When your IT consulting client wants you to "buy in"

If a client asks you to be a partner, a shareholder, or an employee or promises to make you a celebrity, Chip Camden advises you to carefully weigh the pros and cons in each scenario.

 One of the big advantages of being an independent consultant is the freedom it gives you to choose the work you want to do. Sometimes your clients can get a little unnerved by that freedom. They start to worry that you might move on to more interesting gigs and leave them looking for someone else to fill your shoes. Despite all your assurances to the contrary (but never in writing), your clients may look for a way to get you to buy into their business. They reason that if you have some investment in their success (beyond continuing to collect your exorbitant fees), then you'll stick around to make sure that success materializes. And that's not all bad.

Here are four scenarios that a client may present to you:

Let's make you a partner!

I've had this happen several times — usually with start-ups, but once even with a mature software company. This offer screams, "We don't have ready cash, but we need for you to put in a lot of hours." That's not always the motivation, but you want to make sure. Sometimes it really is just about wanting to keep you committed for as long as they can. Besides considering the client's motive, there are a number of other things to think about before responding to this type of offer.

  • Is this company going places?
  • Is their product something special?
  • Is it really going to make me any money? And if so, when?
  • Do I like this company?
  • Am I ready to sacrifice some (or all) of my other business to focus on this?
  • What does my lawyer say about it?

I've accepted two such offers in my career, and in both cases, they were startups that never got off the ground. All the time I invested in those projects counted for nothing — except for the lessons learned.

Let's make you a shareholder!

One of my clients (a privately held corporation) offered to sell me stock. I took them up on it, because they've been in business for a long time and they're getting more profitable as the years go by. It made sense for me as a long-term investment. It made sense for them as a way to increase my investment in their future because, since their stock isn't publicly traded, I can't just unload it when the value goes up. Believe me, I really had to consider that fact before buying.

Another client once offered me stock as part of my compensation. This was back before the dot-com crash, and they had this great Internet startup idea. I said "no way" — and I'm glad I did. I'm sure that decision severely limited the number of hours they were willing to give me, but all that stock I could have earned isn't worth anything now. When considering stock or stock options in your client's company, you have to look at the cost of that transaction (your time and/or money) and the potential value of the stock as if you weren't personally involved in the company at all.

Let's make you an employee!

This is a much bigger investment on your part than it may appear. You're committing a large number of hours exclusively to one client, and you'll probably be prevented contractually from working for any of their competitors. After you get used to those regular paychecks and (somewhat) more affordable insurance plans, it could be difficult financially to go back out on your own — not to mention having to rebuild your client base. Most of all, you'll lose at least some of the freedom to choose your own projects. On the other hand, it does eliminate the "feast or famine" problem, so it might be right for you if you don't like taking risks. I've had a couple of clients offer to put me on their payroll, and I've always said "no, thank you" without hesitation.

Let's make you a celebrity!

This doesn't happen to consultants very often, but when it does, it can be magic for both sides. Rather than hiding the fact that they get help from a consultant, your client proudly shows you off to their users as a key part of their success — which gets you even more business. In return, you become an independent (though admittedly biased) industry specialist on their product. You blog about it and present at conferences, which helps to get the word out to other potential users. Your brand goes up in value as your reputation grows, and you become more invested in your client's success. My huge ego loves this approach.

Assess your risks

Sometimes it pays to invest more than your time into your client's business. But it's important to accurately assess how much you're risking and how deep you're digging yourself in. Evaluate the worst case scenario, as well as its likelihood of occurring. You should consider the best case scenario as highly unlikely.

What other ways can you invest in your client's success? Post your ideas in the discussion.

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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...

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