Business and clients

March 15th, 2007

Clients can drive a business bankrupt, or the “lack of”. I realize that having them might also bankrupt you in no time, unless you do some safeguards.

Almost two months ago we have been booked to start a project, that would last for two-three months and involve two to three developers. High complexity, state of art development, anxious stakeholders. Great! The project was postponed, and then finally canceled due to business reasons.

The client has the right to do that if they feel they are not ready, or that this undertake will not produce the most optimized results due to the lack of specifications or improvements on their own business processes. I sympathize completely with that. But when someone book our time we make ourselves unavailable to other prospects, we hang up phones saying “we don’t have time!”. So a cancellation a few days before a project start really put us in a difficult position.

Now let’s invert the situation. The client come a few days before the project was schedule to start and ask “hey, everybody ready to start?”. If I was an unscrupulous, irresponsible business man I’d say “dude, sorry, I forgot about you. Turned out that more clients knocked on our door, we have accepted their projects and completely forgot about yours. Best of luck and sorry.”

It doesn’t sound right, does it?

So I’m considering approaches to handle these situations, advanced payment, retainer model (which I was just introduced to).

Now on the other side of the fence, we have been involved with a cool (in fact awesome) and huge project. Very promising. With this one we had the opportunity to evaluate their competitors and propose different approaches that would make them years ahead of the competition. We have been involved with this one for a few months, and we’re able to implement in this minuscule time what their team implemented in an year.

Turned out that the project was halted. Thankfully nothing held against us or our deliveries, but was frustrating anyway. It was put on staging server for the first time this week, and we were really working hard to push it to production.

The moral of the story: if you’re not fond of big risks, do not start a business. And btw, for all of you that reached us in the last couple of months, we might have some free time now. :-)

6 Responses to “Business and clients”

Brian Says:

Having been a consultant for six out of the past 10 years, and doing purely development and project management consulting for most of the last two, I know how you feel.

I’ve found there are three types of clients: those that pay on time, those that pay late, and those that don’t pay. Clients who routinely drop an agreed-to project may as well fall into the last category. You have to approach each one differently.

Clients which pay on time are the best, and you should send them flowers early and often.

Clients which pay late are those you have to consider getting advance payment from. Some clients balk at this, and sometimes it’s hard demanding payment up-front when you need the client more than the client needs you (which is all-too-often the case). Try to get friendly with someone internally who can help expedite those checks.

Clients who don’t pay for whatever reason should never be clients again. The best way to avoid them is to ask for business references when taking on new clients, or see how willing a client is to signing an agreement with regard to money obligations if they decide to scrap a project. A client willing to sign is a good sign.

Your personal risk assessment on starting a business is so true: if you can’t stomach it, don’t do it. I’m a risk-taker by default. Heck, I quit a very good-paying full-time job and took an effective 50% cut in pay just to do independent consulting again (less money but more happiness) three months before my wife left her job had our first baby — now THAT’S a risk-taker. :)

Bottom line: Evaluate your potential clients as much as your potential projects.

hammett Says:

Thanks for sharing that Brian. The problem is querying for references down here. And a bigger problem is enforcing the contracts. Those might cost more than what is due. That’s why I’m considering opening an office in the US, just to bridge us, and hopefully gather projects.

Brian Says:

I’m in the US (New York City), so if you need any American guidance, don’t hesitate to ask.

Interesting finding - 03/15/2007 « Another .NET Blog Says:

[...] Business and clients [...]

Christopher Bennage Says:

This is a very timely topic for me. My consulting company is only 5 months old, and we’ve already had to turn down business because we’re afraid of over-booking. Yet several of the potential projects we’ve reserved time for have uncertain start dates and are not guaranteed.

@Brian: I appreciate your observations.

Darius Damalakas Says:

To hammett, and all: thanks for sharing experience of what happens in the bussiness.

Our company is in Lithuania, and the climate to do agile-development here is not .. em.. ready. People just don’t work this way. Our current customer just don’t pay much attention to their project, and it is a big problem.

Customers would not understand what is the internal-quality of the software, and why should they pay for that. I admire very much CastleStrongholds position about the quality, and this is a good example for us to follow.

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