After meeting lots of them, I'm pretty certain I won't.
How do businesses survive?
- Thread starter jsmoke
- Start date
After meeting lots of them, I'm pretty certain I won't.
I work in a job where I'm speaking to MD & high-ups of small/medium enterprise companies, dealing with contracts they've signed with our company. Mostly it's them wanting to change terms so we provide them with more services (and charge them more whilst making it sound like they're getting a better deal)
Honestly some of them, in speaking with them, it's hard to understand how they manage to tie their own shoe laces in a morning, much less run a company.
Some of them threaten to stop paying their owed payments if we don't agree to their terms when changing the contract, often wanting expensive services for free/no extra cost on top of their current contract, thinking that my firm will just ignore the original signed contract has umpteen months remaining and let them off. That is until you inform them that doing so will wreck any form of credit rating their firm has and will land them in front of some very highly paid lawyers.
Honestly some of them, in speaking with them, it's hard to understand how they manage to tie their own shoe laces in a morning, much less run a company.
Some of them threaten to stop paying their owed payments if we don't agree to their terms when changing the contract, often wanting expensive services for free/no extra cost on top of their current contract, thinking that my firm will just ignore the original signed contract has umpteen months remaining and let them off. That is until you inform them that doing so will wreck any form of credit rating their firm has and will land them in front of some very highly paid lawyers.
Yep!
Chance of a lifetime!
(Try to find the movie! The above description doesn't do it justice!)
As a self-employed sole trader I am only one bad decision from ruining my own families life!
I am thankful that i do not have to be responsible for other peoples lives as well! Small business owners that actually employ people have huge responsibilities and work under enormous pressures. I would never want to employ anybody! I have more than enough other problems to deal with!
(Though I do get "Begging letters" (One only yesterday. Personal face to face too!
))
Lots of people are required in service sector type roles...
Take a financial software company for example - the core product they sell might well be created by a small team... at one point, when they were a start up, it was created by a small team... and the founders dealt with all the other stuff that goes along with running a business or relied on outside assistance.
Once the business becomes viable they'll need to expand quite a bit - while a small team might be required to develop a product you'll need a larger team for fixing issues with it, carrying out work on enhancements for specific clients etc... You've now divided up tasks among different dev teams, new developers are not as familiar with the domain - you need BAs to spec things for them, project people to co-ordinate things, product management types to take ownership of different modules, QA teams to run regression tests and ensure you've not screwed up things. You need to recruit a support team for the product to deal with the issues reported by clients... you might well start employing some consultants as your product is complicated and you can charge money to the clients by sending someone to their site at some juicy daily rate to install and configure the product. And of course you do the same every time they have an upgrade... obviously you do provide some documentation to allow the client to do some things but this requires employing more people to write documentation, or taking up valuable time of existing staff... perhaps therefore you keep documentation to a minimum and the clients keep asking for billable assistance from your consultants...
You'll also need sales staff who know the industry well... you'll then need to recruit admin people, accounting, HR, a legal team.
Your start up software company with a product which might well have required just 10 people to create and initially market to the first few clients, if successful, might turn into a company requiring a couple of hundred people... most of whom are, at that stage, doing something other than developing the actual product which is only now being enhanced bit by bit and had various fixes applied but not changed fundamentally since you were a 10 person start up.
Ideally you then want to look at ways to minimise the number of people you end up employing in these other roles... sales people (justifiably or not) get to point at sales figures and claim a slice, consultants are billable so can justify their existence quite easily too... There is certainly a strong incentive to ensure support teams are only manned by the minimum number of staff you can get away with... perhaps explaining why they're stressed all the time....
Take a financial software company for example - the core product they sell might well be created by a small team... at one point, when they were a start up, it was created by a small team... and the founders dealt with all the other stuff that goes along with running a business or relied on outside assistance.
Once the business becomes viable they'll need to expand quite a bit - while a small team might be required to develop a product you'll need a larger team for fixing issues with it, carrying out work on enhancements for specific clients etc... You've now divided up tasks among different dev teams, new developers are not as familiar with the domain - you need BAs to spec things for them, project people to co-ordinate things, product management types to take ownership of different modules, QA teams to run regression tests and ensure you've not screwed up things. You need to recruit a support team for the product to deal with the issues reported by clients... you might well start employing some consultants as your product is complicated and you can charge money to the clients by sending someone to their site at some juicy daily rate to install and configure the product. And of course you do the same every time they have an upgrade... obviously you do provide some documentation to allow the client to do some things but this requires employing more people to write documentation, or taking up valuable time of existing staff... perhaps therefore you keep documentation to a minimum and the clients keep asking for billable assistance from your consultants...
You'll also need sales staff who know the industry well... you'll then need to recruit admin people, accounting, HR, a legal team.
Your start up software company with a product which might well have required just 10 people to create and initially market to the first few clients, if successful, might turn into a company requiring a couple of hundred people... most of whom are, at that stage, doing something other than developing the actual product which is only now being enhanced bit by bit and had various fixes applied but not changed fundamentally since you were a 10 person start up.
Ideally you then want to look at ways to minimise the number of people you end up employing in these other roles... sales people (justifiably or not) get to point at sales figures and claim a slice, consultants are billable so can justify their existence quite easily too... There is certainly a strong incentive to ensure support teams are only manned by the minimum number of staff you can get away with... perhaps explaining why they're stressed all the time....
:yeahthat:
I work in Analytics and can think of more than a few times where i've saved (& identified opportunities to make) amounts which are 100's of times my annual salary. Unfortunately nobody ever buys into my 1% commission suggestion
If revenue is coming in and its attributed to you then its much easier to claim a slice of that revenue than it is to claim a slice of revenue that's been saved or losses that have been avoided as a result of your work. Perhaps push a bit harder at the identifying opportunities bit...
A trader in a bank can point at his profits and expect his bonus to be related to the profits attributed to him. A Risk manager conversely can't as easily point at money the bank didn't lose as a result of his work and claim a slice of it.
Caporegime
- Joined
- 12 Mar 2009
- Posts
- 26,779
Bernie?! Is that you?
It's hard to make money, were selling up and getting rid as the responsibility, stress and the constant saving of money by my local authority has changed the services we provide. The LA do not want quality work anymore they want just 'good enough' Six months to a year and I am out of it. I need to work out if I can retire at 46
and just invest in property.
and just invest in property.Avoiding potential loss (risk) is tricky to claim, reducing existing cost isn't, yet still doesn't earn the commission and general sweet ride that revenue generating streams do.
I can use hard facts to show the business what I have saved them, whereas the Marketing department uses VERY fuzzy maths to 'prove' how well their campaigns are running. Who gets all the credit...?
That's a pretty comprehensive explanation, so does that mean if they make more money then other companies are losing money?
Our business charges £6k to put your message in a box 17cm x 13cm on paper for one day. And we fill 10 pages every week doing that for just one department. Of course you are paying for the eyeballs that look at our paper.
Any business that survives is providing something useful to someone else. If you aren't, you don't survive.
I have to admit I don't get rec2rec agencies. Why wouldn't a recruitment agency just recruit for itself?
Any business that survives is providing something useful to someone else. If you aren't, you don't survive.
I have to admit I don't get rec2rec agencies. Why wouldn't a recruitment agency just recruit for itself?
Strictly speaking they are supplying something which people want. Which is not the same as useful. It's not uncommon for people to prefer to spend money on the former in preference to the latter. Apple pretty much rely on this.
No...they might have the exact same quantity of clients as another company, but just manage their business better....and therefore have more profit....
Lets look at the following example -
There are 2 companies that provide a service. Lets say that service is giving mugs guidance on how to pick the right special numbers to win the lottery.
Business A has 10 clients and charges X
Business B has 10 different clients and charges X+25%
Nobody is losing out on business (they both have 10 clients), but Business B charges more and achieves this because its clients are happier to pay a bit more as the comapny is a known household name, a brand if you will.
Further to this, Business B pays its employees 5% less salary and leases an office in a cheaper location which results in an increased profit margin.
Both of the above businesses are successful, but one more so than the other.
It's not quite as simple as that.
A very simplified example
Say you have company A who update IT systems to make them 50% faster
Company B are a loans company with old computer systems, they go to company A to get their computer systems upgrade, and pay them £100k for the service.
Company A make £100k.
Company B "lose" £100k.
HOWEVER
Company B can then process loans 50% faster. This means they can either:
- Save 50% of their wage bill by getting rid of 50% of their employees, because the remaining employees can process double the amount of loans in the same amount of time.
- Process twice as many loans, so doubling their income.
Soldato
- Joined
- 22 Feb 2008
- Posts
- 11,114
^
The above examples indicate just what Business to Business dealings are like. It's all about Return on Investment. One company pays another company money for their service -- but generally only if that service is designed to then enable the first company to recoup many times that initial cost through <X>, which the second company provided.
The above examples indicate just what Business to Business dealings are like. It's all about Return on Investment. One company pays another company money for their service -- but generally only if that service is designed to then enable the first company to recoup many times that initial cost through <X>, which the second company provided.