NEW YORK – It’s a situation many new business owners land in — they are so eager to find customers and clients that they work for little or no money. Or take on projects they don’t like.
These owners hope to get referrals, build a portfolio or get photos and testimonials for their websites. Instead, they wind up with a lot of grief and regrets.
Elise Gelwicks recalled feeling desperate for clients when she started InternView early last year. Gelwicks, who helps companies create internship programs, hoped that working without pay would allow her to make connections and lead her to paying clients.
“People who were interested wouldn’t pay me, and I said, OK, I’ll do it for free. I needed the experience,” said Gelwicks, who is based in Chicago. But not only was there no pay, she wasn’t doing the work she wanted — she found herself helping companies recruit interns.
Many owners find that clients who get cut-rate or free work may in the end devalue the service or finished product. These clients may take advantage of a new owner and keep making more demands, since they don’t have to worry about running up a bill.
“Underpricing is probably the biggest mistake most companies make,” said Laura Willett, a business consultant and lecturer at Bentley University. “The perception is that your product doesn’t have any value.”
Conversely, owners find that when they set a price that’s in line with what other companies charge, prospective clients and customers take them more seriously.
Gelwicks spent six frustrating months trying to turn no- or low-fee work into a growing business, and finally one day asked herself, “Where is this getting me?” She decided it was time to start charging what she knew she was worth. “It was terrifying. I went through a period where I didn’t have clients,” she said. But she did find companies that needed the services she wanted to provide, and InternView is now growing.
Liz Mally found misery in doing work purely for the sake of building a portfolio. “I was taking on pretty much any client I could get, regardless of budget or style, in hopes of gaining experience and getting my name out there,” said Mally, owner of LPF Blooms, a floral design company in Detroit. That included corporate clients who wanted dyed flowers in flashy arrangements, not the elegant, understated creations that are Mally’s specialty.
“I absolutely dreaded every second of the design process. I also didn’t want to share any photos of my work because it didn’t fit my aesthetic, which is the primary way I market my business,” she said.
Some clients also wanted arrangements that Mally didn’t want to do. She learned to ask a lot of questions up front when contacted by a prospect.
Some owners get lessons in good business practices from the anxiety-driven mistakes they make early on. Kenny Kline, co-owner of New York public relations firm JAKK Media, recalled clients who kept asking him for more work but didn’t pay anything extra. Part of the problem was their written agreement — it didn’t provide for rate increases if more work was requested.
“Since I was afraid of losing their business, I complied more often than not,” he said. “This resulted in a tough relationship where their expectations continued to increase and I was very poorly compensated for my time.”
After being caught in this bind several times, Klein started requiring clients to sign agreements about how much work would be done, and how he would be paid if more was needed.
When V. Michael Santoro started his digital-marketing company Vaetas, he used several methods including the barter system — trading his services for another owner’s — to bring in his first clients. But he found that many saw little value in what he had to offer, even though his work made their companies more visible on the internet.
He realized he needed to say no to some prospects. “We needed to communicate what our value was and back away if it wasn’t accepted. That’s the biggest lesson, know your own value.”