Wisdom for First-Time Founders
In their first year of business, many sole proprietors get so desperate to build a customer base that they compromise their own interests. Valerie Lichman, owner of the $500,000 Valerie Ink, a marketing and public-relations practice in Manhattan, made that mistake last year. Eager to woo clients, Lichman bent over backward when she didn't have to. One client never reimbursed her for $28,000 she'd spent buying ads. Another milked a month of free work out of her.
Lichman now has a method for handling clients that any sole proprietor can use to improve operations. Her first set of rules applies to clients who've retained her services. For starters, she never begins working for those clients until she's received their first check. And if a payment is 30 days late, she stops work completely. Lichman is also quick to ask clients to fund any extra expenses she incurs on their behalf.
Her second set of rules applies to winning new accounts. Lichman used to write 20-page pitches for prospective clients, which took about 20 hours -- a "debilitating" amount of nonbillable time, she says. Then she lost a bid she really wanted. Partly out of frustration, she fired off a 2-page pitch to her next prospect -- who loved it.
So far, all her 2-page pitches have been successful, whereas the 20-pagers had a 50% hit rate. In addition to capitalizing on all the newfound time for billable activities, Lichman has saved on printing costs. She's on track to double her profits this year. And she no longer worries about devaluing the wisdom she charges for by giving away too much of it in detailed pitches. --Ilan Mochari
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