Which projects to take? 9 questions to ask yourself
If you’re a small business, such as an agency like Collective Content, how do you choose your clients and projects? To those outside the industry or anyone who’s never grown a business, the answer might well feel obvious: You go for who’s going to pay most, right? But I wouldn’t put that at number one. Below are our top criteria for deciding whom to work with.
Before continuing, however, I should note a few assumptions. First, we assume that no supplying entity has unlimited time and resource. In other words you need to take projects that make sense in terms of revenue per hour and your own sanity (work through the weekend, anyone?).
And this advice only really applies when you’re somewhat established. Starting out, it’s entirely possible for a lone freelancer or small business to say ‘Yes’ to everything, even at below their market rate. Some work is better than no work, the thinking goes. You could argue that but it’s not the case when you come up against lack of time/resource.
So here are our top nine factors — in reverse order — for taking on work:
9. The size/stature of the brand you are working for. This seems like a really big deal to lots of people. Everyone wants to tell the world that they work with the leading company in a sector. These clients might also be the only brands your family or friends recognise. There are good reasons to count that kind of business as a customer but what I’m saying is that ego shouldn’t be one of them. Consider also how much you can move the needle for a smaller, challenger brand. What will you learn from each type of business? How will they treat you? Can you even make it onto a large company’s list of suppliers?
8. Is the work winnable? There’s a big difference between jobs that are essentially orders (“We need you to do this now, can you do it?”) and work you have to bid for first, usually without any payment. One of the advantages of working with partner agencies — we do this about half the time — is that they will have often secured work and they need you to execute. On the flip side, a high proportion of the work we bid for is larger in scope and worth the extra time and hours. (Also skip to  below for why this can be good.)
7. From where do we get paid? This is more important than many people starting out with a business realise. With a new multinational client, try to get this answered early. Invoicing and getting paid within the EU is generally straightforward but you also need to get on top of the VAT and other implications for dealing with entities in other parts of the world. And this isn’t just about tax. Having clients in the US, for example, can send insurance premiums much higher because of the risks of class-action lawsuits, among other things.
6. How soon will we get paid? This sounds like a minor thing. It can also be hard to tell with first-time clients. But for smaller businesses this is critical. Businesses with multiple invoices awaiting payment and a strong pipeline of orders have been known to go under because of poor cash flow. Larger companies don’t just have people in their finance team chasing those who owe them money — they have people whose job it is to put off paying those they owe. (We even worked with one large agency whose payment policy was “+3 months from when we receive payment from our client”. We no longer work with them.) Sounds terrible but much of this is routine, as well as something few SMBs can afford to do themselves. All things being equal, go with those who will pay you promptly. Consider upfront payments for new clients.
5. Are you expected to physically be there? This is a classic old way of working versus new way of working. How many clients expect to work with you face to face, at least see you for key parts of a project? Some jobs involve having a team member embedded with the client or their other suppliers. That can be hard when your person is in another county — or on a different continent. But consider the big picture. Isn’t it understandable that a new client embarking on a big project wants to look you in the eye? That said, the world is changing. We’re very lucky to work mainly with technology companies. They aren’t just used to virtual teams — they work that way themselves and evangelise the advantages. Not all sectors will be as progressive, though. If you do need to be somewhere else regularly, build that into your costs.
4. Do you have to take this job? Sounds like a crazy question? After all, you don’t have to take any piece of work you don’t like. That might well be one of the advertised benefits of a small business. But on the other hand you’re in business precisely to do work. But how do you say ‘No’ to your best client when they ask for a lot of work on a tiny budget? Can you keep your eyes on the bigger prize, the bigger relationship? Are you able to explain the economics of the situation and either ask for more money or walk away?
3. How much does it pay? Told you this wasn’t #1! But I never said it wasn’t important. It’s not at the top of this list for all kinds of reasons. As an agency, any one account is unlikely to make up more than 10 per cent of your revenue (ideally) so even if you’re able to charge your top rate it won’t make or break your year. Even raising rates in good times isn’t as straightforward as some think. It’s hard to do with long-term clients and even with a simple charging structure — something we pride ourselves on — the work that is hardest or most satisfying to fulfil doesn’t always pay the highest. Always stay on top of your numbers, as an old boss used to say to me, but don’t chase the money at the expense of all the other points on this list.
2. How is this project/client comparable to others? Looking back at calendar year 2015 I was struck by two long-term accounts we have that brought in roughly the same amounts of money. We value them both but it occurred to me that one client was consistently easier to work with. Guess whom we’d like to do most new work with in 2016?
1. Will the work be fun / satisfying /of use to someone? Will you learn anything? I put this top because, assuming you’re making enough to pay the bills, this is the type of work that’s an investment in your future. This might not always be the dream client we all want but it’ll make you and your team go home happy after the longest of days and it’ll lead to better things, either with these clients or, more generally, as you grow.
In your business, it’s best to keep a balance of the above in mind. Also realise that the people you’re dealing with will often know much of this as well and will have gone through a similar thought process — we’re not the first to be grappling with these growing pains.
And lastly, remember priorities can change, especially for different sized businesses, and that no one has all the answers. I’d be a little sceptical of anyone who acts like they do.
This post first appeared on collectivecontent.co.uk. Running Collective Content is my day job. You can find more posts about running a small business and telling stories at the blog there http://www.collectivecontent.co.uk/blog/ .