Startup hiccups – things you wish you had known when you first set up your business

29 Feb 2016 | Research & Business Knowledge

I have been observing in the last year since I started my own little business that indeed the financial part of the business is probably the first consideration when opening and managing a small business, and a good management of the cash flow is the most relevant aspect for the company survival. 

Often, freelancers in our business believe that we are in safe hands just by providing a good competitive cost to win projects, initial good feasibility assessment, accurate feedback to clients, fluid communication on the process and finally high quality in our deliverables.  These are for most of us the basics for success and survival in the industry – our 'recipe for success'.

However, we often find some early obstacles that were not part of the equation and that we did not assess first hand.  These unexpected hiccups can cause a lot of angst and sleepless nights.

When Evolve Fieldwork started I was determined to ensure that I had all the elements in place for success by putting together these ingredients… so I embarked on the adventure (almost suicidal) as I left a fantastic team to be on my own.  I started my own limited company and courageously faced the possibility I may well not be able to pay my skinny salary at the end of each month.  However the feeling of freedom and the high motivation to do something for myself was somehow overpowering to the financial uncertainty.

Looking back, had I known then what I know now I would have added a few extra ingredients into the equation that I did not consider in the first assessment – I had not fully appreciated the complexities of the financial risk and I certainly hadn't accounted for them in my planning.

While I started out determined to pay my suppliers within a week of job completion, more and more I realised that my clients would not follow this principle and I had to accept I would be paid within 60 days…if not more.

My first full immersion to the financial reality was when I faced the struggle to cope with one of my first clients unpaid invoices – this cleared payment 6 months after I had presented it to the client.  I confess that I lost sleep over this over many nights and it brought home how vulnerable my small business is where a single unpaid bill could have made my company unstable.

However, I discovered that this is not the only risk that I faced – and was probably not the most serious.

Unfortunately, I came face to face to some dishonest people in this industry too, that will pay my invoice within my terms and conditions, but would (re)negotiate the initial price (downwards!) at the end based on flawless and unsustainable reasons.

Let me give you the example of one of my clients (ex-client now) in three consecutives studies with patients.  After interviewing the patients and obtaining all the information needed ( including audios for analysis), in the first study, the client decided that one of the respondents wasn’t creative enough.  In a second study, he did not feel a respondent had enough experience dealing with a device (no question in the screener about this), and on a third occasion, as the patient was not very sure about all the drugs he was taking and when he started, the client decided he would not pay for those interviews. 

So, in three consecutives projects, I was forced to pay for recruitment, referral fee and incentives out of my meagre budget and project management fee … so  I effectively made no money at all.  Yes, I probably was paying the price of being naïve and wanting to have a happy client, but the reality was that I was clearly being taken advantage of.  That was the price of lack of experience.

Months later talking to a friend colleague of mine, I discovered that that very client has been doing the same thing with different fieldwork/ recruitment agencies like me … it was his way to make his business more profitable.  Shame on him!

On other occasions I have found that field agencies treat small recruiters or agencies like mine to their advantage and consider us 'dispensable' – commissioning and uncommissioning jobs and recruitment at the very last minute, leaving you to pay your suppliers and last minute cancelation fees and then having to go through difficult and protracted negotiations to agree the final invoice on this basis.

The feeling I got from it is of being totally used, and being treated with an utter lack of respect.

Late payers undoubtebly offer some sort of discomfort and put our business at risk.  However, when (if) they do eventually pay, your business will progress with more or less cash flow issues but eventually survive.  Dealing with those are simply out to manipulate and take advantage of your good will is a whole different matter.

The ICG has an area on our website which gives useful advice on how to deal with late payers – click here.  You may also find the Terms & Conditions of Business  template useful.