I can’t tell you how many times I’ve heard some version of this sentence:
“If this goes well, we have a ton of work to bring you, so give us a deal on this project.”
It’s a negotiation today for the promise of future work. Better expressed with the gambling term, betting on the come.
Betting on the come is derived from a gambling expression and means you don’t have what you want or need, now at the moment; but you are betting or hoping you will have what you want or need when the time comes.
This type of request is rife with problems and reeks of bad business.
The Problem with the Future
I have four main issues with this type of business approach. And in the past, I have almost hung up, walked out, and abandoned any prospective project where this type of negotiation is at hand. I’ll get to how you traverse this situation in a little bit.
At first glance, when someone tells you that they have lots of future work for you, that’s a good thing. A warm and fuzzy feeling should come over you…because you are about to pick up a client that wants to have a long-term relationship. This prospect might help you fill your pipeline for months or years to come, and there is nothing wrong with that.
Many of our best clients were big clients with lots of businesses, each needing their own website, and I was happy to oblige.
Where my smile turns upside down is when they ask for a discount on the first project as a carrot to get the other, future work. Essentially when the prospect says, “I’d like you to bet on the come.”
If you decide to make said bet, there is a high likelihood that you are being fooled, or are one. I’m not sure which, as I haven’t met you.
Problem #1: You are providing a loan without knowing their credit worthiness
Let’s say someone promises to bring you four projects. But, they are unwilling to sign a contract for all four, only the first. So the first project you quote at $10,000, but since this prospect needs a “deal” for you to get the opportunity for the future work, you offer $8,000 to get the gig. You are now providing $2,000 worth of credit in order to get the opportunity to swing at the future deals (because you have no contract, there is no obligation for the client to even hire you on the future jobs).
The prospect’s credit worthiness will come into play if they actually follow through on each of the 3 follow-up projects. If you get the first project, and the come doesn’t arrive, then your prospect has defaulted on the credit that you extended them.
Problem #2: You are sacrificing profits today for future potential revenue tomorrow
You can also look at the above example through the lens of profits. Instead of extending credit to your prospect, you are forgoing profits today for the possibility of future revenue (not profits). In a perfect world, all four projects that the prospect is bringing you would be of equal scope, so $10,000 each. Once you give a deal on the first one, chances are, your prospect is going to pressure you and carry that carrot forward to each additional project.
If your net profit margin as a business is around ten or twenty percent, then marking 20% off a project will eat all your profit. But since the prospect will undoubtedly get the same deal on the next project, you are potentially locking yourself into getting $32,000 in revenue for all four projects instead of $40,000. The missing $8,000 will most likely be your profit.
Problem #3: The bird in the hand is better than two in the bush
Assessing the risk of the situation is a good first step when these opportunities come up. It’s really easy to get blinded by the light (of opportunity) and ignore the fact that without a contract and a down payment for all four projects, there is substantial risk on the come. A lot of things could happen:
- Your prospect doesn’t really have future work.
- They end up going out of business or losing the operating capital needed for future projects.
- You don’t impress them enough on project #1 and they find another provider.
- The scope on the future projects changes and is significantly less than promised.
- The projects don’t materialize right away and end up being delayed into some time in the future.
Hence, the bird you have today is the one you should focus on. Because who knows? It might not even be birds over there in that bush making noise, it could be a skeazy old man shaking the branches and squawking a Duck Dynasty call.
Problem #4: Business owners that present said offer are usually amateurs or bad prospects
I haven’t kept track of this over the yeas (I wish I had), but my gut tells me that almost every opportunity that really pushed the promise of “if you just get this project done for cheap, I will bring a lot more work your way,” ended up being among the worst clients I ever had. Now, I’ve had some solid businesses tell me up front that they had a lot of work in their pipeline (which is a totally fine admission), but it’s when they push for us to work for pennies on the dollar that the warning siren goes off.
Cheap today is cheap tomorrow. People don’t change. A prospect has little to no motivation to get a really good deal and then, all of a sudden, decide that they really want to pay you well tomorrow.
Whereas, a good paying client today will probably be a good paying client tomorrow.
How You Handle the Bet Requests
Do not negotiate with terrorists. No, just kidding, we’re not Congress.
Everything in business is a negotiation. But you also have to create rules for yourself to not get burned. I learned the hard way. I got caught up in so many bets on the come that I can probably estimate that my overall financial loss to these types of deals is in the low six figures. These were projects that I took on for either little to no money on the future promise of business. I either should not have taken the projects, or I should have stood my ground on needing to be paid market rate up front.
But I took the risks and learned my lesson.
So, how do you navigate this request?
Step #1: Acknowledge the situation
When this type of offer comes up now, I call out the prospect on what they are trying to get me to do. I will literally say, “are you trying to get me to bet on the come?” This can catch a prospect off guard. But, when I acknowledge what they are really asking for, it can put a little hint of shame right back on them for asking me to “bet” on them vs. “invest in the relationship,” which is what they think they are asking for.
Step #2: Communicate your stance
“I don’t bet on the come. It’s that simple. If you are open to signing a contract for a volume deal, then I can possibly get some project efficiency by doing four projects in one contract and schedule them all at once. I’m happy to negotiate on a deal that we have today…but not on the prospect of future business.
“How about this, I’ll do such a good job on this first one, that you’ll come back for the second one, and we can talk discount on that project.”
This way you are letting them know that you value repeat customers, but you’ll provide them that value when they come through on their word.
Step #3: Get agreement
It’s important that no matter the situation, you get a clear agreement on what you are going to do moving forward. If they say, “sorry Brent, we’ll only work with someone that gives us a deal on the hopes of getting future business,” well, then they probably don’t have a deal. Make sure that whatever the outcome is, you have agreement on what you discussed so this doesn’t continue to be a recurring theme.
Don’t Finance Your Future
If they are unwilling to change their tune, and will only work with you provided some kind of sweet deal, then be comfortable walking on the project. The worst business memories I have are when I actually did work on complete spec in hopes of getting many future projects. These types of jobs ended up dragging on and never materialized into paid work. If I had just passed on those projects, I could have invested more in my other projects or gotten additional clients willing to pay top-dollar on day one.
Don’t be afraid to walk.
Until next time.