This is a follow on from our ethics debates (Here and Here)
So the situation is this:
You meet someone at a networking event who has a really interesting business, something you would like to know more about and which you would enjoy working on. However, the admin is a disaster - the client doesn’t know who owes her money, or whether or not she’s even charged enough for each job. She freely admits she can’t afford to pay you, but she clearly needs help.
What do you do?
Possible options could be:
1 Go into partnership with her
2 Steer well clear - if she’s that incompetent it is likely to spell disaster in the near future (unless she has external/private funding) because the product/service is unlikely to be being charged at a rate that will make money and as soon as she puts her prices up to the correct level all her customers will run for the hills
3 Take pity on her and put her admin straight for free in the hope that finances will pick up and she will pay you (yeah right!!)
HOWEVER, if the business is in an field that you would like to know more about and she knows her stuff (and if you have sufficient capacity) you could take on the role as a form of training for your own personal self-development. This would have to be made clear at the outset and probably a written agreement outlining what she will teach you and how long you’d do the admin for would be a good idea.
Actually I had a client who worked in a similar way. Took on people for a year to do specific types of work for her on the understanding that she taught them about her business. Unfortunately it ended badly for the trainees - lots of broken promises and disillusionment. I can’t really comment on whether the problems were down to her business model or personality, but from an outsider’s point of view it’s not something I would like to be involved with again unless I was VERY clear about what was going on. It can get messy and emotionally draining if you find that the situation isn’t as has been portrayed.
I recently came across this problem I decided:-
Offer them 2 hours work free (as i do with all new clients). From this I can get a feel of them and their company.
I offered them 1 days work with 60 days payment terms - high risk what if i don’t get paid…put it down to experience and marketing, if it works I have built a good relationship with a client and have lots of repeat business.
We will see if it works or not!
S
That’s an interesting concept Suzi - do you focus on projects which are fee earning in order to make sure you get paid or is it left entirely to the client?
(I’m generally of the opinion that most people are honest, but if they are useless with money, I’m probably working for free!!)
I am going to work with them on winning work and chasing debts.
He’s been going for a few years - he has made it through last year which I think was the hardest time. He’s just too nice when chasing money, So i’ve suggested the good cop bad cop package.
I can chase on behalf of him and be a bit more pushie, if they complain to him he can just oh yes, be on there side a little and keep a nice relationship with them.
It works with our locksmith business - I chase for money - Dave my husband keeps a good relationship with his clients.
A lot of whether you are prepared to risk potentially working for nothing is your gut instinct about the client and possibly the type of work involved. I had qualms about my “bad” client which turned out to be accurate after a few months but hadn’t listened to the alarm bells clanging away in my head. However, if I really believed in the person or project then I might just give them a helping hand and see where it went. For things like this I don’t think you can set a hard & fast rule as there are so many variables. We might be setting newbies a dangerous example by suggesting that this is a good (or indeed normal) way to operate that could land them with an expensive headache. The beauty of running your own business is that it allows you the latitude to be flexible should you so wish.
Actually my hard and fast rule on this is: if they can’t afford to pay me, I can’t afford to work for them.
I might choose to do something as a personal favour - like for example, I do occasionally print out some flyers for my mum’s pet project friendsofmaxwellpark.co.uk (and yes, I’m not adverse to putting a few links around the internet to help!!) 
But I’m not going to do that during business hours or shove aside client work to do it in.
I also don’t do stuff at a discount rate for similar reasons. I offered to do some work at a set rate each month for a networking organisation and I ended up quitting because what was 2 hours work mushroomed to 5+ hours and last minute jobs all the time, which was affecting full-paying client work. So I learned my lesson.
As a new start I’m not speaking from a postion of experience, however have been in the corporate world for long enough to know that you get nowt for nowt. I’m quite soft by nature and for me the whole money thing makes my toes curl. That said, at this stage I do not plan to do work for free - my mortgage still needs paying, plus I do not want to come across as desparate for work. My thinking leans towards the fact that you don’t get trials from plumbers, builders or any other industry so why should we sell ourselves short?
I might be totally naive in my approach, but I have financial commitments and they’re certainly not going to be met by giving away my hard earned skills and experience. I wouldn’t expect someone to do something for free for me and I kind of expect to be afforded the same courtesy.
We’ll see…watch this space!!
Victoria
Personally I wouldn’t work for free, I simply can’t afford to. Also, if I’m not going to be getting paid then frankly I’d rather be relaxing at home than worrying about someone’s business.
When I started out and I really needed the work I did some heavily discounted rates for a couple of business owners that would have struggled to pay my full rate. They didn’t turn out to be great clients, their businesses didn’t take off in the way they hoped and as I got busier with full paying clients I started to resent spending time on their stuff. Obviously, it was my own fault for having got into the situation in the first place. However, it taught me that if people can’t afford my rates, then it’s best not to work for them. I’ve also found that those who try to negotiate deals and beat you down, often turn out to be the slowest to pay. It’s a headache all round.
Pattie
www.onehourpa.com
And on the subject of clients negotiating discounts, here’s a great little video clip. (I came across this on the Gritty VA blog - she’s US based but does some really interesting posts on the industry).
youtube.com/watch?v=R2a8TRSgzZY&feature=fvw
This clip is a bit of a laugh, but makes a good point!
Pattie
www.onehourpa.com
I have regularly offered good trial rates, which almost always resulted in long client relationships. Great way to get a foot in the door and to build trust.
I am about to suggest a bartering agreement to one client who is an entrepreneur/angel investor. He asked me to help with a personal project that is not going to take up much time and I would like his expertise and contacts for growing one of my projects.
Obviously I wouldn’t work for free on a longterm basis or barter against something silly I can never make use of.
LOL @ Pattie - great example!
Victoria I’m also thrilled that you view your business in the same professional capacity as a plumber or a lawyer - you are entirely correct!!!
Morning all
I was going to post about this today when I saw the thread already exists - great minds. I find myself in a situation where one of my clients is struggling to make ends meet and we’ve been in some business recovery talks. To give you a bit of background,my business is mostly sales support and business development based and I have been paid on time by this client regularly over the past three months.
While I agree that we shouldn’t encourage working for free, I can see that helping out a “colleague” might just protect my income on a longer term basis, or I could stick to my guns and potentially lose repeat business when he ceases to trade.
I’ve obviously given him my thoughts on what he should do free of charge (I always like to give my twopenneth!!) as I don’t charge for consultation, but I have also agreed to do some very basic market research for him. This is however is a crafty way of combining business developement for my own services while getting him some info at the same time. I’m hoping that this way we will be killing two birds with one stone and we will both benefit…
I’d be interested in what you think and I’ll let you know what happens.
Becs
In that case Becs it sounds like you are putting together a proposal for your business services, not really working for free. I’d classify that as either “business development” or “marketing” time rather than actual sitting down and working time.
When I’ve done this for clients in the past, it always runs the risk that they’ll take your plan and go do it themselves or hire someone on the cheap to implement it. Although I’ll happily spend half an hour going through an action plan with a client or a lead, I usually state upfront that picking my brains comes with a cost attached after that first half hour. We have valuable knowledge in our heads!
If it was an existing client and I was likely to get more work out of it, I’d be more flexible. It sounds like you have a good balance, as long as the client realises that asking you to spend time on his projects has a cost attached longterm.
I have had a client come to me with that exact scenario.
I did agree to work for free (sort of) but only for a limited time it was for 3 months only on the condition that any time I worked on her business, she would pay me when the three months was up.
So it wasn’t really free if you see what I mean. I kept track of all hours and didn’t do too much work on their business just 2-3 hours a month as I explained that my paid work had to come first.
So you got round it by offering her 3 months interest free credit? Interesting solution Char! Hey, it works for sofas!!