Archive for the ‘Contracts’ Category

Dear Danielle: How Do I Price This?

Dear Danielle: How Do I Price This?

Dear Danielle:

I’m just starting my administrative support business and have really appreciated all of your blog advice and toolkit information. I have run into a slight issue with my first prospective client that I’m not sure how best to handle. She has requested assistance for an annual event she’s planning in late November. We’ve done the initial consultation and I believe we could work well together and there’s a lot of room for growth with her. I had explained that I don’t do hourly billing, but she asked about how many hours per month I would dedicate to her project so I said I estimated around 30 hours per month. I made clear that since I don’t keep strict track of minutes/hours worked that if I end up going over 30 hours a bit that she wouldn’t be billed any extra. I sent her my contract to sign (which didn’t list specific hours, but instead listed the support plan we had determined) and she sent me her contract that states “scope of work will require a minimum of 30 hours up to 48 hours per month.” I absolutely can’t go up to 48 hours a month as then my pricing would be way too low. Do you have any advice on how I should handle this? —Shannon D.

First let me say, none of what I’m going to explain is intended to make you feel bad or that you’re doing things “wrong.”

We were all new business owners once and all started from the same place where we didn’t really know what we were doing. There’s just going to be a learning curve no matter what and it doesn’t make you a dummy or anything like that. And you’re going to have a lot of trials and errors throughout the life of your business.

That said, when people ask ME for my advice, my expertise and my opinions, that’s exactly what they get. They don’t get a bunch of wishy washy “you are free to do whatever you want in your own business…” crap. Um, duh. I don’t think anyone here needs me to state the obvious.

And these discussions are helpful because even though you will still have a learning curve, they raise your consciousness and help you better understand and increase your business knowledge and education moving forward.

Okay, let’s dive in here…

The initial thing that strikes me is that you aren’t yet really clear about what business you’re in.

You say you’re starting your administrative support business, but this really isn’t administrative support. This is more like event management and support which is really a whole other business and industry.

And the reason it’s important for you to get clear about your business is because, well, it affects just about everything moving forward. You have to get clear about what you truly intend to do and be in business if you’re ever going to get any traction.

If I’m a plumber and someone comes to me to fix their car, am I going to take on that work? Why would I do that? Just for the money? How does it serve my business to dillute my energies on work I’m not in business to do and may not have the expertise for? How does that serve the client if I’m really not in business to do that work? Is it ethical for me to take money for something I’m not really qualified to do?

So if you’re going to be a plumber, be a plumber. And direct clients who come to you for things you’re not in business to do to the right professionals. Otherwise, you’ll be spinning your wheels forever.

The other thing I get the feeling you’re not quite clear about is that this is project work, not administrative support.

Granted, it’s over the course of several months, but it’s a project nonetheless because there is a specific ending (the culmination of the event).

Administrative support on the other hand is the collection of tasks, functions and roles that require ongoing attention, management and maintenance throughout the life of the business. Administration isn’t an event, it’s an ongoing relationship. That relationship IS the “product” (so to speak) that you are offering when you are seeking retainer clients.

Now, there’s nothing wrong with taking on project work on the side if you so choose. But it’s very important that you do so consciously, not blindly.

That’s important because here is what tends to happen otherwise:

People in our industry want to have a retainer-based practice with clients who pay a monthly fee in advance every month. However, they end up focusing on and distracting themselves with project-based work instead which is a never-ending hamster wheel that keeps them from ever building the business they really intend.

On top of that, by allowing clients to never commit, they never get the real kind of business they want and dream of.

As the adage goes, you will never get what you don’t ask for and expect.

So if you want a retainer-based practice, that’s really what you need to focus on. You’ll never get there picking pennies up on the ground from non-commital clients and their nickel and dime projects.

If you want retained clients providing administrative support, that’s what you have to expect and make it a standard around who qualifies for working with you. That should also added be on your Ideal Client Profile as an ideal characteristic:

“A client who is ready to commit to working together every month in an ongoing relationship of administrative support.”

Now, we come to the whole hours thing. And as our readers here won’t automatically know, your question initially related to my Value-Based Pricing & Packaging methodology.

So the thing you’re not seeing is that you’re still trying to sell hours.

However, with value-based pricing, there shouldn’t be any talk about hours.

Value-based pricing is about offering a solution and providing results. It’s also about certain values (or morals, for lack of a better synonym) around providing those things.

Let me try to explain:

You say you can only provide X hours per month, but the client wants you to commit to more than that.

Forgetting the fact that hours shouldn’t be what you’re selling, what kind of whole, complete solution can you provide if you are only willing to commit to doing the half the work that’s needed?

Because it’s not any kind of solution if you’re only going to provide something that’s half-baked.

I’m not sure why you would have priced at anything less than what you need to accomplish it. Why would you do that? (That’s probably a whole other great topic for conversation, lol).

I’m not saying you should overextend yourself. But value-based pricing and packaging is contingent upon (among other things) providing a REAL, WHOLE solution and result for clients. It doesn’t help them to sell them something that will only get them half there.

And you won’t create raving fans and testimonials that way either.

So, what needs to happen is that you need to have a REALLY thorough consultation so that you have a very clear idea of what work will be involved, what the client’s needs, expectations and goals are, what results and outcomes they’re looking for, and then price THAT at whatever it needs to be for you to accomplish those things, not the hours.

(And of course that sounds so simple. There is more to it than that, obviously, and my guide shows you exactly how to set parameters and determine what work falls into admin support and which things can be categorized  as project work that you can charge for separately, as well as how to talk about pricing and present that information on your website and in other conversations with prospects and clients. My guide also shows you what to talk about with clients INSTEAD of hours; when you do it the way I show you, they understand how much more beneficial and how much more they get from working together this way.)

But you have to be prepared to provide that solution. If you’re not, then it’s really not ethical to take that client on. A half solution is no solution at all.

As far as the whole contract thing, this is where your marketing and message, as well as what you call yourself, are so important because those are the things that are shaping client perceptions and expectations.

This client needs to be properly educated that it’s not her place to be changing your contract. Your contract is your contact. Clients either sign it or they go elsewhere. Obviously you would be more diplomatic, but that’s what it boils down to basically.

But the other thing is that if clients are consistently doing these kinds of things, it means you are not properly presenting yourself a business owner. Fixing that typically entails improving your content and marketing message on your website and framing yourself more like a business and independent professional.

That starts by not calling yourself an assistant, ever. ;)

Let me know if that helps and if you have more questions, feel free to post them in the comments.

25 Ways to Get Better, More Ideal Clients

baddog

One of the biggest complaints people voice in our industry (the administrative support business) are clients who are a pain in the ass, otherwise known as PIAs, or more gently, unideal clients.

Bad clients are also one of the biggest business killers. One bad client (particularly in a new business) can suck up all your resources and destroy profit—and your morale—to the point of no return.

Despite your best efforts, it’s possible to end up with a rotten apple once in awhile.

Far more often, however, it is we who create the conditions that bring un-ideal clients into our lives in the first place.

You have far more control in this area than you may realize. So, here’s a list that will help you have more ideal, joy-to-work-with clients who won’t tear your business apart:

  1. Own your role. Bad clients don’t happen to you. You’re the one who took them on and continues to work with them. Acknowledge that so you can fix it and start doing things differently from this point forward.
  2. Trust your gut. If you have a bad feeling or see red flags, pay attention. Your instincts will never fail you.
  3. Treat and respect your business like a business. When you do, your prospects and clients will as well.
  4. Have self-respect. Don’t beg, bribe and prostrate yourself to get clients. The only clients who are attracted to desperate people are bad clients.
  5. Don’t be so available. Have a process that prospects go through to become clients. It’s an indicator that you are a professional, successful business, and that is going to attract professional, successful prospects. Anyone who is in a rush and wants to sidestep your processes is never an ideal client. Better clients are willing to wait for the best.
  6. Never take on work or clients just for the money. This is often where at least 75% of the problems start.
  7. Have standards. For example, choosing to work with only honest, ethical people is a standard. What others can you think of? Write them down and hang this list where you’ll see it every day.
  8. Set proper expectations. Remember, you’re not running a mass consumer, assembly-line business like McDonald’s. You’re running a professional service firm where there is a personal, ongoing relationship with each client. Sometimes clients can seem unideal because you haven’t properly managed expectations. They’ve been left to their own devices and so they assumed or made up their own rules. Similar to raising children, if we are too permissive, over-promise, and establish policies that we can’t possibly sustain on a consistent basis (such as 24-hour, on-demand, instant assistance), we can turn clients quickly into spoiled brats who throw tantrums the second you don’t instantly jump at their request. Picture your business with a full roster of retained clients. What kind of turn-around and communication policies does THAT business need to take great care of all your clients, consistently and reliably, now and in the future, without overcrowding and burning you out in the process?
  9. Set policies, procedures and protocols. These are relationship-preservers that bring order to your business, ensure it runs smoothly and gives you the space you need to take fantastic care of all your clients, evenly, consistently and reliably. Without this structure, clients can quickly (and often do) turn into monsters we dread dealing with.
  10. Establish boundaries. Besides helping ensure your business runs smoothly so you can do great work for all your clients, your policies and protocols also establish boundaries. For example, having formal office hours between 9a and 5p is a policy that also sets a boundary that tells clients you are running a professional business that opens and closes at certain hours and they may not expect you to be working past those times. See? Boundary.
  11. Honor your standards, boundaries and protocols. Here again is where we often “do it” to ourselves by taking shortcuts and stepping over our standards and boundaries or allowing clients to. They’re in place to ensure you have a happy business and happy clients. Ignore them at your peril.
  12. Know who your ideal client is. Start an Ideal Client Profile. This is a list of all the traits, characteristics and demographics of the kind of person you really enjoy working with, who you work best with, and who benefits most from working with you. Keep adding to and refining this list throughout the life of your business. This formalizing exercise helps you get more clear, conscious and intentional about who you want to attract and focus on in your business.
  13. Start an UN-ideal Client Profile. Likewise, as you grow in your business, you are going to get more and more clear about who is not the right fit for you, with whom you don’t enjoy working. List these traits and red flags so that you can better recognize those folks when they appear on your doorstep—and quickly and politely send them away.
  14. Work with business people rather those who are employees themselves. Business people get it. Non business people are more often going to be difficult to work with because they aren’t coming from a business context and don’t understand the proper business etiquette and rules of engagement.
  15. Have a target market. A target market is simply an industry/field/profession that you cater your administrative support to. Having one will not only make everything in your business easier, it will also help you get better, more ideal clients.
  16. Have a proper business website. Your website isn’t merely an online brochure. When you have a proper website that informs, educates and markets you like a business, it’s a powerful influence in the clients you attract and how those clients approach you in a proper business context. It helps set expectations and prequalify clients so you get more ideal business people contacting you. The image it presents, the message it conveys, and the process it takes them through set a precedent that is going to attract either ideal or unideal clients to you. If you want better clients, have a better website.
  17. Stop marketing yourself like a substitute employee. Face it, if people are approaching you like a potential employer instead of a client, it’s because you aren’t educating them properly. If you don’t want clients who treat you like their substitute, beck-and-call, under-the-table employee they don’t pay taxes on, then you have to stop marketing yourself like one. Model your marketing message more like that of other independent professionals like attorneys and accountants. You want to position yourself as someone with the expertise of administration, not some order-taking gopher. Reframe the message and you’ll get better clients.
  18. Have a consultation process. And I don’t mean some penny-ante 15-minute chat. That is NOT going to help you or the client whatsoever. I’m talking about a full and proper consultation process that begins before a prospect ever contacts you. Not only does this process help you prequalify prospective clients for mutual fit, it also helps them take your business more seriously.
  19. Always use a (proper) contract. A contract is a relationship-preserver as well in that it helps everyone remember and honor their agreements to each other. A contract helps clients respect you as a business, and a respectful client is an ideal client.
  20. Have a Client Guide. Formalize your policies, procedures and prototols into a written Client Guide that you give to all new and current clients. Part of setting and managing expectations is making sure you are informing clients about how things work in your business. None of us are mindreaders and neither are your clients. If you want your relationship with clients to go smoothly and ideally, you have to inform them of what that means, how things work in your business and what is expected of them (remember, it’s a two-way street; it’s not all about their needs).
  21. Conduct a New Client Orientation with new retained clients before you begin working together to go over and clarify the information in your Client Guide and answer any questions they may have. Do this with existing clients as well whenever your business undergoes significant changes. This further supports your efforts in educating clients about the nature of the relationship, setting and managing expectations, how things work in your business and what the standards, policies, protocols and procedures are for working together.
  22. Issue formal announcements to all your clients whenever there is a change in your business. Whenever you make changes or improvements to your business and how you do things, don’t mention these things in passing. Make it formal. Send out a formal business communication to your clients on company letterhead as well as any ezine and blog you publish. Here again, you’re reinforcing the business aspect of your relationship and treating the business like a business which then influences how clients treat and respect you and the relationship.
  23. Raise your rates. When you’re cheap and there is no barrier to entry for working with you, you get cheap, unideal clients. It’s an immutable law of business that when you raise your rates, you get better, more ideal clients. It’s a way to sort the wheat from the chaff in prequalifying clients.
  24. Face difficult conversations. It will only be worse for both of you the longer you wait. However, the quicker you are to face difficult conversations, the more often those relationships can be turned around for the better. You can learn many new positive things and possibly keep a client .
  25. Let go of unideal clients quickly. They’ll keep you buried in the muck and you’ll never grow or move forward if you continue to work with them. Unideal clients are highly unprofitable to work with and suck up three times the space in your practice compared to ideal clients. They cost your business far more than you realize and you can’t afford the psychological toll they take. You have to let go of the bad and unideal to make room for the better and more ideal.
  26. Bonus Tip: Stop calling yourself an assistant. Who you attract is all about your marketing. Marketing is about educating, setting expectations and creating perception. The words you choose to call yourself influence how clients perceive you and understand the relationship. The fact is, people only understand the word assistant one way: employee. So when you call yourself an assistant, you’re telling them you are some sort of employee. When they think you’re an employee, they want to treat you like one. And when you call yourself an assistant, causing their perception to be that you are some sort of substitute employee, you predispose them to balk at your fees because they expect to pay you no more than an employee. If you want more ideal clients, it’s not enough to change how you work with clients  and insist that you’re a business owner. You have to stop calling yourself a term that contradicts all those efforts. When you do, you”ll get higher quality prospects and more easily command higher, properly professional fees because you haven’t created a disconnect in their understanding and perception of the nature of the relationship right from the get-go.

Contracts Have Nothing to Do with Being a Hardass

Danielle KeisterContracts are not merely for legally enforcing “rules and regulations” on clients.

Their first function is to memorialize (in writing) your promises and understandings to each other.

Memories fail. Things are conveniently “forgotten.” Your contract serves as a written memory of what you both agreed on to each other.

The other role your contract plays is in outlining your standards and helping set proper understandings and expectations for the relationship.

With your contract, you are saying, Here is how I expect to be treated with courtesy and respect. And for my part, here is how I will treat you with courtesy and respect as a client…

So it’s just dumb for anyone to tell you to take anything out of your contract that you may or may not enforce legally.

You might as well not even bother with a contract at all then because if that’s the logic, more than half the standard terms and conditions that need to legally be in a contract to be enforceable would get taken out.

And why stop there. There’s no point then in putting anything in writing if you think the only reason for it is whether you’re really going to sue someone or not if they don’t comply.

Shoot, just let clients do whatever they want and dictate everything to you. Because again, by that logic, anything else would be being a “hardass.”

There’s nothing hardass about informing clients that when you are working on retainer, you expect them to give you 30 days notice if they intend to terminate the relationship. (I actually recommend 20 days, which is what I do in my practice.)

The reasoning is that you have reserved space for that client and dedicated priority to them. If they decide to terminate at a moment’s notice, that leaves you in a lurch without being given a courteous, reasonable amount of time with which to try to refill that slot.

It’s like the policy of requiring 24 or 48 hours notice if someone needs to cancel an appointment. By stating it in your policies, you are telling people how you expect to be treated and respected, that your time is valuable.

And that clause (at least in the ACA contracts) works both ways. You are saying to them, I’m not going to leave you in a lurch either. If I determine that our relationship needs to end, I’m going to give you X number of days notice as well.

It has nothing to do with being a hardass or whether or not you would even take them to court if they didn’t honor the agreements they made to you.

It’s about good business, having and honoring your standards, and informing clients upfront what is expected.

How to Opt Out of PayPal’s New Arbitration Clause

Just a quickie for you today… I came across a great resource on The Consumerist blog which shared a letter template for opting out of PayPal’s new arbitration clause.

In case you hadn’t heard, PayPal recently added a clause to its user agreement that forces everyone into mandatory, binding  arbitration in the event of legal complaints and takes away the right to join together in a class action unless you opt out in writing.

Apparently, many folks’ opt-out letters were rejected due to improper formatting so the Consumerist came to the rescue with a properly formatted template.

If you want to opt-out, just be sure you get your letter in by the deadline of December 1, 2012.

I got mine in AND I brought this to the attention of my clients and drafted up letters on their biz letterhead on their behalf. All they had to do was sign!

TIP:  Alert your clients and do letters for them as well; it’s a great opportunity to show how you’re always looking out for them and provide more value!

Dear Danielle: How Do I Handle Interruption of Retained Services?

Dear Danielle:

It came up that a client with whom I’m working on a retainer basis has just alerted me that in a month he will be taking 4 to 5 weeks vacation so he will interrupt the service for that period of time.  We started our relationship in March, so we have been working together for three months now. How do you handle this kind of situation? Is it acceptable that he interrupts the service agreement at no cost for him? One of the clauses in our Service Agreement states that if for any reason one of the parties decides to discontinue the agreement he/I should give notice to the other party at least 30 days in advance. He is almost complying with that. But this clause was meant for the finalization of the agreement, not a temporary interruption. Should I accept this? Or should I let him know that if he interrupts the service, I might not be available when he is back at work, hence I should charge at least a minimum amount to reserve his space in my roster? Thanks in advance!Mirna Bajraj, MB Asistencia Virtual

Hi, Mirna! Great question; I’ll do my best to help. :)

This is another one of those situations where there is no right way or wrong way. It all depends on how you want to run your practice and what is acceptable (or not) for you.

Obviously, we never want to hold a client hostage if they can’t or don’t want to continue working together, whatever the reason. At the same time, and as you recognize, they need to be fair to us as well. This is the reason our contracts contain a termination clause that gives both parties simple, fair and equal recourse for ending the relationship: 30 days written notice.

But this situation differs because the client isn’t saying he wants to permanently end the relationship, he simply wants to interrupt the service. And here begins our thought process.

So, the client goes on vacation and now you have an open slot on your retained client roster. Obviously, you are not going to sit around and wait for him to return. That’s income you now need and want to replace.

This is where a conversation with the client would be in order.

By all means, be gracious about his wishes. However, it would be a service to him to clarify your policies. You may want to remind him of the termination clause of your agreement with each other (i.e., proper fair notice). You might want to let him know that you don’t offer “service interruptions” per se. If a client opts to terminate the contract (per the termination clause), then the contract is ended. You are then, obviously, going to fill that slot on your roster with another client because that’s income you need to replace.

Therefore, the client needs to understand that when they return, you may not have a spot any longer for them. And, if you did have a spot, the whole contract process, etc., would naturally need to start from scratch as if they were a new client. It may also mean that your rates and other particulars may be different when they return as well.

At this point, you may want to let the client know that to keep his spot on your roster, there would need to be a continuance of service and that means continuing to pay their monthly fee.

I like to use the analogy of insurance as an example, and this would be especially apt if you are using my Value-Based Pricing methodology.

When you pay for insurance, you aren’t paying for actual use. You are paying for the event of use. In other words, we may not need to use healthcare services every month, but that doesn’t mean we get to stop paying our insurance premiums for those months we don’t use any services. We don’t pay, our insurance is cancelled, we lose our spot (and possibly our grandfathered plan) and have to start all over again new.

Another thing comes to mind… and it’s hard to tell since this client is so new, but is a vacation really the reason they are wanting to interrupt service? Might there be some other issues going on, that with some conversation, could be solved to mutual benefit?

This is another reason it’s so worthwhile, especially in the beginning stages of our retained client relationships, that we have weekly telephone meetings. It really helps us keep our finger on the pulse of things with the client, their needs and concerns, and allows us to get to know and understand them better.

Hope this helps, Mirna :)  If you have additional thoughts or questions or need further clarification, please feel free to post in the comments. This will help shed more light and help others at the same time as well.

Dear Danielle: Web Design Client Balking at My Contract

Dear Danielle:

I purchased the web design forms set about a year and a half ago (maybe longer). I have a potential client who read through them and called me (very defensively) and said there was nothing in the contract to protect him, that it was one-sided and there was nothing in there if I didn’t deliver on the project. I have only had one other person reluctant to sign a contract and she turned out to be a very high-maintenance client. Do you have any advice about how to deal with this sort of situation? He wanted to go through the contract and send me his suggested revisions. I am subcontracting for him. He had the client and I am the web designer. I have already spent about six hours doing comps. Can you help with some advice? Are there contracts out there that would protect the client or is the fact if I didn’t deliver, I wouldn’t get paid enough protection for him? Pamela C.

Hi, Pamela, and thanks for the question. Let me see if I can help you think this through. :)

My first bit of advice would be to never begin working without a contract and being paid, at least partially, upfront. Stop with the comps and do not continue further until the contract issues are ironed out and you decide whether or not to even proceed further with this client. If you do proceed, my advice is always to get a deposit toward the full payment before any, any work begins. It’s just good business (particularly with a client who is already demonstrating certain tendencies, shall we say, lol).

It’s never in your best interest as a business owner to work without a signed contract in place. Business is business only when there is a fair and equitable exchange of benefits and interests. Essentially, the client pays for work to be conducted or executed on his or her behalf in exchange for a fee that you determine will fairly compensate you for the value of your time, skill, knowledge and expertise. If everyone were mindreaders and always remembered exactly what they promised to do, we could simply do business on a handshake and a promise and we wouldn’t need contracts.

But that’s not reality. And it can be argued that it’s you as the service provider who has the greater burden of risk and liability in this exchange. This is why we use contracts in business: to formalize in writing all the expectations and terms of the relationship so that everyone knows (and remembers) what their obligations and considerations to each other are, as well as their rights and recourse. It just helps keep everyone honest and on the same page. In case anyone’s memory fails them, a written agreement is there to remind and legally uphold those promises and understandings made to each other. In a worst case scenario, a written agreement is easier to legally enforce than an oral agreement.

The scenario you describe, however, generally boils down to one of ideal and unideal clients. There is nothing unusual or slanted any more in your favor with our contracts than any other typical contract of this nature. What is happening is that this client is expecting you to draw up a contract for him and his business and it’s simply not your job to do that.

What you have to decide is whether this is someone you want to deal with or not. Is this client one who may end up being another PIA, high-maintenance client? You both have the same legal recourses as everyone does who breaches a contract, which is the right to seek legal remedy through the courts. What more does he want? The blood of your first-born?

I’m being silly, but there are actually clients out there who are that unreasonable in their expectations. They would want you to guarantee that the sun won’t set for the next 60 days if they could get you to agree to that. And you are entitled to be paid for work you were engaged to do whether they end up liking the site or not. But that’s a whole other blog post.

So the first step is to have a conversation with the client in order to better understand the concerns and find out what he would like changed or added to the contract. It doesn’t hurt to listen and find out more. From there, you can decide whether what he is proposing is reasonable or unreasonable for you in your business.

Maybe you find that there is room for some additional considerations or compromises. Heck, just having the conversation might allay his concerns.

(A word of caution, though… since you aren’t an attorney, you might be changing things that negate a whole host of other important legal protections in your contract so never accept changes willy-nilly. Always consult with an attorney to make sure you don’t invalidate your contract in any way).

On the other hand, you might simply decide it’s not worth the angst, that the client has trust issues beyond what you can help with, and “my contract is my contract.” Obviously, you would put it more tactfully to the client, but you get my drift. You do not have to work with anyone you don’t want to, particularly if they can’t agree to your terms. YOU get to decide what is reasonable and right for your business and not accept any clients who ask for things beyond those boundaries and standards.

Now, being a subcontractor just complicates the whole mess. Back when I still had a web design division in my business, I did the same kind of thing for one of my clients. He had a web design business and I was the one designing the sites as a subcontractor. We both had to sign each other’s agreements.

It sounds as though your client hasn’t bothered to come up with his own contract. But that’s not your job to do for him. He need to consult his own attorney. But yes, it is definitely more of a problem scenario because you both need to have terms that are working seamlessly and aren’t in conflict with each other. Because, in a worst case scenario, if his client who gets the site decides to sue him, he’s the one stuck holding the bag. It’s just a whole big can of worms.

It goes without saying that the goal is to do good work and have happy clients. We all want clients to love what we’ve done for them. It’s just our natural inclination. A client has to be pretty egregiously unhappy before they go to the trouble of suing, so I’m just pointing out possibilities.  It’s really not an ideal situation, but if you want to be in it, you might want to find a polite way of letting him know that the onus is on him to talk with an attorney and come up with his own contract for you to sign.

Dear Danielle: Should I Get Payment Up Front?

Dear Danielle:

I have a billing question. Should I ask for payment up front or after the work is completed? –KH

You don’t mention whether this is for project work or retained services. Either way, I have some advice for ya. ;)

If you’re doing project work, it’s definitely a good idea to get some kind of up-front payment. Here’s how I do it in my business… if it’s under $500, I tend to require full payment upfront. If it’s anything over that, I require 50% upfront.

Remember, you aren’t a client’s bank and they need to have some skin in the game. They’ll take you and the work you are doing for them more seriously. Plus, getting at least some payment upfront will not only help mitigate your losses should you end up with a dead-beat client, but it will help avoid working with flakes in the first place.

When it comes to providing ongoing support work, clients are usually charged an upfront fee called a retainer. By it’s very nature, it is upfront because they are retaining your services in an ongoing relationship and guaranteeing your time and their place on your roster. There is no deposit or 50% when it comes to retainers. It’s in full, upfront.

Here are some older posts related to this topic that I think you’ll find useful as well:

Help! Client Not Paying!

How to Avoid Getting Stiffed on Payment

You want to also check out these categories on my blog here:

Billing
Getting Paid

Hope that helps!

How Long Should a Contract Be?

Dear Danielle:

I’ve secured a small contract and have another interested prospect. My question is two-part regarding retainers. First, how do you decipher the length of the contract (6 months, 12 months)? And secondly, I’ve noticed that some consultants charge a deposit of first and last month’s retainer fee; where others require only the first month’s fee due with signed contract. Your thoughts?

This is a very timely question. I’ve actually been meaning to post something about this for the longest time. I quite frequently see posts in various forums by folks who it’s clear don’t quite seem to understand the whole retainer thing.

The first thing to understand is that when we talk about retainers, we aren’t talking about project work. A retained relationship is one where clients pay a monthly fee upfront to have your support each month. You determine the parameters of what that support will consist of based on your consultation conversations with clients.

In an administrative support business, retainers are going to be your bread and butter. It’s where the bigger, better money is, as well as dependable cashflow. And the great thing is that once you have a retained client base with regular income, you have a much easier road to hoe than those who try to make a living based on nothing but project work, where you are on a constant hamster wheel chasing after the next clients, the next projects, even as you’re working on what’s on the plate in front of you.

Now, as far as the contract goes, the retainer agreement doesn’t have anything to do with how long you work together. It’s there to cover the terms, conditions and expectations of the relationship regardless of how long you work together, whether that’s a month, six months, a year or longer.

You don’t need to define upfront how long the relationship is going to be. It’s simply month to month. You only need to have them sign an agreement once a year.

And even if you don’t have them sign a new agreement once a year rolls by, whatever contract and/or addendums were last in place is what is in effect (this will naturally depend on what laws are involved in your own locality so you should always double-check on stuff like this with an attorney).

Either way, it’s a good idea to have clients sign a new agreement every year that you continue to work together because as your business evolves and matures, and as you make changes to your policies and such, you will want those changes reflected and enforced in your agreements. It’s also a good opportunity to remind both of you of your agreements and commitments to each other.

As far as locking clients into some number of months of work together upfront or collecting first and last months’ retainers, there isn’t really a right or wrong way. I can definitely see the smartness in that. At the same time, I think you may have a more difficult time getting a brand spanking new client you’ve never worked with before to part with that much money when they don’t know you or what they’re going to get just yet. But, hey, if you can pull it off, more power to you.

Beyond that, I can only tell you my own personal preference, which is that I prefer not to hold clients hostage to me as far as forcing them to commit to more than one month at a time.

You should expect a minimum commitment from clients in order to make it worth your while to work with them. A minimum commitment is also absolutely necessary in order for you to get some idea of the big picture of their business, allowing you to do your best work and provide a higher quality of support.

However, I prefer to let trust grow organically. Expecting new clients to commit to a month at a time is far more reasonable. Then, as they see things actually progress, they naturally want to continue working together.

In the retainer contracts I sell, there is a clause that allows either of you to terminate the relationship with at least (x) days written notice (you determine what “x” is, but I recommend 20 days). This gives both of you a fair and reasonable way to end the relationship that doesn’t hold anyone hostage nor leave either of you in a lurch. You can then get a head start on replacing the income and announcing an opening in your roster.

Another thing I see folks confused about (and I know some of them are getting this from training they have taken) is they seem to go about the relationship as if they were still employees. They think (and are sometimes told) that they need to give clients some sort of “trial” or “probationary” period.

Look, I’m here to tell you this is absolutely ridiculous and unnecessary in a professional service relationship, especially when you are using a retainer contract like mine that has a built-in termination clause.

You’re in business to help people and earn money while doing so. You’re not an employee anymore so stop thinking like one! You either decide to work together or you don’t. It’s that simple.

Clients are grown-ups. Once you choose to work together, they can decide for themselves whether the relationship and support is working for them or not. Your job as a business owner is simply to select clients who are the best fit and then give those clients your best work.

And with the month-to-month contract with the 20- or 30-day termination provision, either of you can end the relationship for whatever reason.

In that sense, every month is a “trial” period, but you shouldn’t be discussing things in those terms in your business conversations. It’s just ridiculous. You either expect the monthly commitment or you don’t. It couldn’t be simpler or plainer than that.

What you should be doing as part of your usual process in working with both new and long-term clients is checking in with them periodically about how things are going.

I recommend that for at least the first three to six months, you meet with new clients by phone once a week, but no less than every other week. From there, you can determine together whether to continue with your regular meetings or decrease their frequency. It’s during these phone meeting that you should be having this “how’s it going” conversation with clients, along with your regular talk about work and goals and such.

With your more established clients, it’s likely you will eventually both find that regular meetings simply aren’t needed as you end up becoming really attuned to each other otherwise.

With those clients, I still like to meet once a month on the phone because the voice adds another way to nurture that human connection and relationship, especially when we so often never meet our clients in person.

And with all retainer clients, I recommend getting their feedback every six months.

I want to emphasis this has nothing whatsoever to do with a “probationary” period. I’m gonna kick your butt if I hear you using that term. This is simply taking good care of your clients by always striving to stay attuned to their feelings and needs.

If you are meeting with clients regularly by phone, you will be naturally doing this through those conversations. It has nothing to do with being on a probationary or trial period. It’s called taking good care of clients. ;)

 

How to Avoid Getting Stiffed on Payment

It’s just a cold, hard truth in business—for all our best work and intentions, sometimes client don’t pay. Sometimes, they were the wrong fit in the first place. Sometimes, circumstances happened beyond their control. Sometimes, circumstances within their control happened, but they chose to put you last. And sometimes, you just get a rotten apple.

The good news is that there are steps you can take and ways you can work in your business that greatly reduce these occurrences. When non payment happens, it’s a perfect opportunity to examine and improve upon things so your business is better and stronger than before.

1. Establish consistent billing and payment policies. Set a billing schedule and stick with it. Don’t wait to bill for work you did six months ago. Not only does that teach clients that paying you is not priority, it creates problems and inconvenience for them (which make it more difficult for them to pay). Before you even begin taking on clients, work out what happens in the event that someone fails to pay or pays late. Know what your recourse is. Have a plan for collecting what is owed.

2. Conduct thorough consultations. I know it hurts to hear this, but sometimes we let clients down and non payment may be their way of voicing their dissatisfaction. I’m not saying it’s the right way; you just need to recognize when this might be the case. This is more likely to happen when we fail to set proper expectations or fully understand the work and results the client is seeking. A more thorough consultation conversation will help avoid these misunderstandings and subsequent client unhappiness.

3. Prequalify clients. Your website can do a lot of this work upfront. Be sure it clearly outlines who you are looking to work with, who you work with best, and who is the best fit for your services, as well as who isn’t. Likewise, your consultation is another mechanism in your business that helps you determine fit and suitability for working together. Don’t be afraid to ask questions about the health and financial viability of any client’s business.

4. Always work with a contract. A contract doesn’t guarantee that you won’t ever get stiffed on payment, but it does help clients take you, your business and the work more seriously. If you don’t respect your business in this way, clients won’t either. And, worse comes to worse, a written contract—which leaves less room for interpretation and faulty memories about what was agreed upon—can help you prevail in court should that step become necessary.

5. Work with clients who can afford you. Are you running a business or a charity? I’m always amazed at people who work with clients who clearly can’t afford their services and had all kinds of red flags a-waving and then are shocked when those clients don’t pay. They might “need” and even “deserve” you, but you have to be mature enough to let those folks be responsible for their own circumstances and growth. They can come back to you once they are in a better position to pay. In the meantime, keep your focus on the folks who come to the table already prepared and well able to pay.

6. Don’t work with anyone and everyone. Narrow your focus down to a very specific market. When you do that, you are better able to understand and screen for just the right folks who have the greatest need and desire for what you do and therefore will more highly value, honor–and pay–for it.

7. Don’t allow clients to go into debt. You have a duty to mitigate your losses, and you aren’t doing anyone any favors by allowing them to get deeper and deeper in the hole. As soon as late or non payment occurs, stop working immediately until what is owed is paid. Remember, you teach people how to treat you. If you keep letting them slide, you teach them to devalue and disrespect you. You deserve better than that!

8. Get paid upfront. You don’t get to take groceries home and decide later when or if you’ll pay, do you? When you buy a product, you have to pay first before the item is given to you, right? So why do you think professional services are any different?

If you provide an ongoing service (such as administrative support, coaching or consulting, for example), you can charge an upfront monthly fee and avoid the whole nonpayment thing altogether and reduce administration at the same time. For projects, getting a deposit or at least 50% upfront is perfectly acceptable, professional business practice.

Remember–you are not your clients’ bank. They need to have some skin in the game. Save special favors only for those clients with whom you have a long history and who have earned your trust.

9. Boot the deadbeats. Your business will never evolve if you don’t learn this lesson. You are never going to “fix” these people. If a client constantly nitpicks, pays late, complains about the work in order to prolong or avoid payment, you are responsible for your own abuse by keeping them on your roster. Love and honor yourself enough to show those folks the door. I promise—when you do that, you open space for more and better clients to arrive in your life!

How Do I Get this Client to Pay?

Dear Danielle:

I have a client who is giving me the run-around on several outstanding invoices. He has stalled, “forgotten,” asked for extensions and payment plans, said the bank messed up his check printing… you name it, I’ve gotten the excuse. He finally told me he was going to get all caught up on a certain date and guess what? The date rolled around and no payment! How on earth do I get this client to pay up?!

I could repeat all the usual kinds of recourse I think we all know about by now:  turn it over to collections, file a small claim, etc., etc..

You have every right to be paid for work you were engaged to do and for which the client agreed to pay. If the situation is so egregious that you see fit to pursue that by legal means, by all means do so. It’s a perfectly valid option and nothing wrong with it at all.

At the same time, weigh out what the cost of pursuing that recourse will be to you in terms of time, energy and money. It might not be worth the toll it will take and may cost more to pursue than the amount of the debt. And if the client is broke, well, you know what they say about bleeding turnips and all.

However you pursue this, and whether you ultimately get your money or not, these kind of situations are always an excellent opportunity to examine what we contributed to the situation. Because the answer is that, yes, we most certainly do cause some of our own headaches. We have to recognize that and own it if we’re going to improve and be more successful in the future. With that in mind, here are some thoughts:

1. Always, always, always, always work with a contract. Did I mention “always?” LOL. You perhaps are very aware of this already and may have even had this client sign a contract before working together. As you know, a contract doesn’t guarantee that you will get paid or that people will always be honorable and have the integrity to abide by their agreements. But contracts are legally binding and enforceable agreements. Should it get to that point, they can definitely help you prevail should it become necessary to take things to court. Now, a lot of times, that’s more work, more money and more energy than it’s worth. But that doesn’t mean you forgo using a contract. A contract does a lot more than just formalize your legal agreements. A contract helps clients take you and your business more seriously. It shows that you are a professional and it makes sure everyone is on the same page and knows what is expected from each other. Never cut corners on this, no matter how big or small the project or relationship.

2. If you work on a project basis, get some kind of money upfront. Would a grocery store let you take home groceries and decide whether or not to pay later? Of course not, and neither should you do that with your clients. You’re not a bank. You have your own bills to pay and it’s not your obligation to extend them credit or otherwise subsidize their business. The time, energy and expertise you give to clients are very tangible, valuable resources in your business. Get at least 50% (if not 100%) payment upfront before you start any work. It’s perfectly standard, acceptable, established business practice to do so. Not only does it help clients (again) take your business more seriously, it also shows that they take their own business seriously. If they aren’t willing to have some skin in the game, neither should you. In the event that they don’t pay the remainder, at least you’ve got half your losses covered.

3. Don’t let folks go into debt. You don’t do anyone any favors by allowing them to go into debt to you. That only makes it harder and harder for them to catch up. And you have a responsibility to mitigate your damages. That’s why you see work-stoppage clauses in contracts that tell clients: no pay—no work. Immediately cease any further work (and do not hand over any pending or completed work) until the client pays all outstanding invoices in full and gets his accounts with you in order.

4. Work with clients who can afford you. Clients who aren’t in profitable businesses or industries are going to have more problem payers than in those that are profitable. Make this a standard and part of your ideal client profile:  you can’t afford to work with those who can’t afford you. Work on your pre-qualifying process (not to mention your marketing message) so that you get better and better at attracting your ideal clients to you while weeding out the cheapskates, tire kickers and wheeler-dealers who always want to dicker or argue over your fees.

5. Work with honorable people. The minute you get any inkling that a person is less than ethical or honest, let them go. Heed those red flags. If your gut is telling you a prospective client might be a problem, trust me (and yourself)–they will be. And if you are dealing with someone you know has a history of screwing people over and being shady or dishonest, don’t fool yourself that you are the one person in the world they would never do wrong. A tiger doesn’t change its stripes. There will be a day that they do it to you. It’s just a matter of time.

6. Define your ideal client profile. Write out all the traits and characteristics that make someone an ideal client for you. Make a list of the traits you don’t want as well. This is something you continue to update and get clear about throughout the life of your business. This exercise helps solidify your intentions about who you want to work with and who you don’t. It helps you better recognize your right clients when they show up and politely decline everyone else.

7. Let bad clients go. If a door kept hitting you in the face, you’d eventually learn to stop letting it do that, right? So why would you keep working with clients who are basically doors that keep smacking you upside the head? If that’s what is going on, you have no one but yourself to blame. And I say that not to berate, but to help folks get clear and conscious. No one else is responsible for what happens in our businesses. To think otherwise is to be a victim.  When you accept that, you are empowered to take the steps to rectify things in your business. Bad clients and poorly-fitting clients will hold you back. They drain your energy and professional self-esteem. If you want to get anywhere in your business, you have to lose the dead weight. Your right clients are out there just waiting to work with you and appreciate what you do for them! But you’ll never find them and they’ll never find you if you keep yourself buried in muck of bad clients, bad policies and tolerating bad behavior. You have to let the unideal go so that you have room for ideal to come into your world.

Doing these things will save you a world of hassle, resentment, wasted time and negative energy in the future. Onward and upward!