For those of you are consultants or sole practitioners, you understand the need to balance your workload in order to provide superior customer service without stretching yourself too thin. I have run a “virtual agency” for a number of years – that means I have a database of contacts whom I can call on in a pinch to help with a last-minute client request or a new contract. The advantage of the virtual agency model is that you can scale your operation without maintaining unnecessary staff or overhead. And the clients still get your expertise instead of a handoff to a junior person; a failing I have identified with most large agencies who use the “bait and switch,” bringing in the senior team to close the contract and then the client never sees them again. Of course the challenge of consulting, or any business, is that you have to plan your workload to make best use of available resources.
That’s why I was frustrated this week by a flurry of new business activity that failed to pan out. I think it was a combination of miscommunication and expectations on both side. At the start of the week I had three new contracts pending; verbal agreements with commitments like “we are ready to go and need you now!” By the end of the week two of the three contracts faded away, despite the verbal commitments and the signing of NDAs. It seems the prospects’ priorities and budgets changed. I guess a handshake on a deal isn’t worth what it used to be.
My dilemma, or course, is that I had to find the resources to support the new work, which as a good consultant I did before committing to the contracts. Now I have the resources lined up and no work. It would be a bigger problem if I had staff waiting idle in the wings rather than other consultants awaiting instructions. But I still find it irksome that experienced executives from profitable companies can’t manage their operations more effectively. It’s not as though they are asking for a quote on a car or an estimate on a construction job – not once they have looked you in the eye and said “you’re hired.” If you have already written the proposal, given your best advice up front, and received a commitment from the prospect, there should be no question about moving forward.
Consultants aren’t protected by the same labor laws as employees, and there is always an element of risk with being self-employed. I have been stiffed by a client or two in the past 20 years, and often have had to renegotiate contracts to accommodate changing client needs and budgets. It’s never pleasant, but it’s a necessary part of consulting.
What can you do to protect yourself? Here are some thoughts based on my experience:
1. Discount for cash up front. If you need to close a deal, cash is king. I usually ask for a retainer when I take on a new client. If they are willing to put their cash down up front, then I know they are serious. And if they are willing to show me the money, then I am usually willing to give them a break and show them the discount. It’s a good way to set the ground rules and cement the relationship.
2. It’s all about expectation setting. You need to make sure the client knows what they are buying, which is not as obvious as it sounds. Provide a list of deliverables and, if you can, a timeline for delivery. Your best bet is to take the guesswork our of the contract, and they will commit.
3. “Pay me for process, pay me for results.” This is an adage that was passed on to me by one of my first clients, and I continue to live by it. You can pay me for process, like keeping timesheets and activity reports, or you can pay me to deliver the goods. If I can focus on the objective, you get more value in the end. Keep your eye on the prize and don’t let process get in the way.
4. Set your terms up front. I always give my clients an escape clause. Most agencies I have worked with use 30-day termination clauses in their contracts, and I find that makes the uninitiated nervous. Be willing to compromise. Offer 10-day or 15-day out so they don’t feel trapped.
5. Know when to dump a bad client. The difference between hiring staff and hiring a consultant is like the difference between marriage and dating. If you hire staff to deal with your problem, it’s a much bigger commitment, since most staffers cost 150% percent of their salary when you add in benefits and overhead. By comparison, consultants are a cheap date, and if it’s a bad date, know enough to walk away. If you aren’t getting what you need or there is something that doesn’t feel right, it’s better to cut and run than hope it’s going to get better.
6. Stand up for yourself. Okay, consultants are easy targets. They are sole practitioners; hired guns with only expertise to sell. So when a client decides to stiff you and complains you didn’t deliver, it’s time to look inside and ask yourself, “is this a valid complaint, or are you getting stiffed?” Consultants seem to be fair game for unscrupulous companies who just don’t want to pay. You don’t have to take it. There are law firms our there that will work for you on contingency. I recall a client many years ago who claimed they were underserviced and wouldn’t pay. I had nothing to lose so I found a lawyer to sue them (out of state) and since my complaint held up an IPO, they paid at least two-thirds of what they owed, which was better than nothing. The bottom line was they expected me, as a consultant, to give up and go away. Don’t.
It would be nice to think that all clients are willing to honor their obligations on a handshake. They often don’t. So learn to protect yourself with solid contracts and well-defined deliverables and business practices that put you in control. Just because you choose to maintain a small business doesn’t mean you shouldn’t be mighty.