The figures are deliberately slightly more vague this time. Why? Because they don’t have to be that precise and it saves considerable time in preparing this post! Efficiencies, you know…

* Equivalence used – two part-time employees working 37.5hrs count as one employee.

One of the largest problems we face is that the growth in cost turns cashflow into a significant issue for management to deal with. One key problem has been that banks are no longer willing to extend lines of credit without personal guarantees from the directors. Given this situation, the directors have opted that should the company require short-term funding this will come from the directors themselves. There is no risk to the company as assets are considerably higher than debts to creditors.

Efficiencies

There is a project in place with the administration and management team to streamline and organise the company processes. This will help release staff members to carry out more chargeable work and should reduce the need to recruit new staff. We are, however, searching for an excellent WordPress developer to help the project team grow.

Order book

We are currently not accepting new customers and have project work planned until the end of April.

Obviously there will be things that we have to keep quiet, such as our plans for world domination (oops!) or commercially sensitive work, but by and large a lot of information will generally need to be published in the future.

The reasons are simple – by being open about our position we can help keep our clients informed.  They are genuinely interested to know where we’re going, what product plans we have, and the services we currently offer.  I’m not going to drill too deeply into the information but provide an adequate enough overview.  I’ll try to stick to the same format and release information on a quarterly basis.

* Equivalence used – two part-time employees working 37.5hrs count as one employee.

As can be seen, turnover has increased massively in a year, and far beyond what the change in headcount would lead you to expect. In effect we’ve learned to do more per person. Some is down to certain efficiency measures, including moving to a quieter and more productive work environment, but one of the biggest changes is due to us working out exactly what we should be charging on jobs. We tended to underestimate the scale of most jobs and effectively halved our hourly rate. This is an experience thing – you never realise how complex some projects can be until you try them.

Intellectual Property Growth

Another key area of growth has been our IP portfolio. With a number of very successful site implementations behind us, we have developed a number of innovative solutions to complex business problems. Whilst first projects, where we develop new IP, often make us no money, subsequent projects of a similar type can bring us significantly improved margins. We expect this to continue feeding our future growth.

Trimming the Fat

We’ve also started to shed some projects. We still like to create free GPL projects, but we now look far more closely at our strategy around it. Do these projects enhance our standing in the community? Do they bring in any support money? Often the answer isn’t quite as positive as we’d have hoped and, as a consequence, we have already started to wind down our Spectacu.la project. We will keep hold of the brand and may build something new with it in the future, but for the time being the income earning parts of that site will be divested back to the original interconnect/it brand.

The Future

We are planning to release some developer plugins to help people achieve more with their WordPress installations. Most will be sold as premium offerings, with the possibility of creating stripped down versions for free download.

We will be developing our training business using some of the latest technologies available.

We will be offering creating some high end products for WordPress, possibly as fully hosted solutions.

Actually, I’ll rephrase it a little… it happens all the time!

It’s rather tricky. Clients are interested in us because we offer them something that gives them better efficiency, sales and returns. But what we do is complex and sophisticated.

As it’s myself that does all the sales work I often find myself giving over two hours of my time to a prospect in order to explain how the dynamic websites work. I’m educating them. For two hours.

How much would it actually cost to get an expert in any field to educate someone for that period of time on a one-to-one basis? £120? £240? Certainly it wouldn’t be cheap.

Yet there I am, explaining various elements of design, hosting and development… all for free.

Not only that, but many clients expect proposals, complete with mockups. For free too, of course. After all, we’re only selling.

And it’s a trap I think that all IT types need to be wary of. We’re natural born ‘pleasers’. We want to write cool stuff, but more importantly, we want people to acknowledge that coolness. It’s interesting that the concept of Open Source is so strong in IT. There aren’t nearly so many top photographers offering any of their materials with a right to free duplication as there are developers.

But here’s the thing… free doesn’t put food in the table. Each prospect may be the result of two hours of work before we even get to visit. On top of that is the two hours of free consultancy they end up receiving when we go and see them. Then there’s the proposal – that can be four hours for something simple, but easily a 16hr job. So we have up to 20hrs per prospect, before a sale is even agreed.

If we then assume a one-in-three conversion (because they’ll probably talk to three potential clients) that means up to 60hrs of work for each client won. I’ve actually estimated that by and large we manage on about 40hrs per client win.

Now here’s the funny thing – many of the websites we produce take less than 40hrs to build. Let’s say each is 30hrs of work to build – what with all the toing and froing of ideas, images and copy.

That makes 70hrs per website. If you’re going to make a modest, middle class income, and cover costs, then chargeable rates have to be around the £30 an hour mark. That’s about what most backstreet mechanics are charged at. So the very base price for a website built according to expectations above, has to be £2,100.

Read that figure.

£2,100!

For a basic, simple, custom website.

We’re working on developing techniques to get web developers away from this problem. Expectations are far higher than can be fulfilled economically. Check back to the blog regularly to see our up and coming announcements…