Judith: So Nicola, I think you’ve brought Client Challenge of the week with you today, haven’t you?

Nicola: I have. It’s funny, because it’s something I also suffer from. When I talk about this, please don’t feel I’m addressing you particularly, anyone who’s listening. Even the Queen has a petty meanness apparently, she turns lights off. It’s all about the reluctance to invest in the right tools, particularly things like getting a logo done, even a Facebook budget.

Someone came to me and they said, “I’ve got an x amount for the year on the Facebook budget.” And I said, “Well, is that for clicks and management?” “Yes, for clicks and management.” So that cut it in half straightaway. And then I said, “Okay. Wouldn’t it be better to throw the budget at it in the first 3 months? Because it’s not a very big budget, and if I try to eke it out over the year, it’s going take you forever to get the data; whereas if we threw the whole budget in the first 3 months, we’d be able to get some meaningful data.” You agree on my stand on this, Judith, on statistics. If you’ve got 2 landing pages, you need a hundred conversions on each landing page before it becomes statistically significant. So, throwing little bits of money at something over a longer period of time is not as good if it’s quite a decent-sized budget, which this is. It’s better to do it all in the first 3 months. The other point of that is, during the first 3 months, if you get to the point where it pays for itself – when you’re making sales and then you’re paying for your advertising ongoing – so I had to do a quite detailed analysis of that to explain it.

This week also, I’ve had a client, who had been reluctant to pay £250 for a logo, and they’ve put one together themselves – which is fair enough, and it looks perfectly fine. I was just intrigued by the fact that they’ve paid a large sum of money to work with me, they’re investing in a very nice new website, but when it came to the logo, they were cutting corners. And it’s all about, I think, having the right tools for the job makes life so much easier, but it’s hard to invest in those tools sometimes, isn’t it?

Judith: It’s very strange what we will and won’t spend money on. I’ve spent years, 20 of them as an accountant—and really all of my work has been in the context of money—and this works the other way around, too. I’ve had a call with a client last night where I dissuaded him from spending 3 different sorts of money because it was too soon; he hadn’t proven his business model yet. But, I think I will go to my grave never understanding how and why people make purchasing decisions, or don’t.

My best friend, who you know, won’t pay postage on a packet. And they’ll often say to me, “Do you mind running me up to Marks & Spencers in Oxford Street?” “No! Let’s just pay the £5 to get it delivered.” People don’t understand, I don’t think, the direct correlation between time and money. Your time costs money, even if it looks free to you. I’m the same! I look at some things and I think, “Ooh, that’s cheap,” and other things, “Ooh, that’s expensive,” and actually, it’s completely subjective, that.

Nicola: A really good example of this – and again, I’m not directing this to anyone, so please don’t take offense if you’re listening – is the client who will go with the MailChimp free email hosting service and doesn’t want to upgrade so that they can get an autoresponder system; the client who doesn’t want to spend $19 a month for AWeber, which is a much better system, really. It’s tiny little things like that that astonish me all the time.

Judith: I tell you what is interesting. Do you remember in the Money Gym book, there’s a chapter quite early on about plugging the things, the holes in your bathtub?

Nicola: Oh yes.

Judith: It’s all about the amount of standing orders that go out. I think why people do get a bit scared of $19 is that, at the beginning when we were keen on this, we signed up for everything. If you added up all of those things, they add up to quite a lot of money. And because people weren’t getting a return on them because we weren’t very sophisticated about it, we didn’t know what we were doing, we just felt like all of these standing orders were going out and it won’t… so I think the thing is to choose very carefully what you want to sign up for, that you are actually going to use now. Because of course it’s always available, you can sign up for it later.

Nicola: Yes. It’s because some things feel like an overhead, and they don’t feel like an investment, isn’t it? That’s what it is.

Judith: Yeah. It is. And we’ve taught them that to a certain extent, Nicola, what’s an overhead. I think that’s a very good question: Is this an overhead, or an investment? And if it’s an investment, how long am I prepared to put into it, and what am I going to do to make sure I get my return on my investment? Because just signing up for AWeber doesn’t mean anything at all, does it?

Nicola: You have to put the time into it, to write the emails that will go into autoresponders

Judith: Yeah, exactly.

Nicola: If you are worried about this, here’s a tip: I’ve got a pay-as-you-go credit card that I put all my online expenses on. And then I pay an amount from my bank account to the credit card every week to cover everything. And regularly, I just phone up the credit card company and I say, “I lost my credit card. Can you send me a new one?” And they send me a new one. And then as the reminders come in to update my credit card, because you know, they’re trying to take payment and then they’re telling you that the card’s expired…

Judith: Yes, you’re obliged to review it. Yes, what a good idea.

Nicola: And that works rather well. You can just go in and cancel ALL your direct standing orders in your bank account, and use them as they come along. It’s the tiny expenditures first, then the big expenditures. I’m very happy to buy a piece of software or a tool for my business, but I’m very reluctant to buy a new kettle, even though this kettle is embarrassing now.

Judith: You’ve told us about the kettle before. Keep quiet about the kettle, because frankly people will be sending them to you soon.

Nicola: Really! Someone came around yesterday, and you’ve flipped the switch on the kettle and it’s not blooming working! It looks so embarrassing!

Judith: I tell you what I think is quite a good thing. When one’s new, so let’s go to MailChimp as a good example. If you start on the free level, and you get into the habit of sending out regular newsletters and you can see that’s working for your business, then actually to upgrade to the paid level so you can send autoresponders is a no-brainer.

Nicola: Yes, but how much are we talking here? How much is it a month for the next level?

Judith: I don’t know. I have no idea.

Nicola: You’re still on free!

Judith: I am! Yeah! Because as I’ve said to you yesterday or the day before, I’ve never sent an autoresponder in my life! But we’re about to change that, you and I. But, interestingly, I think it’s the same, I think it’s about $19. It’s not very much money. I do have some sympathy with the people because we all did it where you sign up for everything, thinking “I’m going to use it imminently,” and you don’t. And sometimes, when you’ve been toiling on for a long time, it’s a nice relief not to have those constant outgoings. You know how it is when you’re at the end of your car loan and you save £189 a month, it’s an absolute joy.

I take your point, which is, “What’s an investment?” I tell you, sometimes people go to Fiverr, and you can get great results from Fiverr, can’t you – but equally you can spend a lot of time fannying around, not getting what you want and being dissatisfied about it. And there’s the “time is money” thing. You might just as well have paid somebody who charges a little bit more; who you know is a trusted, regular supplier. I mean, I know somebody who will do a book cover for 35 quid, why would I go to Fiverr for it, to a stranger that I don’t know. I’ll just pay 35 quid, have it done.

Nicola: Yeah, absolutely. And you’ve touched on a really important topic there, which is the opportunity cost. Because if you’re spending hours and hours and hours trying to get something cheap, what could you have been doing in that time to make money, to make more money, much more money than what you’re trying to save? Try and think about that. It’s the opportunity cost that is very, very, very, very expensive.

Judith: Yes. There was a chap I was talking to last night, I don’t know that he listens to the podcast, he’s a very nice man; and actually, I’m going to come back to him later in the day. He has a day job, which means he comes home at night to set up his business on the side, like so many. He said, “I read that you recommend not making your own website, but I can make my own website.” And he wants an e-commerce site. He’s very techy, it’s what he does for a living. And I said, “If money were no object, and you didn’t have to go to work, how long would it take you to do that?” He said, “About a week.” So I said, “If you’re gonna come home from work and do that in your leisure time, that’s 25-50 hours. But no! First of all, we haven’t proven the business model yet. Don’t waste all the leisure time you got in the next 3 months making a website, before we even know that your thing’s gonna sell.” He’s selling things on eBay, which of course is a perfectly satisfactory website to start off, until you’ve proven the model. In fact, better than your own, because there’s a ready-made audience for you there.

Nicola: Making decisions – this is so interesting. So, making decisions like that is also a way of prevaricating in your business.

Judith: I know. I could see that, because he’s techy and he would love to make a website. And actually having to prove the model is a little bit stickier, so there was an opportunity there for him to hide in the taking 3 months to make a website for a business we don’t even know that’s gonna work yet.

Nicola: Yeah. We mustn’t forget the people are also looking for entertainment. One of the things is they’re looking to be educated, those who are looking to be entertained, and that is to do something in his spare time. That is a hobby isn’t it, in a way?

Judith: Well, he hasn’t got any spare time. I’m gonna come back to him later, because actually people like him come into my Who or What’s Impressed You section.
Let’s carry on with where we are, then. So how would you guide a client who was prevaricating over spending money on certain things? What you’ve said is interesting, and I’m the same; we both have the same issue for ourselves. Some things we can invest in quickly and easily, and other things we go, “Ooh…” and hover a bit.

Nicola: Yeah, well I’ve hovered a bit before paying a hundred… This is another example of it. I know that I’ve got to have a proper membership area. I know that it would be a better client experience; it would be a better experience for me putting new stuff in there. So, I bit the bullet recently, and it was – oh! Mr. Postman is thrusting what feels like a large package through the door.

Judith: He makes a regular celebrity appearance on this show, your postman.

Nicola: He does! Not today, thank God.

Judith: Before Christmas, a ______ line, if you remember.

Nicola: Yeah, absolutely. I was dressed in nighties and a dressing gown, unfortunately. He doesn’t knock.

So I bit the bullet, and paid what felt like a monstrous sum of $148 for a year’s license. And that was the other thing. I was much more reluctant to spend something on a year’s license, because I know $148 is going to come out of my bank account NEXT year. But actually, it’s only gonna take 2 clients in a year to pay for that. No! Hang on, it’s $79 a month I charge for my membership area; so I can’t even do the maths on that, it’s a ridiculously large return on investment. But somehow, I was holding back from doing it, and it’s just ridiculous.

Judith: Yes. I did the same thing on my Webex, which I use for the calls on my little group. I had to go up from £36 a month to £49 a month when I went above 25 clients. But of course, the first client above the 25 would pay for the whole thing! So, you know, it’s madness. But it’s good that we’re aware and we’re actually making those decisions with some kind of instinct, I think. I just think it’s worth considering before you spend money, “Is this an investment? Am I gonna use it?” I suppose is the criteria, isn’t it?

Nicola: Yeah. Is it gonna make you more money, or is it gonna save you time that will enable you to make more money? Again, it’s about thinking about investment, rather than overhead, isn’t it. Is this an investment, or is it just a shiny object?

Judith: Well, in accounting terms, these are ‘fixed costs’ you see, so that’s quite tricky. But I think we’ve proved today that we’re all a bit weird when it comes to spending money. And so, given that we know that, then we could have a think about it. We can park that prejudice and evaluate the expenditure, I think.

Nicola: Yeah. And I’m going to my new accounting system – it allows you to break down things a bit more. I’m a bit dreading the extra work, so at the moment I just lump it all in under ‘Online Expenses’. But of course, some of them will be vague…

Judith: Yeah. I think you’ll enjoy it, Nicola. So it’ll give you more power and more control, and more understanding of what IS an investment. Actually, that’s another thing we should follow. As you get into Xero and VAT registration, what is an investment and what-not in your business, and what will you be inclined to strip out when you see it going out month after month?

Nicola: Yeah. Well I’m quite happy to get on the plane and go to Vegas, and that’s not going to be inconsequentially expensive, even though all of the entertainment is paid for. I’ve still got to go there and put a hotel room over my head. I don’t have any problem with that whatsoever.

Judith: Yeah, I know. And I now understand that, because the things that we want are not expensive.

Nicola: Yes. And also, I know that I’m gonna pick up at least 1 client that’s gonna pay for it many many times over while I’m over there.

Judith: No VAT on travel, darling. No VAT on train fares or airfares. So if you can remember that, that will save you some time when you’re doing your accounting.

Nicola: Good. So how many big zeroes are gonna tell me what’s VATable and what isn’t? It probably won’t.

Judith: Well, I don’t think it will. It might, I suppose. Well… the receipt! You need a receipt for everything now. And a VAT number on it. And a VAT invoice if it’s VATable. Oh we’ll talk about this, let’s don’t talk about this in the show. I’ll give you some tips.

Nicola: I need a VA.