I have been in business in one sort or another my whole life. My dad was a commercial real estate guy and taught my brother a thing or two about business from a pretty young age. We even had to write contracts and negotiate over who got a bigger piece of dessert after dinner. Since then I have worked in several different fields, been engaged as a vendor and hired and fired vendors as well. I’ve bid on projects, won some, lost some, and put a lot of work out for bid. I’ve had the pleasure of managing projects from the small and mundane to very large projects with millions of dollars at stake. And I’ve rather infamously screwed a few things up too. Although I am proud to say that I never took a dollar that didn’t get paid back.
One thing I have noticed, though, is that there are a HELL of a lot of bad business people out there. Whether they don’t understand the rules of business, negotiation, and project management… or whether they are simply so concerned about their own needs / bottom line that they are willing to engage in bad business practices and screw over their vendors, it is always frustrating when you run into someone who just doesn’t seem to know what they are doing.
So what am I talking about? Have you ever had a company engage you to find a solution to a problem they are having only to have you design the solution and hire someone else to enact your plan? Have you ever bid work and upon winning the bid had to renegotiate or simply discount your fee at the end? How about my personal favorite: “You should want to do this for the experience!” Or “If this works, I’ll pay you.”
I know I have… and it’s pretty frustrating. Here are a few do’s and don’ts you should follow. You’ll get a much better result and have years or decades long relationships with people who will go above and beyond to serve you. If you don’t follow these, in the long run you will pay more for work and get worse results. It’s a sure as the sun rising in the east.
Do know what negotiation really is and what it is not:
I blame Pawn Stars. I really do. Some guy walks into a pawn shop and hands Rick or Chumlee some old piece of crap they found in their grandmother’s basement and demands money. Rick comes back at 15% of that and they go back and forth until they hit some number in between. This is not negotiation… this is haggling… And I HATE to haggle. It implies my price is arbitrary. My price is never arbitrary. It’s my cost plus my profit… and I need both.
Negotiation is a completely different animal. If you engage a vendor or approach a buyer, you have to do so with the end goal in mind. E.G. I want you to design this website, or I want to buy your building. The negotiation is how to best get there. Just like you negotiate an obstacle course, you negotiate a contract, sale, or deal. You are finding the most efficient path to the end goal. It is always much more than price and both sides have needs. Just demanding a discount on price is likely to get neither side to the desired goal.
Do understand that nothing in this world is free and you are a jerk for thinking it should be:
I have friends who are website designers, graphic designers, photographers, real estate professionals, and consultants. Every one of them has stories of people trying to con them into working for free.
“Come on, just bring your camera over and snap a few pictures. That’s not going to cost you anything, why should I pay?”
HEY! Time isn’t free. Equipment isn’t free. Education isn’t free. Experience isn’t free. Advice isn’t free. There are some situations where people will take work on contingency or over a couple of beers they will sit down and work with you a little out of the kindness of their heart, but understand… that isn’t the norm. Especially for artists and people in creative fields, expect to pay what they ask. Furthermore, you really don’t know what their costs are. So don’t assume ridiculous nonsense like the idea that their fee is 100% profit. It’s not. The internet is full of stories of jerks who think people should work for them for no pay. When someone tries that crap with me, I want to choke them with a copy of the 13th amendment.
Do value engineer & Don’t negotiate against a vendor’s profit:
This is a bit of a tough rule. We all want value. We all want the best price we can get for a service or product… but there is such a thing as karma in business. You want your vendor to make money. You want them to be profitable. You want them to want to work for you. If you know your business, you should be able to estimate a vendor’s profit margin. You aren’t going to get it exactly, but you can get close. Assuming it’s not exorbitant, look for places in the project to save money other than his profit.
Good questions to ask: Is there a cheaper way to do this? Why do we need this? Would you like me to provide materials? If we took this part of the project in house, would that save you time?
Bad questions to ask: You say it costs $1000. Would you take $950? Will you resubmit your bid with a lower price?
Do be straightforward:
This is pretty obvious but it’s also pretty rare. I don’t know if it is because sometimes people get nervous about sharing their true feelings about someone’s work or whether they just aren’t honest but for the love of Pete, just say what’s on your mind. Nobody is a mind reader and if you are quietly disappointed or upset there isn’t anything anyone can do about it. If we are on a project and I am going in the wrong direction, tell me. I’ll thank you for it.
Do put expectations and updates in writing… and email is fine:
If it’s not in writing, it didn’t happen. Live with this fact. Conversations get forgotten, denied, and misinterpreted. That email or contract is your saving grace. It will save your money. It will save your job. Again, it’s obvious… but I can’t tell you how often it is overlooked.
Do what you say you’re going to do, no more, no less:
Everyone knows the rule of not doing less than you say, but what about more? Why can’t I add value or do a client a favor? You can. In many cases you should… But don’t get into the habit of giving more than what you’ve been engaged to do. You are leaving money on the table. If you do a favor or provide extra value, make sure your client knows it. Make sure they appreciate it. Make sure they know that normally they would have to pay for it. No good deed goes unpunished… The more you give away this time, the more you will be expected to give away next time.
Don’t shop contracts:
There are few better ways to get a bad business reputation and make it harder on yourself to get bids than to shop contracts. If I put in a bid, I expect that bid to stay private. If you want to hire your brother in law, hire him… but don’t go showing him my bid and asking him to match it. It’s not fair to me or him. Keep in mind, his cost might be higher than mine. I might be able to get it done cheaper.
I can only speak for myself, but once I find out my bid or contract got shopped, there’s a better chance of winning the lottery after getting struck by lightning during an earthquake than me ever offering services to that group again.
Do catch more flies with honey:
There is no reason to be unpleasant. Don’t call people stupid. Don’t call people incompetent. Be kind. Be understanding. Listen more than you talk. Offer to help. If the goal is to complete a project on time and under budget… being a prick simply doesn’t move you toward that goal. Being an ass is not the same thing as being competent, strong, and tough. A smile and a joke will go a lot further than yelling. If the time comes to fire a vendor or quit a project, just do it professionally, politely, and quickly. No lectures, no yelling, no final “screw you”. People who follow this rule don’t have many enemies.
Do trust but verify:
Most people are honest. But most dishonest people don’t think they are dishonest. This is a little difficult to wrap your head around. Most of us like to think that dishonest business people are just crooked. They are intentionally ripping people off. It has been my experience that this is almost never the case. When I’ve been lied to in business, it has far more often been because the person lying to me is desperately trying to convince themselves as well as me. A dishonest contractor will tell you that he can complete something in two weeks when anyone who really looks at the project and his workload knows it will take a month. He will justify bidding on a project at below his cost knowing he is going to attempt to hit you with expensive change orders once you are committed to working with him. He can always justify his actions. There is always an excuse. He’s never a bad person, it’s just a tough situation. He over promised and now he’s trying to keep his head above water so he cuts a few corners. The result is the result though. He might as well just take money right out of your wallet.
Ask around. Check numbers. Don’t be accusatory, just vigilant. People rarely try things they know they won’t get away with.
Do understand that s&*t happens:
Along the same vein as the above… understand that mistakes happen. Meetings get missed. Deadlines get changed. Costs of material go up. People get sick. Needs change. When this happens, you as the project manager or the vendor should be flexible.
Don’t trash anyone in public:
I don’t care what they did. Don’t go on Facebook or Yelp or anywhere else and trash a company. That’s someone’s livelihood. If you weren’t happy with their service, don’t use them again. If you’re asked about it, be completely honest, but don’t try to hurt their business out of spite. It’s not your role to put someone out of business… So just don’t do it.
Let me know if you agree, disagree or think I missed something!
Sic Semper Tyrannis