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Reversing the Risks For Your Clients and Partners (Part 2)
In today’s challenging business environment, how do you assure potential clients or partners that it’s safe to move forward with projects they may be considering, but are putting off due to concerns about their finances?
Part 1 of this series discussed ways in which a service provider (contractor, vendor or consultant) can share the risks and rewards of a project undertaking with the client. This method can greatly expand the options for doing business during uncertain economic times. If you each have the ability to stay afloat while taking calculated risks, you might consider joint project development, followed by a revenue-sharing agreement, such as:
1) Becoming a “Partnership Associate”, where once a joint product or service is developed and ready for sale, you can use the affiliate module of an online e-commerce system to automatically track the revenue split that accrues. It simplifies accounting and increases the level of trust between partners.
2) exploring other “results sharing” methods, such as splitting a percentage of any royalties, splitting a vested interest in long-term returns, or similar equity-sharing arrangements. (Consult an attorney or accountant to help with any unfamiliar contracts.)
This article, part 2 of the series, suggests more ways to reduce, eliminate, and even reverse the risks of doing business, making it much easier to say “yes” to potential clients and partners.
It includes using tests, prototypes and project phases; Also a non-disclosure agreement to protect proprietary ideas. Although these tools are standard in many business situations, each one can take on a whole new significance and value when applied creatively to reduce risk.
Propose using tests, prototypes and project phases
A frequent and frustrating project scenario involves a client with a long list of desired features but only a small budget and/or schedule. Negotiations easily break down in such situations. To overcome obstacles and get the project off the ground, parties can consider the following risk-mitigation measures:
1) Develop and test the new process first.
When a project requires designing a new method to produce deliverables, the unknowns involved can significantly increase the estimate. Therefore, you can propose to remove unknowns and lower the estimated price tag by taking the time to develop and test the new process beforehand. With some experimentation and fine-tuning, you can optimize those techniques to be both efficient and effective. After neutralizing the various risks in this way, your overall project estimates can be quite low. This will boost everyone’s confidence in taking the project forward.
2) Use patterns and prototypes to model results.
When it’s not clear how long the effort will take or what the output will look like because the requirements are so vague, you can discuss creating a working sample or prototype (such as developing a widget, editing a book chapter, or completing a training module). to do). The result will help the stakeholders realize the complexity of the work and understand what is possible to create. These samples allow all parties to meet requirements before finalizing estimates and committing to the entire project.
3) Reverse the risk of testing and prototyping.
If you are a service provider who is eager to take the project forward and also have sufficient financial reserves to bear this particular risk, you can test new methods and/or create samples on your own time. You can use small, low-budget, incremental tests to test a wide variety of hypotheses. After reviewing completed test results or work samples with your potential client, you’ll be able to estimate the rest of the project with greater accuracy. Or, as mentioned above, you and the client can take an alternative route of sharing downstream revenue.
4) Proposal to complete the project in phases.
If the parties are trying to muddle their way through open-ended and vague requirements, you can propose completing the project in phases. Phases allow features, tasks and deliverables to be defined over time. Another reason to use phases is to start a project with a small budget or schedule and only do a small, basic subset in Phase 1.
Focusing only on the first phase lays the foundation for future expansion. Stakeholders may decide to add or refine features at a later stage. A decision on whether to proceed to Phase 2 may depend on the successful testing, use and/or marketing of Phase 1 results.
As a service provider, offer your own non-disclosure agreement
Another angle that can set a service provider apart from other professionals and reduce risk for potential clients is to routinely offer non-disclosure agreements (NDAs) as part of doing business.
Instead of waiting for a client need to be met, you can proactively do so while offering your services. That way, you can more easily pursue projects that involve “ghost authoring,” or the behind-the-scenes development of books, training, or designs that the client will then sell under his own name. You will simply advertise this benefit in your service package because you can give your clients peace of mind!
Finally, even in an uncertain business environment, service providers can reduce, eliminate, or reverse risk for customers with cash flow concerns. By using creative approaches like partnerships, result sharing, preliminary testing, prototyping, and NDA, you can keep project options flowing even during challenging times.
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