Cash Caws and Wild Cats

8/14/2019 Cash Caws and Wild Cats

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The author Claudio Erba

Degree in Marketing and company communication at Catholic University of the Sacred Heart in Milan (Textsabout E-Learning and Open Source Business Models) and Marketing Communication certify by InternetAdvertising Association(http://www.iaaglobal.org).

Since 1994, he has supervised, in Italy and abroad (China, Germany, USA), web oriented projects bycoordinating software development activities for companies and public bodies of big and very bigdimensions.

Until 2006 he was teacher of CMS Systems at the University of Florence (Masters degree in Multimediaand Internet Engineering University of Florence/RAI),

Co Owner and CEO of Docebo The open source e-learning company, a company developing E-Learningopen source software for big companies, the Civil services and Ministry of Health.

The Blog: http://claudioerba-eng.blogspot.com

The company: http://www.docebo.com

Dr. Claudio Erba is available for speech around the world in this topics:

Strategic marketing and management in de-structured companies

Strategic marketing and management focused on teaching to Asian companies in how to compete

in complex marketing environment

Strategies and business model for Open Source software

E-Learning and E-Learning 2.0

The web 2.0 Marketing

Contact: [email protected]

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http://www.iaaglobal.org/http://www.claudioerba.com/http://claudioerba-eng.blogspot.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/mailto:[email protected]://www.claudioerba.com/http://claudioerba-eng.blogspot.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/http://www.docebo.com/mailto:[email protected]://www.iaaglobal.org/


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PART 1 BACKGROUND AND BASE THEORIES

Introduction

Handbook aims, consultation tips

Improvisation, a damage to root out

Background

Working background

Parallelism, virtual district

Parallelism, gold rush and frying pans

Opportunities to seize

Specialization

Basic knowledge

Introduction

Maslows hierarchy of needs

Products life-cycle Hyper Cycle graphic

Boston Consulting Group matrix

PART 2 MARKETING

Marketing

Marketing definition

4P theory

Strategies: define, analyze and understand you own market

Customer typology

Competitors

Actions systematic manner

Define your own products and marketing Mix

Products and services for IT professional

Buy, re-buy and fidelization

Pricing and different type of fees

Pricing, strategies and objectives

Types of fees, work by the hour, project work, mixed work

Calculation method suggestion

Communication

Soul searching

Total communication

Personal selling

Advertising

Public relation

How to create a marketing plan

Marketing plan

Marketing plan prospect

PART 3 BUDGETING

Budget, costs, proceeds, cash flow

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Introduction

Cash flow

Other costs and financial planning

Break even point

Costs structure

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Handbook aims, consultation advice

Objective 1. to provide the IT professional, who generally has a more technical than economical training,with information about strategic and operative marketing in order to facilitate customers acquisition.

This little book does not pretend to illustrate marketing new trends (relation marketing, electronic marketing,

permission marketing, lateral marketing, ), which often depend on still green fashionable intuitions; theauthor wants to illustrate, in a practical way, a simple system based on Professor Kotler 4P classical theory.See bibliography to deepen your knowledge about this topic.

Objective 2. to provide IT professional with some basic concepts about economical theories that can beuseful in order to understand better the environment, the figures and the organizations the professional hasto deal with.

Objective 3. to illustrate a working method to follow as regards activities with direct or indirect business aimsin order to plan and realize effective marketing strategies.

Objective 4. to provide a complete bibliography to study the illustrated theories in depth.

Font used in the text:

Italic bold: relevant in the context

Italics: quotations or authors consideration at the and of the chapter.

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Improvisation, a damage to root out

An IT professional is not just a person who works in the computer world; anybody, who has something to dowith PC, generally has an insane passion in the interaction human being-machine, in founding and solvingproblems they face while programming, realizing a 3D film clip, or building a web page. Computer scientistsare lovers of electronic who build their own PC by choosing the components alone; they have a genetic

predisposition and, strange fact, they are proud of that.

In addition, entrance barriers are very lawand anybody can turn IT professional or define as so and offerto the market with more or less refined techniques. There is a Bad news and a Good news to summarizethis background.

Bad news: computer market is full pf competitors, anybody can be a rival of us, also a talented 18-year-oldboy.

Good news: computer technicians are not prepared about marketing and communication themes; afterreading this book you will have a competitive advantage compared to them.

A training in the field of marketing and economics will allow you to approach problems as a manager of

yourself, you will be your company marketing responsible, you will be able to plan your activities and todialogue with the top management of your customers-company, but most of all you will be able tocommunicate.

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BACKGROUND

Acting background

Labour market structural changes have taken a direction that (unfortunately) cant be question; the increasedcompetition both at European and worldwide level offers to companies the excuse to manage in a different

way human resources by outsourcing not only non-critical activities but also the main ones, those consideredcentral for the future of the company.

Economic situation has diminished alternation periods between positive and negative phases; companieshave been forced to reduce or extend quickly their labour by dismissing when resources exceed and byflexible agreement when demand increases.

One the most relevant result of massive unemployment is the progressive youth alienation. According torecent surveys, young people stillwanta job, despite the difficulties to obtain one; they stillhope to make asatisfying career. In general terms, there is the danger that in the next decade society not only will bemarked by an increasing division between we and they (that is, managers and labour), but also riftsamong the most important groups will rise, because the young and people without a social protection will bein conflict with more protected and more experienced workers.

OCSE general secretary (Investing, 1998, p. 15)

In this kind of background the 20 years ago employee certainties (regular job, lump sum, a relatively earlypension, ) are crumbling. In addition, the pension situation rests on young people shoulders, who have tocope with system structural uncertainties problems and they also have to pay for pensions of old people(often with high amount of perpetuity benefits).

IT professional market is very dynamic, competitive and cruel; there is an excess supply and a worldwidecompetition, a difficulty in distinguishing a real professional from an improvised one (no register exists) andlots of few trained customers who pretend to fix rates and modus operandi.

Such a situation is typical of this job. Lawyer, doctors, notaries and many other figures have a register, in

addition, their activity is well defined thanks to different specializations: a doctor treats diseases, a lawyer(should) solve problems and a notary certifies notarial deeds.

What does an IT professional do? Under this definition lies jobs as programmers c++, Java programmers,Web graphic designers, Linux systems analysts, Security Manager, Web accessibility consultants; the onlything they have in common is an uncertainty about their future.

If sellers know their products quality level and consumers do not, there are two possible consequences:there is no business or low quality products are sold. Akerloff swindle market model demonstrates thatconsumers are not able to distinguish high quality products from low quality ones, so they accept to pay anaverage price that satisfies only poor quality products makers. Despite these extremes, there is no doubtthat an incomplete information leads to a market qualitative level reduction. Consumers are not able torecognize and evaluate products correctly, thats why makers are not stimulated to realize high quality

products. The solution for this situation is a peer information between parties.

Another element to consider is that nobody starts from nothing to realize a web project, a CMS, a CMR, because lots of tools exist (open source and closed source) that shorten delivery time and increase margins.

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Parallelisms, virtual district

The so called district is a typical instance of Italy, California and many Asian countries. How does a districtstart and why?

To answer this question it is necessary to come back in the past when, during the post-war economic boom,

engineering small concerns supplanted enormous companies. What was the Killer Application of thisphenomenon? In that period a simple tool was found out that allowed to produce metal small parts at a lowerprice than using a tool called numerical control lathe. Anyone who was able to use a numerical controllathe, could become an entrepreneur. You just needed to have it or the money to buy one. (It is quite littleand you can equip the workshop in a garage). With that tool you could compete with the biggest companyand win, too. Everybody knows how the story ended: big engineering companies closed and manyspecialized industrial districts grew.

What is the analogy between the lathe and an open source software? It is easy, anyone who could programa numerical control lathe, was a potential competitor of the big company; now, anyone who could program,can compete with very big software houses that produce half million dollars CMS or very expensive e-commerce systems.

Engineering small concerns phenomenon is one of the most studied from the countries aiming to have aflexible business system that can cope with economical situation without too many big mistakes. Thementioned occurrence is that of business district; a business district is a great number of companies,placed in a specific geographic zone, producing similar products or services or accessorizes one to eachother, that constitutes a group.

It is important to explain how a district grows: an entrepreneur recruits some helpers (blue-collar workers,subordinates, or employee, as you prefer), chooses among them the more talented ones and provide themwith knowledge. When these people think to be trained enough, they strike out on their own helped by theirprevious boss who uses them as third party. They both take advantage: the boss outsources part of theproduction by giving it to a reliable company and the neo-entrepreneur starts his activity with the help of hisprevious boss who assure the work.

The virtual district has the same characteristics of a geographic district, despite the bare geographicconnotation. A IT consultant needs helpers in a specific domain, he assumes or gives consultancies toanother professional who:1) gets the trust of the team leader2) gains experience about a specific issue.At this point a vicious circle is created that, thanks to information circulation and mutual cooperation, createsan experts team specialized about a specific topic.

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Parallelisms, gold rush and frying pans

Gold rush means any phenomenon with this characteristics:

News

Good profit perspectives or other advantages

Little knowledge of the actual background Risk propensity from people who try to take this opportunity

High number of people who try to take these opportunities.

At these conditions we can speak about gold rush, in computer science this phenomenon is known as NewEconomy and it has led to the outcomes everybody knows.

In computer domain there are lots of little gold rush, IT professional can take advantage of theseopportunities by turning into a pans seller.

The fact is, when American settlers run in order to award the licence to extract gold, they should equip ofcourse with a horse, a coach and a pan, too. In the end, only the pans sellers really gained a profit from thegold rush; they did not run the risk of not finding a gold deposit and of remaining with nothing.

Why do people call gold rush the phenomenon simply known in other domain as trend? For two reasons:

Computer science is an increasing phenomenon; it always grows as any new discovery leads to

other discoveries with a greater speed compared to other fields.

Computer science welcomes even more ill-informed converts ready to take rash decisions whenever

they can take advantage of the opportunity.

[N.B. how do you think this kind of unreliable investments occur? Of course, sysadmin does not make thiskind of choice able to make any IT professionals flesh crawl and make their hair stand on end. Managers,who read about an innovative trendy solution on the first magazine they found, made this kind of choice. Inthis way gold rushes start]

Here is an example of gold rushes where you can go and sell pans; of course, some of these winningphenomenon will strengthen (e.g. e-learning, wifi) but others will go up in smoke:

E-LearningWifiAccessibilityI-modeCRMNet SemilogyMobile LearningMobile CommerceUsability

You can go on with the list and decide which gold rush take part in as pans sellers, of course!!!

Misinformation and consequent myths can also come from the IT professionals (in such a case, they are thecause of his trouble), this syndrome is known as lover syndrome : you hear, often from unqualified sources,about particularly fascinating issues able to arouse your curiosity and restrain your objectivity. In this case,an economical assumptions analysis (cost/profit) is useful in order to come back to reality.

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Opportunities to seize

In the first pages of this handbook I underlined that independent consultants flexibility allows them to fit inchangeable environments; this paragraph is going to underline only opportunities you can seize. For eachfact you will be provided with the strategies to turn it into an advantage.

Labour market reformation, flexibility, outsourcing: in few words, it means that companies recruit nomore programmers or IT consultants, they do not necessary ask to foreign programmers, they generallyoutsource activities to professionals. You could be these professionals.

Economical crises, budget reduction: budget reductions generally involve big companies, budget reducingdoes not mean give up a project, it means do the same project at a lower price. Independent programmeror a consortium has a cost structure that allow to be aggressive and to make lower estimates compared to astructured company. It is necessary to seize the opportunity, it is always useful to have big companiesamong your clients.

Provisions, regulations: computer market too is subjected to even more detailed rules, a coming into effectlaw or standard forces a company to regularize its position. It is important to be attentive in order to knowimmediately next normative background; this knowledge will allow us to prepare a commercial and

communication strategy..

Open source software: many people look at open source software as a way to steal money, this tool isinstead a way to reduce development times, to increase programmers margins and to diminish customerscosts.

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Specialization

In the high fragmented and confused computer market, where everybody do everything, a good strategy isthat of specialization. It is a winning strategy as regards:

Work quality

Interlocutors quality

Work management

Savings

Communication strategy optimization

Visibility

Updating

Many IT professionals make the mistake of saying I go it alone just not to loose a order; there are systemanalysts who build web sites, graphic designers who manage Linux server in order to resell hosting, too.

These choices effect is always a poor quality of part of the work made for the customer, this poor quality

belittle the well done work, too.

Lets take for instance a web designer with XHTML and CSS competencies who wants to take a web hostingwithout any intermediary. ACME Ltd customer orders to this web designer the web site realization, the webdesigner suggests to the client also a hosting with a total order 10% overprice, ACME Ltd accepts.

Here is what will happen:

The web site will be well done;

Linux server entails a system activity that a web designer is not able to do:

o First consequence: the web designer will necessary acquire information about systemic

activity; he consequently neglects his main activity;o Second consequence: the web designer will necessary monitor server software revisions

and install them; ACME Ltd. will often call in order to know how to depict e-mail:

o Third consequence: the web designer will have to give technical support to his customer,

neglecting his main activity;

ACME Ltd. will be dissatisfied of the whole service because of the down due to a non-professional

worker; the customer will not consider two separated service but a unique one because of the webdesigner wrong strategy.

In addition, specialization allows to optimize the communication strategy, lets take for instance thecomparison between:

A PHP programmer who specialised in help desk software realization and personalization.

A PHP programmer who realizes anything.

In communication terms, the specialised programmer has a easier work to do, target is well defined andcommunication effort will be focused on well defined aspects.

On the other hand, the second programmer will search for different job opportunities; even if his targetmarket will be broader (in this case, Market = anybody who needs a PHP programmer) and in a theoreticalsense, he could gain more customers; practically, he has to face different types of problems like:

Hard identification of the activity done;

Difficulty to present a good case-history to future customers;

Competition with improvised programmers;

Too disorganized communication.

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The last topic of this paragraph regards how to protect themselves from excessive specialization. If aprogrammer invests all his knowledge and investments on a single activity, how will he be able to bemodernized and to invest on new products before the existing ones will get old?

Answers to this question comes in part from the common sense and in part from two theories explained inthe following paragraphs (production cycle and Boston Consulting Group matrix). As regards common sense,

a skilled programmer:

Specializes on one or few activities but he does not isolate from the market, he should always be

ready to seize new opportunities but he should mind crazy ideas, he should also be able to managechanges from a specialization to another.

Widens his goods and services domain, he minds in particular domains similar to his own sector (for

example, a system analyst who manage Linux server could think of a screening specific serviceabout security on other companies server, or Linux training, )

A skilled programmer should also create a network with other specialists. The objective is to work togetherand create working procedures, simplifying interactions and optimizing mutual advantages.

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BASIC THEORIES

This paragraph explains some interesting theories to use as a base in order to understand what follows. Thislist is not complete but it just offers some hints for a possible close-examination, different philosophers andexperts from different school of thought are quoted. Each theory can be applied to IT professional contextand it can be used to explain some phenomenon.

Maslows hierarchy of needs

Maslow grouped human needs in a hierarchical scale, the more human beings meet their primary needs themore their needs change and they seek to satisfy higher needs. Needs do no concern a specific part of ahuman being but the whole individual; needs are common to the entire world but they can be satisfied indifferent ways according to the context and the culture.

Basic physiological needs: fundamental needs such as feeding, sleeping, eating, they are the first to

be satisfied in order to survive.

Safety and security needs: belonging, stability, protection, dependence come directly after

physiological needs.

Love, belonging, social needs: if these needs are satisfied, they allow to be loved from the others, to

create satisfying affective and love relationships.

Self -esteem and status needs: they concern the need to be appreciated and esteemed by the

others; other people perception can differ from reality: we could be over- or underestimate.

Self-actualization and fulfilment needs: they concern every individual desire to became what they

want to be.

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Porters product life cycle

When the market sets a new product/service, it generally has well defined development dynamics andspecified customers typologies for every phase.

Demand point of view:

Introduction: reduced sales, restrained market penetration rate, buyers are known as pioneers.Development: market penetration rate increases thanks to mass product.Maturity: overstocked market, mostly substitution demand.Decline: demand dries up because the product is replaced by other products.

Supply point of view:

Introduction: not much known technology, makers poor experience.Development: price drop, market fee increase.Maturity: price competitionsDecline: production capacity rationalization, market leaving by lots of people, reorganization.

Dynamics is explained in the graphic below:

The following table represents how some of the variables listed by Porters theory behaves ( only the mostrelevant for an IT professional are considered).

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Introduction Development Maturit Decline

Customer - Tester - High profits

- Base widens- Accept everything

- Mass market- Glut in the market - Sophisticated buyes

Product - Low quality- Design Critical

factor- productmodification

- Product gets better - Qulaity gets better- Standardization

- Little difference- Uneven quality

Competitors - Few companies - New entries- Many competitors- Merging

- Price competition- Selection- MKT exit

- Exits- Few competitors

Strategy - MKT quotaincrease- important R&D

- Price change- Imagine change- Quality change

- No quota increase- MKTG fondament.

- Costs control

Margins - High margins

- Low profits- Flexible prices

- High profits

- High prices (-)- Recession resist.- Acquisition

- Prices fall

- Low prices- Low margins

- Prices fall

Risks - High risks - Developmentcovers risks

- Cyclic nature

Marketing - Adv./sells relation- Other MKTG costs

- Invest. Advertising - MKT fragmentation- Range widens- Reduction relationPub/Sell

- Low relationAdv./Sell

According to the phase your products/services are in, you face one of these backgrounds. Following Porterstheory help you to plan actions according to theory. It is important to differentiate services so that they areplaced in different phases.

In the decline phase, it is important trying to re-launch product by placing it in a different way (e.g. DietCoke), so that you can re-create a new development phase with consequent benefits.

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Gartner Group and Hyper Cycle

Sometimes even the Gartner group guesses right. Here is Hyper Cycle graphic, a good representation oftechnological trends changes as regards visibility in different life-cycle phases (it would be interesting tosuperimpose this graphic on the product life-cycle graphic, but I am not sure it has any sense).

The graphic is very clear and it does not need many explanations, anyway a technology visibility is at highestlevel at the beginning, it is trendy; it follows a disillusion phase that leads to an enlightenment phase. If

expectations were excessive, now disillusionment is too pessimistic. Slope of enlightenment leads to amore conscious growth and then to a relatively stable situation.

Human brain and crowds work in such a way: great enthusiasm for a technology at the beginning, then scornand consequent slope and market consolidation. New economy Boom/Sboom went that way like many stockexchange cycles about Hi-tech, biotechnologies,

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Boston Consulting Group matrix

BCG matrix is a representation of different business areas position, these areas are categorized followingtwo criteria. The first criterion is Market development race, that is how the market will increase/is increasingfrom year to year; the second criterion is market share held by the considered company.

According to the position filled in the matrix, the considered product/service will have the followingcharacteristics:

DOGS: market with low growth rate and low market quota. It indicates products and services to beabandoned because they do not cause any profit and do not have significant market quota.

WILD CATS (or Question marks): market with high growth rate and low market quota. It indicates serviceswith a low market quota, but you can find them in high growth rate markets: you need to work in order to turnthem into STARS.

STARS: market with high growth rate and high market quota. It represent the best position, do not stay calm!According to the product life-cycle theory, market will stop growing sooner or later. you need to prepare thisproduct/service to become a CASH CAW.

CASH COW: market with low growth rate and high market quota. It indicates products/services that, whenmature, still produce profits, thanks to a high market quota. It is useful using these profits in order to launchnew products you want to turn into STARS.

In a medium/long term strategy, it is important to know what place your products occupy in order to choosewhich invest in as regard money, communication, research and development.

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Marketing definitions and slogans

* Marketing aim is to get selling needless (Drucker).

* Marketing is the science and art of acquiring, maintain and develop customers able to assure profits.

* Marketing is the technical function of choosing who sell to, what to sell and how to sell; it is alsoplanning consequent actions and making profits through customers needs satisfaction (Corigliano).

* Marketing are the whole activities carried out by a company in order to turn its ability in producingideas, goods and services according to potential and real customers needs and desires (Scott).

* Marketing is the analysis, planning, realization and carefully carried out programs control in order topromote voluntary exchange of values with markets you want to reach. That way, you fulfil companyaims. Marketing implies supply definition as regards potential markets needs and desires, andeffective systems use for pricing, communication and distribution in order to inform, motivate andserve markets (Kotler, Bloom).

All the definitions reported before aim to the realize a systematic company procedures in order to fulfil thecentral objective, that is profit. They all demythologize marketing imagine as creativity or selling; Kotlerprecisely says:

* Marketing has been vilified and misunderstood for long: according to many people, marketingexploits, it is expensive, interfering and not much professional. On the other hand, other peopleequate marketing with advertising and selling. These prejudices interfere with marketing diffusionbeyond business world boundaries in a traditional sense. (Kotler, Bloom Marketing forprofessional, UTET ).

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4P theory

Marketing basic theory uses the 4P metaphor. This metaphor tries to identify what elements a professionalhave to work on in order to realize a complete marketing strategy.

4P mean:

ProductPricePlacePublicity

Let analyze each of these words:

Product: it means the product/service the company sells; work on the product means: understand whatproducts/services market needs and will need in the future, understand market needs (real and hiddenneeds) and satisfy them by realizing new products and services. The classical diatribe is about theopposition between research/development and marketing areas, both want to decide what to produce.Marketing should not think the product, it should underline future trends and report market feelings aboutproduct/service or area.

Price: this element is very important for IT professionals, you often do not know what is the value of theproduct/service you sell because you do not know precisely what is your aim. Price defining strategies arevery different. Here is the most important:

Cost based pricing: given a cost structure, you define profit % margins to obtain on hypothetical

sales. (For example: this year you expect to have a 100.000 turnover and you want a 40% profit,given n. customers that will buy your product, the service price is 100.000/n.)

Taken time pricing: this method is used by professionals who work in a close market or already have

fixed rates according to register/associations etc a working hour corresponds to a certain fee.

Competition based pricing: for their fees or products, professionals make reference to prices applied

from their rivals in order to define a pricing policy (sell at the same price, at a higher or lower price).

Increasing market quota strategies pricing: professionals decide to give all their products/service alower price compared to the real value in order to increase their market quota or to acquire certaincustomers.

Customers selection strategies pricing: even it seems to be a paradox, professional can choose to

increase prices in order to get rid of customers that, for the same spent time, yield less. So theydecide to concentrate on more profitable clients.

Place: it regards sale channels though which you allocate your services; IT professional cant sell theirproducts in a supermarket! Let consider the following sale channel:

Internet

Software house

Consulting firms

Sellers/agents

Other channels (category association, other intermediates )

Publicity: it regards how to promote your products through a communication activity that use differentchannels. In particular, we can identify three types of communication:

Basic communication (you speak about you and you company);

Business communication (you promote your products);

Public relations (you relate to publics you consider interesting for your business).

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Strategy, define, analyze, and understand your own market

Customers typology

It is difficult to create customers cataloguing models, here is four different approaches: three of these areclassical while the fourth is more complicated.

Customers typologyInexperienced customer: this kind of customer knows little about the offered product/service and they needdetailed explanations of what they are buying. They can easily be influenced from price and external factors(e.g. magazine articles )

Medium customers: this kind of customer is the most dangerous, they pretend to know technical problemsand interfere in the solutions development and implementation procedure. It is necessary a proceduralapproach that impose some rules.

Evolved customers: this kind of customer has already experimented similar services and solutions, thesecustomers request an accurate approach and a great professionalism and quality in the supplied services.

Interlocutors typologyAccording to the position occupied by your interlocutor in the company that you hope becoming your client, itis important to use a suitable approach and understand the company operational manners. For example,purchase office will speak about budget to allocate, IT office about platforms and security, legal office aboutnormative, etc as a rule, during negotiation, you have mixed interlocutors.

Reference company dimensionAccording to the company dimension, there are different approaches, different time to take decision anddifferent budget. You need to negotiate with interlocutors with power to decide, starting from lower levelswould mean re-negotiate everything whenever the interlocutor gets a upper level.

Market typologySee product life-cycle theory for suitable strategies.

AreaPrivate area: based on efficiency dynamics, tendency to bad economies if the company is big.

Public area: it pays great attention to laws and instructions from legislator and other institutions able to issuecirculars.

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Competitors

You often consider as your rivals only professionals or companies who sell products/services similar to whatyou sell, actually danger comes from areas or service that differ from what you sell, but they revealsimilarwhen you realize this fact, it is too late. Let see both scenery.

Competitors selling similar products/services are people who can be added to your aim-clients. In IT worldthere are three kind of situation:

Independent consultants: they have two possible behaviour when facing the market:

o I didnt find a job, therefore I play the professional.

o I have a very good training and I manage, by myself, to obtain more than working as

subordinate in terms of perspectives and life quality. Consultant is a common figure in allcompanies and his rate is usually proportional to his training and fame (an IT professionallacks a bit of marketing training and this book aims to supply this lack).

Little companies or independent professionals associations:

o these structures generally have cost covering problems because they dont have a great

amount of work but they have a staff structure with a well defined cost structure. Big

companies are generally suspicious of little suppliers for two reason: they dont have a known brand they dont guarantee a sound company able to allow a lasting relationship.

Burgeoning little companies are an exception.

Medium companies:

o These companies have a well defined cost structure, they often do body rental activity or

work in niche markets.

Big companies:

o These structures can allow a great branding and lobbying activity towards big players (both

managing directors go golfing together), they are often chosen because they represent aguarantee in problems terms (an IT professional can say the supplier is wrong, not me inchoosing him; he cant say that if he had chosen an unknown company). They canguarantee a sound relationship.

Concerning competitors who dont sell similar products, there are market analysis dynamics that allow todefine and analyze products or services able to substitute yours, for example standard software customdevelopment activity could be substituted by open source software personalization, server systems activitycould be substituted by an installation and configuration service plus an efficient help desk ( e.g. Dell).

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Why you cant predict your turnover (prelude to actions systematic theory)

Market is influenced by an infinite numbers of variables, for example:

Cycling floats

Legislative norms

Competitors entrance/exit

Technological development

All these variables are independent from your management, despite their influence on your companyturnover course. In new economy times, a lot of companies created business plan in order to predict futureintroits, actually you cant predict future introits, in particular Start Up future introits.

Concerning started activities, you can do previsions based of past turnover and started activities efficacy.This method is very poor, too.

The only objectives you can be sure to pursue are those depending on your own actions, you can surely

contact almost 20 possible clients a week, send a handout every three months,

It is not easy to be able to pursuit this aim.

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Action systematic manner

It could be banal, but the central development factor in marketing is respect for the established rules. Here isa very simple example:

Your next six-month period marketing strategy entails a market expansion as regards computer security; in

order to approach new customers, you decided to sent an informative brochure to target companies ITresponsible with a telephone follow up a week after sending.

A previous test revealed that such an action regarding companies offering accounts service, leads to onemeeting every twenty calls. In addition, previous experiences concerning similar areas revealed thatgenerally one meeting in three give concrete form to a new contract.

That means, three potential clients every 300 contacted prospects, you can contact 600 prospects bydividing them in 100 every month.

As you can see, the acquisition of three new clients is not so difficult, you just have to sent 600 brochure andto make 600 calls.

As 600 calls are not a very cheap way to acquire three clients, you need to understand why such intentionsoften remain intentions. The reason is simple: you dont follow rules you established, that is you dont make600 calls. It could be trivial, but thats so.

Let make things more difficult, let imagine your market expansion strategy for next year entails:

Greater visibility of your web site

Reinforcement of your imagine in two niche areas

Contact personally 10% of those niche leader companies (by chance, 600!)

Strategy:

Web site visibility is reached by six article publications speaking about you in three online specializedreviews. (12 handouts about 12 different initiatives)

Reinforced imagine: it is reached by publishing two articles on the press in order to increase your file (6handouts about 6 important initiatives)

Sales promotion: direct action on 600 clients (see above).

In order to pursuit your aims, you have to:1) co-ordinate actions;2) carry out all actions respecting the established times.

Most of the failures in marketing actions are due to suspension of planned activities and enthusiasm loss

coming from lack of results (as you can see, it is a vicious circle). You need a plan of action to realize aplanning (see following chapters).

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Products and services offered from an IT professional

In this paragraph you dont find a list of what a professional can sell, youll find the strategy able to designproduct area of your marketing plan.

IT products/services are correlated and consultancy is part of value-added services, as regards an IT

professional, consultancy can be a main product or a service/product fulfilment.

We can divide products and services offered from an IT professional in three categories:

Personalized solutions development activity: project software programming and development.

Software selling activity: distribution of programs developed by professional or structure and sold

as package solutions

Systemic and assistance activity

Training activity

Consultancy, audit and help activity: these clients support activities add value, but they also

concern web marketing activities, SEO,

TLC related activities: web hosting activities, sms service

If you want to estimate the real value of a service, you have to understand what are the accessory services.These services have different aims:

Competition differentiation

Add of value to the product/service

Customer fidelization

Service quality increase

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Customer fidelization & Customer retention

Sellers use to say that its easier holding a customer than acquiring a new one. In this context, fidelizationpolicy are fundamental.

In a very pragmatic way, customer acquisition policy define customer a person who buy again; it often occurs

that the first buy aims to test the supplier, if the product/service has the expected characteristics, it wouldprobably re-bought.

In marketing terms, reference market composes of the following figures:

Prospect: companies that can be part of target market you address to and potentially interested in ITprofessional product/service.

Qualified prospect: customer that are interested in your product/service but havent bought, yet.

Customer: customers who did at least a buy.

Qualified customer: reliable and satisfied customers who did at least a re-buy.

If accessory service entails a renewal policy, you can try to create an expectations model when your havecompany a great number of customers. You have to consider acquired customers exit rate, then you canpredict financial incomes deriving from acquired customers.

Previous paragraphs underline how important is creating renewable services from year to year in order toenhance at the very most acquired customers. You can pursuit this aim by:

Allowing customers to renew main services.

Allowing customers to renew accessory services (training, maintenance, upgrade, ).

Trying to guard similar companies (that is, you can sell the same product to other areas or you can

extent the range of offered products exploiting direct contact you have created with your customers).

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Pricing, strategies and objectives

How can I quantify my professional services? this is the second most asked question in IT professionaladdressed NG (the first question is How can I get more customer?).

The question is not easy but let try to answer it by analyzing price influencing variables. Before doing that, it

is important to clarify some points:

1) a price list does not exist, so you can refer to it;2) market is very confused, it comprehends very keen boys, professionals, companies, 3) the more you specialized, the more customer cant compare prices.

The following principles will help you to decide the price of your product/service.

Profitability: if you sell a product to a certain price, multiply this price by the number of customers who buy itin a year and subtract costs, you have to obtain an acceptable profit.

Competition: the price should allow you to compete with rivals who sell similar products and services.If one of this element is not present, you cant face market.

Price is fundamental in order to make profits and prove to be successful, price is also a way to introduce youto the client: price communicate!!! There are different price strategies according to your aims. Analyze them:

Profits optimization strategy: in this case you sell your product to the most profitable price for your company.This strategy has two main advantages:- it makes your company solid and profitable from a financial point of view- it allows to make investments without getting into debts.

Market quota acquisition strategy: in this case you decide to sell products/services at a lower price incomparison to your rivals. You aim to acquire more customers in less time. It is important to reach customersbreak even point in order to make profits even if you sell at a low price. Here is the advantages:- a great number of customers in a few time

- competition defeat, unable to conform to your market policy.

Elite market placing strategy: in this case you apply very high prices and you decide to offer your servicesonly to reach structures. This strategy permits to be profitable with an efficient cost structure. Advantagesare:- high margins- less customers, more little company structure, less costs.

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Types of rate, work by the hour, project work, mixed work

It exists different types of price list you can apply to the customer, some of them are related to the product,others are related to the strategy you have chosen, others, unfortunately, are related to the customer (try toimagine a customer who goes on asking for not agreed alterations, in this case you are forced to apply awork by hour rate as deterrent for your enthusiast customer). Lets analyze the four types of rate:

List or packet rate: this tariff is suitable for products like hosting, sms or pre-packed products. Incommunication terms, a good idea is realizing a price list also for services that not provide for one (e.g.software product realization + assistance + training) in this way, you communicate to your client clearlywithout making him doubt that you fix prices according to interlocutors. In a packet approach, usually,when quantity increase the unit price decreases.

Work by hour rate: it exists activities where you cant quantify before the time it takes you to carry them out.In this case, you decide to fix a hourly rate to be quantified at the end. In order to be clear, it is important toquantify in a realistic way time it takes you to accomplish an activity and possible advances. It is alsoimportant to bring client up to date in a systematic and punctual way about hours/days you have done andabout the activity you have done in that period.

Project rate: it is very difficult to quantify an activity before doing it, but the client appreciate this attitude a lot:in such a way he is certain about how much to invest in a project. Project working means analyzing deeplythe activities so that you can quantify time and activities not included in the offer.

Mixed rate: it often occurred that in list or project products/services new activities step in, these activitiescant be quantified before and are presented to client at the end (e.g. product personalization not agreedbefore), in the same way in hourly activities you can offer services with a pre-fixed price (e.g. softwaredevelopment and web hosting packet selling).

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Calculation method suggestion

This paragraph analyzes different ways you can use to pricing your products/services, all these strategiesare based on capital remuneration principle and on professional profit expectations. Lets start from profitexpectations, we are going to face two different sceneries: the first one regards a professional who sellpacket services, the second one is about a professional who works using a project or work by hour

approach.

Packet approach

Profit annual expectation: 20.000Taxes: 11.500Costs: 15.000

If you sum these three cost element (costs are both fixed costs like renting, business consultant, etc andcosts directly related to your activity like hosting price, other consultants, etc), you obtain an estimate ofthe turnover to reach in order to satisfy your expectation ( 46.500).

As second step you have to divide turnover into products/services you offer, for example:

A Hotels management 23.000Web hosting service 3.000Training 2.000Assistance 2.000

B House renting management 12.000Web hosting service 1.500Training 1.000Assistance 1.000

In order to determine the value of your product/service, you have to understand how many products/servicesyou will be able to sell, lets suppose you ll sell 10 for service A and 8 for service B and that services are

comprises in a unique price including software:

Product A: 30.000/10 = 3.000

Product B: 15.500/8 = 1.940

Once you define pricing following this method, you can complicate calculation by considering two variable:

Variable 1: you notice that your rivals sell product A to same price but they are much more expensive (2.500) as regards product B. You can try to bring product A price down and increase a little price of productB, this way you increase product A sales without loosing product B sales

Variable 2: during the year you have sold more product A and product B sales are regular, now you can

decrease product A price in order to acquire market quota, your profit expectations will be satisfied in anycase.

Maintain price stationary and make better profits

These are standard principles you have to adapt to your reality, but it is important you have understood themeaning of profit expectations and costs structure.

Project or work by hour approach

By maintaining profit expectations and taxes stationary, you can decrease costs. People assume that aprofessional who just sells his time, has less costs.

Annual profit expectations: 20.000Taxes: 11.500Costs: 8.000

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In order to determine your ideal daily cost, you have to consider how many days you can really give overproductive activity. According to this schema, you have to consider the following elements:

Days in a year: 365Saturdays and Sundays: 105Holidays and feast day: 30

Sickness days: 10Not paid work (selling, relationships, ): 60Not paid work (training and auto-training): 20

Real workdays: 140

Calculation is ready done: 39.500/140 = 283 a day

You can expect that some workdays (20%) could be missing and part of your work (20%) could be unpaid,so you have:

Real workday: 140Unpaid days: 28

Missing days: 28

Real workdays: 84

39.500/84 = 470 a day

Two things are to be specified:

days are approximate, calculate them according to your experience;

outsourcing risk is that you have not your own clients; therefore, after 60 workdays, you could bejobless because the supplier asks others for the same service. In this case 60 workdays could beconsidered a good exit.

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Soul searching

Before thinking of a communication campaign or of what to communicate, it is important to make a soulanalysis of your activity in order to create a communication campaign sound with your company identity.There are three simple questions you have to answer in no more than 20 words each.

Who I am (company)? What is my role?

What are my purposes?

In marketing field, Peter Drucker extended this introspective analysis to other marketing elements and madea five question list that every company should try to answer:

What is your business?

Who is your customer?

What is important for the customer?

What should be future characteristics of your business?

What should be your business?

Once you answered these questions, it will be easier for you to identify what elements are better tocommunicate.

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Total communication

This paragraph is based on professor Brioschi theory about total communication. Among the differentelements he analyzed, lets consider only the three ones related to marketing external communication:

Personal selling

Advertising Public relation

For each of this method you are provided with a brief explanation and related help tools.

Personal selling: it regards the activity of selling power, that is actions directed to create orders throughdirect or indirect meeting with the client. Selling power approach can be free (each seller behaves as heprefers) or leaded (seller follows guide lines common to all direct or indirect company sellers).

The company can provide customers with the following tools:

Paper and multimedia documents

Demo areas of products or software solutions

Case history

Advertising: it regards indirect and impersonal communication activity, it is directed to a wide public and itaims to inform interlocutors about the existence of your services, to convince them of your services goodquality and to persuade them to buy your services. Communication can be direct (it produces immediatefeedbacks) or indirect (effects come later).

IT professionals useful advertising channels are:

Telephone Direct Marketing

Direct Mailing

Promotional newsletter

Banner

Public relation: communication activity directed to create a relationship and support network withoutimmediate effect on short term sales. Public relations activities are:

Handout

Articles and interviews publications

Meetings and workshops participation

Forum and newsgroup participation

Virtual community creation

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HOW TO CREATE A MARKETING PLAN

Mini marketing plan

Before defining a structured strategy to put later into practice, you need to do an exercise that will makeseasier a detailed plan writing out. The exercise consists in a step by step reflection about some elements that

constitute or influence the marketing policy you are going to embark on.

We are going to consider the following elements:

Products and services offered by your rivals

Analysis of your price policy sustainability

Analysis of your own products/services and marketing mix definition

Definition of a plan of action.

Lets analyze single elements in detail:

Products and services offered by your rivals: it consists in analyzing products offered by rivals, marketsthey turn to and prices they apply for their products/services. In the following example, it is also illustrated the

case when a product is sold at different prices in different markets.

Analysis of your price policy sustainability: by comparing markets and prices you apply/are going toapply, you manage, broadly, to define price policy sustainability and possible product differentiationtechniques.

Analysis of your own products/services and marketing mix definition: choice of the products you wantto sell and communication strategy definition for each product/service.

Definition of a plan of action: reflection you have done, tools you have analyzed, data you have taken,should be inserted in a plan of action that:

Will provide guidelines for future actions

Will let to manage a first testing phase Will monitor actions constancy and will confront results obtained with efforts you have made.

Operative plan is realized thanks to a working out activity, planning, data reporting and actions to do.

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Marketing plan prospect

Step 1: Competitors analysis: through this plan, you create a map about your main rivals working method. Todo:

Competitors identification

Market where they work identification

o Supplied products/services identification

o Price identification

o Communication channels identification.

Competitor Market Product Price Communication

Competitor 1 Market 1 Product 1 100 Banner Direct Mailing

Market 2 Product 2 50 Personal Selling

Competitor 2 Market 1 Product 1 98 Direct MailingWeb Community

Step 2: price policy sustainability analysis: once you have defined the working background and products youwant to compete for, you can analyse what areas you are good at or not.

Competitor Market Product Price Yr Price Communication

Competitor 1 Market 1 Product 1 100 99 BannerDirect Mailing

Market 2 Product 2 50 60 Personal Selling

Competitor 2 Market 1 Product 1 98 99 Direct MailingWeb Community

Step 3: marketing mix definition: you choose products you want to apply your price policy, including products

you intend to introduce in the market.

Product Market Price Communication

Product 1 Market 1 98 Direct marketingWeb CommunityPaper Adv

Market 2 99 Direct MarketingWeb CommunityPaper Adv

Product 3 Market 2 120 Direct mailingWeb Community

Market 3 120 Direct mailing

Web Community

Afterwards, you have to integrate product communication campaign with institutional communication (that is,directed to the company itself and not to the product). Institutional communication comprehends tools like:

Institutional website

Company leaflet

Offline presentation and seminars

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Step 4: Once you defined tools, markets and channels, you can plan a marketing campaign based onobjectives you want to reach. If you choose step lasting a month, youll have a wide overlook and, at thesame time, margins in order to counterbalance possible delays and actions shiftings.

Month 1 Month 2 Month 3 Month 4

Product 1 Market 1 Paper Adv Direct

Mktg

Paper Adv Direct

Mktg

Market 2 Paper Adv DirectMktg

Paper Adv DirectMktg

Product 3 Market 2 Direct Mail

Market 3 Direct Mail

Institutional Seminar Seminar

Web community activity is ongoing, product leaflet are support tools as institutional leaflet are.

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BUDGET, COSTS, PROCEEDS, CASH FLOW

Cash flow

Even if the IT professional isnt an economist or an accountant, he daily has to do with costs, proceeds anddebit/credit cash flow. It is important to define operative rules in order to avoid surprises when you have to

pay for taxes, VAT at the end of the month or when you have an investment to do.

Cash flow analysis and monitoring is an important element both from a provisional and financial point ofview. When you sign a contract or hand in your work, you may not receive an immediate payment (positivecash flow), generally recurrent costs produce an immediate expenditure (negative cash flow). This kind ofcosts monitoring and planning allows to control your liquid assets condition in the following months (liquidity= cash on hand).

In the following example we are going to consider a professional who has graduated in computer science atthe age of 25 and has been working for a year in a web agency compound of five people, he then has beenworking for two years in a consultancy multinational.Before striking out on his own, he has been working for a year as IT responsible in a Food and Beveragebig company.

This is the our professional financial situation for the next five months:

COSTS

Recurrent costs:Telephone costs 200 every two monthsCompany car instalment 350 every monthOther costs (fuel, writing material, etc) 100 every month

Non recurrent costsHousing sever annual renewal 1500 per annumProject B travelling expenses 450

Investments1 new portable PC 15004 books 120

External costsCustomer A project graphic 600Customer B flash consultant 800

PROCEEDS

Project A deposit 1500Project B deposit 1500

Project B balance 1500Project A second instalment 1500Project A balance 1500

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At the beginning of January, the professional has liquid assets of 2000. Lets see how liquid assetssituation will evolve in the next five months.

Type Costs Profits Liquidity

2000

Jan Car instalment 350 1650Server renewal 1500 150

Project A deposit 1500 1650

Project B deposit 1500 3150

Feb B transfer costs 450 2700

Car instalment 350 2350

Phone costs 200 2150

Project A graphic 600 1550

Project A secondinstalment

1500 3050

Mar Car instalment 350 2700

New Laptop 1500 1200

Books 120 1080

Apr Car instalment 350 730

Phone costs 200 530

Project A flasher 800 -270

Project B balance 1500 1230

May Car instalment 350 880

Project A balance 2000 2880

2880

In the example, our programmer, even if he has a positive situation (liquidity increase = 880 in fivemonths), had liquidity problems in April. The fact is due to an excess of investments, all concentrated in theprevious month and not counterbalanced by takings.

Liquidity management is very important in order to avoid the overdrawn bank account and deriving costs(interest payable).

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Other costs and financial planning

In the previous schema, we analyzed PROG activity costs without including any remuneration or any fund fortaxes you have to pay in the following financial year.

The first element to consider is a PROG remuneration. Two system exist: the first consists in mixing your

family personal current account; this system is muddling enough and it doesnt give a clear picture of costsstructure (What costs are to attribute to the family and what to the company?), it also can create wrongoptimistic expectations when cash is positive. The only advantage deriving form this modus operandi is thatyou have to do with one current account by saving on management costs.

The most coherent system consists in managing professional account separately form the private one with asalary at the end of every month.

There are other two elements to consider: taxes you have to pay at the end of the year and allocation for thepension. Also in this case, a separated management of allocation is the best solution: long term investmentsfor pension allocation and very short/short term investment for taxes allocation.

These physical divisions on different current accounts can seem difficult, but they avoid using money

apparently at your disposal actually not (taxes) or money you have to allocate for activities not related to ITprofessional job (pension fund allocation ).

We can summarized what said, on monthly base, in the following schema:

End of the month result- salary allocation- taxes allocation- pension allocation

In order to define these three voices quotas, it is necessary to consider:- how much activity is profitable- how much you want to reinvest in the activity

If activity is profitable, you can assign to you a greater salary; on the other hand, if you want to reinvest intechnologies, communications etc division calculation will be different. You can also apply a mixed policyconsisting in salary attribution and profits distribution at the end of the year.

It is useful to save an amount for taxes so that you dont have the illusion to have at your disposal moneythat isnt yours. Allocation calculation isnt to do according to results you obtained at the end of the month(results can be distorted by cash flow); it is to do according to each invoice value. Percentage is defined bythe professional according to activity cost structure.

Example: if 800 costs correspond to a 1000 invoice, calculation for taxes to allocate is based on themargin ( 1000 800 = 200). Percentage of taxes to allocate on 200 could be , for example, 30%.

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The example is mere theory and difficult to estimate because activity costs are not simply due to a singleperformance, it is useful to estimate percentages according to the past and to previous month/year businessvolume. If the previous year, you invoice 20.000 and costs (apart from salary that professional award tohimself) were 10.000, then profits are equal to 10.000. If taxes paid on this 10.000 were 4.000, itmeans that the amount to allocate is 20% of given services total (rough calculation). To each invoice youdetract 20% of the amount to allocate. This system is the same if customer pays part of the taxes through

invoice; if you refer to amounts considered, you will have a different situation as regards numbers (e.g. 4.000could become 1.000 because others 3.000 have been paid by customers) but the method is the same.

Where do you allocate money for taxes? The suggestion is to allocate it in the same current account whereyou allocate money for pension; but investments are different: for taxes, you could keep them liquid or, if youhave a considerable amount, you could invest them very short period shares (.e.g. three months statebonds).

The last topic to treat regards how to allocate money in order to benefit from a pension in the future. Letsstart from the (very pessimistic) assumption that state wont contribute nowise to your pension. Lets considerthree cases:

this fund management will be done from the professional himself

this fund management will be delegated to a pension fund

your register still entails a pension fund.

In the first case, it is difficult to establish the amount to allocate, the fact is you dont know how much thisamount will revalue and what inflation rate will be in the period. You should also consider how to divideallocated money among different investments. You can also delegate these allocation management to aconsultant.

In second and third case, you dont have to worry about how to invest allocated money because funds will doit for you, you just have to deposit the monthly amount that will return to you in a prearranged time.

It is very important that you establish iron rules for each of these investments and that you absolutely respectthem. These duties will give you the determination you need in order to reach objectives you have fixed.

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Break even point

Break even point is a calculation method to determine production or profit level you have to obtain so thatprofessional or company get positive proceeds margins; from another point of view, once you havedetermined cost structure, break even point allows to calculate the lowest profit you have to obtain in order toavoid financial losses.

In this context you can create a second break even point, that is the lowest income a professional have toobtain in a year. This second method doesnt exists, but anyway you can include profits in this calculation,since professional or company working environment is more simple than a multinational or a big productioncompany.

Before going on with theory, we must show two different types of costs, that is fixed costs and fluctuatingcosts.

Fixed costs (FC) are the costs that a company always has to face, regardless quantity of products/servicesit offers. These costs concern the existence of the company itself; fixed costs are also different according tothe company dimension (directly proportional to number of services offered), so you have incremental fixedcosts according to services you offer. For example: web hosting company:

10 100 Websites FC 100 Euro100 200 Websites FC 200 Euro200 300 Websites FC 300 Euro

Fixed costs we considered are related to technological infrastructure, staff, rent costs.

Fluctuating costs (FLC) are the costs directly related to product/services you offer. For example, a webhosting starting up entails:

Registration activity 5 EuroBilling account activity 3 EuroWeb hosting reselling 23 Euro

If you sell a web hosting packet at 55 Euro and if your cost structure range is 10 100 web sites, here isyour proceeds and your break even point:

Host number FC FLC FC+FLC Incomes Profits10 1000 310 1310 550 -76020 1000 620 1620 1100 -52030 1000 930 1930 1650 -28040 1000 1240 2240 2200 -4050 1000 1550 2550 2750 20060 1000 1860 2860 3300 44070 1000 2170 3170 3850 68080 1000 2480 3480 4400 920

90 1000 2790 3790 4950 1160100 1000 3100 4100 5500 1400

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Break Even Point

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

10 20 30 40 50 60 70 80 90 100

Host numbers

Income

FC

FLC

FC+FLC

Incomes

As you can see from the table and the graphic, primary break even point is between 40 and 59; after thisquantity your company starts to make profits. Second break even point depends on your profit expectation: ifyou want to make a annual profit of 1000 Euro, you have to sell from 80 to 90 Web Hosting.

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Costs structure

If you consider an economical account standard balance, you can see what is a professional/company costsstructure. The following example starts from an hypothetical income of 55.000 Euro and it removes graduallysome hypothetical amounts that represent different types of costs.

Production value (turnover) 55.000 EuroProduction area (typical management) 20.000 EuroProduction area (support management) 5.000 EuroFinancial area -500 EuroExtraordinary profits/expenses 0 Euro

Profit before taxes 29.500 EuroTaxes 8.850 EuroRunning profit/loss 20.650 Euro

Production value (turnover): it regards invoicing ( as regards a professional, it is the sum of invoicesalready collected).

Production area (typical management): it regards costs directly connected with products/services youoffer; for example: Other consultants, travelling expenses, accessory services, etc

Production area (support management): it regards costs not directly connected with the products/servicesyou offer and not directly related with production activity (e.g. rent costs, sellers, secretary, )

Financial area: in this case, it is not relevant because the professional doesnt get into debt; anyway, itregards interests and payable interest, received or given to banks.

Extraordinary profits/expenses: they are expenditure or income not related to standard activity (e.g. sellingof a building belonging to the company).

Profit before taxes: it is the profit you consider in order to calculate taxes to pay (after having rectified costs

you cant completely deduct).

Taxes: anyone knows what taxes are!...

Running profit/loss: what remains after paying taxes.

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Bibliography and suggested books:

Marketing Professional Services: Forward-Thinking Strategies for Boosting Your Business, YourImage, and Your Profits, T. Hayes, P. N. Bloom, P. Kotler. Prentice Hall.

Marketing Management, Philip Kotler In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters

The popcorn report: Faith Popcorn

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