Take the Money or Run: 3 Expensive Business Relationships to Avoid

Guest post by Lisa Langsdorf.

This is a guest post by Lisa Langsdorf.

Money is dangling in front of your eyes and it’s so easy to say to oneself “take it, take it.” But, if you’re a consultant, agency or hiring a creative, and in it for the long term, having more meaningful and better relationships is a more rewarding strategy and more stable way to build a business than the quick burn of several bad ones.

Unfortunately, there are a few types of relationships that will financially “detour” you. Recognizing and avoiding them will be one of the most important pillars for you to building your business in the long term.

Here are some common relationship detours to avoid.

1. The creative payment plan:

I recently spent a good 8-10 hours talking to, researching and writing a proposal for a company. After submitting the proposal, the CEO suggested that we discuss a performance-based payment model—you get us coverage and we pay you based on that coverage. PR people are used to getting this request and most of us find it offensive, although some agencies base their livelihoods on performance. But other than the fact that so much more goes into PR than just coverage, I, and most others, run away from these clients as quickly as possible. It’s an indication that they may not be able to pay because they can’t commit to a baseline budget or that you will have to negotiate every invoice if/when you do perform.

In PR, performance models can be so subjective: if I get you top tier, you will pay me X. But what is top tier (is it subjective or do I have to create a grandiose contract with top tier, second tier third tier etc.) and what is their budget cap?  And, if I exceed their expectations, will they be able to pay me for that work?  That’s a contract that’s way too complicated and open ended.

Finally, this pay-for-performance scheme is also a red flag that the contact or CEO doesn’t trust you or believe in your services from the get go, a bad way to begin a relationship. If they are expressing that aren’t willing to invest in the relationship, even before a contract is signed, then it may be time to move on.

2. Vampires:

You probably won’t know if you have a vampire until it’s too late. Vampires are those who’ve retained you for a certain scope and who regularly ask for work substantially out of that scope or retained hours.

Here, I’m not referring to the general over servicing you do to go above and beyond for the clients you love. Rather, vampires will take up all your time, even if they’ve only paid for 50 hours of it. These clients will be a problem because they will impact your work for other clients and limit your capacity to take on other business and restrict you from growing. With vampires, it’s very important to agree on a scope in advance so they understand everything that is encompassed in a relationship.

By having that scope up front, you’ll be able to better communicate with them when you’ve hit hours and need to stop or bill more.  If they’re not willing to work within that scope, don’t be surprised if you need to let go of them or vice versa.  Continual work outside of scope by more than 10-20 percent will negatively impact your relationship with other clients, restrict your company’s growth and is an indication that their expectations surpass their budget.

3. They don’t really need you:

If you take on a client but can barely inch out the scope of work in the contract phase, it’s very likely they might not actually need you or that the project is much smaller than you initially thought.

If you don’t bill a retainer, this will lead to uncertainty in your projections and it’s better to just take on a more concrete (even if smaller) project. If you happen to be that client that is unsure of scope, you should know that some firms will willingly bill a client retainer for months even if the client is doing nothing and the account is slow. Your marketing head or accountant may rubber-stamp these bills.

As an agency, you may make some money off this short term but it will most likely impact your reputation and client trust in you for the long term, especially if the CEO gets wind. While having the money dangling in front of you may be appealing, it’s better to be honest with a client and engage with them once they are ready.

Lisa Langsdorf is a technology public relations and media relations expert. She has spent the past 10+ years working in house and at agencies representing a wide-variety of early-to-late-stage and public technology companies.