LearnShareProsper logo Boosting Business_Performance Adele Sommers
by Adele Sommers, Ph.D.
 www.LearnShareProsper.com Adele@LearnShareProsper.com 
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October 2016
Volume 12, Issue 10

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Note from the Author

The Delicate Art of Budget Negotiations

Consultant meeting with clientsDo you have an independent consulting or contracting gig?

If so, today we’re exploring the typical funding challenges that contractors or consultants face when they are hired to create custom solutions, such as Web sites, software, videos, documentation, and training.

If you provide any of these kinds of services to clients, you’ve probably noticed that one of the greatest difficulties is broaching the subject of funding and budgets.

If the services you perform tend to vary from client to client and from project to project, you may find it difficult to provide a realistic estimate for your first effort with any new client. So difficult, perhaps, that you might easily end up estimating way too high or too low. But by considering some of today’s tips, you could avoid unnecessary stumbling, and can turn a novel undertaking into a win-win result.

For these reasons, I hope you enjoy today’s features, and please be sure to share your thoughts by leaving your comments on my Facebook page!

Here’s to your business prosperity,

Adele
Adele Sommers, Ph.D., business improvement specialist, author, educator, and award-winning instructional designer

P.S. If you missed any previous issue, please visit the newsletter archive!

Special Message

Read This Book Before Discussing Budgets

Few books have been more informative, insightful, and influential across disciplines than the classic “Influence: The Psychology of Persuasion,” by Dr. Robert Cialdini.

"Influence: The Psychology of Persuasion" by Robert CialdiniAlthough the title hints at a treatise on how to persuade others to do things, the book is really more about what makes us humans susceptible to being persuaded or influenced by people or conditions in our environments.

After years of rigorous, evidence-based research and study, Dr. Cialdini compiled and distilled the findings of fascinating experiments on how subconscious triggers cause people to react in six distinct ways. He posits that the human species developed “hard-wired” tendencies to respond to certain stimuli in a knee-jerk fashion, without stopping to think — which he theorizes has helped ensure our survival since ancient times. The six categories are:

  • Reciprocation – our nearly irresistible urge to return a favor once we have received one, which enabled members of early cultures to become interdependent and mutually helpful.
  • Social proof – our “shortcut” tendency to emulate what others are doing when we’re not certain of what action to take, which saves time in our daily routines and helps us react quickly in unfamiliar or emergency situations.
  • Liking – the fact that we’re more inclined to favor people we know, like, and trust — whether they look, think, talk, or act like us; give us compliments; or otherwise support us or give us special considerations.
  • Authority – our ability and willingness as adults to go even to extreme lengths to follow the direction of an authority figure, whether it’s in a military, religious, corporate, government, academic, or some other environment.
  • Scarcity – a common phenomenon in which an item or experience becomes immensely more attractive whenever its availability is limited. (Example: “Buy today while quantities last! The special ends at midnight tonight!”)
  • Commitment and consistency – our innate desire to remain true to our past actions and statements, so that we can be trusted and believed. Once we “sign up” for something, we feel compelled to act on it!

Light bulb with a "tip" labelAll of these triggers have profound implications for both selling and marketing. Masters of these techniques have used them with extreme effectiveness for decades — perhaps even centuries. Just as important is becoming aware of when we become vulnerable to such influences (sometimes actually triggering them on ourselves!).

Read more about this in the feature article, next...

Feature Article

Finding the Funding for Your New Client Projects
by Adele Sommers

Do you have difficulty engaging in budget conversations related to new client projects, particularly during initial meetings when it can be quite tempting to make promises that could be very difficult to keep? If so, you’re not alone! This article explores five ways to help you gracefully avoid backing yourself into a corner.


It All Starts out Innocently Enough…

Imagine that you’re meeting with prospective clients for the first time. You’re bubbling with anticipation about the possibility of launching a mutually rewarding working relationship that will produce gratifying follow-on engagements.

Consultant meeting new clientsYou listen carefully as the clients explain the project that requires your attention. At the end of the discussion, you feel confident that you and your team can meet or even exceed the clients’ expectations.

After all, the project seems perfectly suited to your team’s repertoire of expertise, and you already sense an excellent rapport emerging. You have a tremendous desire to help these people and make them so supremely happy that they will request your group’s services again and again.

In your mind’s eye, you can see the project fully completed. The delivered outcome works beautifully in your imagination. With delight, you describe this vision to your clients, along with the benefits the results should bring. The clients appear thrilled with your concept and can’t wait to get started. It already feels like a “done deal”!

But Moments Later, a Delicate Dance Begins…

Two dance partners dancingThe clients mention having a limited budget. So limited, in fact, that you have no idea of whether you and your team can complete the project within the financial constraints. Yet, on some level, you feel very committed to the outcome you had just described moments before.

You experience an overwhelming desire to remain fully consistent with what you believe you just agreed to, even though this new feeling of “commitment” preceded any discussion of schedule or budget.

So, when the clients state that they just can’t budge on their budget, something inside of you whispers, “Well, why not go for it anyway? If we know anything at all about what we’re doing, we should try to deliver it within their price range!“



Five Techniques for Reframing a New-Client Budget Discussion

To reduce the likelihood of unintentionally agreeing to an unrealistic arrangement, particularly when courting a new client, below are five approaches that you can mix and match to create a win-win situation. Having these ideas prepared before you meet can help you smoothly and gracefully handle these situations.


Package of crayons1) The “introductory package” offer.

Many businesses gain new clients through introductory packages of their products or services. This means that they complete very specific chunks of work, such as designing a logo or setting up a Web site, at specially discounted prices. Note that these discounts apply only to certain services, and not necessarily to an entire project.

Benefits: Once your new clients have experienced a good starting sample of your work and have come to know, like, and trust you, they may be much more inclined to request further assistance from you at your regular rates.



2) The “test sample” technique.

Test samples of candies
When you’re really not certain how long an effort would take because there are too many unknowns, you can offer to produce one or more “test samples” of the work (such as editing one chapter of a complete manuscript) to see what it entails before committing to the entire project.

To create the test sample(s), you could propose working to a not-to-exceed price that may or may not be a discounted rate.

Benefits: This approach is especially useful if the clients’ content, terminology, technology, and/or other factors are new, dynamic, or otherwise difficult to gauge without further exposure to the material.

After reviewing the completed sample with your clients, you’d be able to estimate the remainder of the project with much more accuracy. The clients also can decide whether your production style is an ideal fit for their needs.



3) The “level of effort” approach.

Wallet containing a monthly allowanceSometimes a client might not have much funding up front, but could finance a greater expenditure over time — much like a recurring “monthly allowance.” In this case, you could offer to do the work on a level-of-effort basis, not to exceed a target number of hours per billing period (say, 20 hours per week).

And if the volume of work of turns out to be substantial and steady enough, you might even be able to flexibly adjust your rates, since you won’t need to expend as much overhead on seeking clients and marketing your services.

Benefits: This approach tends to eliminate the need to create a detailed estimate for each task to be performed. It also keeps the flow of work relatively steady for you and makes monthly expenses very predictable for your client.



4) The “range of options” alternative.

Consultant presenting optionsWhen describing a vision of how you can best serve your client’s needs, offer to propose multiple options for achieving the desired results. This will communicate the message that you’ve anticipated the possibility of working within some kind of financial constraints.

In a subsequent presentation, spell out two or three ways of achieving the outcome you had described, each with a different price tag. In the least expensive approach, for example, you might deliver certain elements over time, with fewer features, or in a different format from the “high-end” approach.

Benefits: The low-end option might be perfectly suitable for the client’s needs, and yet the client could flexibly choose another option if more funding became available.



5) The “share of results” method.

Woman with two bags (splitting the profits)If a project budget is practically nonexistent, consider whether accepting a share of the results (such as a percentage of sales) would make sense. If you can strike an agreement with your client in which you would split the profits in a fair, equitable way, you could carefully craft a written understanding that reflects this arrangement.

Benefits: This technique can be quite lucrative in situations where the shared results increase over time as your client’s business prospers from your work. It’s considered a type of “contingency financing” because the results are contingent on your efforts. If you can afford to offer your services this way, you all but eliminate the financial risk for your client, yet you reap the benefits when you do a good job. The downside is that your efforts could result in a financial loss if the sales do not pan out as hoped.


In conclusion,
it’s not difficult to back ourselves into a corner with unrealistic budget arrangements when we’re highly enthusiastic about a new client project. Using one or more of the five reframing techniques, you and your client can find an ideal approach that serves both sets of needs with grace, dignity, and mutual gain.


Copyright 2016 Adele Sommers

About the Author

"Straight Talk" Special Report
"Straight Talk" Workbook

Adele Sommers, Ph.D. is the author of “Straight Talk on Boosting Business Performance” — an award-winning Special Report and Workbook program.

If you liked today’s issue, you’ll love this down-to-earth overview of how 12 potent business-boosting strategies can reenergize the morale and productivity of your enterprise, tame unruly projects, and attract loyal, satisfied customers. It’s accompanied by a step-by-step workbook designed to help you easily create your own success action plan. Browse the table of contents and reader reviews on the description page.

Adele also offers no-cost articles and resources to help small businesses and large organizations accelerate productivity and increase profitability. Learn more at LearnShareProsper.com.

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