Early steps can help prevent client relationships from imploding
I was irritated the other night so I took the opportunity to ask Chris Brogan how he deals with consulting clients who some might charitably describe as “bad.” You know the type — slow pays, no-pays, scope-creeps, and/or people who want to steal your time for free (with the promise of more paid work later). Chris laughed and said (and I’m paraphrasing), “you tend not to have that problem when you write one of the five most popular marketing blogs on the Internet.”
Some people will tell you that there’s really no such thing as a “bad” client….
New consultants seem surprised by the amount of time they spend on business development. Their list of great friends from their last job doesn’t necessarily translate into actual contracts (referrals, maybe), no matter how interested they seemed in your idea when you left the company. Within a very short time, consultants in that situation start to get nervous — OK, they panic – and may make some decisions that come back to bite them.
Add a slow economy to the mix – many businesses are looking for ways to manage their cash flow (a nice way to say, “hey, I’ve got an idea, let’s save money by not paying our vendors this month”). If I sound bitter, it’s because I am. I’ve just gone through that with a client. Here are a few things I’ve learned in the past few months that you should think about:
- Don’t discount your rate in hopes of getting more business down the line. Set your price and stand firm. Rather than cutting your rate, look for ways to add value (this assumes your rate is reasonable). If someone expresses willingness to commit to a longer engagement, that’s one thing (if you’re going to have an hourly rate, also have a daily, weekly, and monthly rate that provides some kind of discount). But don’t just charge them less to try to get them committed so they “can see what you can do.” And other reason to be careful around this sort of client: I’ve found that the cheaper a clients wants something, the more likely they are to also have unreasonable expectations that they’ll bring to the project.
- Listen to your gut (or other people), particularly if the voice(s) is about the person’s willingness or ability to pay you on time. If someone has a history of paying late (or not paying at all), why would you think you’re going to be different? If what they’re saying sounds too good to be true, it probably is. You can’t put lipstick on a pig.
- Get some of it upfront. Net 30 (or its really ugly stepsister, Net 60) means they may not cut a check for a month or two after you FINISH the work and invoice it. Unless your cash flow is great or you’re sitting on a pile of savings, that will get frustrating (and painful) fast. Many service businesses require their clients to put something down before they begin work. Be that person.
- Be wary of a client whose primary skill is sales. He or she will convince you that you’re working for the greatest concept ever (“Huge, I tell you, we’re going to be huge. I have big investors begging me to let them in on the ground floor…How about I pay you less but give you stock?”). You’re going to want to believe this is the monster client (as Robert Shaw said in Jaws, “I think we’re going to need a bigger boat.”). It’s more likely that big fish is a minnow.
- Collections take time away from doing the work or finding new business. It’s bad enough when you don’t get paid. Chasing them down is exhausting. Sending e-mails. Calling them. Calling them again. Carefully crafting more e-mails. Reading their e-mails that say all start-ups have cash-flow problems (“yeah, buddy, including mine, thanks to you.”) or there’s been a family emergency. Or something. It’s always something. Add up the hours you spend chasing them…or thinking about chasing them…or complaining to other people about having to chase them and you’ll find your discounted rate suddenly got uglier.
- Define your project scope very carefully and get an agreement in writing. Discussions about a project in a conference room, by e-mail, or on the phone tend to result in less-than-perfect project scopes. Put it in writing with specific bullets about deliverables, timelines, objectives, and pricing and get the other person to send it to you. Don’t start a project — no matter how smoothly everything is going — until the paper is signed and, if advance payment is due (see above), the check arrives and clears.
- Be the expert, not the vendor. Perception is reality and your clients are less likely to treat you badly if they respect your knowledge and experience. Frankly, it’s best when clients find you. That way they’re seeking your advice rather than you asking them for work. As a result, more value is put on your input and you have fewer issues.
And now, I turn it over to you. We’ve all had bad clients. What do you do to avoid the problem?
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