By Matt Doyle, VP and Co-Founder of Excel Builders
Client disputes are a concerning problem in any arrangement. When the dispute involves a large-scale project, however, the future of your business could be at stake.
Do you know what to do when a client is becoming increasingly angry and uncooperative? Do you know how to protect your business from the consequences of a client pulling out of a deal where you’ve already invested massive resources?
I have some tips that may help you. I have a lot of experience in this area. My company builds luxury custom homes using some uncommon materials, often for clients who are retiring or who have experienced a windfall.
Any deal I sign means months (even years) of planning, cooperation, building and check-ins. That’s a lot of time for honest disagreements and misunderstandings. Over many years of managing these projects, I’ve developed some effective ways to prevent disputes, defuse them and ready my company when an agreement hits the rocks. Here are the top three:
1. Focus on warning signs early in the relationship.
When you’re working with large projects, it’s very important that you and the client get along or at least have respect for the goal you’re both trying to accomplish. You can determine this the traditional way: by inviting the client to dinner to see how you mesh.
It can be tempting to just be a pushover when it comes to a client whose project could support your company for a year. However, you should know that certain warning signs mean you may not only not get paid, but you might be on the line for the costs you’ve already sunk into the project.
Be very cautious signing with clients who:
- Are resistant to picking a direction or giving definite answers about their needs.
- Try to steer you toward unethical or illegal behavior (such as fudging reports to regulatory authorities).
- Insult you, your partners or your staff.
2. Develop comprehensive contracts with a good lawyer’s help.
It is incredibly cheap for your business to have your contracts produced from boilerplate templates. It takes very little of a lawyer’s time and is effective in many situations. But if you’re signing clients for big projects, you can no longer afford to take the risk that something will get missed by a template.
Pay a highly regarded lawyer what it costs to develop a comprehensive contract that is unique to your business and the types of projects you develop. Make sure that it includes fair clauses that protect you in the event that the client would rather pull out than try to resolve a misunderstanding.
The provisions that matter the most will depend on the market that you’re serving. If you choose a lawyer with experience in your industry, they will be able to identify the most important points that should be covered.
Many problems can be prevented simply by having a strong contract in place. The idea is not to limit the client’s options, but to set the terms for what changes can be made to original plans, how often and how substantial they can be.
3. Focus on a continuing relationship.
This final tip doesn’t really have a cost associated with it. The important thing to remember is that every client experiences anxiety about the progress of a large project. They are investing a lot, and it’s normal for them to want to be assured that things are going the way they envisioned.
It’s your responsibility to make sure that they don’t feel left out of the loop. For large-scale projects, it can be practical to have an account manager working closely with the client from the beginning to end.
You should be able to deliver updates (in an attractive report, presentation or other format) on a regular basis. Trust me when I say keeping the client updated is one of the key ways to prevent disputes. It allows you to catch many small problems before they become the kind of problems that can sink a project.
Preventing disputes is a job from beginning to end.
With a focus on warning signs, strong contracts and great communication with the client, you can prevent disputes. As you can probably tell, that’s just as much work as it sounds like. Keeping a large project on the rails takes daily effort, but it’s worth it -- the alternative could be losing what you’ve worked for.
Matt Doyle is the VP and co-founder of Excel Builders, a truly unique custom home builder, creating homes that make every day easier.