I’m working for a client when I should be working for me!

Hi there Aunty B,

I have a small consultancy business and one of my clients, whom I have been working with for the last year, has been setting up a new venture around the marketing space.

He originally asked me to do the strategic market planning and market entry planning for the business, especially the planning for the digital marketing. When he first engaged me it was on a sub contracted basis, but as my skills in this area increased about four months ago I set up a consultancy business so I could perform similar strategic marketing work for other clients.

The situation is that he is quite good at sales and he is interested in setting up a marketing business, however he doesn’t have the capabilities to do any of the strategic, creative thinking or development for himself. He does farm any work gained from his client relationships to other companies and simply puts margins on top and then represents the work as his own.

In his business model he misrepresents the actual relationship between his business and the actual businesses that perform the work. By this I mean that in reality his business is a type of brokerage/virtual management business (composed of one) and he makes himself out to be a full service development/marketing company (which actually consists of several sub contracted independent companies).

Myself and his suppliers are not allowed to make any references to the work that we actually perform for his clients to build our own business credibility, and generally are not allowed to liaise with his clients or note that it is we who have actually performed the work on our websites/marketing collateral, this tends to be important as the clients he has tend to be known brands.

In my own work/business I would make these relationships transparent, however he does not.

I have been asked to front up with his clients and pass myself off as an employee of his, which I feel very uncomfortable with so that he can gain credibility as having more substance than being a one man band. The work outputs from this system so far are good, as his suppliers like myself perform quality work, his clients are happy and he pays reasonably well and on time.

As things are tight I swallow my pride and accept this charade. My issue is that as more work flows through I feel very uncomfortable in having to say that I am an X employee and to act as one, thereby misrepresenting myself and my relationship to him and to his clients.

I am building his brand up while I am diminishing mine, he uses my IP to represent his brand (sort of OK as the work so far flows through to me). He clearly resents the fact that I set up my own consultancy to offer services to other clients as he sees me competing in the same space as his “virtual” marketing business, even though I stated that this is what I would do in a written agreement. But I did set up my consultancy as his work alone isn’t enough to feed me.

I have asked him to simply refer the client to me for a commission but he is unwilling to do this.

Funnily enough I have been offered a major shareholding in this business but have declined it due to the fact that early on in the relationship I was unequivocally exploited on the basis that I had a minor “profit share” arrangement, however it was I that did all the work. I cottoned on reasonably quickly and refused to perform any unpaid labour, at which point a more normal commercial relationship was entered into. Although he does have very good sales skills, my taking part would once again show I accept the offer, leading me to build up his brand to the detriment of my own. But I’m not in a position to employ a sales person, so I still need work that he throws me.

An objective perspective would be appreciated from you Aunty B.

Regards,
Mark

Dear Mark,

Both of you need a good kick up the bum. Now I do love you but you are carrying on about brand like a pork chop, or Richard Branson. Always ask “what do I have now?” and “what do I want?”

What do you have now? A tiny little consultancy that very few people have heard of. But unless you build an infrastructure around that, it is all you will ever have.

One of the crucial skills for building that infrastructure is great sales skills. In fact, when I went into business this was the second appointment I made (after a part-time bookkeeper.)
A great salesman is a highly valuable commodity. If you hire one, you pay them a lot of money and in smaller ventures sometimes also give them equity. They can be difficult. They are usually motivated completely by money which makes them very hard to negotiate with. They also present ambit claims so people not used to dealing with salespeople feel ripped off and very annoyed. So what! You just learn to negotiate very hard with them. You set them budgets, targets, commission them up and let them lose.

There is another thing you need to learn. When you go into business with people, you share. You share the IP, you share the risk, you share the upside and you ride the lows together. I call it a marriage of business.

One of you usually is the face of the business – and that is usually the show pony. The creative, strategic type usually runs the operations and is more behind the scenes.

You guys seem to have the perfect partnership: he is great at sales, you are great at strategy and vision. I can name you countless people on the Rich List who set up great companies with this type of combination: think Hudson Conway (Lloyd Williams and Ron Walker) or Becton (Max Beck and Michael Buxton.)

But if the second one of you gets greedy or starts carrying on about personal legacy, the show is over.

So here are your choices.
1. Go and negotiate a great deal with him and become a major equity partner in his business. Get a title as CEO. Get as much equity as you can and make sure that if you meet your targets as CEO, you get more equity. Get over this childish hang up about who is doing more work. If you run the new business properly both of you will be so busy you won’t have time to scratch yourself. Lastly ask yourself, can you do all that?

2. Make him an offer to join your business. You would need to give him a major stake and probably a big salary.

3. Find another salesman that you like more and offer than a major stake in your business.

4. Struggle on until you can afford to pay someone.

5. Come to terms with the fact that you don’t have the emotional intelligence to build a business. Structure your business successfully to work with a network of people. Get used to the idea that you are going to stay a one-man band with limited growth potential.

6. Get a job.

Good luck!
Your Aunty B