Banking

Don't require a big commitment from IT consulting clients

Worried about keeping your consulting business afloat in this economy? Chip Camden shares how he minimizes the chance of losing a client.

 In the discussion about my post "The part of 'no' that I didn't understand," TechRepublic member josh.t.richards suggested that we should avoid "yes or no" proposals altogether. Try instead to provide your prospect with multiple options from which to choose, so "the ball is in their court," and they can fit the solution to their needs and their budget. They're much less likely to slap you with a categorical "no" if you give them a whole menu from which to choose, ranging from a low-cost "what they need right now" to a high-end "doing the full Monty." The same principle applies to keeping existing clients, especially now that the economy is suffering so badly. In July 2008, I presented some tips on weathering the economic downturn (though I didn't realize just how bad it would get). There's another important tip that I'm adding to the list: don't require a big commitment.

Your clients and prospects will be looking for ways to cut expenses. If you're a constant $X,000 per month in their budget, you can bet they'll be asking themselves whether they really need you. Maybe they could get by using someone less experienced — perhaps even someone in-house. They may not realize that a decision like that could cost them more in the long run — that's awfully hard to quantify, after all.

So, make yourself able to get small. Back when the dot-com bubble burst, the only client I lost was one that went out of business (they were a dot-com startup). How did I manage to keep all my other clients when the industry was suffering? Except for the occasional project where the client required a fixed price, I've always charged by the hour, and I have no minimum. There's never a reason why a client needs to "let me go" when they can just ignore me for months at a time instead, or maybe only use me for half an hour here and there. Consultants who charge a retainer fee or a flat monthly rate force their clients to review the value proposition every time they write that check.  It's a solid number that is either in or out of the budget — there's no middle ground.

Even if you are hourly with no minimum, clients who are pinching pennies will also frequently review your value proposition in order to decide whether to send work your way. But it's a smaller, incremental decision in each case — and therefore easier to approve. In my experience, it can even result in more revenue as these incremental decisions add up, especially when they frequently see their investment pay off. But that all depends on you providing real value for your fee.

There are some significant downsides to going hourly with no minimum. Since there's no guarantee that you'll have enough work month to month, you may find yourself scrambling to scare up more business. But I've found that even though I don't require a firm commitment, clients can usually give me a good idea of how much they're going to need me ahead of time. That estimate is almost always lower than reality, because unexpected things pop up that have a way of requiring my participation. Clients are also more likely to give you a heads up if they know that your time is in high demand. Thus, I always like to have a few low-priority projects I can work on in between, so I don't sound desperate for business.

The strategy I've outlined trades one risk for another: It minimizes the chance of losing a client, but it makes your monthly income less predictable. How does this strategy compare with yours for weathering this economic downturn?

More tips on keeping your business afloat in this economy

Get weekly consulting tips in your inbox TechRepublic's IT Consultant newsletter, delivered each Monday, offers tips on how to attract customers, build your business, and increase your technical skills in order to get the job done. Automatically sign up today!

About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

Editor's Picks