If you've been in the consulting business for more than a year or two, you've probably had an encounter with a less than honorable client. You've either been stiffed, lied to or had a customer renege on their contractual obligations. Unfortunately, it's comes with the territory of being a management consultant.
In my book, the only foolish mistake is one that you don't learn from (or one that you make more than once.) It's hard to walk away from revenue, but the experienced consultant learns fairly early on that all that glitters isn't gold. That client that looked so good at the beginning doesn't look so good when they're 60 days late with your payments and paying you isn't one of their priorities.
Qualification is part of any good sales process. You should be qualifying for budget, authority to sign a contract, a need for your services and a current timeframe for implementation. The only problem with this qualification process is that it doesn't identify deadbeats, chiselers and lowlifes. Here are some ideas on how you can avoid clients that will end up being more trouble than their worth (get out your ten-foot pole.)
Step 1 - Get Rid of Problems Before they Become Problems
One business management theory advocates that you get rid of your bottom 10% of clients every year. These are the clients that aren't profitable, are taxing on your people and generally cause disruption in your business. While you need to be professional, it's best for everyone to end these problem relationships. For an excellent article on how to identify toxic clients that you need to fire, I recommend Geoff McQueen's, "It's Not Me, It's You - When To End A Toxic Client Relationship." While I agree totally with getting rid of problem clients, this article is about avoiding problem relationships in the first place.
Sometimes we want a deal so bad that we ignore warning signs that are right in front of us. Here are a few warning signs to look out for.
"Can you do this project for free? If we like it, we'll hire you." On this one, you can just ignore the second sentence - the prospect is looking for free work. The eager beaver may go for this deal, but will likely end up disappointed.
Your job as a consultant is to show a prospect that you understand their needs and have the ability fulfill them. If you do this, there's no reason a potential customer should object to putting skin in the game. For example,
If a prospect has a problem committing funding to your assignment up-front, it's a sign of potential trouble.
A relationship built on trust is worth its weight in gold. I'd rather have a handshake deal with a person of integrity than an ironclad contract with a lowlife. Here are a few suggestions to help you avoid problem clients.
The vast majority of our clients are great, trustworthy people. But we have had problems with clients that could have been avoided (and will be avoided in the future.) Use these precautionary measures to build client relationships that are valued on both sides.