Like many freelancers, when I first started out, I would work with anyone who would hire me. After a few years, I developed enough of a client roster that I wasn’t continuously struggling to find new projects. However, even with a roster of clients, you still have peaks and valleys. When things were good, it was very easy to turn away work, but when things slowed down prospects that I would normally turn away began to magically look more attractive. I took on a few clients that I never should have worked with and regretted it on every occasion. It’s easy to think that any work is better than none. After all, it doesn’t matter if your rate is $400 an hour if you have 0 billable hours a month. However, the truth is that it’s better to be broke then to take on bad clients or projects.
Bad clients are cancerous to your business. They will drain your time, energy, and mental well-being. They will need to be managed while you work with them and eventually fired once you’re through your dry spell. This is an enormous cost on top of the discount rates they will seek. When you work with a bad client, it’s like taking a loan out against your future self. Yes, you will likely get paid now, but the interest on it is costly and it could be a burden you carry around for years.
Bad projects are no better. Doing work for which you are not well-suited for or which you are not confident the project will be successful will cost you time and drain you emotionally. Worse, it is potentially damaging to your client who hired you in good faith. In these situations, it’s common to comp time to the client to make up for the associated problems.
The time cost for these situations is much larger in the end than they initially look. If we were to express the situation as a mathematical equation it would like this:
Naïve view = earning *something* > earning nothing
40 hours x $40/hour (discounted rate) > $0 @ Full Rate
Experienced view = earning *something* < time and energy available
An example bad situation:
40 hours x $40/hour + 8 un-billed hours client management + 3 days 50% work capacity due to poor sleep (12 hours) + 2 months follow-up emails @ 4 hours (total of 64 hours)
You have direct costs of 64 hours when it looked like 40 hours and also indirect costs in frustration and unhappiness. Now ask yourself, what better things could you have done with that 8 days? This is the opportunity cost.
(Time available = Opportunity cost = 8 days) > 64 unhappy hours earning “something”
Okay, so what should you be doing instead of taking on a bad client or project?
Here are 5 high leverage activities that tend to have an out-sized impact compared to the time investment (the inverse of bad projects or clients):
- Marketing. Expand your marketing to ensure that you always have a steady stream of leads.
- Case Studies. Improve your conversions for prospects to clients by creating case studies from previous successful projects.
- Learning. Deepen your knowledge of your chosen skill set.
- Networking. Grow your network to create a web to capture opportunities in clients, knowledge, and projects.
- Rest. Take some mental health time so that you can give your next real projects your full energy and attention.