The profitability of a company is significantly impacted by its ability to identify both the core client characteristics that make for a good client as well as those that do not fit with your business expertise or require more support from key resources than can be supported by the revenues they generate. For example, last year a company was referred to me and I accepted the engagement. This company was seeking government grant funding to develop technology. It was a one-person operation and the founder did not personally have the technology credentials to do the research and development of the “product.” The company decided to pursue Federal research grants, specifically those for small business innovation research (SBIR).

Customer oriented

Not having technical/scientific expertise would require this founder to hire as an employee a person with the credentials to serve as the project manager, or principal investigator. To qualify for the grant, the principal investigator would be required to be at least 51% employed by this company AND not employed full-time anywhere else.

The Dilemma: Learning Curves

The client needed to learn many things in a very short space of time:

– grant application processes;

– how to define the scope of its technology;

– research project planning;

– commercialization planning; AND

– compliance with the regulations related to these areas.

The small business grant proposal requires a small business to have the ability to both oversee the research and execute a substantial portion (50–67% depending on the phase/stage) of the project. This means that at the time the grant is awarded, the recipient organization must have employees—not consultants, subcontractors, or independent contractors—to perform the research.

The organization seeking a small business grant has to be able to execute the research and meet a number of different eligibility, technical and financial requirements and capabilities. When a proposing organization lacks the technical expertise and wants to overstate (at best) or misrepresent (at worst) the company’s organizational capabilities, then as a consultant/advisor it is important to be able to steer the client in the proper direction. When clients don’t cooperate, then the advisor is in a precarious position between the client and what is legally, regulatory and ethically mandated as actions.

In the case of a client who is overstating or misrepresenting the company’s capabilities, there are several steps for the advisor to discontinue the relationship:

1. Discuss the rules of the road directly with the client.

2. Outline the issues and guidelines for generating a work product.

3. Draw the line! If the client won’t listen and hear what you are saying, give notice on the project.

4. Stop the project work immediately.

5. Write it off; reduce the fee, return retainers, or present a documented final bill that includes a few politely worded issues that you recommend the client address.

6. Notify: If the client was referred to you let the referring person or agency know there has been an issue (without breaching confidentiality, of course). Keep it professional and to the point.

7. If a complaint is filed against for any reason related to the project, respond promptly and with adequate documentation (again, without breaching confidentiality items) that the claim is incorrect or that the situation is being misrepresented by the filer.

8. Learn the signals. We all have instincts as to when situations or people could be risky to do business with; e.g., you may be hearing that little voice in the back of your mind saying “something’s not right about this project, client, situation…” In the worst case scenario, it’s important as an advisor to be able to walk away whenever you get that feeling; it is usually your subconscious processing signals of body language and what is being said at an instinctive/intuitive level. If your instincts say run, then RUN! The client will likely be costly in more ways than you can imagine.

Author: Lea A. Strickland, MBA CMA CFM CBM GMC

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