How to Create Proposals for Your Customers

As a small business owner, I’ve run across instances where I needed a proposal and where an estimate would work. What’s the difference? Simply stated, an estimate provides the product or service and its cost including any labor, taxes, or other fees. You normally provide an estimate for a customer or potential customer that has asked to know how much it would cost for your product or service. On the other hand, a proposal is more of a sales document – an estimate on steroids to convince the potential customer that you have the right solution to meet their needs.

While you can easily come up with an estimate, a proposal requires a bit more effort to succeed. Sometimes potential clients will submit a “Request for Proposal” which is an official document requesting businesses to “bid” on solutions to their problem. But many times, a potential customer may simply request a proposal from you and you might not even know they have asked other businesses for the same thing.

Since a proposal needs to convince the potential customer that your solution is the one to solve their problem, you need to plan your proposal by following the steps outlined below. Even if your proposal is only a couple pages, following the basic plan and doing your research may make the difference between getting the job and losing to the competition.

  • Carefully study the requirements or the customer’s “issue”

It’s critical to clearly understand your customer’s “issue” and what’s important to your customer. In evaluating the issue, also make it a point to understand the underlying causes of the issue or problem and if any other solutions have been tried before. Did these solutions work or fail? Why did the issue arise again? Is there a cause that is being overlooked? Is there an attribute that this customer is looking for that other companies aren’t understanding?

  • Research and understand the customer

To be able to ensure that your solution not only solves the problem at hand, but satisfies the customer’s needs and wants, you will have to find out more about your potential customer. Is cost most important to the customer? Or is quality or a warranty more important? Or is customer service the most important? Researching these customer needs may take some investigation such as asking other companies that may have worked for this customer previously in another industry. You can also ask the customer or their employees’ questions that will help you develop an understanding of the customer.

  • Develop your approach

You know how to solve the problem, but you need to sculpt your solution to meet the expectations that you researched in 1 and 2 above. Use the information you identified to develop the wording, pricing, and scheduling for your definition of the problem and discussion of the solution.

  • Evaluate your solution

Test drive your solution against steps 1, 2, and 3 above and make sure you are the solution the customer is looking for based on your findings. If there is any doubt, re-evaluate your approach and fine tune your solution.

  • Know your competition

Make sure you research your competition. Even if you don’t know if other businesses will be submitting proposals, it’s best to see if any other companies have solutions and how yours compares. If you find that the competition offers a better value to the customer, evaluate if your solution offers more value, or if you can adjust your solution to provide more value.

  • Write it

Your proposal should include an executive summary which includes: a) a summary of the basic issue(s); b) a succinct description of the proposed solution; c) the expected results including the goal, the expected outcome, the solution overview, and a call to action (to choose you). In the body of the proposal you will expand upon these sections and provide facts and proof why your solution works and why it is the best choice for this customer.

  • Edit it

Ruthlessly edit your proposal. Even if you have to ask a friend or employee to assist you. It’s amazing how much power a misspelled word or improper grammar can have on a customer’s decision even if your solution is superior to the competition.

The method of submittal for your proposal is normally described in the “Request for Proposal” (RFP). However, if there was no RFP, use your research regarding the customer to determine the most effective way to submit your proposal. This additional touch will help show that you understand your customer and what they are looking for.

Mahalo and much success,
Lynn Herkes



Clayton, S. (1996, January 31). 7 Steps To A Winning Business Proposal. Retrieved from Entrepreneur:

How to Write a Proposal. (2015). Retrieved from wikiHow:

James, G. (2014, February 26). How to Write a Winning Proposal. Retrieved from Inc.:

Turak, A. (2013, February 18). How to Write a Plan or Proposal That Rocks. Retrieved from Forbes:



How to Balance Your Business and Personal Life…

As entrepreneurs and small business owners, we all know this is very difficult. No matter whether you’re working full-time and running a business or running a business full-time and juggling a family and friends, managing your time so you meet all your business and personal goals and objectives is one of the most difficult things you’ll face.

When I was running my dressage training business, I was also working full-time as an engineer for an aerospace company. My idea of time management was to focus on my engineering career for 50-60 hours per week, and use all my other time to run my training business. After 16 years of that kind of stress, I was beyond burned out…and didn’t even know how much fun a “vacation” could be.

No matter what you’re situation, I highly recommend using the following tips to manage your time effectively so at the very least you don’t burn out, and at the very best you employ a balance that will increase your creativity, effectiveness, and accomplish your goals while enjoying life as much as possible.

  • Define what is truly important, what are your goals, and what makes you happy

Understanding what is important to you and knowing your goals for your business and personal life will help you focus on where to spend your time. Clearly define what makes you happy, and what doesn’t. Work up an initial plan to prioritize your goals and define work times and personal times in a schedule. Make sure you schedule in time for things that make you happy even if it’s just 10-15 minutes a day.

  • Understand yourself and your patterns

Take the time to really understand your patterns and how you work best. If you’re an early riser and do your best work in the morning after a good workout and light breakfast, then schedule your most challenging tasks for that time. It’s also a good idea to put a little stress on yourself by not being too generous with deadlines. If you are the opposite type of person, and everything is urgent, try using a system that allows you to prioritize tasks and allow yourself more than ample time to complete them. You will develop a better sense of accomplishment and completion which will lead to more positive planning and an increased ability to push tasks out of the “fire” and in line with your goals.

  • Delegate when possible

If you’re have employees or a virtual assistant, delegate. If you give the right work to the right people, you will allow yourself time for the tasks that only you can do. You really don’t want to do it all yourself if you have options and can delegate some of it. This is true for business and personal life. For example, if you can afford to pay to get your car washed, do it. You can use that time for something that is much higher on your priority list.

  • Manage your environment

This is critical. I’m so guilty of not effectively managing my environment I could be the poster child for this. I’ll have my priority list for the day, go to my office and start working and then start playing with the dogs, put the laundry in the washer, take out the vacuum, feel guilty, and stop everything and go back to work. Not only is this terrible for my concentration, I get so much less accomplished. So don’t be like me. If you work at home, schedule time or days for household chores, your family and your pets. If you are a phone or email checker (you know who you are), schedule specific times each day to check the phone and your emails. If you have an open door policy at your business for your employees, ensure that you have “office hours” for them so that they don’t constantly distract you. It’s good for your employees to learn to plan their time as well. And unless the building is burning down, there isn’t usually anything that is so life-threatening that it can’t wait until specific office hours.

  • Separate work and personal times

When you plan your daily time and your weekly and monthly schedules, it’s really important to include your personal appointments and schedules as well as your business appointments. I used to be in the habit of scheduling all my business and work tasks and appointments, but I never scheduled any time for family, friends, or even exercise. You can imagine where that led. It may seem really tedious and time consuming at first…that’s the excuse I used to use. But it’s so important and incredibly helpful.

  • Remember why you work so hard



Mahalo and much success,

Lynn Herkes



Chapman, A. (2015). Life Balance, Happiness and Life Change. Retrieved from BusinessBalls:

How to Get Your Work-Life Balance Right in 2015. (2015). Retrieved from xero:

Kanarek, L. (2010, December 20). 10 Ways to Balance Your Work-From-Home Life. Retrieved from Entrepreneur:

Pisolkar, K. (2014, February 26). 5 Easy Ways to Balance Your Business and Personal Life. Retrieved from Huffington Post:

Pollack, B. W. (2013, January 22). Balancing Work and Personal Life with Your Business. Retrieved from SBA:








Do You Know the Top 5 Reasons Small Businesses Fail?


According to the US Census Bureau in 2013 there were 400,000 new businesses created and 470,000 existing businesses were closed. That’s approximately 117% termination rate! In today’s connected and technologically advanced world, where the tools are so readily available to start, run, and be successful at business, I’m astounded to hear those facts. I bet you are too.

Of course you and I as business owners are thinking “well that’s not me, those businesses must have made huge mistakes”. Right? But when you look into the research, here are some common causes. See if you can relate to any of these.

  1. Lack of funds

There are numerous reasons your business could fall short on funds. The annual report by the Corporation for Enterprise Development indicates that 37% of experienced business owners fall short of the cash they need to cover their expenses. That could be you if you don’t see the warning signs.

Consider these potential warning signs for your business:

  • Over-extending or growing too fast.
  • Not starting with a minimally viable product or service (MVP or MVS).
  • Expenses becoming too costly such as labor, marketing, supplies, office space, and equipment.
  • Unprofitable business model and revenue streams.
  • Inability to attain additional funding from outside sources (such as loans, venture capitalists, angel investors, or personal funding).
  1. Competition and customers

Both underestimating the competition and not understanding your customers can be a large factors in the ultimate demise of your business. A 2014 study by Accenture revealed that 66% of consumers in 1 out of 10 industries changed to a different company due to customer service issues. And 82% of consumers felt that the company they left could have done more to prevent them from switching companies.

This could be you, especially if you don’t ask yourself the following questions.

  • Do you know who your competition is and what differentiates your products and services from theirs?
  • Do you know how your customers feel about your products and services?
  • Do you have your feelers out for new technologies or advancements in your industry that are attracting consumers?
  • Are your competitors implementing changes or technologies that you have overlooked?

Another aspect is the overreliance on too few customers. Some small businesses are completely reliant on one or two large customers. If you have all your eggs in one basket and the basket decides to get up and go somewhere else that could be the end of your business. Yikes!

It’s critical in today’s hyper-fast-paced business world to not only research and understand your competition, customers, and your market, but to quickly react to changes that move your business to the front lines. Even if you think you’re in a very steady and reliable market with plenty of customers and very little competition, it only takes one competitor with one great product or service that resonates with your customers to rock your boat.

  1. Operational inefficiencies

Now is the time to flush out operational inefficiencies and focus on a lean, mean business machine. But what exactly are operational efficiencies? Operational inefficiencies can be broken down into a number of more specific areas such as:

  • Wasting money, time, supplies, inventory, and products.
  • Repetition and/or replication of tasks, duties, services, and paperwork (duplication of effort).
  • Paper vs online everything.
  • Inefficient or ineffective communications…this is a huge waste of time and money!
  • Imbalanced workload. Too many employees doing too little, or some employees doing too much and others not enough.
  • Owner and/or managers having to redo the work of employees not performing properly.
  • Inadequate or unorganized inventory management system.
  • Inadequate or unorganized bookkeeping system (tracking expenses, receipts, usage, inventory, etc.).
  • Owners and/or managers doing the majority of the work, and not training and delegating to their employees.
  • Paying for marketing that is not generating a sufficient return on investment (ROI).
  • Inability to negotiate terms for rent, labor, and materials leaving with higher costs.

These are just a few areas to address, but major players in becoming an efficient, lean business and increasing your bottom-line.

  1. Dysfunctional management/leadership

While leadership and management are not technically the same, both play a huge role in a company’s performance and ability to succeed. Especially in today’s economy and employee landscape, it’s essential for management and company leadership to not only present a united front, but provide a model for the company culture, focus, and vision. The following list represents some areas where management and leadership need to concentrate to provide a solid foundation for company success.

  • Owners and/or managers with lack of focus, vision, planning, communication skills, and motivational techniques (all stick, no carrot).
  • Owners and/or managers lacking standards and values, consistency, non-partiality, inter-personal skills, foresight, and conflict resolution skills.
  • Lack of succession plan: nepotism, power struggles, poorly qualified replacements.
  • Owners and/or managers using conflicting messages and communications (for example: lecturing employees about cutting costs, then bragging about their new expensive vacation or house).
  • Owners and/or managers without management skills or training. This is true for many entrepreneurs. Entrepreneurs aren’t always great managers of people, they can be, but not always. They are often better leaders than managers.
  • Owners and/or managers that can’t get out of their own way. They are stubborn, risk averse, conflict averse (need to be liked by everyone), perfectionists, greedy, self-righteous, paranoid, indignant, insecure, etc.
  • Owners and/or managers not taking enough participation in the accounting/bookkeeping side of the business. It’s critical that the owners and managers are very involved in the pulse of the business including the income, expenses, profit, and loss.
  • Owners and/or managers more closely involved with front-of-house or back-of-house versus overall focus. This can be seen as favoritism, or worse lack of knowledge in that particular area. A manager that is perceived to lack knowledge in the area he manages (which would be all areas if you’re the owner) can be huge cause of disengagement in employees.

Changing your own behaviors and that of your managers can be one of the most difficult aspects of owning a business. Start by recognizing the behaviors or actions and work from there.

  1. Disgruntled employees

Herein lies one of the most elusive aspects of business. And it’s not just disgruntled employees, but all variety employee issues. And if you fall into the dysfunctional management category above you might not even realize you have disgruntled employees.

  • Disgruntled employees
  • Unengaged or dispassionate employees
  • Untrained or insufficiently trained employees
  • Unchallenged and/or over-challenged employees
  • Under-utilized and/or over-utilized employees
  • Inability to hire or attract qualified employees (and in some cases any potential employees at all)

So there you are. Based on these five categories of potential reasons, even if your business is doing great, you may need to reflect potential areas of concern. It doesn’t hurt to consider the potential hazards presented here and do some analysis and planning to make sure you are ready when and if these issues pop up. Feel free to use our EDITOR process model to assist you in determining if you have any of these potential problems and developing a plan of attack to stop “failure” from happening to you and your business.

Mahalo and much success,

Lynn Herkes




Goltz, J. (2011, 1 5). Top 10 Reasons Small Businesses Fail. Retrieved from New York Times.

Pofeldt, E. (2015, 10 13). 11 Common Reasons Small Businesses Fail. Retrieved from CNBC.

Thorpe, T. (2014, 7 17). The Top 5 Reasons Small Businesses Fail. Retrieved from Inc.

Wagner, E. T. (2013, 9 12). Five Reasons 8 Out of 10 Businesses Fail. Retrieved from Forbes.

Zimmerman, E. (2011, 1 5). How Six Companies Failed to Survive 2010. Retrieved from New York Times.



Creating and Sticking to a Business Plan

If you’re like I was when I started my first business, I started the business and was knee deep into it before someone finally said “do you have a business plan”? And even though I wasn’t looking for funding, I wish I had taken the time to at least write a simple plan. It would have been very beneficial through various crossroads along the way. So if you haven’t taken the time to write even a simple business plan, here’s why it’s important and some creation tips that might help.

One of the biggest benefits to having a business plan is to help you stay on track. This includes the direction of your intended products and services as well as how to successfully change directions when needed. A perfect example of this is when I had grown my dressage training business to the point where I had practically outgrown the facility we were at. But like I said, I never did a business plan, and I definitely didn’t track my growth or my customers, or market, or any real business data. So when I planned to move to a larger facility, I didn’t really have a “feel” for things like how much to spend on what type of marketing or even if my customers would want to move, or what kind of clientele the new facility would attract or if my pricing and training options were appropriate. Needless to say, my move was a very expensive lesson in what not to do.

Another important benefit is that researching and monitoring your sales, cost of sales, marketing ROI, and business processes against a business plan will allow you to make course corrections and future decisions much more effectively than relying on your “gut”. It will also help you with your planning and prioritizing in areas such as growth, management, and financial health. Determining milestones, or due dates, will help you stay on track and understand how long it actually takes to meet your goals.

A business plan will also help you break down your dreams into short-, medium-, and long-term goals. You’ll be able to more clearly determine if you’re meeting your objectives when you need to expand, hire, or cut-back. You’ll learn to be more proactive instead of reactive, which is always better for becoming successful. And your plan doesn’t have to be super fancy or complicated.

So how do you write a business plan? First, do some research. Determine what your goals and objectives are for your business. It’s important to breakdown your goals into short (1 year), medium (3-5 years), and long-term (5-10 years) goals. Next, crunch some numbers to define what your financial needs will be over the same time periods. If you need to do some additional research to get more concrete values for costs, expenses, and potential revenues, make sure you write down where you got your information (for future reference). This type of information will be known as your “assumptions” if you don’t already have existing numbers to use.

Once you’ve done some background research, crunched some numbers, and laid out the basics, you want to write an Executive Summary. This will be an attention grabbing description of what you do and why the reader should read the rest of the plan. Many times the executive summary is the only part of the plan potential partners, investors, or backers will read. Start with an enticing statement about what your company does and why it’s important.

The next section is a detailed description of your business, your industry, information on markets in the industry, and a present and future outlook on those markets. This section also needs to include any new products, services, or developments in the market that may positively or negatively affect your business.

The third section will included market strategies including a detailed, thorough market analysis. The market analysis should include the results of your detailed market research and a definition of your intended target market.

The fourth section is a competitive analysis. A common method of creating a competitive analysis is using a SWOT analysis where you analyze your company’s strengths and weaknesses, opportunities and threats based on your market research in the proceeding section.

The next section will describe your products and/or services and your company’s development plan with respect to production, marketing, and budget. It’s best to use charts and graphs that clearly show your short-, medium-, and long-term plans.

The next to last section will be the operations and management section. You will describe how your business functions including operations, logistics, management team and responsibilities as well as your capital and expense requirements. Again, it’s a good idea to use graphs and charts to clearly define these parameters.

Your final section will be your financial plan. This section will define how much external funding your company will need from short- to long-term. You will need to clearly describe where and how the funds will be used and what assets will be required.

Now that you know why you need a business plan and a general overview of how to write one, let’s discuss why it’s important to stick to your plan. Simply stated, it’s not. What’s important about having a business plan is to use it as a tool. As with any plan, it’s meant to be a tool that guides you through a process…the process of developing your business along your defined goals. Therefore, you need to regularly track your progress against the metrics defined in your plan and re-evaluate your plan and make adjustments to meet your goals. That is the most critical part of having a plan.

Another example of using a plan as a tool comes from my experience as a dive instructor. We were always taught to “plan our dive and dive our plan”. And many times that was exactly what happened. But we all know, especially if we dive, things happen, and as dive instructors, we were highly trained in effectively dealing with these types of “things”. So even though we “planned our dive”, and did our best to “dive our plan”, when “things” occurred that weren’t in the plan, it was imperative to reassess the method of achieving the goals of the plan, and adjust accordingly. That’s the key! And, of course, to enjoy the dive along the way!

Mahalo and much success,
Lynn Herkes



Barry, T. (2015). A Simple Business Plan. Retrieved from Entrepreneur:

Berry, T. (2013, September 6). 10 Business Plans Benefits You Might Be Forgetting. Retrieved from Entrepreneur:

Berry, T. (2014, February 24). When and Why Should You Stick to the Plan? Retrieved from SBA:

Bert Markgraf of Demand Media. (2015). Short-term, Medium-term, and Long-term Planning in Business. Retrieved from Chron:

Business Plans: A Step-by-Step Guide. (n.d.). Retrieved from Entrepreneur:

Create Your Business Plan. (n.d.). Retrieved from SBA:

Lavinsky, D. (2014, January 30). How To Write a Business Plan. Retrieved from Forbes:

Markowitz, E. (2010, September 15). How to Wrtie an Executive Summary. Retrieved from Inc.:








Cutting Costs Effectively

All business owners know that there is an ebb and flow to owning a business. At times, your business is kicking butt making a ton of profit, and at other times your looking at ways to cut costs and stay afloat. The trick is to even out the disparities and keep the costs at bay while keeping the income high so that there’s always a profit, and best case a good profit, the majority of the time.

To keep the profits up and costs down, you need to keep a careful watch on your ratios including your income versus expenses, profits versus sales, and sales versus overhead. And if you see negative changes, you don’t want to wait to take action until it’s too late and you’re in a death spiral of doom headed towards collections, bankruptcy, or closing your business.

In addition, being proactive on making improvements that keep you in the black will keep you from having to do layoffs, implement drastic strategies, and introduce policies that could damage your company culture which in turn can lead to a decrease in the quality of products and services, and increase customer turnover. All of which will not help keep the profits coming in.

As a proactive and successful business owner, you will need to implement a systematic approach to managing costs in order to create long-term value for your business, your employees, and your customers. Below are some basic methods of implementing that approach.

  • Renegotiate all contracts on an annual basis. This includes contracts with vendors, landlords, logistics providers, and equipment leases. As you develop relationships with your vendors and providers, you want to negotiate more cost effective contracts and be reluctant to sign into contracts longer than one year. Actively cultivate relationships with additional vendors to be able to have leverage if a switch is needed.
  • Talk to your customers frequenting. Your customers may have some really great ideas on products or services that aren’t needed, or ways to reduce or replace unnecessary steps in a process that you or your team might not have thought of previously. In addition, developing an open relationship with your customer can lead to ideas for products and services that might create additional revenues streams.
  • Change up your payment terms to suit your product, service, or inventory. In other words, negotiate your contracts to include payment terms that match the inventory turns of individual products. So if you are purchasing an item from a supplier that normally sells in 60-90 days, negotiate Net90 instead of Net30. This will encourage your suppliers to work with you to improve your inventory productivity.
  • Incorporate Just-In-Time inventory practices. Just-In-Time means that you take delivery of the item from the vendor so that it not “held” in your inventory for any length of time, but goes directly to the buyer or directly into the fabrication of the final product without being “stocked” in inventory. Just-In-Time practices can be implemented in many areas of the business to reduce “holding” costs for everything from purchased parts to employee efficiency.
  • Maintain a steady headcount. While many companies, hire and layoff to ease the burden of difficult financial times, the costs of eliminating, hiring, and training employees far outweighs the costs of alternate solutions. Some ways to avoid this expensive cycle include allowing attrition without hiring replacements for open position and combining or re-organizing job responsibilities. Hiring contract employees or temporary employees is another solution that is easier now than in the past with the advent of more capable employment agencies. Additional tools that can increase the productivity and efficiency of existing employees are technology, lean techniques, and process re-engineering. The goal is to increase the revenue per employee by creating efficiency and effectiveness.

While streamlining processes, cutting costs, and increasing efficiencies will improve your bottom line in difficult times, it’s critical to also sustain a progressive, positive, and functional company culture. If the changes you implement turn your company’s culture into a “dog eat dog” fight for survival of the fittest, eventually you will be worse off than if you did nothing.

Mahalo and much success,

Lynn Herkes



Crone, E. S. (2015, February 20). 7 Smart Ways for Your Small Business to Reduce Costs. Retrieved from nerdwallet:

Jacquelyn Lynn, I. R. (2015). 50 Ways to Save Money in Your Business. Retrieved from Entrepreneur:

Odland, S. (2012, February 15). 5 Ways to Control Costs. Retrieved from Forbes:

Tozzi, J. (2008, October 24). Shifting into Cost-Cutting Mode. Retrieved from Bloomberg Business:








What’s the Best Way to Collect on Delinquent Accounts?


Are you struggling with a customer that just won’t pay? Or a few customers that always pay really late? Or have you always had really great luck, and just now realized that you have some invoices that haven’t been paid? If any of these scenarios are happening to you, and you’re getting frustrated and even mad, we can help. We’ve been there and we traversed some reputable articles to help provide you with some next steps. Here’s are summary.

  1. Stay calm, cool, and professional.

Even though it might feel better, getting angry or frustrated doesn’t get you your money. And sometimes it can even make the situation worse by encouraging your delinquent clients to avoid you at all costs. It’s best to think rationally and professionally. There can be many reasons a customer is late on a payment – anything from cash flow issues, to poor organization, or belligerence about paying.

It’s always easier to stay calm, professional, and focused on the goal (getting your customer to pay) if you have a plan. Sometimes it even helps to write a script or some bullet points, especially if you’re new to collections and you will be making phone calls. Make sure your script or notes provide reminders of how to stay focused and calm as well as the details of the conversation.

  1. Work to keep the relationship positive.

Even though you feel frustrated and/or disappointed because you thought you had a good relationship with your customer before they didn’t pay, you really want to focus on trying to keep the relationship positive. Often you’re thinking that you don’t want to keep customers that don’t pay but there are a few more details to consider before culling your customers for non-payment.

  • Even if you have an overwhelming amount of customers, and are making all the money you could ever possible dream of making, creating a negative relationship with a customer may lead to negative word of mouth or earned media for you company which can lead to an increase in customer turnover.
  • There will always be a customer that doesn’t pay on time. You will work through these steps and tighten up your system, but there will always be at least one no matter how hard you try.
  • Using a positive, yet firm, approach and staying professional, will actually provide a positive influence for your company in word of mouth and earned media. Even if you decide not to offer products or services to a specific customer in the future, keeping it positive will prove more affective for your overall company image, which in turn may help increase your customer loyalty.
  • Most people respond better to positive, yet strong communications than they do to negative or frustrated communication. And using empathy or showing that you care may even allow the person to open up and share their current situation which may provide some help so that you can develop a repayment plan to collect on their debt more successfully.
  1. Communicate often and save everything.

You have an on-going communication with your customer from the minute you started your marketing. And you continue that communication through the sale, whether your customer is purchasing a product or service. Therefore, a logical step is to continue the communication through the payment process and beyond.

Make sure your invoice clearly states a “due date”. The due date should be different from the “invoice date” and it’s best not to just state due “immediately”. The best response in payment and collections come from invoices that state a clear due date. It’s also critical to save everything. Even if you’re calling, record the call or take notes, and send a follow up email stating what was discussed on the call and any agreements or due dates determined. Remember that if you are recording the call, legally you need to inform the person that they are being recorded.

Next, follow up shortly after the invoice is sent out. Make a follow up schedule for yourself for each customer. The first follow up should ask for feedback on the satisfaction with the product or service, as well as if the customer received your invoice and noted the due date or scheduled it for payment. This type of follow up should continue the conversation with your customer and improve on the relationship.

The next follow up should be shortly after the due date on the invoice and also be geared to enhance the relationship by reminding the customer about the due date for payment of work that has already been performed or product that has already been delivered. Ask if there is anything that you can do to help them make the payment, such as offering to accept credit card or debit card payments, picking up the check at their location, or paying online. Offering to help may assist greatly since a specific customer may not realize there are additional ways to pay.

Once the customer has reached a point where they are 60 days past due, or you have not been able to setup a payment plan with them, or they have not been reachable, it’s time to start providing ultimatums. It’s important to not only email but to call and to follow a plan and have specific goals and wording for each interaction. It’s also helpful to keep a table or spreadsheet of delinquent accounts and their priority with respect to amount due and number of days past due.

Some of ultimatums you can start with are:

  • Decline to sell additional products or services to the customer until their current delinquent invoices are paid in full.
  • Communicate with them weekly or daily by email and phone.
  • Depending on the amount owed, consider submitting the debt to a collection agency or going to small claims court. You must be very careful with your communication when you’re considering these options.
  • Resort to drastic measures only if all other efforts fail.

Statistics show that after 90 days past due, the probability of collecting on a delinquent account drops to approximately 69.6% (per the Commercial Collection Agency Association). The collectability drops to approximately 52% at six months, and 22% at one year. Most sources recommend sending delinquent accounts at 90 days past due to collection agencies. Collection agencies usually take a commission of 10-25% of the value of the invoice. Reliable collection agencies can be found through the Association of Credit and Collection Professionals or Commercial Collection Agency Association.

Legal options are another option, however, these can be time consuming and cost more upfront. Small claims court normally handles claims of $5000 or less, but claims greater than $5000 usually need to be handled through civil court and you will need to secure an attorney.

  1. Make changes going forward.

For the best results, going forward, you should review all the pieces of your business to ensure that you incorporate all the needed changes to help your customers pay on time before any of these measures have to be taken. Review your invoices and make sure you have a clear “due date” and your company name or “pay to” is clearly defined as well as your mailing address. It’s also helpful to state right on your invoice the methods of payments you accept. If you send invoices electronically, do you offer the option to pay electronically? Do you accept credit cards? Which ones? Make sure your phone number is on your invoice so any of your customers that want to call and pay over the phone with a credit card don’t have to search the internet or the phone book.

You also need to develop a clear credit policy and collection plan. Your credit policy needs to be clearly stated on your invoice or in an attachment sent along with your invoice. Stating your credit policy on your website is also recommended. Create a follow up plan for all customers that starts immediately after the product or service is received or completed. This plan should include a “thank you” email that also includes a reference to the invoice sent and the date it was sent. Encourage feedback in your email such as asking the customer if they are satisfied with the product or service. This will build on the relationship and communication.

Additional emails and phone calls should be planned for one day after the due date, and each week thereafter. Phone calls should be one day after the follow up emails and should be geared to solidifying payment or an alternative payment plan. Make sure you save everything, including notes from phone calls and reiterate the phone calls with an email.

Just making these changes can improve your delinquent account rate. But most of all, applying these strategies and incorporating a well-defined credit policy will save you a lot of time and effort, as well as possibly prevent some delinquencies since customers will be aware and know you are serious about on-time payments.

Mahalo and much success,
Lynn Herkes


Blair, A. (2014, August 14). Freelancers Broadcasting Network/Blog. Retrieved from

Credit Research Foundation. (1999). Retrieved from Principles and Methods of Collection:

Dunn, N. (2009, August 4). Accounts Receivable Nightmares: Collecting on Delinquent Accounts. Retrieved from

Hess, M. (2013, June 11). The best way to handle cusstomers who don’t pay. Retrieved from CBS News:

Mehta, M. (2010, August 31). Bloomberg Business. Retrieved from

Nine Collection Tips for Small Businesses. (2011, July). Retrieved from

When can I charge late fees or finance charges? (2015). Retrieved from

Wood, M. (2012, July 3). Delinquent Accounts: The 3 Simplest Ways to Get Them Paid Fast. Retrieved from







Communication: Count to 10…Or maybe longer?

cropped-cropped-frustration1.jpgAloha all,

We all have bad days and good days. Customer service and communication skills training tells us that the minute you walk in the door, you leave it all behind. But let’s be realistic, that doesn’t always happen. And sometimes, your bad day happens at your business.

So the rule of thumb is: count to 10 before you respond. What happens if that isn’t long enough? Some people say it’s the 24 hour rule, but that doesn’t work if you’re right there in front of the person who is the potential cause of your bad day. And you can’t just say “I’m sorry, you’re pissing me off, I need to walk away and come back in 24 hours to answer you”. Where’s that “Easy” button when you need it?

So, what to do?

Here’s a few recommendations. Some are easier to do than others. Most will take practice. But all are effective and can become second nature if practiced often.

  • Focus on the complainant’s words and make mental notes (or actual notes). This often acts as a deterrent to an emotional response and gives your brain something to do in the background (coming up with positive solutions).
  • While listening, tell yourself that the person could be having a bad day for other reasons that are contributing to their reaction to the current situation in an unreasonable and over-reactionary fashion. This makes the situation somewhat bearable and allows you to focus on possible things that may have happened to that person. Plus it allows your mind to transfer into an empathetic state, so you can be more aware of keywords that might help tone down the emotional side of the discussion and focus on solutions.
  • When the other person takes a break from talking, quickly and simply summarize the main points they were making. Ask them if this summary seems correct or accurate. This often fizzles the emotional input by confirming to the other person that you are listening and that you care about what they are saying and the issue they have.
  • Breath. Believe or not, breathing does help. If you feel your temper and blood pressure rising, and your instinct is to fire off something that most likely will not help, stop and breathe. You can focus on breathing and still listen. Resist the temptation to retaliate. It won’t end well.
  • If you feel that the conversation is straying from emotional control, and straying from the facts, and is starting to venture into a non-reality based blame or accusation session, acknowledge the person’s grievances and very politely ask if you could continue the conversation at another time when you are both calmer. Make sure you have another time in mind, that is within 24 hours, and that you set up a specific appointment and location. This will provide the complainant some minor satisfaction and may allow them to calm down some as well.
  • Remind yourself that a bad day in your world may be someone else’s good day. Sometimes, even though this is cliché, it helps. I know when I’ve had what I consider to be a really bad day, I’ll take a call from a vendor or client who is having a miserable day, and it really helps to put things in perspective.

These tips should help diffuse many situations. Feel free to customize these to your own style and communication skillset.

I hope this helps.


Lynn Herkes


A Funny Example of customer service…local style

Rap Replinger’s Room Service sketch

Rap Reiplinger’s Room Service

Thank you to Rap Reiplinger for the wonderful example of humorous customer service…local style.

We all love this video and it always reminds us of what not to do.

Have a fantastic weekend,

Lynn  and Bob Herkes


Infuriating Customer Service

I recently had a very frustrating encounter with a customer service representative that I would like to share with you.  The company, let’s call them ABC Company, is one I have done business with for many years. I use their products regularly with no issues and, as a result, I have never needed to contact their customer service department for anything. Their products work very well and until now, I had never thought about the company in any negative way, other than to wish that I had come up with the idea (I’m sure we all think of that sometimes, wishing we had the foresight to invent something like “bot’s dots”, but you never know, you may be Mr. Bot!).

This interaction began when I received an email from ABC Company stating that they were not able to charge my credit card for this month’s service fee. I was surprised to get this email from ABC Company since I was under the impression I had cancelled the order for that particular service a year ago, and I was pretty sure I had an email to prove it. My bad for not checking my credit card charges regularly (but that’s another story). Either way, I had a few moments, so I decided to call the customer service number indicated on the email.

I called the number and after a brief wait (less than one minute – feeling pretty good here) the call was answered by a female who very quickly stated her name and her greeting. Quick enough that I didn’t catch her name, her title, or the company. She did ask, “How can I help you?” which led me to think she might be a customer service agent. So I told her my name, and began explaining my problem. I started to say that I was surprised to get the email because…. She interrupted as the words were coming out of my mouth to explain about the attempt to cancel the order a year ago, and before I ever finished, she stated, “Oh yeah, the email from December 12, 2013 stated that you needed to call us to cancel your order”. I agreed with her on the date of the email, and the fact that it stated I needed to call, and I began to say that I find it difficult to call because… She interrupted me again, stating, “This is an important service that we provide and it’s critical that you call in so that you can answer security questions prior to cancelling your order”. Then, right here, she actually stopped talking to me and stated, “Good night and Merry Christmas”. She must have been saying that to someone else, probably a co-worker that was leaving. She then continued right on talking to me, “But I can cancel your order now, and I will take the last monthly service fee off of your invoice so that you won’t be charged that amount”. I was amazed that she had interrupted me a second time, then interrupted herself to say good night to a co-worker mid-sentence, and proceeded right on talking as if nothing had happened.

I have to admit, my blood pressure went up a few notches. Regardless of my extensive customer service experience and training, or perhaps, in part, because of it, I find it difficult to tolerate this lack of basic courtesy in a customer service agent. I regrouped and stated calmly, “Thank you for taking off the final charge, however I think that ABC Company needs to make it easier to cancel orders since it is not always possible to call and many customers prefer written proof that their credit cards will not be charged”. As I’m finishing the last part of my sentence, she started talking over me very abruptly, “Email doesn’t work, we have to have you provide answers to security questions, and you should have called to cancel your account like it stated in the email. I’m processing your account now”. I was amazed at this point, and kind of shocked. I hadn’t been treated so rudely in a very long time. I simply stated, “Your customer service is awful”. There was a brief moment of silence. I started to say, “If it is so critical that a customer call to answer security questions, it would be better customer service for ABC Company to follow up with me instead”. That must have struck a nerve, she angrily interrupted again with, “ABC Company has millions of customers. We couldn’t possibly call them all. Your account will be closed and your order cancelled. I have cancelled your last payment. You will receive an email with the confirmation number. Is there anything else I can help with?” I was still in shock. I couldn’t recover at that point. I didn’t even think to request to speak with a supervisor. The tension was so intense I almost felt like there was a voodoo doll in her hand and she was getting ready to be-head it. Yikes. And did I mention this was on Christmas Eve? I understand that the holidays can be intense and people can be particularly edgy. But this was over and above. I just said thank you and hung up.

So let’s parse this experience in order to help us not make the same mistakes.

  • To begin at the beginning. The greeting is your opportunity to make a positive connection with your customer and should always be both intelligible and friendly, as well as offering assistance. I understand after many years of answering customer service calls, the desire to rip through your greeting and get to the point of the call quickly is huge! But it’s important that you provide a clear, warm greeting including your name, your company name, and an offer of assistance. This is your “first chance to make a first impression” as the quote goes. And you will not get that chance again. If your initial greeting is irritating and rushed, and doesn’t provide the customer with a good impression as well as a pleasant invitation to spill their guts with whatever they intended to call about, how do think the rest of the conversation will go? It’s like asking for grumpy customers. You have the perfect opportunity to manipulate the conversation into a smooth, effective, positive resolution for your customer, yourself, and your company. Don’t waste it by being in a hurry.
  • Next, DO NOT INTERRUPT! EVER! The MOST IMPORTANT part of ANY customer service interaction is to LISTEN. Often, just being a good listener can resolve the problem. Failing to allow the customer to present their argument, point of view, or whatever it is they called for, makes you part of the problem, rather than the resolution. Practice active listening… LISTEN, LISTEN, LISTEN. Then, reiterate what the customer stated in your own words as clearly and concisely as you can and ask if your understanding of the situation is correct. There are many ways to do this in a polite, clear manner that invites positive approval from your customer. Right here, you have the ability to create a pleasant emotional connection between you and your customer as well as to turn your current interaction toward a favorable outcome.
  • Remember to FOCUS. Everyone has friends and colleagues at work and though we don’t want to be rude to them, our focus should always be on the person in front of us at the moment. And let’s remember, if someone is on the phone with you, that person is in front of you at that moment, regardless of the fact that you are not face to face. If you absolutely have to get the attention of someone you work with, use proper manners and excuse yourself from the conversation briefly. When you return invite the conversation to continue by apologizing for the inconvenience, reiterating where the conversation was, and requesting that the customer please continue. This technique, though the most appropriate way to interrupt a conversation, should rarely be used and only when truly needed such as needing to confirm when or how a problem may be resolved, or to respectfully greet another customer before returning to help the one on the phone, not to say goodnight to your friends. You can make the customer feel like you really care about them, like they are important, or you can destroy any hope of a future relationship. Courtesy and respect are crucial to developing repeat, satisfied customers.
  • Please, DO NOT LECTURE. If you are meeting the above steps, this shouldn’t be an issue. However, if you have a particularly insistent customer or someone who continues to go on and on, it is tempting to lecture them about how the company works, etc. This is not appropriate, acceptable, or even productive. Even if stating your company’s procedures clearly would explain why the situation occurred, if a customer has taken the time to contact customer service for the issue, they are not interested in being read a list of rules, procedures, or facts. They want to tell you about the issue, they want a sympathetic ear, and the satisfaction of having their issue resolved. The procedures are there for you to use to resolve the issues, not to explain to the customer so that they know the rules. Once you have listened, reiterated the matter, and asked if you have understood the problem, provided that the customer agrees that you understand, apologize for their inconvenience and offer a solution or two. That is what people want. Imagine yourself in the same position as I described above. All I really wanted was to proclaim that I didn’t want to be charged for an order I tried to cancel, and to have them stop using my credit card. I didn’t care about why I was supposed to call, or even that I was at fault because I didn’t call. If you look back on the story, how did the customer service representative help the situation by telling me that I hadn’t followed the rules? The answer is that she didn’t. The resolution was the same, she canceled my subscription and credited my account. However, she left me angry and feeling wronged, not at all desiring any future interaction with her or her company, when she could have, with the employment of excellent customer service, left me feeling happy and satisfied, ready to do business with them again in the future.

So, to reiterate, be courteous and warm, using your first interaction, the greeting, to make a connection. Listen carefully and attentively, making sure that you understand the situation by asking the customer to agree with you about the problem. Give the customer your undivided attention so that they are certain about how much you value not only their patronage, but also their time. Finally, use your company’s procedures to help resolve the problem, not to bludgeon your customer with so that you do not have to accept any blame. Whether it was your fault or theirs is not the issue, making a positive connection and resolving the conflict is the only relevant objective.

Hope this helps you to put yourself in your customer’s shoes in order to keep your customer relationships headed in a profitable direction.

Have a Successful Day!