Our panel shares stories of failures we’ve had with client projects and how you can avoid similar disasters in your own business.
- Reuven Lerner
- Jeremy Green
- Erik Dietrich
- Kai Davis
Each episode, the panel (and guest) share their picks: a book, app, service, resource, or something else that they’re enjoying and recommend you check out:
- Patriot on Amazon Prime (Jeremy Green)
- The No Asshole Rule by Robert Sutton (Erik Dietrich)
- The Entrepreneur’s Guide to Keeping Your Sh*t Together by Sherry Walling, PhD with Rob Walling (Kai Davis)
- Loom (Kai Davis)
- Guns, Germs and Steel by Jared Diamond (Reuven Lerner)
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WHAT IS THE BUSINESS OF FREELANCING?
If you’re a freelancer, then you’re not just an expert in your field. You’re also a business owner, responsible for everything from bookkeeping to marketing to customer satisfaction to business development.
On the Business of Freelancing, our panel of experienced freelancers discuss the issues that they have encountered while building up their business — and give you practical, actionable advice to take your career to the next level. We also invite expert guests to provide their opinions and perspectives on how you can better succeed in your freelance career.
Reuven: Hi, everyone, and welcome to the Business of Freelancing podcast. This week, we’ll be talking about disasters, consulting failures that we’ve had, and how you can avoid them in your own work.
On our panel this week is Jeremy Green.
Jeremy: Hey, everybody.
Reuven: And Erik Dietrich.
Erik: Hi everyone.
Reuven: And Kai Davis.
Kai: Hey there.
Reuven: And I’m Reuven Lerner. So this week, we’re going to talk about failures we’ve had in our consulting careers, not just because they make for amusing stories, but because hopefully, they can be lessons that you dear listener will avoid in the future. So has anyone ever had a problem, a failure at work?
Kai: Oh, absolutely. I can think of a couple of projects where either expectations were off of alignment or we thought, hey, we’re going to return to the right here and get to where we’re going. Then we ended up in like a completely different spot. The best one I could think of is back in the old days when I basically was a freelancer doing a WordPress marketing things. I ended up connecting with a startup IE bootstrap, they’re making dog biscuits with CBD in Portland, and they needed a website.
So we started off, we were like in alignment, “Okay, you need a site, these are the products, you got me the images.” We move forward with it, and then about four days before final delivery of the project. They said, “Hey, so we’re doing the eCommerce thing can you make it so we just have local delivery right now we don’t want to ship it out of state or out of Portland. Can you make it so just people in Portland can order from us?” “Yeah, probably.” I said okay. “But can you make sure only people within a 25-mile radius of our house can order from us?” “I think I can.”
Basically 40 hours of me trying to hack WordPress with a machete to do it. Getting my buddy involved in and it just went completely pear-shaped. At the end, we figured out a solution, they were satisfied, I still had some blood left in my body.
But looking back on it, to me, it really is a lesson in the importance of both confirming scope initially and saying, okay, we’re doing A, B, and C, and only A, B, and C. Further on in the project, they’re saying things like, “Hey, just allow people in our neighborhood to order from us pop up, push back and say, Well, hey, I understand that as a feature. That wasn’t what we thought of in the scope initially. So let’s have that as a second phase, but wrap this one up first.” How about you guys?
Jeremy: Yeah, I’ve definitely had projects go way wrong. Much like you Kai, it’s often about misaligned expectations and poor communication from my side or my agency’s side. Probably the worst one that I ever had was about four and a half or five years ago. I had been on a long-term contract with a company that had wound down and so I find myself in a spot with no work, and I hadn’t been really working on a pipeline or anything, so I was in a hard spot.
I didn’t need the work that day, but in the absence of other prospects, I just kind of thought, “Yeah, why not? It’s some work.” It came from somebody that was a contact in the local tech scene, who, in my mind, I slotted into the, “Oh, this is a project with a friend bucket.” He was really an acquaintance.
I gave him too much credit for being a friend and gave him too many benefits to the doubt on scoping the project. It was a thing where they told me that, “We have these new features mostly built. They’re all but ready to go. They’re behind a feature flag we need… And our developer left suddenly and we need somebody that can do the final UI polish on these things and turn off the feature flag to get them into production. I propose that we do like an exploratory session where I would review the codebase. Look at the state it was in.”
They said, “Oh, no, we don’t want to, we’re not going to do that we’re not going to pay for that. Let’s just go straight to work.” I should have pushed back on that. That was one red flag that, my bad, I screwed that up. So I got into it, really not knowing what I was getting into. I’m trying to make clear that, “Hey, look, if there’s more to do here than what you’ve described to me, we’re going to have to come back and revisit this contract, and it’s going to be more work, and you’re going to have to pay for that.”
They said, “Oh, yeah, sure, of course, we would expect that.” I did not insist on that caveat being in the contract that I signed, which was another failure on my part. So I get in and start looking, it turns out these features do not exist. The feature flag for the features exists, and it’s hiding a button for where the feature, the entry point for the features should be, but none of the rest of the feature exists, no UI for it no back end, nothing.
So, I try immediately to raise like, “Hey, this is not going to work. We need to renegotiate a new contract.” They push back real hard and said, “No, you signed a contract that said you would deliver these features.” We went round and round. They had paid for the whole project upfront. We went round and round, I did tried to get new work, authorized. I had done some work, trying to work towards the features just in good faith. I had committed that code and pushed it so they had access to it.
Finally, ultimately, when we couldn’t work anything out, I had to refund the entire $16,000 project fee and just say, “Look, I’m sorry, I can’t help you. This is more than we had agreed upon. It’s going to take way too much time for me to build these features from scratch that you had told me I mean, we’re mostly done.”
So it went from being four or five or six weeks estimate of getting this thing done to. “Yeah, I honestly have no idea. You’re asking me to integrate with this external system that I don’t know anything about.” So I finally just had to walk away, give them back all their money and say, “Okay, I’m out.”
That was a very painful series of lessons to learn in a very short amount of time, but a lot of it was entirely my fault for just completely mismanaging communication, leading up to the project, self-inflicted. Don’t do what I did, learn from my mistakes.
Reuven: Erik, do you have any horror stories to share?
Erik: Not really, interestingly not in my capacity as a freelancer or a business owner and I have some thoughts on why that is that maybe we can delve into it a little bit. But I could be going back to my salaried employment days where I worked for an app dev agency, custom app dev agency.
There were any number there, and they usually all involved the standard thing, which is there’s some piece of custom app dev work. The client solicits bids or gets an RP. The firm I was working for goes out, provides estimates, but someone says, “Hey, this is time and materials.” Then it was always some variant of we go way beyond the estimate, the clients gets increasingly unhappy about that because in spite of the amount of that agency would poopoo clients for doing this, they take the estimates as commitments, which is actually quite understandable.
So inevitably, it was, we’re way over the estimate, why are we over the estimate? Why haven’t we completed the work? What are we going to do to mitigate it, and then there’s always this increasing tail off kind of mutual risk where you as these agencies start to write off hours of discount hours. So, there you’re working together, it’s costing the client more money than they anticipated and every incremental hour that you’re working as the agency is getting closer and closer to having no margin, and so everybody’s just super unhappy.
Like across the board, there is no better recipe for projects going horribly wrong than that. Which may be at times not everything that agency did when poorly, but I saw enough of them to see that the larger the scope, the more likely that outcome was. Even if you have milestones where you’re checking in it, there was always the tendency to say like “Well, even though we’re a quarter of the way to where we should be done, and we don’t feel like we’ve made that progress, we think we can make it up in the last three-quarters of the last half.”
Me personally, as a freelancer, as a business owner, I’ve had contentious situations with clients, but nothing that I would say has gone horribly wrong. It’s more than early in discovery or in the beginning of working together, I realized this isn’t a fit, here’s your money back, don’t pay me nevermind, bye.
That’s a bummer, but I wouldn’t really consider it horribly wrong. So there’s been a shift in the way I do things which maybe I can talk about it a bit. But all my experience with projects really going off the rails were when there were these long feedback loops based on estimates, where it would be months or even years before you realize that things were really going to be misaligned in terms of expectations.
Reuven: I will tell you my own one of my many, I just was just writing down a whole bunch of different possible tails of whoa, I could share. We’ll see how many I can get to during this podcast. But you do this long enough, and you definitely end up with a large collection of them.
So perhaps the most extreme one, it was probably already close to 20 years ago. I was about to leave my home office along with an employee to go to a meeting, and I get a phone call. “Is this Reuven Lerner?” “Yes.” “Do you work on Linux Administration?” “Yes.” At that point, I did. “Oh, boy, we could really use your help. We’ve got a real emergency going on here.” “So well, I’m on my way to a meeting.”
It turns out that the meeting was pretty close to where they were. So after the meeting, the meeting probably ended around 3 pm. I went over to their offices, and they were actually in a server farm underground in some basement somewhere. So, we go in there, and they explained to me that their sysadmin, just up and left them, and they’re totally stuck, and the system is down, and would I be able to get them out of this jam? I said, “Of course, I want to help you.”
My employee and I sat around and worked on it for about two, three hours. Then my employee actually had to go home. So I stayed around and pulled an all-nighter, helping them, fixed everything, got the server up and running. Fantastic. They were delighted. They were ecstatic. I get home. This was days before cell phones. So I explained where I’d been, by the way, that was a secondary mistake. Don’t do that.
I told my wife and kids where I’d been all night, working on the server thing. In any event, the next few days they continue to ask us for questions. We continue to fix their server. All was fantastic until we invoiced them. We invoice them and no response. Not a no, not a yes. No response, tried again. “Oh yeah, we’re going to send the check soon.” Tried again and finally, we started to get a little firmer with them.
This was again in the days of fax machine so they said. “Oh you fax, we’ll fax you something.” What they faxed was a letter saying, “Reuven Lerner is a cheater and a fraud, and nearly destroyed our servers. We are going to sue you for damages to what you’ve done to our system. It was only thanks to our CEO stopping you from doing terrible things that we managed to stop this.”
To say that I was shaking and crying does not do justice to my reaction in getting this fax. I had never see anything, anything like this before. I quickly understood that their previous sysadmin had not just up and left them but they’d also probably been stiffed. So, I would say there’s some commonalities here between certainly what I went through here and what Kai and Jeremy went through, and to a certain degree, Erik, which is, it all comes down to communication with the client all comes down to being crystal clear communication expectations.
But that incident led me to think, “Okay, if I have an airtight contract, if I make sure before I go, so when I have a contract, I will never have these problems again.” Tell me what you guys think.
Reuven: My guess would be better. Right? Right. But it will not reduce the risk to zero. Thoughts?
Erik: The most easy way that I could go wrong that I could think of as I was talking to a business owner recently who was saying that he disproportionately catered to startups. What he had started doing was having an attorney that structured an arrangement so that he could pierce the corporate veil if need be.
Because these are like pre-funding startups and I guess one game that they would run as engage with vendors. Then say, “Well, if the business wasn’t working out, I’m bankrupt now, and there’s no business anymore for you to sue.” So it was like they could engage with vendors and then not really have to pay these obligations if they just went out of business.
So, I mentioned that to say one way that even with the best contract, you can imagine is if the company you’re engaged with is circling the drain, and then they go out of business, good luck with that.
Jeremy: Yeah, I remember being in exactly the same position thinking all I need is a really good contract and master services agreement and I’ll get something that’s just airtight, and then I’ll be set and nobody will ever be able to cheat me or rip me off again. Then realize that it’s really not about the legal lease that you bring into play, it’s about having clear, honest communication with people that you feel you can trust and that you think are engaging in good faith. Legal lease can’t help you find any of those things really.
It might in some cases, but it’s really more about having good communication with the client and good open channels. It’s hard.
Reuven: I did a project a few years ago for, it’s probably, five, six years ago already, with some lawyers helping them put up a website for lawyer stuff. Obviously, they were contracts involved, and so on and so forth. But at the end of the day, the problems that we had had nothing to do with a contract, the problems had to do with the fact that their project manager inside of this legal eCorporation, as it were, they kept saying, “No, you need to do everything we want for a flat fee.” Or “Our definition of bug fix is ad infinitum.”
That wasn’t specified anywhere in the contract. Maybe that was my mistake. Maybe that was their mistake, but, basically, there was just miscommunication. At the end of the day, there was no good faith, it had nothing to do with anything else. They were like, “No, you owe this to us and you’re just being petty.” I said to them, basically the same thing. They paid us in the end but it was very, very frustrating and neither of us wanted to continue working together.
Kai, you mentioned this, I guess it was dog biscuits company that you had some miscommunication on the geography stuff at the beginning. But it sounds like it worked out in the end. It sounds like you were able to patch over these differences. Did you continue working with them at all afterwards?
Kai: No, there was no repeat project there. Were able to figure it out. They moved on, I moved on. It definitely wasn’t an Oh gosh, the plane has crashed into a mountain worst-case scenario or terribly wrong project. But it was one that especially at the time, I was 22, senior year of college, or super senior year, and entering something like that with the energy was like what the fuck do I do here? I don’t know how to move this forward.
Yeah, it’s experiences like we’ve all shared here and like mine in particular and other client interactions that come mind really are what have moved me down the path of saying, hey, an initial paid project via discovery project, a roadmap, something else, just a smaller scope project with some money attached. So you can say, “Okay, how do we work together as client and contractor or freelancer and consultant? What are the issues? What are the pluses?”
Maybe you start off and you’re like, “Oh, it’s probably terrible communication.” Then two weeks into that initial project, like, whoa, this is moving better than I thought. So I really advocate for that initial paid project, just as a way to see like, let’s net each other’s butt how do they work? How do I work? How do we work together? Is this a good relationship?
Sometimes I get to the end of that first project and I say, Okay, this went terribly. We got to the objective, but it cost me another gray hair, let’s just end here and recommend them to another provider or if the project didn’t turn out, let’s refund that initial paid project and move on to wiser for having tried it.
It feels like a safe way to move forward as you either worry about or experience some of these negative situations. But one thing that comes to mind even within that is there’s definitely an element of confidence in our own skills or our business skills here? We need to be confident in ourselves to advocate for, hey, this is out of scope or that wasn’t in the contract, let’s have a bigger conversation or Oh, your expectations on timeline or features or whatever, completely out of whack with what I thought we were entering into.
But it’s easy to say you should have these types of conversations, it’s a lot harder to internally feel like you are competent enough or capable enough to go into that conversation and move towards the outcome you’re looking for.
Erik: So, along those lines, what I was saying before about the reason I think I haven’t encountered since leaving the custom app dev salary world. I haven’t encountered what I would describe as these huge project going off the rails like miscommunication. This is because there’s a handful of things I do that rightly or wrongly, I think de rescue in a lot of ways.
One of the big things is I tend to bill at a minimum 50% upfront, usually 100% for things that I’m doing. Number two, Kai, as you were saying, usually, the thing I picked to engage with initially, is something that’s low enough in price that even if it goes wrong, and we discover in the course in a few weeks or whatever, it’s going to take that it’s just a horrible fit, I just send them a refund, and that’s it. So until I’m sure it’s going to work, I put that money aside, don’t depend on it in any way.
Another thing that I’m generally doing is flat pricing everything in some way, and making scope and deliverables clear in the statement of work or proposal that I do. So all of those things add up to whatever may go wrong. I have had some clients that I’ve fired, have had some complete relationship non-fit, but I don’t really consider them a project gone horribly wrong. It’s just almost like instead of in the initial sales call slightly after that, I discovered this isn’t a fit.
I didn’t really learn that all at once, I stumbled into it. In some ways for me luckily, in that there were like near misses, that could have been bad situations. Like client that I was doing some custom work for early on in my freelancing, that racked up like a $50,000 bill, that was still outstanding, and they did eventually pay me.
But I started to think in terms of what on earth am I going to do if they don’t pay me because this is very important. I didn’t know, I didn’t have a good answer. If they had just said, nope, we’re not paying you I just would have lost a decent chunk of the year’s income.
So, luckily, I didn’t get burned that way, but I learned like, Okay, how do I de-risk this? Let’s get payment upfront. Let’s quote things in a very clear way. Let’s build on small wins. So, all that has been helpful.
Kai: I love that as a framework. One thing that comes to mind through what you just shared is to succeed as in the Business of Freelancing. You don’t want to avoid projects that go wrong in some shape or fashion, they’re really learning experiences.
Like for all of us, we would not know how to communicate or set expectations or hey you should charge upfront if we hadn’t been through situations where we let the client get ahead of us on billing, or we found ourselves at an impasse where we thought the scope was A and they thought the scope was B. It’s a teachable moment.
Reuven: One of the reasons that I’ve been so happy moving into training over the last decade or so, is that I decided, I was just fed up with these sorts of things. Maybe it reflects my negotiation skills and the clients I was getting, and I could definitely improve on that. But at the end of the day, I’m offering a fixed price per day and fixed scope thing. Basically productizing my consulting as courses allowed me to avoid a whole lot of that.
Now, I still have conversations with people. My favorite one is they’ll say, “Oh, but our people are very smart. So they can do a four-day course in three days.” I have to explain to them, “No, that’s actually not possible.”
But as you were saying, Kai, I’ve gained, not only experience but confidence over the years to be able to say to these fortune 100 companies, “No, I actually know better than you do. You can’t do this in three days, but we can reduce scope.” It took me a long time to get to that point because for a heck of a long time, I was saying, “Oh, yes, I’ll do whatever you want.” Because clearly, you’re the big company and you’re the client. I must please you, I must accept what you say.
Kai: Yeah, I strongly agree with that. Recognizing in the moment that we are the specialists, we are the external consultant or freelancer, we are the person coming in to solve the problem, they don’t know how to solve. Especially when it’s a larger client, and you’re like, Oh, my bill is one 100th of a percent of their revenue in a week or a month. It’s hard to balance there.
But exactly to your point, that inner fire gets stuck with time. You realize, oh, even if I’m saying yeah, the process you’ve been following for months or years, we can’t do it that way. It’s what we need to say as an external consultant to make sure the project we’re working on goes in the right direction.
Erik: Yeah, one thing that I’ve learned gradually over the course of years that I find really valuable is I was talking about sales consulting recently. I’m trying to remember how he put it because it was really artful, but it was something like, “In your sales conversation, one of the two of you is going to explain how the engagement is going to work and the other one is going to listen. You want to make sure that the one explaining how the engagement is going to work is you as the freelancer, as the service provider, because if you don’t, it’s going to be the client.”
So a lot of you listening, especially if you’re newer in your journey, you may think that if you’re going to go consult with a fortune 500 bank or do some work for a company like that, you’d think, “Oh, that’s just staff augmentation, they have a way that they do everything.” But no, not so much. Yes, they will. They’ll have a certain infrastructure in place for that, but that doesn’t mean you have to work that way.
So, if you explain in discovery calls, or pre-sales or sales calls, I bill upfront. I work in these ways. Even some of those big companies that you wouldn’t think would do it will say okay, like if they want to work with you bad enough. You have a bit of leverage in that fashion, especially they will do it, and it may surprise you to learn that.
But I’ve gotten fortune 500 type companies or governmental institutions to pay upfront, even though they said they didn’t have a policy to do that. So take hard like you may not, especially if you need the business early on, or what have you. You may not feel comfortable doing that right away, but you can get there, and that’s going to help a whole lot in avoiding disasters. Because it’s not just that you’re going to de-risk it for yourself if you get payment upfront or whatever.
When you say I have a process and this is how I work, you’re kind of dictating those terms, and they follow your lead. You are telling them how you expect the engagement to go, what’s going to be delivered when and they’re a lot less inclined to get picky, believe it or not when you have set it up that way. So yeah, that definitely dictating some of the terms of what you’re going to do and sticking to those guns even if it means that somebody walks away after a sales call, that’s usually important.
Jeremy: So a lot of what we talked about so far has been pre-engagement type of stuff, ways to avoid getting into projects that could go wrong. But how do you guys handle… Have you had projects that have started to go off the rails, that you’ve been able to successfully rescue and bring back to a good place where you reach a good resolution where everybody’s happy and nobody feels taken advantage of? How did you do that?
Erik: Well, I can speak to that a little bit. So just for context, since the listening audience out there may not be as familiar. I personally have had a freelance practice in the software as a team management strategy consultant. These days, I run a business that does content marketing for companies to market to software engineers.
Speaking in the capacity of that business where we do blog content, things like that for clients, we flat price everything. We’re usually starting off initially with a smaller engagement, and then we’re building on wins like I was talking about before. What I’ve had is sometimes if a client didn’t understand something that well on a sales call, we get into it, we’re doing some content, and then they start behaving in a way that I set up front. This isn’t how we work. So kind of we don’t do this, and then they do it anyway.
I’ve recovered from that. Well, one of the things that I’ll often do is to say, “Here’s a refund, I’m sorry, we don’t work this way.” But I’ve recovered from it at times by even developing an additional offering or a different way of working where I say, “Listen, we got one of two ways we can go. I can give you a refund right now because this just isn’t how we work or we can scratch what we were doing before. I’ll make you whole, we’ll do it your way on these couple of things we’ve done so far. But after that, if you want to keep doing it your way. That’s an upsell. So it’s really up to you. We can disengage. We can do a couple of these your way and re-engage at a higher price level.”
I’ve actually found that to be pretty successful just giving them that choice. Usually, it will result in a disengagement but sometimes they say, “Yeah, I’m happy paying a premium to work this way.” So that can be one that lets you redefine and work the way they want, but without them walking all over you.
Jeremy: One thing that I’ve found helpful when projects start to go south is surfacing to the client’s potential problems just as soon as I’m aware of them. It can be counterintuitive because when I first started out my inclination was that my job was to protect the client from knowing that these problems even existed and that it’s my job to just figure it out and shield them from all of that.
But those problems often lead to either schedule slippage or scope creep, sometimes both being the same thing. In those cases, if you want to get paid for that extra work, it’s really best to get that information to the client, as soon as you’re aware that it’s even a possibility that that’s going to happen.
You don’t have to raise that, “Oh, this is a terrible problem, the world’s on fire.” It can just be as simple as, “Hey, I’m looking into our integration with service X, it turns out that they don’t quite have the same mental model of the world as we do. That’s going to make this integration a little hairier than we thought. I’m still looking into it, still coming up with a plan for how we’re going to address this. But I wanted you to be aware that this is potentially a problem that could affect the schedule.”
Doing that early gets people in a lot better mood, than if you wait until the day before you’re supposed to deliver this thing and you’re trying to pull an all-nighter, and then you realize, “Oh, this just isn’t going work tomorrow.” By that point, you’ve led expectations get way out of whack, and it’s going to be a mad scramble if you can’t deliver the thing on time.
If you address it way early and let them know that, “Hey, there’s a potential that the schedule is going to slip.” They’ve got time to accommodate, everybody has time to be comfortable with that new information when it’s not just right up against the deadline, and people are already stressed and want the thing today.
So one of my biggest things is just try to surface potential problems early and let people know. But definitely let them know that they’re only potential problems and that you aren’t even sure yet.
Kai: Yeah, I completely agree with Jeremy on that. This is a skill that I am actively working on getting better at but to me, it very much embodies communicating to the point where I feel a little uncomfortable with how often I’m communicating. I think if I’m regularly hitting that point where it’s frequent updates as we encounter, “Hey, this is like a 70% chance of affecting the outcome affecting delivery, affecting whatever.” I’m letting the client know about it, even if there isn’t a next action for them to take, just so they have a general idea of the shape and flow of the project.
As you put it, Jeremy, the night before, let’s do an all-nighter and we get there. Then 3 a.m. we realize, Oh, no, there’s no way we could get there.
Reuven: I still have a long term client. So my last project software client that I’ve been working with for many, many years, and, it’s been like 10 years now, maybe even more. We’ve had our ups and downs over the years. Overall, things were excellent, all excellent. But there have been occasional snags where communication wasn’t so great, or they weren’t happy with the work that I was doing or with my employee.
One of the ways that we managed to avoid these problems was by talking, making a schedule for speaking regularly. A weekly half an hour meeting did wonders for our communication because then like you were saying, Jeremy, like things didn’t sneak up on anyone, I could say, “Hey, we have to do X, Y, and Z, we have six months, we have four months, we have two weeks.” However long, but the fact that we could plan in advance, they also I found in having these meetings, they were very happy to tell me what the direction of the business was.
Because here I am working remotely, not even close to their office. I don’t really know what they’re discussing, and they sort of forget that I’m not in all those discussions. So they can say, “Oh, over the next six months, we’re playing do X and Y and Z. How would you prioritize this? How should we work on this? What do we have to worry about in terms of budgeting?”
It really, really, really smoothed out all those rough edges and communication problems, and build a lot of trust among us as well or rebuild the trust that we had to such a degree that really if I were to go to them, remind them that we had problems not that I’m about to they’d be a little surprised because things have been running so smoothly for so long. How hard is it to find half an hour a week or even every other week doesn’t have to be super, super often, but often enough that everyone looks forward to and knows that they can update each other?
Jeremy: Yeah. Another important thing to mention and having those sorts of meetings and communications with clients is that it just helps humanize everyone. Because when you’re just emailing with people, it can be easy to fall into this mindset that you have an adversarial relationship with your client, where you just expect that they’re going to ask stuff of you that wasn’t included in the contract.
It can be easy to forget that there’s just a human on the other end of this thing and that if you can relate to each other as people that greases the wheels for a lot of business conversations, and helps everybody give everyone else benefits of the doubt, instead of the opposite of that and assuming worst intentions.
Reuven: So, let’s continue. Jeremy, you said before, Okay, we’re talking about the beginning talking about the during. When things go wrong, how do you then separate? It can be bad, like my fax threatening me with losses and so forth. I don’t recommend you do that to other people or that you be on the receiving side of such things. It’s bad either way.
But how can you try to extricate yourself from a bad situation to have a soft landing as possible? I’ll just start by saying, I have done a few monthly retainer projects, or I don’t actually… Yeah, I’ve done a bunch of monthly retainer projects. They all ended on a sour note. Were like, “Oh, we don’t have the money. We’re going to stop.”
I started putting my retainer contracts. You have to give me one month’s notice. That tended to force them to think ahead that even if things were souring, we had time to wind things down. I could hand things off to other people there and explain what I’d done, rather than, “Well, this is your last time here, bye-bye.” Well, it definitely happened once or twice.
Kai: I don’t have a good answer to this one. I wish I did. I’m curious to hear what other folks share.
Erik: So I don’t know if it’s a good answer exactly. But one of the things that I found when it comes to… Because we’ve had situations, especially with the content business where we engage with somebody who says things about our writers or does something in a way where I say… I don’t know if anyone out there has ever read the No Asshole Rule book, but we have that about employees, clients, anybody.
So I’ve had a few times where I shut down and said, I’m not doing business with anybody who behaves this way. We’ve had contentious breakups at times. What I found is that there is nothing quite as powerful in landing as gently as possible in basically being able to say to a client, like, “I’m willing to take an L out to do a deal with you anymore.” So if there’s something going wrong, and you’re issuing refunds or free services or something, you say, listen, we got to be done. Here’s half your money back or whatever it is, whatever you can tolerate.
That goes the farthest of anything and it’s powerful. Frankly, I’ve said that at times and they go the other way and say, no, that wouldn’t be fair, here’s more money. But that moment where you’re saying to them, it would be worth me losing a bunch of money, never to have to talk to you again, that has an effect on people.
So I can’t guarantee that that’s going to help, especially in Reuven’s situation, if they were like, out to screw you over in the first place. They might say, perfect, that’s exactly what I was looking for. But I think that that does provide you a good chance, if you demonstrate that kind of, “I have this skin in the game to get with this relationship.” So that’s been my experience.
Jeremy: Yeah, I agree. Offering refunds if they’ve already paid you is far and away the easiest way to just defuse the whole thing and get out of it. When you’re going to do that, it’s probably when you’re at the point that you’re not really trying to salvage the project or the relationship. You’re trying to make this person go away.
For me, with the big disaster, one that I had to refund the ginormous fee on, it was hard for me just to accept from an ego standpoint that I was going to give all that money back and let it go. It really, really felt like I had to eat some crow to just be okay with that and then come to terms with “Hey, it’s not worth my time and energy to fight these people because it is such a mess that my life will be better if I don’t have to talk to them again. I will be able to concentrate on real work from clients that I enjoy working for who are going to pay me.”
I was very lucky that I was in a spot that it wasn’t a huge financial disaster for me to have to refund that amount of money. I had a little bit of savings and some runway to run it out, but just the just the emotional investment of letting that go was hard for me to swallow.
Erik: Yeah. So, the corollary to being able to demonstrate that willingness to take a loss is you have to be able to take the loss.
Erik: I can get into a lot about like, how you’re booking revenue from your business, and at what point do you take in revenue and then feel comfortable standing it? So, if you anticipate that there’s a risk of this, I would suggest to anyone listening out there that you keep that money set aside. Don’t pay yourself with it, or spend it on things in the business if you think you might have to make a play like maybe wait till the outcome of the engagement is good, and then you do things with that money. If you can.
Reuven: Yeah, people often, non-consultants, non-freelancers often gripe about a face charge so much and that’s ridiculous. To go through with them sort of the, “Okay, well, there’s a salary and there’s both sides of the salary and there’s taxes, and social security or national insurance.” Whatever you’ve got in your country on and on.
You’re also taking on risk, and so your fees have to reflect downtime when you don’t have clients, clients who won’t pay. This sort of thing where you have to refund money to people or partial refunds. I had something a number of years ago, back when… I still remember it was this company doing software for phones, back then.
They said, they’re going start putting cameras on phones, it’s going to be a really big thing. I was like whoa, what a brilliant idea. So I’m dating when this happened, but the big thing then was, of course, sending text messages, SMS. What they wanted to do was analyze the text in an SNS, and then attach an emoji to it.
Yes, folks, this is how billion-dollar companies are. Well, they actually didn’t go very far. But the idea was basically they wanted me to write this software, to do all the analysis and so forth. Well, I wasn’t feeling so well and I started up the testing system. Went to bed got up and discovered I’d send some 100,000 test SMS is charging them, a few pennies for each. They were upset, to say the least.
We had to figure out what we were going to do, and in the end, we just compromised. Also, long story short, my entire project was completely unnecessary. The whole point of my doing their project was because they wanted to put it on Unix Systems, as most telecoms have, and so that we call up them upon, the day it was going to go online. I said, “Okay, we’ve got the system ready. What’s your Unix System?”
They’re like, “Unix? We don’t use Unix, we use .Net.” And that was the end of my project. That was the end of the company. So they had bigger problems than paying me or me paying them for all those SMSs.
Reuven: But yeah, I had to eat some money there because I had spent it unnecessarily and that had to be part of the fees so that it would bankrupt me just making that mistake.
Kai: A hearty wow, for me. That story 16 different ways. Wow.
Reuven: Any last suggestions and thoughts before we head into picks, folks?
Erik: Semantically like some of the things we’ve touched on that are you surface risks as early as possible maybe even in the sales call. For instance, when we’re doing content marketing for a company, if their website is really slower, they’re doing other things that are going to actively hurt their SEO. I call that out before we even engage and say, “You’re going to have a harder time than another company would because these are the risks to us engaging.”
So the more you move that to the left, if you will, the surface risks, the more regularly you communicate, like the good advice about setting up a regular checking call and all of that. It’s just really about tightening the feedback loop so that you’re not just going off and doing app dev or whatever you’re going to do for six months. Then you come back and say, “Hey, I’m only a third done.”
The sooner you can message everything and the more frequently you can do that, the more you can build on wins and learn things early, the better. So I’d say, when it comes to avoiding these terrible outcomes, the biggest thing is just learning as much as you can, and telling as much as you can as early as possible. That’s my takeaway.
Kai: Mine is slightly different than a takeaway. But for listeners who have run into issues like these, or see themselves, potentially running to them in the future, a mastermind group, it could be one other person, it could be three people, it could be five people. Just a group of folks, you could say, “Hey, I this thing is happening. I’m not sure if it’s me, I’m not sure if it’s them. And I’m not sure if it’s the process.”
Since that other person in your group isn’t emotionally invested in this relationship, or the situation is so much easier to say, you, tell me if I’m the crazy one here or tell me if like I just need to send a stern yet polite email to make sure we’re on the same page. It really helps turn it from an internal crisis to Okay, I could see the next two steps to take here and get it moving forward.
Jeremy: 100% on that, I was luckily in a mastermind group at the time when my disaster project went, and it was a large part of them, helping me get over that emotional hurdle and just saying, “Dude, give them their money back, you need to get out of this mess.” That helps a whole, whole lot, helped me not just be in my head and dwelling and how I wanted to win the situation and instead, some emotional detachment to say, “No, you don’t need to win this situation you need to get out of it.”
Reuven: Sounds like there’s very wise advice if painful. Let’s move to the picks. Jeremy, what do you got for us this week?
Jeremy: I don’t really have a business-related pick this week, but I do have an entertainment pick. A show on Amazon Prime called Patriot that we’ve really been enjoying. It’s about a deep-cover government operative who is also a folk singer, and who regularly ends up at an open mic singing about whatever shenanigans he’s been getting into. It’s a dark comedy. It’s very funny. Highly recommended.
Reuven: That sounds really amusing.
Reuven: Erik, what do you have?
Erik: Well, since I tossed it out there, during the show itself, I’ll go with the book of No Asshole Rule. I don’t know if we’re going to dump that playback. But one of the things in the book that the author talks about is insisting on that terminology. So that’s actually the title of the book. The author thinks it’s important to mention it.
It’s really about not putting up with toxic people, whether they’re employees, superstar employees in your business, or clients, just anyone. It’s not even just a life is too short. It’s that those people tend to have a real cost associated with them. So if they’re an employee, working for your organization, even if they’re a superstar salesman, or really talented engineers or something like that, that they actually create more cost with all the HR and all the stuff they leave in their wake, than they’re worth.
It’s a really compelling thing to go read. It’s important, especially for listeners when it comes to your clients. If people are abusive to you, you can always get more clients that you shouldn’t work that way. It will take a psychic toll on you that outweighs the revenue from the client.
Reuven: Very interesting. Kai, what about you?
Kai: Absolutely. So it’s kind of related to the episode topic. I’m starting to re-read of Sherry
Walling’s incredible book, The Entrepreneur’s Guide to Keeping Your Sh*t Together, how to run your business without letting it run you. Truly an exceptional book. For any listeners in the audience, if you’re a consultant, a day job employee, a freelancer, a software engineer, a software owner, whatever, it’s worth buying on Amazon.
It’s like 40 bucks right now, and it gives you a lot of great insight on how to stay sane and make sure you and your business thrive and you don’t die to the monsters hitting out there and freelancing.
The other one is a jumping-off with a suggestion of having those frequent calls or check-ins with the clients. I have started using the app Loom on my computer just to record a short five-minute video, maybe it’s a screencast, maybe it’s just talking head. But I found it to be a good step just to record a short thing like that and send it over to the client. It’s a little less intimidating than like, “Hello, here’s a 2000 word email about what’s happening.” And easier for them to like, “Okay, I looked at it, I get the gist. Great. Let’s move forward. I understand the constraints.”
Reuven: Very neat. My pick is a book that I bought, I’m about 20 years ago, started reading, said, “This is terrible.” Put it down, picked it up a few days ago, and how could I’d been so dumb? It is Guns, Germs, and Steel by Jared Diamond. If you’ve never read this book, it is a mazing, amazing.
It basically tries to answer the question. How is it that some societies in earth’s history managed to become technologically advanced and others did not? And what sort of advantages/disadvantages they have? He says straight off, “I’m not saying some people are smarter than others. The question is what did equally smart people find, have, do, that allowed them to evolve into more successful, less successful civilizations technologically? And then that led to the situation we’re in today where there’s a lot of inequality in the world.”
Brilliant, fascinating drawing upon everything from evolutionary biology to technology to history, on, on, and on. So Guns, Germs, and Steel. By the way, the germs part of the book, very, very relevant to today. It’s amazing how prescient a lot of what he wrote was, so by Jared Diamond, great stuff.
That’s it for this episode. Thanks, everyone for joining us. Jeremy, Erik, Kai, great as always. We will see you next week on the Business of Freelancing podcast.