Success in Sweatpants

There will be points in your business when you need to get revenues kicked into the next gear. It could be in the beginning, when you are working to establish yourself and get a track record you can demonstrate. It could be at a growth point, where you are launching new offerings or shifting company direction. Or it could be during an economic downturn, when the buying behaviors of your target market shrink significantly.

At points like these, it can be almost irresistibly tempting to ease up: Lower prices, agree to different terms, take on clients that would make it past your normal filtering mechanisms. The overriding mantra in the brain is something like, “Do whatever it takes…do whatever it takes…”

This is not surprising. It is a natural reaction to an undesirable change (in this case, a change in revenue flow). You have a mindset for success, which means that you will take action to solve problems and break through barriers.

But this situation can lead to additional challenges. If you ease up on your standard operating procedures or on your “client filter,” there is a risk that you will end up in situations where client expectations are quite different from what you have agreed to. Once into a project, it can be very difficult to resolve this kind of mismatch; it can boil down to a “they said, you said” kind of debate, where each side stands firm by a recollection of the agreement that was made. Also, if you ease up on your usual payment terms, you may end up not getting made for all or part of your work. The client can come up with reasons not to pay you, and you may not have any reasonable recourse.

There is a relatively easy way to prevent these and other challenges that arise from changes you’ve made to your business process in order to get revenues in the door.  Set client expectations before the engagement officially starts by providing an engagement memo.

This memo is more than a verbal agreement and less than a contract full of legalese. It sets the arrangements out in writing, so that your client can review everything ahead of time. The key elements of   the memo are:

• Scope of work. Write out the details of the job you are taking on. Be as specific as possible; the more the better.
• Price. This is the price for the work you have just scoped out.
• Terms. Your payment terms. (Note: ALWAYS get some percentage up front, no matter what. This is one policy that should never be eased up on.)
• Policies. List the critical policies that must be followed in order to fulfill the scope of work for the price you have quoted. This may include how you will communicate with the client, what the client’s responsibilities are and what will take place if they do not follow through on these, and how changes in scope will be handled.
• Signature. Have the client sign the memo and send the signed copy back to you. Though this is not technically a legal document, a signature means that the memo has been read and the client agrees with its contents.

Actually, an engagement memo should be part of the way you do business at any time. In addition to setting out the elements of project in black and white (which avoids differing recollections later on down the line), the memo can be an “early warning signal.” If a client argues with the scope, the terms, or your policies, pay attention. Depending on the situation, this may not be someone you want to go further with. I have terminated a number of engagements at this stage because of an argumentative client, and have never regretted it.