business advice | Feb 13, 2018 |
How to handle indecisive clients

Welcome to our latest installment of business advice from industry expert Sean Low. Do you have a design business dilemma? Reach out to us, and your question could be answered by Sean in an upcoming column.

What are your tips on addressing issues that slow down my work that are outside my control—for instance, slow-moving vendors, payment delays and indecisive clients? What are some of the ways I can avoid, prevent or tackle delays like these? —Full Speed Ahead

Dear Full Speed,
Inevitably, when I hear that a designer is suffering from client decision paralysis, slow-moving vendors (perhaps caused by client decision paralysis), and/or payment delays, I immediately leap to the idea that the designer has not properly accounted for time and set in place the mechanisms to adequately protect themselves from delays that were not of their own doing. These are painful lessons, to be sure.

To protect yourself from the abuses of delay, you first have to have a fundamental understanding of time and its impact on your design business. Let’s start with a simple example: A dollar received today is worth more than a dollar received a week from now, especially if all you get is a dollar. So, if you receive a dollar for a six-month project, you need to receive $2 for a yearlong project.

Easy enough. Almost all designers charge a set fee for their work (whether fixed as a number and/or as a percentage of purchases), so there is likely very little opportunity to get the extra dollar for the extra six months unless you address the issue upfront.

For those who say they charge by the hour, so delays are not an issue, think again. Most of your work will be completed in the original time frame (six months) and you need to make another dollar. How exactly are you going to charge that much time when most of the work has been completed already?

The issue is not that projects extend, it is that they extend without adequate compensation. To calculate the compensation you need, here is a straightforward way of thinking about your projects, regardless of how you collect your money.

First, how much revenue do you want your firm to make in a year? Not how much do you think you can make—how much do you want to make? Now, divide this number by 12 to turn it into a monthly figure.

How much of your resources does the project consume, as a percentage? Multiply this number by 1.25 and you have your monthly fee, which is necessary if there are any delays through no fault of your own.

Warning: You are not going to like the number and you and/or your clients will likely think it is outrageous. But I do not care, because it is the number you need to justify undertaking the project in the first place. You have to be able to say to your client: If you delay the finish date and think that you will not have to pay a creative business commensurately for the delay, think again.

Let’s give a numerical example. If you hope to make $600,000 this year, and the project in question is going to take six months and thirty percent of your time, it needs to generate $90,000, or $15,000 per month. If there is a delay, the cost per month is $15,000 x 1.25, or $18,750. The extra 25 percent is there to be punitive to the client. But the $15,000 is what you need, and there’s no way around that.

The time to have this conversation with a client is before the project begins, so that everyone can understand and appreciate the value of your time, with specific appreciation for the process that will make the project the best it can be. However, even if not at the beginning, please do have the conversation, no matter how difficult. In the end, all you have is your time, so you need to be prepared to do whatever is necessary to protect it.

Sean Low is the founder and president of consulting firm The Business of Being Creative. His clients have included Nate Berkus, Sawyer Berson, Vicente Wolf, Barry Dixon, Kevin Isbell, and McGrath II.

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