Part 3 of a series of posts aimed at young professionals. The world is getting increasingly confusing. Here are some of my learnings. Previous post here.
As an innovation and strategy consultant, I have had the occasional prospect haggle over fees from day one. When one of the first prospects reached out within days of me starting out, I didn’t know what to charge. Quickly doing some math, I quoted a fee unimaginably low (now in hindsight). The prospect said it was too much, we wished each other the best and went our ways.
Over the next 2-3 years, that prospect would call once a year to inquire the fees which by then, finding takers, was increasing reasonably well. The prospect, somehow expecting the fee to reduce over time, didn’t seem committed to moving forward themselves.
Thankfully there have been clients who value my work and have seen immense returns: business growth and profitability, successful funding, and even acquisitions—stemming from a few simple conversations to a few months of consulting engagements. More on that in a later post.
Key Lesson:
Confidence drives success, and confidence comes from completing things. If you’re constantly underpaid or forced to cut corners, it erodes your confidence, and you do less than your best. Know your value, stick to your goals, and choose clients who see the value you bring. You can still do your nonprofit work when necessary, but if a client can afford you and refuses to pay, they most likely won’t see the difference between your work and that of someone cheaper. In those cases, I am quick to recommend affordable alternatives.
Early on, I agreed to a client’s request for a three-installment payment of my fees. After the first part of the fee (33%) was paid and nearly 80% of the work done, their Board decided to postpone that direction of growth, and the client stopped responding, hoping to dodge the balance fees. Rather than fight or chase after, which would have been an additional waste of my time, I took a different approach: I sent them the work done till then, and I wished them the best.
And from that point, I switched to 100% advance payment of fees. Interestingly, the right clients were more than happy to pay up front—even after just one meeting. It was humbling to be trusted that quickly. It also meant they were the ones who had committed to their growth and change, and not simply fumbling about in the dark.
That decision to switch to a 100% advance fee without exceptions was not easy. However, it made me realize a fatal flaw in something we had come to treat as the norm from our business school days, where we learnt that companies should strive to maximize its creditor days and minimize its debtor days. In layman terms, means try to get your customers to pay you at the earliest possible, and pay your suppliers as later as possible.
The obvious problem with this is it lets big companies get bigger and smaller ones scramble for cash flow. Companies like Bajaj Auto have been the great exception, strategically helping their suppliers grow with them.
The Takeaway: In tough situations, ask yourself: “Am I on a path where I’ll be forced to do the bare minimum just to survive?” If so, resist.
Many small firms, entrepreneurs and freelancers are trapped in this cycle, undervaluing their work to stay afloat.
Earlier this year, one of my mentors asked if I could review and trim the design thinking content for the undergraduate program at a prestigious university. The fee was not even commensurate with the work of reviewing and trimming. However, I found the content far from relevant. So rather than review and trim, I wrote them a whole new handbook. However, someone in my place who was squeezed by clients, might have been pressured to do the bare minimum. And as a result, hundreds or thousands of students over the years might have missed out on the best you have to offer because of it.
You can’t create work you are proud of from a place of scarcity. If you’re always underpaid and undervalued, you are not in a position to give your best. Like the cliched oxygen mask advice on flights, take care of yourself before you can truly help others.
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