It really is a numbers game
Posted by Brian | Thursday, September 10, 2009
In business there is one thing that has to take precedence over all others, the Numbers. If the cash does not work, the business does not work. Plain and simple with no exceptions.
There is no escaping this issue regardless of the type of business that you may run. It is important in any business setting that you manage your costs very closely and that this allows you to sell your product or service and make a profit in the middle.
This is highly relevant currently, when so many companies are facing difficult times. Within the digital arena it is especially apparent as it is easy to allow development costs to get far too close to a selling cost thus eradicating your earning potential.
Web development companies can sometimes be very creative and gifted but lack business expertise and not get the numbers working correctly. When you are developing websites or any online project there are a few pointers that may be worth attention.
Scope (or what do you want then?)
This really is the start and the part that could make or break the project. It is also the part at which you need to determine who is paying for what and why. It can be useful to commit to an outline cost to a client prior to any scope but it is important that whatever is scoped is then passed to the client in the invoice. It is apparent that there are projects out there that are ‘part owned’ by the developing agency as they have built more than the client asked for or was quoted for.
Brief
Ensuring the team understands fully the project requirements can save money and use time most effectively. It is also relevant to correct delivery of the project to the client and therefore best return of cost to the business. More time spent here can result in less time overspent anywhere else which equals a healthier bottom line for the business.
Design
Whilst it may be very exciting and creative to picture the colossus of websites it is vital to only deliver what has been requested. It is also key to remember that what you picture the client will want so no great additions in design that haven’t been costed for delivery and invoice.
Build
This happens. Client calls to discuss project, speaks to development team and suddenly remembers they want their new puppy to make the tea and solve global warming as well. Kindly development team add this in as they like to do what they are asked. This can result in a low budget/high value end product that nobody wants to pay for
Sign Off
Everything must be signed off. It is useful to ensure a sign off is conducted at each stage of any project as what they sign they can’t decline. Not only can this enable the client to be comfortable with progress and continuity it will as well allow you to be confident that they will pay the invoice at the end.
Project Management
It is fair to say that good project management should eradicate most of the above. Constant communication and management is important in any team and having the services of a strong and well qualified PM will hopefully ensure projects do not overspend.
The above is intended as a quick overview and not a complete guide. The important point is to be aware and be managing correctly. If you are not comfortable with numbers get someone else in the business to do this or use your Accountant.
It is simply far too important to get wrong as numerous companies nationally are sadly discovering right now. A successful business is based on good profits in a well controlled cash environment and not just turnover. Getting cash is simply not enough; you must get the right amount and manage it properly when you have it.