Rails Business - What Have You Learnt in 2009 That You Can Use in 2010?

[Kapil]

What a year this has been for web consulting firms working with ruby
on rails! Many of my friends have done some amazing work and did
some mistakes also .

When it comes to business aspects of developing web applications -
this group discussed frequently occurring issues - everything from
estimation to managing clients communication. And I think there are
tonnes of issues we can discuss here in 2010.

The best way we can wish a happy and profitable new year is by sharing
our learning, knowledge,insights with each each other.

What have you learnt in 2009 related to web consulting that you can
use in 2010? Please contribute to this thread, so that we can all
benefit!

Wishing you a joyous holiday season, and I hope for peace, prosperity
and success for you and your firm in the new year! Thank you for
being part of this group of diverse and awesome ecosystem of
entrepreneurs, developers and designers.

PS : I would like to thank Robby Russell to start this group :-)

Best Regards,
kapil Bhatia

www.vinsol.com

+1 (415) 670-9514
+91-9818807271

[Aaron Blohowiak]

Your solvency is directly tied to the ability of your debtors to make good on their obligations to you.

- Aaron

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[Matthew Isleb]

On Dec 31, 2009, at 6:51 AM, Aaron Blohowiak wrote:

Your solvency is directly tied to the ability of your debtors to make good on their obligations to you.

Oh, and I'm feelin' it, too. 

This is one lesson I could have gone without learning.

[Philip Hallstrom]

On Dec 31, 2009, at 4:51 AM, Aaron Blohowiak wrote:

> Your solvency is directly tied to the ability of your debtors to
> make good
> on their obligations to you.

+1million

This happened to me. I was lucky and recovered probably 80% of it,
but it took about 6 months and that was no guarantee. The two things
I took away from that are...

- Payment on invoices are due within 15 days. I had been invoicing
monthly with a 30 day term. For a big client that simply leaves too
much money out there for too long should they have problems.

- For unknown clients I now ask for 2-3 weeks of payment up front. I
then work it off. Rinse. Repeat. Until I'm comfortable with their
ability to pay.

[Tammer Saleh]

I'm sure most of us have figured this out already, but 2009 was the first year I actually experienced it:  The quality of clients you attract is proportional to your rates.

Happy 2010!
Tammer Saleh

---

tammersaleh.com | 626.841.0708

On Thu, Dec 31, 2009 at 4:22 AM, Kapil <kapi...@gmail.com> wrote:

[Philip Hallstrom]

> What have you learnt in 2009 related to web consulting that you can
> use in 2010? Please contribute to this thread, so that we can all
> benefit!

- Side projects are a must. It gives you something to do when work is
slow, adds to the portfolio, and lets you try out things a client
doesn't need or isn't willing to pay for (ie. you want to play with
the latest testing framework of the month, etc.). It also scratches
that proverbial itch.

- When the sun is out go golfing because once fall hits and it rains
non-stop you're gonna want to go golfing, but won't be able to :-) Or
put a little more seriously, if you're not going to take advantage of
the benefits of freelancing in terms of where/how you work and quasi-
working-vacations, why are you dealing with the disadvantages of
freelancing?

Happy New Year everyone! Here's to a good year for everyone in 2010!

-philip

[Steven Talcott Smith]

Kapil, I agree it is a good time to reflect and share lessons learned.

I learned a lot this year -- my second full year of Rails consulting.  I take some comfort that I grew top line revenue over 60% despite challenges and missteps.  Here are some of my takeaways in no particular order:

1) In spite of how busy I may be on a project, I must spend time every week on sales and marketing so that we avoid the "slow periods." 

It is easy for a big project to come through and when it is over, you may have nothing else lined up.  When you are busy, you need to sell or have someone out selling for you.  I find pairing or pairing part time allows me to occasionally duck out to attend to business matters without losing momentum.

2)  I will not sign any subcontractor agreements where payment is contingent on the lead contractor or intermediary party getting paid first.  

This year, we became a pawn in a game between two large companies in a billing dispute having nothing to do with our work.  I have yet to receive the final payment, now almost 6 months delinquent - long after I incurred all costs and paid my subs.

3) I will not take a project where the client has a remote or distributed team. 

Insist on control or walk away.  The team might be good.  You might even like them. You might think you need the money.  There are many ways this can get screwed up.  I have done this 3 times and every time it was less than satisfactory.  Keep looking for business that suits your model.

4) I will not carry large receivable balances if at all possible. 

Collections is a huge distraction and stress.  Get paid up front if at all possible, in thirds or whatever to protect your downside and cash position at all times.

5) I will insist on all work being performed under supervision in our office -- preferably in a pair where developers can supervise each other.

Even if you have a good, conscientious developer or freelancer, you cannot let them work from home on autopilot for long without review.  It is temping to go hands off and let them do their thing.  No one will care as much about your clients as you do and no one is perfect.

6) I will guard my margins jealously.

Do not underestimate the cost of doing business.  There are many unanticipated costs.  This year we suffered a break-in and theft in our technology startup incubator office complex.  Other offices were hit.  We lost two brand new iMac pair workstations.  This was reinvested capital.  It is easy to think, "oh, I can earn that back in two weeks" -- not really.  Yes you may gross that in a week or two (when you're working) but those workstations represented most of the accumulated profit of an entire quarter of hard work.  It hurt.  I had an insurance policy but it lapsed because I was reluctant to pay for it until the client whose contract required it paid us...  Even so, it was an expensive policy that I probably would not have carried at all had it not been required.

7) I will pay regular attention to my passive-income-generating businesses.

A dollar of passive income is worth maybe 6 dollars earned through labor.  If you have a product that brings in subscription revenue or unit sales, keep it up and give it regular attention even if it earns just a few thousand.  If you plan to develop a product for yourself, remember to make steady progress.  It is easy to back-burner these things as you get your hustle on and pay your bills but they will provide your ultimate freedom.

Four years ago, I built a product that did well during the real estate boom.  While the market went through a terrible time, this business did not go away completely and continued to bring in thousands even in 2008.  This year, it started eating a hole in my pocket because I had neglected it so long.

Business is not easy and I respect anyone who takes the risk to go out there and do it.

Here is hope that 2010 is a good year for all of us.

Regards,

Steven

Steven Talcott Smith

President

Talcott Systems, LLC

3701 FAU Blvd Ste 210, Boca Raton, FL 33431

st...@talcottsystems.com

http://www.talcottsystems.com/

[Robby Russell]

On Thu, Dec 31, 2009 at 4:22 AM, Kapil <kapi...@gmail.com> wrote:

> What a year this has been for web consulting firms working with ruby
> on rails!   Many of my friends have done some amazing work and did
> some mistakes also .
>
> When it comes to business aspects of developing web applications -
> this group discussed frequently occurring issues - everything from
> estimation to managing clients communication. And I think there are
> tonnes of issues we can discuss here in 2010.
>
> The best way we can wish a happy and profitable new year is by sharing
> our learning, knowledge,insights with each each other.
>
> What have you learnt in 2009 related to web consulting that you can
> use in 2010?  Please contribute to this thread, so that we can all
> benefit!
>
> Wishing you a joyous holiday season, and I hope for peace, prosperity
> and success for you and your firm in the new year!  Thank you for
> being part of this group of diverse and awesome ecosystem of
> entrepreneurs, developers and designers.
>

The one thing that has been running through my head a lot the last
year... is you're only as strong as your weakest link.

This applies to your clients, employees, business partners, and of
course... yourself.

If the weakest link isn't something you can strengthen, it's time to
replace the link or build a new chain.

> PS :  I would like to thank Robby Russell to start this group :-)

You're welcome. :-)

Cheers,
Robby

--
Robby Russell
Chief Evangelist, Partner

PLANET ARGON, LLC
Web Design and Development with Ruby on Rails

http://planetargon.com/

+1 408 372 7466
+1 877 55 ARGON [toll free]
+1 815 642 4068 [fax]

[John Moody]

Mine is simple: No fixed bids, ever again. It's not worth it.

- John

[Robby Russell]

On Thu, Dec 31, 2009 at 9:31 AM, Tammer Saleh <tsa...@gmail.com> wrote:
> I'm sure most of us have figured this out already, but 2009 was the first
> year I actually experienced it:  The quality of clients you attract is
> proportional to your rates.

What defines a quality client? Sure there is... ability to pay you in
a timely fashion, but what about:

* Their knowledge of their domain
* Their knowledge of the web (should that matter)
* Their ability to communicate
* Their ability to prioritize
* Their ability to generate their own revenue
* Their ability to hire a good development team ;-)
* ... ?

For example, we've had clients that can afford our rates, pay their
invoices (on time), have what appears to be a profitable business...
yet suffer from burning money on stuff that isn't worth their
investment. We aren't in the business of writing software without a
good reason to do so. If a client can't explain why X should be
built... then X shouldn't be built. If they insist that X be built
without any rationale... than we wouldn't classify them as a quality
client.

How would you classify a quality client?

[Robby Russell]

Forgot another (important) one. :-)

* Their respect for your time

[Aaron Blohowiak]

I have another developer that I'm talking with that charges half what you charge and is estimating the project will take 75% of the time.  I want to go with you, but I can't justify the cost difference to my superiors, maybe we can work something out?  

The only reply I can live with is "Sure, I can work with you to prune the scope into budget and if you buy more than a hundred hours in advance, I offer a 10% discount."

On Thu, Dec 31, 2009 at 10:08 AM, John Moody <jo...@mentalvelocity.com> wrote:

Mine is simple:  No fixed bids, ever again. It's not worth it.

- John

--

[Jaime Bellmyer]

John -

I agree 100%, and I'd like to expand a little. Don't agree to
anything sight unseen. I took a couple projects this year where I
jumped into an existing codebase *after* being under contract, only to
find messes of untested spaghetti code. One resulted in a lot of
frustration and in the end I probably looked like an amateur trying to
work with it. The other cost me a couple thousand dollars in unpaid
time because it was a fixed bid. Luckily, it was a small project, and
lesson learned.

Even if you're not doing fixed bids, know the code before you agree to
work on it. It would be nice to charge for this due diligence, but
reality might not allow it. I'll do it for free if needed, because I
know it will save me money in the long run.

This is a "lessons of 2009" post, otherwise I wouldn't sound so
gripey :) This year saw some of my greatest successes as a freelancer,
and I'm grateful. I also learned a valuable lesson I'd read years
before (knowing and learning are two very different things) from Chad
Fowler: practice your craft. PRACTICE. When I was working to be a
professional musician, I never would have dreamed of NOT practicing,
but we as coders neglect it. Learn as much as possible from your paid
time, but don't let it be your only source of learning and experience.

Happy 2010!

Jaime

[Philip Hallstrom]

> What defines a quality client? Sure there is... ability to pay you in
> a timely fashion, but what about:
>
> * Their knowledge of their domain
> * Their knowledge of the web (should that matter)
> * Their ability to communicate
> * Their ability to prioritize
> * Their ability to generate their own revenue
> * Their ability to hire a good development team ;-)
> * ... ?
>

> How would you classify a quality client?

* That they understand they hired you because you are an "expert in
the field" and that means they should trust your judgement in those
areas. Otherwise, why are they hiring me?

* That they are willing and able to accept criticism of their ideas
and are open to some back and forth discussion as to how to best
implement their ideas (or not implement it at all).

For example... It's great that you love the color purple, but what
does the designer think? What does the focus testing say? How does
it affect your ROI? It doesn't matter what you think about colors
(for the most part) and it doesn't matter what *I* think about colors
(i'm not a designer). Quality clients will let go their love of
purple and look at the stats. Bad clients will say "make it purple."
Now if they have a good reason for purple, that's different, but you
know what I mean...

-philip

[Mike Mondragon]

Somewhat related to Philip's golfing advice.

"Carpe Diem? Maybe Tomorrow"
http://www.nytimes.com/2009/12/29/science/29tier.html

It seems like humans are prone to defer the exercising of benefits to
the point of not using them. Unless their is a deadline to the
availability of the benefits.

Perhaps that also plays into why short development sprints are also
good for producing quality code.

Mike

work: http://sas.quat.ch/
blog: http://plasti.cx/
twitter: http://twitter.com/monde
github: http://github/monde

>
> Happy New Year everyone!  Here's to a good year for everyone in 2010!
>
> -philip
>
>

[Philip Hallstrom]

>> - When the sun is out go golfing because once fall hits and it rains
>> non-stop you're gonna want to go golfing, but won't be able to :-)
>> Or
>> put a little more seriously, if you're not going to take advantage of
>> the benefits of freelancing in terms of where/how you work and quasi-
>> working-vacations, why are you dealing with the disadvantages of
>> freelancing?
>
>
> Somewhat related to Philip's golfing advice.
>
> "Carpe Diem? Maybe Tomorrow"
> http://www.nytimes.com/2009/12/29/science/29tier.html

Awesome! There's now a scientific reason for my skipping out early
and going golfing. Excellent. Excellent! :-)

-philip

[Mike Mondragon]

On Thu, Dec 31, 2009 at 4:51 AM, Aaron Blohowiak
<aaron.b...@gmail.com> wrote:
> Your solvency is directly tied to the ability of your debtors to make good
> on their obligations to you.
> - Aaron

I made the mistake this year of taking on a client without really
investigating their background. It turned out that some other
freelancers in Seattle had already fired this client partly for
reasons around billing, poor communications, and habitual feature
creeping. I unfortunately had the same experience and let that client
go.

I had another client that I had to let go around billing and
communication of features. I had delivered a feature precisely in the
amount of time that I had estimated. Unfortunately before it was too
late to correct the communication, I had allowed the client to have me
complete additional UI work related to the feature without updating
the estimate. This made it appear to them them that the total cost of
the work was double what had been estimated. As a result they
questioned my billing practices. Of course I pointed out that the
additional work they asked for was clearly not covered in the
estimate. The worse part was that they accused me of being sensitive
about discussing billing.

From that point on the client would go over my invoicing with a fine
tooth comb, and every time I answered their questions they would infer
that I was being sensitive. For a sanity check I had a friend look
over the communications around billing to make sure I was completely
transparent and non-confrontational during the discussion. My friend
also pointed out that it seemed to him that the client was accusing me
of being sensitive to discussing the invoices as a means to get more
work out of me without having to pay for it. So the third time this
client questioned my integrity I fired them.

Mike

work: http://sas.quat.ch/
blog: http://plasti.cx/
twitter: http://twitter.com/monde
github: http://github/monde

>

[Mike Mondragon]

On Thu, Dec 31, 2009 at 4:22 AM, Kapil <kapi...@gmail.com> wrote:

I think the biggest takeaway I have from 2009, other than what has
already been said by others, is that my most valuable asset are my
friends in the Rails community. Over the past three years freelancing
in Rails, all of my best client experiences were started from
referrals of other Rails developers.

Mike

work: http://sas.quat.ch/
blog: http://plasti.cx/
twitter: http://twitter.com/monde
github: http://github/monde

>
>

[SteveQ]

My 2 lessons from 2009:

* Ask for a 33 to 50% of the money upfront - this immediately
separates the time wasting clients from the serious ones
* Work on a product that generates predictable monthly passive income
- this means you're covered for the quieter months of the year
(August, December etc)

Steve
http://kablingy.ie
http://twitter.com/stevequinlan
http://github.com/stevequinlan

On Dec 31 2009, 7:33 pm, Mike Mondragon <mikemondra...@gmail.com>
wrote:

[Bradley Grzesiak]

Things aren't as scary as you think they are... for now.

I'm trying to move forward into next year with cautious optimism. It's really easy to dwell on the negative potential outcomes and waste tons of time determining the possible actions that follow "what if..." Instead, I'm trying to merely identify the bad outcomes, and then I focus on the positive outcomes and expend my efforts to get those to happen.

Also, Aaron hit  a homerun with his post.

:brad

---
Bradley Grzesiak
co-founder, bendyworks LLC

[Troy Davis]

On Thu, Dec 31, 2009 at 4:22 AM, Kapil <kapi...@gmail.com> wrote:

What have you learnt in 2009 related to web consulting that you can
use in 2010?  Please contribute to this thread, so that we can all
benefit!

Any niggling doubts you have about someone/something will be magnified many times after you start working together.

Applies to clients, vendors/partners, and staff.  Can't avoid it, just expect and plan for it.

Troy

--
@troyd  --  http://sevenscale.com/  --  http://cloudvox.com/

[Jarin Udom]

"When the sun is out go golfing"

Seriously, one of the best lessons I learned was to stop working 7
days a week. Friends, beers, hitting balls, hot dogs after the 9th
hole, and out-of-control golf carts is a great way to keep everything
in perspective.

Jarin

[Wojciech Kruszewski]

On Jan 6, 12:17 pm, Jarin Udom <ja...@robotmo.de> wrote:
> "When the sun is out go golfing"
>
> Seriously, one of the best lessons I learned was to stop working 7
> days a week. Friends, beers, hitting balls, hot dogs after the 9th
> hole, and out-of-control golf carts is a great way to keep everything
> in perspective.
>
> Jarin

Yup. And clients like to work with developers that are cheerful and
upbeat, look healthy and well slept, talk like humans (about their
lives, not only features).

It must be a weird feeling to visit a workshop with windows shaded,
pizza boxes in the corner, energy drinks on every desk and zombies
moaning to their computers. Although I found it's good to have one
such person in the team, show him to the client and call a "real
hacker" (-:

Regards,
Wojciech

--
http://twitter.com/WojciechK

[Eric Davis]

> What have you learnt in 2009 related to web consulting that you can
> use in 2010?  Please contribute to this thread, so that we can all
> benefit!

Chase the niche.

I've been chasing my niche for over a year now and it's paid off (not
just money but skills, reputation, and experience also). Because of
that niche, I've bid on projects in the past 8 days of 2010 that will
gross more than I made in all of 2009.

--
Eric Davis
Little Stream Software
http://www.LittleStreamSoftware.com

[johan pretorius]

Kapil:

> PS :  I would like to thank Robby Russell to start this group :-)

Thanks from my side as well.

And thank you, Kapil, for starting this discussion. There are some
good responses so far, reminding me again to:

- put (more) time aside for marketing
- find a niche and grow some alternative income sources
- identify some good partners to work with on projects (working in a
one-man team does have benefits, but there are surely disadvantages as
well)
- find time to write that blog and contribute to Open Source software

I was lucky in 2009 to find a very good client (and Rails project) to
work on, and have finally phased out my C/Oracle work. It was tough to
manage the migration (into full time Rails development), but worth
it.

And I'm no longer commuting, which will surely help me in finding the
extra time (and energy) to pursue some of my neglected goals :-)

--
rgrds,

Johan

[Wojciech Kruszewski]

On Jan 10, 3:50 pm, johan pretorius <johan.pretor...@gmail.com> wrote:
> And I'm no longer commuting,  which will surely help me in finding the
> extra time (and energy) to pursue some of my neglected goals :-)

In fact I moved my workshop from basement to nearby town to force
myself to commute. Half an hour jog jogging through the forest keeps
me fit and full of energy to work. For me this works better than extra
hours I could. And today, after going through knee deep snow I really
appreciated sitting down in front of the computer with a cup of coffee
(-:

Cheers,
Wojciech

--
http://twitter.com/WojciechK

[Timothy Fisher]

This has been a great thread.  I've been following the list for awhile now, but finally hope to participate more this year as a friend and myself are going to be launching our own development company and Rails will be the primary technology we use.  Through some contacts, we already have a couple of projects lined up.

 

Tim

[Mike Pence]

My big take-away from last year was: don't overcommit. For a while there, I was working practically every waking hour, and feeling guilty about working when I was not. The net result was that I was not serving either project I was working on effectively enough, and my personal life and marriage were in rapid decline.

Don't bite off more than you can chew! And don't work for sub-market rates. No one wins in those situations.

On balance, though, a very successful year. 

Best,

Mike Pence

[Eric Davis]

Mike Pence wrote:

> My big take-away from last year was: don't overcommit. For a while
> there, I was working practically every waking hour, and feeling
> guilty about working when I was not. The net result was that I was
> not serving either project I was working on effectively enough, and
> my personal life and marriage were in rapid decline.

I got some good advise a few years ago about over-committing:

1. Figure out how much income you need to break even (business and
personal expenses)
2. (If you bill hourly) Figure out how many hours you would need to
bill to break even.
3. Work each month until you breakeven. Then you can invest your
remaining time into whatever will help you the most right now.

I found this to be really simple and have used to it refocus on
different things as needed:

* Family
* More income
* Better health
* Marketing
* Community growth