Clients expect consultants and other professional services providers to be successful. If you're good at what you do, then you should have the bank to back it up. But given the financial turmoil of the recent past, there are many talented, hard-working people who are still trying to spend less than they make, negotiate their underwater mortgage and rebuild their credit scores.
It’s difficult to accumulate the outward signs of success—a nice office, a luxury car, a proper wardrobe—if you're working on the basics again. It can also be a problem if your potential clients decide to conduct a standard background check on you before making a final hiring decision. A bankruptcy filing, collection actions and other embarrassing details can kill the deal. What can you do to protect yourself?
Understand It’s a Matter of Trust
Potential clients are looking for signs that they can trust you. They want assurances that you can do what you say and that your solution will solve the problem they have. Most people assume that a successful consultant or professional services provider will also be in good financial shape. If they're not, many take that as a sign to look elsewhere.
Your job is to win your potential clients' trust. First, engage with them at their offices and show them what you know. Offer previous clients as references so that they may independently confirm your abilities. Spend some time improving the search engine results page (SERP) for your name. When asked (and yes, you will be asked), be honest about your financial condition. You can also point out to the client that since you're working hard to get your business back on track, it's just another reason you'll do your best work to ensure that the client is happy and can refer you to more business.
Use a Deliverable-Based Payment Schedule
If a potential client has doubts about hiring you because of your financial condition, eliminate the risk for them. Institute a deliverable-based payment schedule where you receive money only after turning something in. If the nature of your work doesn’t lend itself to physical deliverables, then create some. Status reports, receipts and project updates are all examples of deliverables that give clients comfort knowing that you're working and that they haven’t given an advance to someone who isn’t responsible with money.
Purchase a Robust Business Insurance Policy
Professional liability insurance and Errors and Omissions insurance are two types of policies that offer you protection and your client peace of mind. By purchasing insurance and providing proof of insurance to your clients, they know that there are deep-pockets behind you in case something goes wrong. It’s of no comfort knowing that they can sue a consultant who’s nearly broke. These policies, especially from insurers specializing in professional services providers, are very affordable, with prices starting at around $50 to $100 per month.
Negative financial events like bankruptcy stay on your credit report for up to seven years. Even if you have a terrible credit report, rest assured that it won’t last forever. The financial bubble burst five years ago. It should only take a few years to get back to where you were. Hang in there.
Read more articles on small-business finance.
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