Business

A warning in advance – today’s blog post is a little disconnected. It is really a collection of thoughts I’ve had as people struggle through the question of “How 3rd party developers make money in the GPL’ed Joomla world?”

• Size matters. Successful GPL models will probably need to be based on large and very important applications. I can imagine that Community Builder, Virtuemart and Fireboard would be the extensions that are in the best position to move towards a subscription model. However, all of those are currently GPL so I’m left struggling to find examples of non-GPL extensions that are ready to make the move. We may find that smaller apps are left behind because fewer people are willing to pay recurring fees for components that aren’t mission-critical. On his blog, Roberto Galoppini agrees that the smaller non-GPL extensions might not make the move successfully to the GPL:

• Community matters – but takes a long time. Community Builder, Virtuemart and Fireboard are in the best position because they have had years to build a following. Skore mentions that he had one subscriber per week during the first months of development and close to a year to become profitable.

• Template developers have an advantage. Template clubs have the ability to issue fresh product every month. Component developers can issue bug fixes but they don’t have the “Wow!” factor to help retain people month-on-month. Its also an unfortunate fact of life that most people never update their extensions. They install and forget, not having or wanting to spend the time keeping up with developer’s new versions.

• The developer’s alliance idea is intriguing. Roberto mentions this on his blog. Would people subscribe to one site which offers support and downloads for not just one extension but several, even dozens? I think that we’re likely to find out at some point.

• What reward do subscribers get? Some people are already trying the subscription model with components. Skore with this Account Expiration Component is a good example. His advantage is that people can make money with his extension. Subscribers have a direct interest in keeping his extension going because it makes money for them. Components that have a less direct relationship to the subscribers’ wallet may find life more difficult.

• Replacement is unlikely. Its been mentioned a few times on the forum that people will step in to take up the slack on projects abandoned by developers upset at the change in licensing stance. This is a nice idea but I don’t think its likely to work in reality. Past experience has shown that the majority of projects never do find a new developer. See this thread for a list of the currently abandoned extensions. Some of the most important and popular extensions may be continued but most will not.

• Change is likely to come from new, unburdened developers. Skore mentioned on the Joomla forums that he’s young, has no family and thus in a much better position to take risks with his business model. People with mortgages and families have less leeway to experiment and are faced with some difficult decisions by the changed licensing stance.

I will probably add this list over the next day or two as I mull over the matter more.

I don’t often piggyback on someone else’s work in blog posts, but this article was too good not to share (and besides, I became an uncle again in the last week and so I’m heading off to see the little one soon).

This article comes from Margie Zable Fisher via Guy Kawasaki’s How To Change the World blog. Guy asked Margie a simple question: "Why PR doesn’t work?" She gave ten reasons.

Replace "PR" with SEO or design, and I’m sure you’ll agree there’s a lot of truth in what she says. I’ve republished the best six here:

Continue reading “6 Reasons Why SEO and Design Don’t Work”

There really are only two business models in the world and one of them is soon going to die.

Continue reading “The Best Advertising in the World”

• Accountant – get one. You build websites. The mathematics in your code doesn’t mean you can do your books. A good accountant can save your business.
• Backup everything. Backup your sites, backup your databases, backup every computer everyday. Take the backups off-site if you possibly can. Take them into the next room if you work from home. You’ll be surprised at how many years of work can disappear with one crash.
  
  
• Charge by the hour. You need to make sure you can pay your bills. Hobbyists can set a project price and stick to it. A business needs to set a ballpark figure based on an hourly rate. There are some caveats to this policy: you’ll need very clear invoicing, good communication so the client always knows the billing situation and also a willingness to finish the project for the agreed price if you’ve made a mistake that you should have avoided when estimating costs.
• Deposits – never, ever forget them. There’s a lot of people out there for view web design as a hobby rather than a livelihood and are keen to treat you as someone working just for fun. That means trying out your work for a couple of weeks and then changing to another designer if they don’t like something about your company. Deposits ensure clients are serious.
  
• Expect to succeed. That means acting like a real business. Get incorprated, a business plan, a PO Box, a privacy policy, oh – and dress smart. Most of that corporate crap was created for a reason. What you’re small firm can leave out is the bearaucracy of working for a big firm.
  
• Freelancer sites suck. They’re bad for finding work and they’re often bad for outsourcing all but the simplest, most repetitive tasks. The partners you want are people who have the initiative to start a company and get moving on their own. If you have work to outsource, look to an exisiting small business. You can see their portfolio, you can see they’ve taken the initiative.
  
• Good partners should be treated like gold. Even when you get to the stage of having several employees there are still things you will need to outsource. Not every company has every skill they need in house. Start on small projects with each partner and build up towards larger projects. Once they’ve earned your trust, do everything you can to keep them happy, bonuses, extra work, you name it… a network of reliable companies to lean on will save your bacon many times.
• Handle cash like your life depended on it. Small business can leak money in ways that will shock you and scare you every day. You need to keep a big cash reserve, no matter how much it burns a hole in your pocket.
  
• Incorporate. For numerous reasons – it looks professional, it protects your backside legally, and its much cheaper than you might imagine.
  
• Just use online payment. Too many clients have too many excuses for why the check hasn’t been sent. The 3% that you get charge by PayPal or whoever is tax deductible. This way you can say "Pay me in 5 minutes" and call the bluff of late-paying customers.
  
• Kick bad customers to the curb quickly. Its better for you and its better for them. Its not difficult to be polite about it. Explain that you’d rather part ways before any problems start. If you have to take a loss, do it and move on.
  
• Long-term customers are worth fifty clients with individual projects. Going through the following routine for many different clients soon eats up your time: sketching out each project, negotiating, and collecting payment at the end.  Once you have good clients who know sites you know well and who pays on time, you’ll be happier and more efficient.
  
• Minimum project size. $50 dollar projects are not worth your time unless its for a long-term client. Set a floor of $200 or more for all individual projects.
• Niche Yourself. Focusing on one Content Management System is a great way to start. No-one wants "a web-designer". They never did and they never will. Customers want a "Joomla Web Designer", a "Drupal Web Designer" or sometimes something even more niche than that. Your niche is your friend.
  
• Offices are needed when you have more than 4 employees. Otherwise work from home and save the money. When you grow, dress up smarter, spend the extra $800 per month and move into proper business space.
  
• Position yourself where you want to end up – at the middle or upper-end of the market. Low fees bring bad customers and increasing your fees is like pulling teeth. Start off on the right foot.
  
• Questions answered on your website can save you from numerous hazards. Clearly state everything you can about your firm on your website’s FAQ page – hourly rate, design process, tools used, you name it …..if you think you’re spilling company secrets, you’re on the right track. By the way, FAQ pages are not excuses for advertising: "Why is our design work the best in the business?" It nees to be honest and useful.
  
• Regular work days. Open at 8 a.m. and close at 6 p.m. Monday to Friday. Clients will call after that time, but you need to make it clear that answering at 9.30 at night is your perogative, not your duty. Also, having a regular work day makes you more productive.
• Skype everyone. Cut out the phone bills and unhook the fax. Using VOIP can save you hundreds a month and you can take the number with you when you travel.
  
• Time disappears. At least 60% of your time at work needs to be on the clock. Most small business manage around 40% and struggle for cash-flow.
  
• Utilize and embrace downtime. A day off to improve your skills beats a day working for the wrong client.
  
• Vary your business model. Sell something apart from your services. It might be an E-Book, software or off-the-shelf templates, but experiment with other income streams besides your hourly labor.
  
• Word-of-mouth. Just a marketing people know some sources of leads are high value, those you get from word-of-mouth are likely to be better people and better clients than those you can get elsewhere.
  
• X all the advertising from your company site. Your business website should advertise nothing but you. Go to EBay and get 500 Adsense sites for a dollar if you want to make money from Google. Even nix any affiliate or "partner" links. Don’t work hard to sell someone else.
  
• Yellow Pages. Don’t bother getting listed, with the possible exception of the town/city you live in. No-one looks for a web design company in the Yellow Pages. Every lead we’ve ever had from those rotten books has been an dufus.
  
• Zounds. I don’t know of anything to fit in here for Z. Tip #26 – know when to shut up.