For a small business owner, losing an employee can be devastating. It’s an even worse situation if it’s your best employee. This week join hosts Elizabeth Larkin and Gene Marks as they help you triage that sticky situation and discuss the best way to invoice clients on this episode of the Small Biz Ahead Podcast.
Welcome to another episode of the Small Biz Ahead Podcast. Sign up for the weekly newsletter so you never miss an episode. Do you have a question you’d like Elizabeth and Gene to answer? Submit your question to the Small Biz Ahead Podcast.
Elizabeth: Welcome to this week’s episode. Gene, how are you doing?
Gene: Doing fine. Oh, I’m thirsty.
Elizabeth: We’re sitting here with some beverages.
Gene: I have in my hand a bottle of Aquafina, but it’s just regular bottled water.
Elizabeth: It’s just plain and regular, so I’m a big fan of the flavored water. I’m enjoying an Aquafina Black Cherry Dragon Fruit that I got at the cafeteria at The Hartford for this.
Gene: Fantastic. Yes.
Elizabeth: We needed a little liquid before we sat down to do this. This week we’re talking about employees quitting and invoicing clients. Obviously those are 2 topics that I’m sure you’ve dealt with in the past.
Elizabeth: What’s harder?
Gene: Employees quitting is the worst. It’s absolutely the worst.
Elizabeth: It’s the worst thing.
Gene: When you lose somebody it’s devastating. It’s happened to me a couple times in the past 20 years. Remember there is only 10 people in my company. Most recently was about 2 or 3 years ago. I had a key person in my company leave. She was great. We left amicably. God forbid when anybody quits, you never burn bridges, and maybe we’ll get into more detail about that, but when she left, it took me a while to recover, but sometimes good things come out of it as well. Depending on the person.
Gene: You bring in new blood. You learn. You improve.
Elizabeth: New skills.
Elizabeth: Okay, so after we hear from our sponsor we’re going to talk about that.
QUESTION #1: My Best Employee is About to Quit
Okay, we’re back with our first question. This is from Geraldine in Tampa. Gene do you want to talk about your mom?
Gene: She’s back from Florida. She’s fine.
Elizabeth: The joke is that every time we talk about Florida, Gene talks about his mom.
Gene: It brings up my mom. Listen it was a little rainy down there, and then the sun came out. We had a great time.
Elizabeth: All right. Geraldine in Tampa writes,
“I run an accounting business with 3 full time accountants and one secretary. I’m pretty sure my best accountant is about to quit. I’ve tried to meet with her more regularly. What else can I do?”
Gene: My answer. Let her quit.
Elizabeth: Because she wants out.
Gene: Yeah. I mean you can’t put a gun to somebody’s head and tell them they’ve got to stay in your company. Even if you throw them more benefits or more salary. If somebody is already talking about it, and you become aware of it, their foot is pretty much out the door. Right.
Elizabeth: Yeah. I agree with that. A lot of times companies I have worked for, someone has quit, or tried to quit, and then the company has counter offered. I’m always thinking if they want out, why would you-
Gene: I agree. I mean look, we were talking about this earlier in our introduction about it stinks. It’s difficult when somebody quits. It’s whatever. If you do get wind that you think somebody is going to quit I don’t think I’d stand in your way. I think your biggest objective is to try to make the transition as smooth as possible.
Elizabeth: Yes. Let’s talk about that then. I think this is, for a small business, especially one that only has 5 people including the owner, this is a make or break situation for you right now. I feel like it’s actually a good time to reassess what your business is all about. What you could do with that person is once they do quit, definitely find out why they’re quitting.
Elizabeth: Was it you? Was it the environment? Was it the job? I mean maybe they’re quitting to go open their own business because they always wanted to run their own business.
Gene: It could be any 1 of a zillion reasons why somebody is going to leave. By the way even if you do ask them why they’re quitting, it’s a 50/50 chance if they’re going to tell you the truth anyway.
Elizabeth: Yeah. How do you elicit an honest response from that?
Gene: You can’t. People are just going to say what they’re going to say. I mean, look. Come on. How many times have you been to a restaurant and you’ve got an average meal and the waiter is like, “How is everything?” You’re like, “Oh, it’s great. Thanks.” It’s just human nature. You don’t want to have that kind of confrontation.
Elizabeth: True. You can talk to that person. Try to find out why they’re quitting. See if they have any feedback for the company or yourself at that point.
Gene: Could be helpful or constructive.
Elizabeth: Then definitely talk to your other employees because in a business that small I’m assuming you’re all in the same office. It’s going to be a big issue when 1 person is gone when there’s only 5 of you.
Elizabeth: I would definitely talk to them. What kinds of things would you say to your other employees?
Gene: Well not just other employees, but I would, I’m thinking of my own personal experience when my key person, when she told me that she was going to be leaving the company. I did nothing to stop her because I wanted her to be happy. She was just not happy working here for whatever the reason is, I don’t want an unhappy person. It’s not good for anybody. You do think of yourself though. You’re thinking of self-interest and self-preservation. My immediate action with her was to see how long will it be until you leave? Sometimes people are like, they’ll give you notice, and they’re leaving the next day. The best situation is if you can get, can you work it where you leave 2 weeks from now? Or 3 weeks from now? So that we can, I’d like to transition somebody else on. You know what I mean? If you’ve got a long time employee, or somebody that hopefully you’ve got a good relationship with, if they have that flexibility where they can give you as much time as possible for you, then get somebody else on. This person’s example, Geraldine, right?
Gene: From Tampa. She’s it’s like her accountant. Okay well we’re all replaceable. I mean as awesome as you are Elizabeth, we’re all replaceable. There’s other good accountants that are out there. Geraldine should be talking to her accountant and saying, “If you’re planning on quitting. I understand. I don’t want to get in your way. It’s all good. It’s fine, but can we work together on this so that I can find somebody that can transition in here to make the ping for the business that much less?” Hopefully you can meet somebody halfway and do that.
Elizabeth: What about for the other employees? If there’s 3 accountants and 1 quits, I would be thinking if I was one of the other accountants, am I going to get all their clients? Am I going to have to do all that extra work?
Gene: Right. That’s so funny. You asked me that question like if the politicians answered. I just went off completely on another tangent. As far as the other employees though, are concerned, I mean, they’re all going to want communication. I think that’s what you ask for. It’s funny. This is a perfect example where it’s no different in a small company than it is in a big company.
Elizabeth: Oh exactly the same.
Gene: Someone from your department quits, you do want to hear from the boss. Okay. Let’s acknowledge this person is leaving and here is the plan. That’s what it is. It’s just the plan. Maybe the plan does involved you having to do more work for a temporary period of time, or longer than temporary. It’s just that people just want to know what is coming up? How is this going to effect me? I think that you need to be communicating that to the rest of the people.
Elizabeth: People might not mind doing that extra work. They just want to know that the boss is acknowledging that that is going to happen. It’s going to last for this long until I can find someone. If you know anyone good.
Gene: Right. Like anything else in this world with communication. You go on a flight and it’s delayed, and you’re not getting any information, the airline. Okay, everybody can accept if there’s a delay or whatever, just tell us what the plan is. Then reschedule the departure time, and that kind of thing.
Elizabeth: Okay we’ll be back with our next question after we hear from our sponsor.
QUESTION #2: What is the Best Way to Invoice Clients?
Okay we’re back with our second question, this is from Chris in Cedar Rapids.
“I’m a sole proprietor. I’m wondering what the best way to invoice people is? I’ve been using Google Wallet, but it’s been getting harder to keep track of everything. Should I be using apps or tools? Paper or snail mail?”
I’ve used Google Wallet to pay invoices, and I hate it.
Elizabeth: It will only allow you to use, at least in my experience, it would only allow me to use a debit card. You have to, it takes like a week, so when you want to pay the invoice, you have to put your debit card in there, and then it has to, I guess, ping your bank or something. It takes a couple of days. If I want to pay for a service I have to set that up for before the date that I’m supposed to pay it, so it was kind of a pain. But I’m assuming you’re going to say you should invoice people via your CRM system.
Gene: No actually not. In fact it’s funny that you actually say that. Absolutely not through the CRM system.
Gene: Because your CRM system is not an accounting system. You don’t want any dollars going into it.
Elizabeth: It merges with-
Gene: It integrates and will display information from your accounting system, but you don’t want to track dollars. That’s like a no no. But a lot of businesses ask that question. I’m glad you brought that up. As far as invoicing, first of all, this I want to make sure, as soon as you’re done with the work you’ve got to get your invoices out. It drives me nuts. I had a guy come and fix our air conditioner in our house, and it was like 3 weeks later, I was e-mailing him. “Are you going to send me an invoice?” Which is crazy, isn’t it? It’s like when you do the work, invoice, because every day it’s costing you cash. You’ve got to make sure you’re doing that.
As far as the technologies to use that are out there, there are a couple that I can recommend. First of all, your accounting software, if you have accounting, Quickbooks online. Xero. X-E-R-O. Fantastic. Wave. Denero. Sage. Whatever accounting. All of the major accounting vendors out there have invoicing options that will include a credit card payment option right on the invoice itself. Like us, we use Xero is our accounting software. When we send out an invoice to somebody it has the payment information on the e-mail. The invoice that you’re receiving, so that the recipient can just fill out the payment information right there on the e-mail, and boom. We receive the payment right away. We pay the transaction fee. Whatever it is. 87% of their cost or whatever, but it is fast and it’s quick, and it gets you right in.
Elizabeth: I’m wondering then what Chris is using. If he’s using Google Wallet do you think he’s just tracking everything in an Excel spreadsheet or something?
Gene: Right. I don’t think he’s actually sending out an invoice. He’s just accepting payments that way. Paypal is a great service that will provide you both with the invoicing, and you can accept payments on it as well. Paypal you’re not limited to any one. You have a whole bunch of different payments that they use. A wonderful service as well. Then of course Square. Fresh Books. These are all online. Again we can put this in our show notes.
Elizabeth: Oh these will all be in the show notes. We actually have an article about this coming out as well.
Gene: Good. These are all really great cloud based technologies that you can use. When you talk about what the best method is, no you’re not sending invoices by snail mail anywhere. That is like-
Elizabeth: I still get invoices by snail mail.
Gene: Me too. By my utility company or whatever, but they’re all changing over. That’s ridiculous to do that. You send it by e-mail. You just want to make sure or confirm the first time that it’s getting through. It’s not getting caught in somebody’s spam filter when you send out an invoice, but it’s quickest. It’s immediate. And again, you accept credit cards. That’s the way people do business in 2016. Yes there is a fee for accepting credit cards, but you can have it such where maybe you build that into the price that you’re charging so that you’re not out of pocket.
Elizabeth: Oh, good tip.
Gene: Then you get paid right away. That’s the way it works.
Elizabeth: To expand on Chris’s question. What if you don’t get paid right away? What if people, it’s like 15 days, 30 days.
Gene: Oh god Elizabeth, this is like the problem, this is a whole other segment. Here’s the fact Elizabeth, okay? You can talk to any business owner. Any business owner, me included. I will be 95 years old, without any teeth, and wearing diapers, and sitting in a nursing home, and I will still be able to recount for you a list of all the customers who have stiffed me over my business career because we never forget the customers that don’t pay. Right. This is the thing that we all … If your customers, if they’ve gone beyond 15 days or 30 days, then clearly you’ve got a collection issue. By the way, accepting credit cards, significantly cuts down on that.
Gene: Because the less that you’re asking your customers to do, you know, writing out a check and then printing it out, and then stuffing it in an envelope, and then sending it like it’s 1975. That’s all recipes for people not paying.
Elizabeth: Do you think that invoicing right away gets people to pay quicker as well?
Gene: It does because it’s fresh in your mind.
Elizabeth: Yeah. Because a lot of times I get bills like I work with a vendor-
Gene: You’re like what’s that for?
Elizabeth: Yeah, and she bills always at the end of the month. I’m thinking why? Why wait? I wonder does she sit down at the end of the month?
Gene: Yeah, that’s what she’s doing. She’s messing up her whole cash flow by doing that because she’s kind of like gypping herself out of a whole month’s worth of having the money in her bank. When you get it, and you can pay by credit card right away, people tend to just do it and get it done. There are going to be some of those people that don’t pay. That’s tough. The biggest lesson that I learned from there, it’s all about delegating. Maybe that’s a topic for another time, but delegation is … I delegated all of my collections to my bookkeeper to do, and I’m out of it. I’m not emotionally involved and that made a huge impact on my health.
Elizabeth: Stress level down.
Elizabeth: Do you think, do you apply a fee after a certain amount of time?
Gene: I don’t, and I don’t because I think that like me, if anybody receives, any customer receives an invoice from me with a fee from my little small business, I’m sure like I do they’re laughing saying, “I’m never going to pay that idiot’s fees. He’s lucky he’s getting my payment as it is. 60 days late.” No paying a fee I don’t think works. What I do think works is that, and by the way, this is for a very small percentage of your customers, but there are going to be some customers that are just jerks when it comes to paying.
Build that into your pricing. I’m not saying don’t do business with them because you’re going to do business with anybody. If you’re running a business who is going to pay you, but if you know this guy is a slow payer, 60 or 90 days to pay or whatever, first of all limit your exposure. Don’t have a lot out on the street with him, but then number 2, he should be paying a little bit more for your product or service than the guy who pays immediately and is a really good paying customer, so build it into your pricing.
Elizabeth: It’s so funny. We’ve talked about this so many times before, and I just had this conversation with my friend. He works at a very small engineering firm in Manhattan. It’s like less than 20 people. He just took over an account. I guess his boss was on the account, and he used to throw in all this free stuff for this company. Like oh no, we’ll take care of that. That’s included in our rates. Then he took over the account and said, “This is not worth my time. We’re not-”
Gene: Making any money.
Elizabeth: “I’m going to bill them for these things now.” The company paid them.
Elizabeth: They were like oh okay. People are afraid to ask for the money. They’re like oh let me be nice and throw this in for free, but you should definitely put surcharges on difficult clients.
Gene: No doubt.
Elizabeth: As we’ve talked about. He said this is an extremely difficult client.
Elizabeth: We do have a surcharge that they-
Gene: I wouldn’t even call it a surcharge. We just bump up our rates. That’s just what it is for you, or a typical rate is 175 an hour. For you 185. That’s what it is.
Elizabeth: All right, so in conclusion Chris, definitely go with one of the accounting software systems that we’re going to list in this. I hear about Wave accounting all the time.
Gene: Yeah. Wave is very good.
Elizabeth: Everyone loves it.
Gene: Very, very small scale accounting.
Elizabeth: Fresh Books.
Gene: Yeah. Fresh Books. Xero. I think is excellent, and of course the granddaddy is Quickbooks online.
Elizabeth: Quickbooks also I think has a self employ. Because he said he’s a sole proprietor. I think they have a whole suite of self employed tools.
Gene: They do. They all do actually. I mean Quickbooks and Xero both have products targeted at freelancers and self employed.
Elizabeth: And they integrate with their-
Gene: Tax return.
Elizabeth: With their tax return software too, so that makes it-
Gene: Yeah. Correct.
Elizabeth: It’s so easy to be a small business owner, isn’t it? All this software out there.
Gene: Well to be honest, when you look at the software and the technology there, you really look back 20 years ago, or 30 years ago and people were doing business, it’s amazing how, it’s never easy being a business owner, but boy these tools have really made a lot of things easier.
Elizabeth: Okay, we’ll be right back after we hear from our sponsor with our final word of brilliance from Gene.
WORK OF BRILLIANCE: Committee
Elizabeth: Okay. All right. We’re back. Gene, what’s your word of brilliance?
Gene: My word of brilliance this week Elizabeth is committee.
Gene: What I mean by committee is the house of representatives small business committee, or committee on small business. Did you know Elizabeth, that there is a 22 member committee on the house of representatives that meets, I think they met 26 times in this session in congress and they do nothing but talk about issues that effect small business owners.
Elizabeth: Can you watch them on C-SPAN?
Gene: You can watch them on C-SPAN. If you have absolutely nothing to do in your life and don’t mind being bored out of your mind. No, I’m just kidding. You can watch them on C-SPAN. All of their committee on their website, you can Google the house small business committee. They have a whole big website with all the times that they met. Videos of when they met. Transcripts of when they met. They provide other resources and research. It’s all about, all issues about how the government can help small business.
In this past congressional session, 70 bills went through the committee, only 2 actually became law. I don’t think that’s the fault of the committee. I think it’s more of a fault of Washington than anything else, but they’re out there, and they’re holding hearings all the time on these issues that effect small businesses. Issues with the small business administration. Issues with getting loans and getting financing. Issues with contracting with the governments and doing business with the government, and then overall issues of regulations that effect businesses anywhere from environmental, Obamacare, other regulations, taxes, overtime.
Great way to stay up to date on what’s going on, and also they are also looking for small business owners to testify. To give them their point of view on what’s going on. If you really want an opportunity to have your voice heard, believe me, reach out to the committee on those small things that you yourself might be invited to go to Washington and testify in front of this congressional committee.
Elizabeth: Wow, and if you are let us know.
Gene: Cool stuff. We’ll go right along with you, and we’ll interview you when you’re over if you can still talk about it.
Elizabeth: Put you on periscope.
Elizabeth: All right. Thanks for tuning in everyone for another week. Gene, thanks for being here.
Gene: Glad to be here.
Elizabeth: We’ll talk to you next week.