Beach after the moving company delivered it, placed the top carefully upside down on blankets and screwed back the pedestals.  The sheet rock screws they used were long enough to go through the pedestal braces, through the Cuban mahogany top and into the floor.  After all 12 screws were in place they realized they couldn't lift the table.  That was a fun job to restore!

Pay for insurance.  It is important to be professional.  I am insured the minute I walk into the home.  If I break it in the home I am covered.  If it breaks in my truck I am covered.  If I damage it during the restoration I am covered.  At all phases of my contact with the object I am protected.  That said, in all the years I have paid for good insurance I have never had a claim.  Still, if you consider yourself a professional you need to include the cost of insurance in your overhead.

I have already discussed in a previous post how to calculate your hourly rate.  Simply put you need to know exactly how much per day it costs you to be in business.  At the end of the year look at the total expenditures and divide by 365 to get a per diem cost.  Then you need to determine your productivity or efficiency percentage.  If you work 8 hours a day but only 4 of them are directly billable to the client then you are 50% efficient.  So if your actual overhead is $200/day and your efficiency rate is 50% you need to bill $50/hour.  Even though you are at work 8 hours you only are producing 4 hours of billable time and thus get $200.  To improve your situation you have three options: reduce your overhead, increase your productivity, or raise your hourly rate.

Notice that you must earn your overhead every day of the year.  That works if you are not sick or take weekends or vacation time off.  If you miss a day therefore you must double your billable hours the next day.  Otherwise, divide your annual cost of overhead by the actual number of days you actually work to get a different per diem goal.

I worked for many years on a schedule which was every day for three months, then a month off for travel.  Instead of 52 weekends a year, I enjoyed 3 months of travel.  Sacrificing a couple days off work a week is not so painful when you are traveling in Europe or American visiting shops and museums three times a year.

Most importantly, stay in one location, if you can.  Even better, buy your business location.  It is a great investment to own commercial property.  If you manage to pay it off, then you are set for life.  When you no longer want to work you can lease your location and live off the income.

That is my plan.  I already have paid off all my debts, including mortgage.  That is one reason I managed to survive the crash of 2008.  I just don't want to quit working.  I love my job too much.

7 comments:

Freddy said...

Pat,

Great blog post. I couldn't agree more. Thank you so much for sharing. I guess I need to get better insurance after reading this post. Please keep sharing, you have a ton to offer to us wannabe makers and restorers.

FR

paulk said...

Great post Patrick. I've been self-employed almost my entire adult life. It's not for everyone and when I see people fail it is more often than not from lack of motivation. Running your own show means, especially in the early years, that you work harder than most everyone else. Those of us who are lucky enough to love what we do don't see it as work and so it is not the burden that many think it is. I left the cabinet trade in my late 30s for a career in information technology, not because I couldn't make a go of it but because I got hooked on computers. I am now returning to the bench but this time around it's just for the sheer fun of it...although I will hang out my shingle again just to see where it leads.

Luke Addington said...

I'm with Freddy, I need better insurance. Any recommendations?

You briefly mentioned your invoice being a contract, but do you have a general formal contract that has been drawn up by a lawyer? This is something I've been advised to do but haven't done yet.

W. Patrick Edwards said...

I have seen commercial invoices with "legal" disclaimers and specific protections printed all over them. There are two comments I would make. Number one: nothing is actually "legal" until a judge decides that in a court of law. That means that no matter what the paper says, it eventually comes down to a decision reached between competitive lawyers at some expense. Number two: seeing those "legal" phrases on the invoice instills a sense of fear and distrust on the part of the client.

After all, they contacted you to do the work after a reference from another client or some positive posting on the internet. They already have enough confidence to ask you to do work for them.

Your job is to keep it personal, friendly and, above all, professional. What that really means is that you comport your self properly in your actions and statements. Do what you say you will do.

The invoice is just so they have a receipt and a document which you both agree to. That is enough of a legal document for me. It has always worked over the years.

If I ever need a lawyer to settle a dispute I can only blame my self.

Renewable Community Power said...

As an ex-lawyer I'd like to second the comment that nothing is 'legal' until a judge rules it is - there's no shortage of disclaimers which are straight-out false and misleading or otherwise useless. And if you need to call in a lawyer you've already lost because their fees will undoubtedly dwarf what you stood to make to begin with.

Rather than waste your time with putting 'legalese' on your invoices I think you're far better served following Patrick's advice to take the time to write down in detail what it is you'll do, and note clearly any problems or reservations you expect might arise. Get this agreed to before you start doing anything, or advise the client as soon as the problem rears its head.

I'd also like to add a rule 'answer your emails'- I've lost count of the number of times businesses haven't replied to my queries - usually resulting in me not spending money with them. While we're at it make it easy to find your address, contact info and opening hours on your website. And include with normal business hours any extended closing times (eg over Christmas) in your phone answer message (which you should have). It's astounding the number of businesses that don't do simple things like this. It's like they don't want you to spend money with them.

Jay Beemer said...

Back when I worked in the corporate world, there was one guy who was especially 'corporate', hence I didn't like him very much.

However, he had one good, simple statement, which I still use:

"good business is about setting and meeting expectations".

If you keep this in mind, it will help solve most problems before they occur.

W. Patrick Edwards said...

Note that your expectations for success should always be higher than the clients.

Getting a good tip is one way of recognizing this achievement.