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BACKGROUND

 

I have degrees in business/accounting as well as certification as an accountant (CPA).  I've had two long-term corporate jobs that were pretty high level.   I've taught accounting and business courses at the college level as an adjunct instructor.  So I know my stuff pretty well.

 

One of the "stuff" is how to determine a fair purchase price/sales price for a small business.   There are a variety of methods and some research involved. 

 

When I lost my 2nd corporate job in 2007, I established a business to do consulting for small businesses, figuring I could provide the same services as large firms at a much lower price.  When my business was ready to go in 2008, the recession hit so no one was doing much of anything, including me.  So I focused on the teaching.   Since late last fall, I have not been working at all,  since I've been truly and really depressed.   Our budget is feeling the strain.  

 

THE PROBLEM

 

More recently, former colleagues or people I know casually (like my hairdresser) ask me to perform work for them... usually involving buying or selling a small business.  

 

I can do the work; that is not the problem.  GOD KNOWS we need the money.   However, almost EVERY TIME these friends don't expect I will charge them anything.      Or they end up giving me a gift card or something (like for $50)  even before I can send them a bill.  This occurs EVEN WHEN I tell them upfront that this is something I charge money for, and even when I give them an estimate (say  "a few hundred dollars").   If a law firm or accounting firm would do the same or similar work, it would be several thousand dollars.   Plus, sometimes they are paying upwards of several hundred THOUSAND dollars for a business!  

 

So Monday, this guy who I used to teach with calls me and asks me to help him put a price on a business he wants to buy.  He has an MBA himself, but doesn't really know business valuation.    He works during the day, so he says "How late do you stay up?" and I end up agreeing to go over to his house to meet with him and his wife at 830 pm tonight.   Across town, no less.    To be fair, they did offer to come here, but it wouldn't have been until 9pm and hubby didn't want people hanging out here with calculators, etc. after 9:pm while he's trying to enjoy a movie or something.     I do like and respect this former teaching buddy.  

 

So I told him on the phone that it would likely be a few hundred dollars.  He seemed taken aback by the mention of compensation.   

 

Does anyone have any ideas for what I can do about this?      I know it is going to happen again.  

Edited by FlamelessCandle
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That sounds really frustrating.

 

I've heard of the strategy of letting people know that you're happy to help them and that you charge $X per hour when you're discussing times to meet. And asking them how many hours of your expertise they'd like to buy.

Edited by Wooster
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that really sucks.  i think it's a good idea to tell people directly that you are financially strapped at this time (in whatever way is appropriate), and that in the recent past you've shared your professional input for free to friends and other folks.  be honest about the position this has left you in - that because you have been giving away your time and resources, your own financial stability has become untenable.  i'd probably say something about how this pains you to have to charge for your services, but it has become a necessity.  maybe that way, they won't take it personally.  and if they do, perhaps remind yourself that asking you to do this work for free is kind of an abuse of your friendship and generous nature.

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Thanks - these are both good ideas.  Wooster, it IS frustrating since I try to say something about fees in the first phone call/contact.  I can't put $$$$  in writing (well, an hourly rate I suppose)  since I don't know yet how much time it will take.... although I usually have some idea.  

 

Lysergia, your thoughts are really timely... the guy I'm meeting with was himself out of work suddenly (walked out the door w/o notice in a restructuring)  three years ago.  

 

I could say something about how I wish I could offer services for free to friends, etc. but  it's become a necessity to charge (maybe a discounted rate for friends), and most importantly - there is VALUE in what I do!       He knows I am not working right now.   

 

I have to remind myself --- there is VALUE in what I do.   If I charged him $200 for a couple hours of work - - -  let's say because he has a better idea of what the business is worth, he ends up paying $10,000 LESS than he otherwise would!

 

Some advisors actually charge a percentage of the purchase price (Wall Street types, not so much here in flyover country).  

Edited by FlamelessCandle
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**ETA, we posted at the same time!  Apologies if some of what I wrote looks a bit out of sequence since I was going on just the first two posts on the thread when I started!

 

Ugh.  I'm in a profession vastly different than yours but constantly hit with very similar "friends and family favors" assumptions.  I've had roughly similar situations to work from, but I'm still not clear on how successful my efforts have been.  (from what I gather from your various CB posts, I think I'm younger than you so the sliding pay scale for years of experience, and expectations of business formality, would be different too)

 

I'm totally sure you know way better than me how and why to do these things, but I thought I'd just put out there some first-line actions since other people here might also benefit from the overall conversation.  Personally I'm also interested in yours and other people's responses.  I struggle with the freelancing/consulting aspect of what I do when I get really depressed or anxious because I totally devalue myself and severely undercharge out of non-existant self-esteem.

 

1.  Do you have professional-looking business cards specifically for your current private consulting practice circulating in the local community?  Do you feel that these kinds of little tangible boosts to your "this is a legit business operation" image could push the situation in a better direction?

 

2.  Related to #1, do you have your basic ballpark pricing for services in a conveniently easy-to-distribute brief document?  Can you whip out a paper or quickly attach it to an email?  An estimate invoice within 24 hours?  (to pre-empt the gift card thing)  Hopefully giving the impression that charging for services is a mandatory no-brainer for you will more readily confirm the idea that coughing up just compensation should be a no-brainer for them too.  Or at least it sets a negotiation starting point at somewhere besides "free" in a concrete way that verbal agreements can't quite match.

 

3.  Might people be doing the gift card thing thinking they are helping you out by not paying taxable cash?  I have done a bunch of non-cash transaction work and bartering and sometimes its just plain confusing to figure out what the most beneficial compensation arrangement will be in that situation.  I think by putting out more tangible clues to how formal/informal your consulting business is, people might be better able to gauge how to appropriately approach you in the future.

 

4.  In my experience its often hard to know when to use the "I'm financially strapped and can't work for free" line.  Sometimes it puts people on notice productively, it lets them know they are pushing limits of certain boundaries.  But other times I worry it makes me look like a poor manager of my time/resources/connections/money.  Or simply like I'm prone to TMI.  Which I am already so I don't need to exaggerate that trait any further! 

 

5.  Also in my experience, making a point to meet on neutral territory helps to remind people that this is business.  People more easily mischaracterize a meeting for a social call when its at someone's home (unless there's a formal home office arrangement).  Even a Starbucks or IHOP will do in a pinch late at night.  

Edited by CirclesOfConfusion
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You probably are younger than I am, but you have some excellent ideas (for me and as you said, for others who may be in this same predicament.)   I definitely don't know everything.  Also -   I think especially when we are depressed, anxious, or whatever... it is much harder to feel that what we do has enough value to charge a fair price!  And like it or not, it does seem harder for women.  Most of the guys I know in the business world are pretty damn assertive/aggressive.  I know that is a stereotype, and I'd be pissed as hell if a GUY made that statement but I'm female so I am taking the liberty of insulting my own gender.  Or at least myself! 

 

My answers are in red

 

1.  Do you have professional-looking business cards specifically for your current private consulting practice circulating in the local community?  Do you feel that these kinds of little tangible boosts to your "this is a legit business operation" image could push the situation in a better direction?      Yes, I do - business cards, stationery, a marketing brochure, the whole works.  And a website.  Funny - although I use my biz cards with friends, I don't often give them the brochure (which was done by a pro hen I used to have more money) or direct them to my website (which would add credibility) 'cause I think "they already know me".....

 

2.  Related to #1, do you have your basic ballpark pricing for services in a conveniently easy-to-distribute brief document?  Can you whip out a paper or quickly attach it to an email?  An estimate invoice within 24 hours?  (to pre-empt the gift card thing)  Hopefully giving the impression that charging for services is a mandatory no-brainer for you will more readily confirm the idea that coughing up just compensation should be a no-brainer for them too.  Or at least it sets a negotiation starting point at somewhere besides "free" in a concrete way that verbal agreements can't quite match.    That is a GREAT idea.  I come from a public accounting background (first job after grad school) where instead of a brief "price sheet" we wrote really long "engagement letters" or proposals, setting out the scope of services, range of fees, all kinds of disclaimers cover our assess,  blah blah blah.  I don't want to do that   - but I could draw up something shorter and easier.

 

3.  Might people be doing the gift card thing thinking they are helping you out by not paying taxable cash?  I have done a bunch of non-cash transaction work and bartering and sometimes its just plain confusing to figure out what the most beneficial compensation arrangement will be in that situation.  I think by putting out more tangible clues to how formal/informal your consulting business is, people might be better able to gauge how to appropriately approach you in the future.    Interesting.  I did barter some haircuts with my stylist for another project (evaluating various credit card companies for her to use for her clients).     In general I prefer cold hard cash and it is definitely more "legal" from the IRS's perspective.  You are right, though, I need to get more formal even when it is a friend or former colleague.  I am able to be formal and crystal-clear when the client is someone I don't know.... usually referred by someone I know.

 

4.  In my experience its often hard to know when to use the "I'm financially strapped and can't work for free" line.  Sometimes it puts people on notice productively, it lets them know they are pushing limits of certain boundaries.  But other times I worry it makes me look like a poor manager of my time/resources/connections/money.  Or simply like I'm prone to TMI.  Which I am already so I don't need to exaggerate that trait any further!    I know, the client usually doesn't give a crap about YOUR circumstances!  However, with this particular situation, it may work since (a) he was in the same situation and (b) he knows I am not working.  Any professional would have to use this line sparingly and never with someone they did not know well.  

 

5.  Also in my experience, making a point to meet on neutral territory helps to remind people that this is business.  People more easily mischaracterize a meeting for a social call when its at someone's home (unless there's a formal home office arrangement).  Even a Starbucks or IHOP will do in a pinch late at night.    Yes, usually I do this.  I do have a home office which I sometimes use if I need to spread out papers with a client, etc. but I often meet (especially first meetings) at a coffee shop near my house.   That is excellent advice for anyone.  (This time was sort of weird because he wants to meet so late.   Normally, I would never agree to meet with a client STARTING at 8:30 pm! )

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My response is, "I would like to do XXX for you, however it is my policy to never mix business with friendship."

 

The few times I have violated that rule, like you I have been "burned" with either a token payment or shock that I would require payment, even though that was discussed before hand.

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Hmmm ...  you do bring forward a good point, Indigo.  

 

I'll have to do this one ...I'm leaving in about an hour! 

 

BTW, I've already looked at some emailed financial documents he forwarded . . . .  and pretty much figured out what is necessary to figure (only took me a short time; but I won't let the "client" know that).  Not 'cause I am so damn smart, but because I have done this analysis many times before.  Wait - it might actually be because I am so damn smart! Take that, low self-esteem.

 

I'm going to make it clear that I am charging for my expertise/knowledge. This is a smart man.  Smart in the ways of business.  I can always withhold my work product (the range of what he should pay for the business he intends to buy) IF he can't wrap his business head around the idea of paying me.  

 

I am so glad I posted this question; gave me clarity and excellent input.  

 

I hope none of you plan to charge me for your counsel.   heh.

Edited by FlamelessCandle
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I have no suggestions to add to what everyone else said, but I will tell you that my stepson is a plumber, and when he put in the plumbing and heating for a big renovation we did, his dad sat down with him and worked out a weekly wage.  He was coming over here 4 days a week for 5 or 6 weeks.  We paid him every Thursday before he went home, and he worked long and hard to get the job done.  Friends were surprised that he didn't do it for free, but why should he?  The guy had to make a living like everyone else.

Your friends should be paying you for your skills and knowledge, and I hope you can use some of the suggestions and get those freeloaders straightened out.

 

If you haven't done so already, you might want to join the local Chamber of Commerce.  If there is a chapter of the Business & Professional Women's Club in your area, I found them very supportive when I was in the business world---and I made lots of contacts.  I assume you are a member of Linked In and the other internet networking things. 

 

I also wonder if real estate agents would be interested in your services.  If they don't do a lot of commercial real estate sales, they might be interested in having you give them a price for small businesses that they are listing.  It might be worth investigating.

 

olga

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#1 - SIGN A CONTRACT

 

How to manage this socially

1) "Yes, I can do that, and I can give you a really good rate."

    A) if the baulk at having to pay, you can add, "Since you're my friend, I'm willing to give you a smoking deal. But since most of my business comes by word of mouth, if I didn't charge friends and family, I'd always be working for free. I'm sure you understand."

2) Whip out the contract, and either

    A) Have a printed hourly rate - say $100/hr - which you then cross-out and write $80/hr

   -or-

    B) You have a space to write in the hourly rate - you write in $80/hr. On your website, it lists your rate as $100/hr. 

Either way, they'll know 

    i) they're getting a 20% discount to your customary rate

   ii) if they do comparison shopping, they're getting an 80% discount

 

Now, you can play this like an auto dealer or a retail store. You may print your rate as $120/hr. But you never sell it for that - it's always "on sale" - and  you "mark it down" to $100/hr. 

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Again - some excellent ideas.    

 

FOLLOWUP - WHAT HAPPENED??

 

Things went much differently than I had feared... - in a good way!  I did tell my friend as soon as we sat down that there would be a fee for my services,  but that he would receive the "friends" discount.  I asked him if he would need a written report (that is the largest time/effort, and I would rather not do one if at all possible, for various reasons.) 

 

He said he did not need one, just needed me to validate  that the price the seller was asking was fair and reasonable.  In any event, after a while, his wife joined us and I shared my initial thoughts with her about the price the seller had already proposed.... (she is actually going to be the one involved in the operation of the business and had been out when I arrived.  I knew in advance that she would be late; I didn't know that she was the major person that would be involved in this.)

 

The first thing she said to her husband was....."I know you two are friends, but I don't do MY work for free, and so I want to be clear that we're definitely paying ____ for her knowledge and experience.... take out the checkbook and write a down payment".

 

Which he did - for the amount that I had expected to get in total.  They expect to write another check when I am finished. :)

 

Thanks again - these are all great ideas.  I realized I'd let my consulting skills lie dormant for so long that I'd forgotten how to be "formal" enough with friends/colleagues.  And that I was undervaluing or even devaluing my ability to do this work.

 

It was a good boost of self esteem to use my brain for something not everyone knows how to do, and to see that they were both pleased with how I explained it and what my initial thoughts were.  (I had reviewed some documents prior to the meeting, but that didn't take me very long.)

 

Wow - CB comes through for just about everything!  

 

ETA: to Olga - yes, I'm on Linked In and was a member of the Chamber (should rejoin), several business groups, professional women's groups,etc.  Was active until about six years ago when my (mental) health took a turn for the worse, and I've sort of withdrawn and isolated myself except for a few good friends I made where I last taught.   If I plan to do this type of work on my own, I need to get 'out there' again.   

Edited by FlamelessCandle
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FC, when you go back to those groups and they ask where you have been, tell them something vague about "the demands of family members" or something like that.  They can assume that you were taking care of children or elderly parents or whatever they want to think, but don't hesitate to re-join because of what was actually happening.

 

I'm so glad you got your cash in advance!!  Yay!

 

olga

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Things went much differently than I had feared... - in a good way!  I did tell my friend as soon as we sat down that there would be a fee for my services,  but that he would receive the "friends" discount.  I asked him if he would need a written report (that is the largest time/effort, and I would rather not do one if at all possible, for various reasons.) 

 

He said he did not need one, just needed me to validate  that the price the seller was asking was fair and reasonable.  In any event, after a while, his wife joined us and I shared my initial thoughts with her about the price the seller had already proposed.... (she is actually going to be the one involved in the operation of the business and had been out when I arrived.  I knew in advance that she would be late; I didn't know that she was the major person that would be involved in this.)

 

The first thing she said to her husband was....."I know you two are friends, but I don't do MY work for free, and so I want to be clear that we're definitely paying ____ for her knowledge and experience.... take out the checkbook and write a down payment".

 

Which he did - for the amount that I had expected to get in total.  They expect to write another check when I am finished. :)

Glad the meeting went better than earlier expected!   :)

 

It was a good boost of self esteem to use my brain for something not everyone knows how to do, and to see that they were both pleased with how I explained it and what my initial thoughts were.  (I had reviewed some documents prior to the meeting, but that didn't take me very long.)

And I totally agree that it feels really good to exercise the specialized brain muscles!  Its so easy to forget what makes you special in a good way when depression and other MI symptoms/complications unhelpfully insist otherwise.

 

Though, I have to say that one difficulty driving devaluing of one's skills and knowledge is the opposite danger of biting off more than we can chew when we're feeling less-than-balanced.  Having taken on big commissions or tightly scheduled contracts only to have them horribly disrupted by abrupt depression sinkholes and anxiety, I find myself often pre-emptively devaluing myself in wary anticipation of the threat of depression even in the absence of actual symptoms.   :cussing:

Edited by CirclesOfConfusion
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Circles, you are so right about biting off more than I can chew.  That has definitely happened to me.  On one hand, smaller projects where I feel comfortable with the subject matter can provide a welcome diversion from anxiety and may even get me moving a little bit when I am depressed.      

 

However, when I've been more depressed (as in crying when I am awake and sleeping the remainder of the day and night.)  I find that just the simple act of typing up an invoice or writing an outline for a project can take me hours and hours more than it would if I were in a better place mentally.  That is IF I can get it done at all.  And most times, the work I do is time sensitive, so it can't just be put off until I feel better.

 

Ugh - that exact thing happened to me last year.  I ended up getting the project done, but the client really had to push me and it was embarrassing.  

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Circles, you are so right about biting off more than I can chew.  That has definitely happened to me.  On one hand, smaller projects where I feel comfortable with the subject matter can provide a welcome diversion from anxiety and may even get me moving a little bit when I am depressed.      

 

However, when I've been more depressed (as in crying when I am awake and sleeping the remainder of the day and night.)  I find that just the simple act of typing up an invoice or writing an outline for a project can take me hours and hours more than it would if I were in a better place mentally.  That is IF I can get it done at all.  And most times, the work I do is time sensitive, so it can't just be put off until I feel better.

 

Ugh - that exact thing happened to me last year.  I ended up getting the project done, but the client really had to push me and it was embarrassing.  

Yes, definitely me too.  I can't even reply to emails, pay bills, or even post here much.  Or do anything else remotely challenging since my confidence and tolerance for frustration sink to zero.  I actually have some incomplete projects and communications that have been languishing since the last couple rough periods disrupted them.  And the longer they languish the harder it gets to even consider how to re-engage with dealing with them.

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