Take My Wallet, Please!
Many of us entrepreneurs playing the service role put ourselves in situations that are likened to opening our wallets and asking our customers to indulge generously in their contents. Many of us also provide services in exchange for dollars. Many more of us provide services in the "hopes" that the people receiving these services will do the right thing (in our mind) and return the favor. And just as many of us learn the hard way that this is a formula for failure.
Please get something straight: Most people who receive services for free will continue to do so until there is some obligation to reciprocate or until the guilt becomes so overwhelming that to continue would be tantamount to accepting the loss of their stomachs. Only then will they stop the flow of their attention and divert it toward a service provider who will charge the right price. Their thinking is, "why start paying someone who provides things for free?" or "I can't face this person anymore (because of my guilt.)" Notice the following: neither situation creates cash flow for you.
Now, if you wish to prevent this from occurring in your business, there are some nifty ways to train yourself and your staff to stop the setup for this type of activity from ever getting started. Here are some simple things to remember and they are very easily identifiable. They start with identifying the five situations you're most likely to provide your valuable services for absolutely free. They are in the following areas:
And there is no small wonder to this list. These are the same five situations where you're most likely to make money, too.
- Proposal Writing
- Precursory Agreements
- Follow-up Situations
- Diagnosis & Needs Analysis
Let's take a look at these areas more closely...
1. Proposal Writing- Being in business, you're very likely to put yourself or your staff in situations where your prospect is expecting a proposal. When you write one, never focus on the how. Always focus on the two most important aspect that create the interest and curiosity that anchors the prospects commitment - 1) What specifically are you promising?; and 2) what are the specific benefits should the future client expect? If you tell them how, they are very likely to have someone else do what you are proposing, for a much cheaper fee.
NUTSHELL: Don't provide too much detail on how you will do it. Concentrate on the outcomes you will produce as a result of them investing in your services.
2. Precursory Agreements -Many situations include pre-contractual agreements. This includes any and all actions which may increase the odds of securing contracts. To prevent loss of precious resources of time and money, have precursory agreements that include clauses which guarantee a return for your effort. This may entail a written note saying that if what you deliver precursory to the proposed contract benefits the client, then you're assured the contract for the project. This includes actions that would provide information to the client which can leverage their position with others. Can you imagine taking action that benefits the prospect before a contractual obligation is secured and not benefiting yourself?
NUTSHELL: Be clear to what you're agreeing to UP FRONT and make sure your client has the same clarity.
3. Follow-Up Situations - If your client expects you to be there on follow-ups, you could find yourself or your crew members burning up time that was not in your original bid. This cuts into your profits and the time you could be investing in other endeavors. What was once a very lucrative contract soon becomes a time sponge and possible money pit. Especially if your client expects a contract to be followed through on and that contracts has no limits in this area.
NUTSHELL: Have a clearly spelled-out and limited contract as to the amount of follow-up assistance you and your staff shall provide and the specific reasons for that assistance.
4. Evaluations, Diagnosis & Needs Analysis - If you're an expert in your field and have developed skills for identifying problem areas or what needs to be added to make an operation run better, you may be trading your need to show off in exchange for some precious income stream. This goes for your people, too. Have strict guidelines spelled out ahead of time as to what you're willing to have your company share in the way of evaluations and such. The alternative is to share important information with the customer that is of value to them while your company files for Chapter 11.
NUTSHELL: Evaluations, diagnosis and needs analysis are likely your most valuable services - Set up systems that prevent you from giving it away without equitable compensation. REMEMBER: If it conveys information directly or indirectly that is of value to your client, find a way to charge for it.
5. Diversions - When a job has been contracted, have the scope of it clearly defined. Many moments will present themselves for you and your crew to divert attention from the original intent and agreement. Know what you're being paid for SPECIFICALLY and stick to that original agreement - no matter how exciting and intriguing the new opportunities may be! Once you make an exception without qualifying it and making arrangements for re-imbursement, you cause a cascade of other activities that take from your profits. REMEMBER: When you do business by exception, you wind up with an exceptional business - and that's not good in this case.
NUTSHELL: Involve yourself only in activities and service within your agreed scope of work and when your client requests more, identify it as an opportunity to contract for additional charges for services rendered.
6. Friends/Associates/Relatives - We all have them, particularly if we are successful at what we do. Out of all the possible situations where we could be taking from our own mouths, this one is the most guilt ridden. Business owners must establish firm standards of operations and equally as firm boundaries for those who could benefit from our services at our expense. Know who you're willing to reduce your profits for and why and adhere to your rule structure without waver. And remember the best way to prevent this situation from happening in the first place is practice being a recipient of services for pay only. What goes around comes around.
NUTSHELL: Pick your own charities and be an example by paying your own way.
CAPITALIZING ON A THEME:
- Ask yourself if you have too much detail in your proposal.
- Do they focus on the "how" instead of the "results to expect?" Have you spent any time trying to win a contract where the effort benefited the prospect and not you?
- How much time do you spend in follow-up situations that are not accounted for in your agreement and quote?
- How many times has information gotten to your clients in the form of evaluations, diagnosis and other analysis that were not paid for fully?
- What situations are most likely to divert you from the original scope of your work?
- What are your standardized procedures to prevent diversion without pay? How much time and money have you lost due to these situations?
- Which friends, relatives and associates are most likely to benefit from your services at your expense?
- In what ways might you be doing the same to others?
- Know what you and your business are worth! Respect yourself and your company.
- Expect to deal with only those who also know your value and show a willingness to reciprocate for services rendered.
- Plug the holes in your operations.
- There are plenty of people who can spot a deal, especially if what is being shared is being given for free.
Have a Bodacious Week!
Coach John S. Nagy is CEO and Lead Business Coach for Coaching for Success. Inc., a Business Coaching Service specifically designed for top level decision makers dedicated to peak performance in all facets of their activities. He’s hired to focus them continuously in activities that bring higher returns on their resource use. His programs are for the seriously committed. This means having his clients work "ON" their businesses, not just "IN" it. He’s a published author and a multi-degree professional with a nationwide client base. Coach Nagy can be reached through his E-mail address at his website at http://www.coach.net and by calling 813-949-0718.
Copyright © 2000 John S. Nagy