This was an impressive new venture with some good backers and people involved.
Let’s take the meeting.
These guys were launching a new App and they needed a Marketing and PR Plan to help them – we had our briefing meeting with them, getting stuck into the detail so that we had a deep understanding of their requirements.
We did our research and the team went to work developing a detailed plan for them, one which would achieve their objectives.
We met the guys and presented our plan, which they loved and they gave us the green light to proceed.
We were thrilled with the client win and to be working on such a new and exciting venture, so we handed it to our accounts guy to draw up the contract and ‘lock in’ invoicing and payment arrangements.
Problem!!
The guys would not be in a position to pay the monthly bill on receipt of an invoice at the end of the month as their funding would not be through at that stage. They would not be in a position to pay for three months.
This was really disappointing as it was the first time we heard that there would be an issue with payment. It strangely never came up in the briefing meeting!
Solution – At this stage we had a lot of work done, we were really enthusiastic about the project so as long as funds could be guaranteed we would live with the delay.
Problem number 2 !!
The guys now shared with us that funds were not in place and they were still in a pitching phase, so three months was just an estimate, which they were quite confident about but they could not guarantee with any certainty.
Solution 2 – Taking a huge leap of faith in them we offered to proceed with the work as long as we would get a Personal Guarantee to ensure that we would be paid.
What do you think happened next?
It turns out that these guys were not prepared to provide us with a personal guarantee and instead wanted us to bear all of the risk of our arrangement with them.
In effect they were quite happy entering an arrangement with us knowing that there was a good chance we would not get paid for months or at all.
Furthermore, it turns out they were hoping that we would have more faith in their project than they had themselves so as you can imagine we had no option but to walk away from the work, despite having done lots at this stage.
Ethics?
You meet all types in business but you do hope that the vast majority of them will be honest and honourable and you have to try your best to protect yourself to ensure that you don’t fall prey to the chancers, and we have met quite a few in our time.
The really worrying aspect to this “transaction” was that these young guys who are starting out on their entrepreneurial journey with credible backers/advisors, already have a belief that this is all a game and a perfectly acceptable way to deal with people.
This might be the way that new business is now being conducted but..
Don’t be anyone’s fool..
GregÂ
Tags: Fuzion Communications, Greg Canty
Greg Canty Fuzion Blog 
April 16, 2019 at 7:48 am |
Of course business is a game, but there are rules! Banks and equity holders provide funding, other businesses provide goods and services. If your potential clients in this scenario didn’t acknowledge this basic principle, you’re well out of it.
On the other hand, did you consider asking for an equity stake in return for your forbearance? Outside your normal terms of business but, perhaps, worth a punt if you were so inclined.
April 16, 2019 at 10:31 am |
I didn’t even go there – We need to be part of our own dreams , not theirs. There was no intention on their part about being upfront about their financial status so they walked into us in the full knowledge that they would not be able top pay us. This was dishonest – shares in their operation would be of no value and would you even want to be associated with them? Thanks for reading ..Greg
April 16, 2019 at 3:59 pm |
I can empathise. One will never be short of work when one works for free.
April 23, 2019 at 11:52 am |
so true …thanks for reading ! Greg
April 22, 2019 at 5:16 am |
It sounds like you made the right decision, Greg. It leaves a bad taste to start a business relationship in this way and you’d always have that niggling feeling of feeling that something was going to go wrong at some stage.
April 23, 2019 at 8:52 am |
You are right Fergal – t’s too easy to get sucked in, in particular when you have done a lot of the initial work already, Greg
April 24, 2019 at 2:23 am
I know what you mean – it’s that sunk cost fallacy at work. It feels easier to keep going than to call a halt.
April 30, 2019 at 10:35 pm
no doubt someone else will fall into that particular hole in our absence!
May 1, 2019 at 4:42 am
At least it won’t be you!
May 1, 2019 at 8:50 am |
Lesson learned the hard way. Check out payment terms at the start of any project
May 8, 2019 at 1:50 pm |
A great way to turn away a prospect is to talk payment terms before you even write a plan I would be thinking? Thanks for reading.