A small business owner I know has a simple rule: the “clock” starts the minute a prospective client seeks his advice. There are no exploratory meetings or proposals provided to clients – just a flat fee for an introductory meeting. Every minute of this time is paid for, no matter how small the enquiry.
I’m sure many business owners wish they had a similar policy. Especially those who are “milked” by prospective clients who seek their advice under the pretence of possible work. You have to give some ideas to excite the client and get the work, but not so many that you unwittingly become free labour.
It usually goes like this: the pretend client calls asking for your views on an issue. After getting your ideas and contacts, he or she suggests you submit a proposal detailing a path of action. You spend hours or days on the proposal and the pretend client walks away with thousands of dollars of free ideas, intellectual property and advice. You have been milked, good and proper.
Knowing when you are being used – and how to avoid it – is critical in small business. If time is your most valuable asset, you cannot afford to give away ideas and advice for free.
Yes, it’s a fine line: you have to give some ideas to excite the client and get the work, but not so many that you unwittingly become free labour. I’ve learned the hard way that it pays to be more judicious in how you give time to potential clients – and to better vet those seeking your advice.
Here are seven signs your business is be being milked for free work:
1. The “size” card
Entrepreneurs’ number-one weapon for getting free advice. They tell you about their multi-million-dollar revenue and previous successes to excite you about their potential as a client. Then they do nothing with your proposal – other than steal the ideas. Beware any clients who try to sell the size of their business to you: real clients know their enterprise speaks for itself.
2. The “I’d value your input” phone call
Here, pretend clients play for your ego by commenting on a previous piece of work, or suggesting your ideas and opinions would add greatly to their project. Some even have the gall to say “I wanted to reach out to you” to get your views, as though they are doing you a favour.
3. The lunch
Remember that Seinfeld episode where one of Jerry’s antagonists argues that “soup is not a meal”? It’s a bit like that when a pretend client invites you to lunch, expecting all your best ideas and help in return. You wonder why you gave away two hours of free work for a $50 lunch, and now feel obligated to provide further help. Better to have a quick coffee with unknown prospective clients, or keep it to an initial phone call.
4. So-and-so recommended I call you
Another classic milking tactic. They drop a big name, flatter your ego and try to get as much free advice as they can. Half the time, the person who “recommended” you mentioned your name in passing, but the pretend client happily leverages off somebody else’s network and reputation to get time with you. My advice: ask the client how he or she knows the person who recommended you.
5. Sounds great, can you put it in a proposal?
How many small business owners have wasted tens of thousands of dollars writing proposals that go nowhere? The potential client wants you to supply a plan, but positions the request as a “proposal”, knowing that’s much harder to charge for. Ask the client for a proposal specification before supplying your ideas, so that he or she does some work as well. Never submit an open-ended proposal where you supply a range of ideas about what could be done, and far too much unpaid work. Keep it short and specific.
6. Can I mention I spoke to you?
Another common trick of pretend clients. They email or cold call for advice, ask if you know anybody else who might help, and if they can mention they spoke to you. Sharing your network with trusted contacts, or helping genuine people, is worthy; giving aways your network to pretend clients who are milking your business – and don’t have contacts of their own – is dumb. Keep your contacts close to your chest until you feel more comfortable with the prospective client.
7. Who needs details?
The classic give-away of pretend clients. They go blank when you ask them what sort of budget will be applied to the project. They have no process or timeframe for choosing the proposal. They take forever to reply to your proposal, claiming they have been too “busy”. They hint at money being available, but never want to talk about dollars when the free ideas are coming thick and fast from you.
*Original Article by Tony Featherstone: http://www.theage.com.au/small-business/managing/blogs/the-venture/stop-giving-away-free-advice-20140508-37×35.html