If you've been in business for any amount of time, I'm sure you have had your run-ins with troublesome clients. You understand just how detrimental those relationships can be. But sometimes it's tough, even scary, to drop a client--particularly when your company is new, or cash flow is low. Even so, often, the best solution for both your well-being and your business is to terminate the poisonous partnership.
As a business owner, you're bound to come across difficult clients, and there are three major red flags to watch out for if you don't want the headache:
1. Regular Late Payments
In the majority of cases, when a client is one or two payments late, it's an understandable mistake instead of a clear effort not to pay you. In these instances, usually, all it takes is sending a brief email or making a phone call.
However, if tardiness in paying becomes more than an occasional mishap, think about terminating the relationship. Why? Because you have committed obligations to your team members, outside vendors, and other creditors that need to be met regularly. Just imagine what would happen if you paid your employees, days, weeks, or even months after their work was completed—they'd probably quit! And rightfully so.
A method of preventing late-payment disputes is by including clear-cut terms in your sales contract that outlines when payments are due and the specified penalties or other methods of recourse for delayed payment. Another solution might be to require clients to pay upfront or submit a deposit before work commences. No matter what route you choose, it is mandatory that you make all customers sign a legally binding document, which contains chosen payment terms, before performing any services.
I specialize in creating great agreements that prevent late payments from becoming bigger problems. If you need help, don't hesitate to schedule an appointment with me.
2. Getting Paid Too Little
Business owners who don't get paid fairly often have an unhealthy relationship with money, which then leads them to undervalue their time and energy. This can make it difficult for them to charge clients the rates they deserve.
The root of "money dysmorphia" often originates from when we were younger and negative influences shaped our views about money. If you don't address these incorrect assumptions, it can be harmful to your well-being, work life, and relationships—especially the ones involving clients.
If you want to be seen as confident in your work and successful in your business, you have to charge what you're worth. If you lower your rates or take on too many low-paying clients, not only will it affect how much money you make, but it can also hurt your self-esteem. This lack of confidence will show up in the quality of your work, causing even more dissatisfaction until finally leading to complete professional and personal burnout.
But it doesn't have to be that way. If you find yourself in this situation, start by evaluating how much your time is worth per hour. Then, research what others in your field with a similar skill set are charging and make adjustments based on the type of clientele you want to attract.
If you need help evaluating your worth or want tips on how to increase your rates, I offer business assessments to get you started.
3. Scope Creep
Have you ever had a client who asked for more work than what was agreed upon? They might start with small requests, but before long, they're asking for extra on every project. This not only puts an unfair strain on you but your other clients as well.
Though it may be difficult, you should analyze your current relationship with these clients and see if continuing to work with them is really worth it.
You shouldn't feel guilty when a client asks for extra work, and you should be fairly compensated. If you set the precedent that you're willing to do more work than what you agreed on, then the client has no reason to stop asking. They might think they are getting an amazing deal because, from their perspective, they paid for something, and now they're receiving additional services at no cost. The problem is that those "quick" alterations may take much longer than anticipated, and it's not fair to either party if adequate compensation isn't discussed upfront.
A "change order" is when you, the client, recognize the need for additional work and simply ask to be paid for it. If you’ve ever done any remodeling on your house where you decided to add anything extra onto your build, then you know all about change orders. And if scope creep often occurs in your business, but you still don't use change orders, then maybe it's time to start now.
If you never communicate your need for more money to your client, you might lose them entirely, even though they may have been content with paying you whatever amount you asked. Hence, it's important that you voice this request before ending the relationship abruptly. Of course, If they outright refuse to pay additional compensation or follow the terms of the agreement—it's time to walk away then.
Develop Healthy Relationships With Your Clients
It's admittedly tough to break up with clients that are giving you more headaches than they're worth. However, it's important to remember that keeping them around will only waste your time and energy in the long run. You can always find new clients, but you'll never get back what you've lost by staying with a bad one for too long.
As your lawyer, I would love to support you through any difficult business relationships. Whether it’s creating airtight sales agreements or helping convince late-paying clients to pay up, you can count on us to have your back. If you’re ready to get started, schedule a Lift Your Life and Business Session today.