Our CEO Dave sees these two crucial pitfalls all the time, and knows exactly how to avoid them.
I spend most of my time working with service-based business owners and I’ve yet to see a firm that hasn’t suffered at the hands of the Evil Twins.
Make no mistake, these nasty little blighters will eat up all your profits if you let them. So, who exactly are these two profit-scoffers?
Evil Twin 1 goes by the name of Underquoting.
Evil Twin 2 is known as Over-delivery.
Unfortunately I’m not exaggerating when I say these Evil Twins will literally suck the profits right out of your business if you don’t proactively work to eradicate them.
The good news, however, is that if you manage keep them at bay, the impact on your bottom line will be nothing short of spectacular.
First off though, it’s important to learn the conditions in which this terrible twosome thrive.
Here's what usually happens...
- Your client gives you a vague brief on a new project and asks for a quote.
- You provide the quote, but because of the vague brief, you’ve had to make some slight assumptions about what’s required.
- The client hires you. Woohoo!
- Your team starts delivering the project. But without a clearly defined brief and a solid set of rules, Evil Twin 2 shows up and your team spend far longer delivering the project than they should.
- The client comes back with some additional requirements that they thought were covered in the price. Unfortunately, you didn’t specify the scope that was actually covered by your quote, so Evil Twin 1 sinks his teeth in and you end up doing additional work for free.
- You complete the project. But because you underquoted in the first place, your team has over-delivered on the project and you end up making a loss.
The worst thing about these Evil Twins is they’re insatiable, and they tend to show up time and time again.
We’re all guilty of feeding them too.
I remember quoting £20,000 on a project years ago, only to end up spending £65,000 worth of time delivering it!
And with no scope and no breakdown of the budget, I had no way of getting more money out of the client. Not the best day at the office.
If this sounds all too familiar, here’s a process you can implement right now to eradicate the Evil Twins for good:
Start building accurate project costings
Identify all the stages and tasks required to deliver the project. List all the people you’ll need and estimate the amount of time they'll need per task.
I’m not going to tell you how to calculate your fee, but the key thing to remember here is to make sure you’ve taken the time to plan out the project properly.
For some tips on how to avoid under quoting, check out this piece:
Be clear about what's included in the price
Include a breakdown of your costing so that your client can see the tasks involved. This also really helps to justify your cost if the client thinks it's a bit high!
Lay your cards out on the table about what's included in the price. Have you accounted for additional work, rounds of amendments, or will there be an additional fee?
Also, if you've made any assumptions about the project, state them clearly along with your quote. Good communication with your client is key, and will result in happy parties all round once the project’s delivered.
Don't over-deliver. Make sure your team know exactly how long they've got.
Make sure that each person working on the project:
(a) knows exactly what they need to do and,
(b) understands exactly how long they've got.
Tracking time is vital in a service-based business because, when it comes down to it, that's what you're selling.
So, you need to ensure your staff are zealously recording their time so you can quickly see if the project’s heading over budget.
Don't allow the scope to grow unless the budget does, too.
If your client asks for extra work, don't be afraid to push back. Make it clear that it's outside of the agreed scope and provide a quote for the extra work.
Check out this piece on how to cut down on over delivery:
Make this approach your standard process for your projects and I can guarantee the Evil Twins will go hungry - and you’ll see a serious increase in your profits.
If you'd like to learn more about the Evil Twins and how they affect your profits, download our short guide today: