Freelance consultants have to be nimble and resourceful in order to compete successfully and that is especially so when in pursuit of a big-league client. Winning a big client is tremendous validation, but when swimming with whales it is essential to take precautions and maintain as much control over the process as possible. It would be disastrous to do what is second nature to many small business operators and Freelancers: whatever it takes to get the job in and whatever it takes to get the job done. Pursuing important clients with big contracts out for bid takes a more sophisticated approach.
When assessing and pricing a big contract, the project fee attached to your proposal carries much weight, in more ways than one. Bid too high and you’re knocked out of contention. Bid too low, a common practice of Freelance consultants and small business owners, and one of two impressions will be made:
1. That you are perhaps unqualified to do the work because you’re selling your services for too little money, or
2. That you’re desperate for business and probably ripe for exploitation.
To both convey the image of a capable and experienced professional and ensure that you make money on the project, be sure that you thoroughly understand what will be required to fulfill the contract and your ability to do so. Job costing and cash flow projections will need special care. Will you need extra expertise for some aspect of this job, or perhaps an extra pair of hands in order to meet the timetable?
Realize that big projects for big clients mean big accounts receivable and there can be a downside. Be honest about how much money you can afford to have outstanding, even if payments are received on time. Help yourself by requesting 20% – 35% of the project fee up-front and due within 15 days of the contract signing. Set up a payment schedule in your proposal that ensures you’ll be able to pay any subcontractors and also yourself on time.
Freelancers and small business owners often compete on price, but one is advised to avoid dangerously low bids in order to get work or add a marquis name to the client list, only to receive very little profit from the project. Michael MacMillan, founder and CEO of MacMillan Communications of New York City, focuses on selling personal attention and customized PR strategies to his clients and providing more bang for the buck. “One of the advantages of being a smaller organization is that you’re more efficient because there are fewer overhead costs. We are able to apply more of the project fee directly to account work”.
According to Jeffrey Bolton, managing partner at the accounting firm Daszkal Bolton LLP of Boca Raton, FL, the key to evaluating whether to pursue a big client is to ask yourself how important that account will be for future business growth and whether the project work fits into your strategic plan, even if you don’t make money on it. “If you’re trying to build a reputation, that foot in the door is necessary, but you must have an institutional mind-set when taking on a big client and not a mom-and-pop mind-set”.
Thanks for reading,