The other day, my head exploded.
That’s what it felt like, anyway.
I received an email from a young singer-songwriter friend of mine who “hired” a videographer friend of mine on my recommendation.
Everything was fine until I reached the following paragraph in the email (I’ve changed the names):
I wanted to get your opinion on a matter regarding the video. Tom has set the price at “whatever you can do” but I want to make absolutely certain that he feels appreciated and knows that he did not waste his time.
Do you have any advice?
I immediately wanted to clunk these guys’ heads together. This is a classic example of the #1 reason why business between friends so often fails or creates hostility:
A lack of what I call “Cash Clarity.” Here’s the overly simple definition:
Creating certainty in all parties involved in any business transaction on the specific amounts of cash, payment, fee, etc. before any business takes place.
After discovering the complete and total lack of Cash Clarity between these two guys, here is the response I sent:
The advice is—you should’ve never agreed to do that. Tom should never agree to do that. That is a half hearted way of doing business. Creates uncertainty for everybody. Nobody knows what to do. Hence, here we are.
In this case numbers do speak louder than words. Always concentrate on getting the number first. Especially if it involves money. If you don’t do it first—it’s too late. If you don’t do it first, you’re guaranteed that somebody’s going to feel bad. Both of you are too high up on the pyramid of life to create bad feelings for anybody.
Both of you need to learn this lesson now and forever. To make that point perfectly clear, offer him $10. Send him a check for $10 and say here’s what I can do. I guarantee you this will never happen again. I believe you will learn your lesson and Tom will learn his.
The going rate a year ago (that I paid) for a finished video that was shot and edited, was $1,000 an edited minute. Your video is supposed to be 90 seconds. That would be $1,500. I’m sure that’s not what either of you had in mind. Now do you see how you need to start talking with numbers and not feelings? I have never been able to deposit a bag of feelings at the bank.
Talking about money is hard enough. Throw friends (or, in this case, even friends OF friends) into the occasion and things become downright impossible for most people.
Cash Clarity, however, will make just about all the usual worries go out the window. How do you achieve it? There are four simple steps:
Step 1: To Free or Not to Free
There is no “do what you can.” At the very beginning, you either decide if it’s free or not free. If it’s not free, you then decide how much. Immediately. It’s that simple.
Step 2: Get Specific
The word “around” should not appear before the agreed-upon price. There should not be a range of prices. There should be one final figure that both parties feel good about.
If that figure cannot be found, you should walk away.
Step 3: Prompt Payment
After arriving at the agreed-upon price, both parties must be crystal clear on what the payment process will look like.
Is anything to be paid up front? Will it be paid in full immediately upon the project’s completion? Do they accept online payments?
When you have agreed to the terms, honor them. Don’t pay the day after you said you would. In fact, pay early if you can.
Bottom line: don’t make the other person have to chase you down to get paid.
Step 4: Over-Deliver
In the email exchange above, Tom was filming a video for my singer-songwriter friend (we’ll call him John), making John the client in this scenario.
But that’s not how I advised John to look at the situation. Here is the exact response I sent to him after he informed me that he and Tom talked and agreed on the $10 payment I suggested as a lesson for them both:
Would you like to take this to the next level and really WOW everybody and yourself? Consider sending Tom an Amazon gift card. This can be done with a physical card or simply an eCard. This is in addition to the $10 check you are sending today.
No one should get short changed by this situation. You can send it for $50 or $100. At this point, the value is not as critical as the thought. I want you to feel like you did not take advantage of anybody. And we certainly do not want Tom to feel taken advantaged of.
Remember, he is your client. Most of the world would think you are the client. But you must turn that around. You must wow your clients to keep long-term relationships.
Know this lesson is for both of you. So each of you must take full responsibility for this situation.
Even at $100, Tom is not getting fully paid or compensated for his time, energy, and effort.
You want Tom on your side. Tom wants to be on your side.
Always tilt the balance toward the other person. Add all the value you can in every situation with all people concerned. Make sure the Win/Win is always in the other person’s favor. When you do this, you will never lose and will be blessed beyond belief.
This client philosophy you can apply to every business relationship, regardless of the level of friendship—the other person is always YOUR client.
I’ve done this with everyone from the company that cuts my lawn to the companies that publish Andy Andrews’ books. And you know what? Something strange happens…they always seem to go above and beyond with their work!
At some point, you’re going to encounter an opportunity to do business with a friend. All you have to remember is that it IS possible to avoid the mistakes that doom so many other long-term friendships and business relationships.
All you need is a little Cash Clarity.
In case you’re curious, John did send Tom a $150 Amazon gift card and a $10 check. Both parties remain friends and continue to work together.
What’s the biggest mistake you’ve made when doing business with friends? What did the experience teach you?