The Cost Of Delays

by seanlow on June 20, 2018

Why is it so important to get money for production in advance?  You avoid the cost of delays.

Pretty straightforward, except there are so few creative businesses that get paid well enough in advance to avoid the pain of delays.  I wish I could specifically state why this is, but I cannot.  What I can say though is that most creative business owners do not fully grasp the cost of the delay until it is too late.  Mostly, creative business owners undervalue both project risk and systemic risk when it comes to delays.

Say what?

Project risk is what you think it is.  When there are delays, your chances of failure for the project increase and you may not be able to do what you want to do for the price you originally quoted, if at all.

Systemic risk is more subtle.  When you have to have to work harder for a particular client (who caused the delay), that leaves less time for your other clients who have been good actors (and did not cause a delay).  Less time is less time and now your ability to perform for your “good” clients just took a hit.  Remember, unless you are paid for BOTH systemic and project risk when there is a delay, you do not have the money to pay for the added stress you have just placed on your creative business.

Of course, you are who you are and you will pull it all off in the end even if you do not get paid for the extra risk.  But there will be a price, a big one.  Every year, I see creative business owners at the end of their season walking around like the living dead, catatonic from the effort of completing their projects without being compensated for the cost of delays.

When I ask a creative business owner what happens when a client is late in paying, changes their mind about an important design element, or is slow to decide critical path issues, what the cost to the client is, inevitably I hear crickets, or worse, ten, twenty thirty percent of their fee as an additional expense.  No wonder there is no blood left.  The clients have sucked it all out.

How to contemplate the real cost of delays?  Ask yourself what the project would cost if the client came to you right after the delay and had to get done in the reduced time frame.  What would you charge, first to get the project itself done and then to make sure that none of your existing projects suffered?  Yes, two separate numbers.

When you do this work you will find very quickly that the number is an exponent of what you originally charged and you should not be afraid at all to charge this new number now since there is no difference between that situation and the one you currently face.

One more thing.  You do not want your clients to cause delays and want to actually punish them for doing so.  The numbers you calculated above are NOT punitive, they just keep you at the same risk profile as when you originally took the project.  They get you back to even.  You want to create a disincentive to act this way and need a punitive fee to do it.  I like fifty percent of the new fee added to your calculated number.  If you originally charged $100 to do the project but were delayed, the cost is now $200 plus a $100 penalty or $300 to finish the project.

The whole point is you do not want the delays in money flow and/or decision-making.  If clients can understand the pain they will cause AND the pain you will cause them, likely is that there will be respect on both sides.  Explained in this context at the outset, there will likely be mutual agreement and no thought by the client that they could ever be the bad actor you describe to them.

Of course, none of these triggers are likely in your contract and/or process now, even though they will be tomorrow (right?).  What to do then? 

Be willing to walk away if the pain is too much.  You bringing your creative business to the edge, literally, because of a client’s bad behavior is pointless.  Pointless, because you are hired to do great work, to inspire and transform.  If this becomes impossible, why would you finish other than ego?  You might say this would cost your reputation and provide sympathy for the client you left hanging.  On the other hand, you would have the wherewithal to live to fight another day and garner the reputation that you, your art and your creative business are worthy of respect.  The days of martyrdom are long gone, live to the truth of what makes you and your creative business the force that it is, if only to change the world, one client at a time.

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As many of you know, last June I launched The BBC Collective for Event Professionals.  Together, I am so proud to say, we have made meaningful change in the industry and we are just getting started.  The change comes from a willingness to erase the proverbial box and question everything, together.  My mission is to help creative professionals come much much closer to their truth as businesses; to have the business itself be as creative as the art is produces.  And it is working.

When I think of doing a similar group for Interior Designers and after talking to many many designers, I realized what is also necessary is the voice of a master designer.  A designer who can bring his decades of experience in the industry to the discussion.  Someone who has seen and done it all — AD 100 forever, completed incredible residential and commercial projects around the globe, authored four books and counting, entered into more than a few success licensing deals, and a tremendous retailer to boot.  What would a weekly experience be like with both of us?  One where the same format as The BBC Collective would operate: written post with a recorded conference call to follow (all archived), private Facebook group for ongoing discussion, quarterly one-on-one check-ins.  If I were a designer who really wanted to up my game, to question all that I am doing, to challenge myself not just to change but to truly evolve, would this be for me?

So I asked my mentor Vicente Wolf if this is the kind of work that would excite him at this stage of his career.  Something he would really value and appreciate?  I shared my experiences with The BBC Collective with him and after about five minutes he was all in.  That was a month ago.  Today The VW COLLECTIVE is here.  We will start our conversations on July 10th.

A little history on Vicente and me.  I have known Vicente for over 14 years.  I worked with Vicente for almost five years on everything other than his core design business, making many many deals for commercial projects (hotels, condominiums, and country clubs), licenses and other endeavors.  During that time Vicente taught me all he could about the design business and I have used that foundation to grow my own philosophies about what makes a successful interior design business.  Nine years into my consulting career serving many of the industry’s elite has brought me amazing insights into this incredible business and I feel like we are just getting started.  I also feel like the interior design industry is at an inflection point.  The brave new digital world is affording opportunity like no other and, at the same time, exposing those who have not yet done the work of rethinking the way things are and ought to be.  Above all, this is the purpose of The VW COLLECTIVE — to move the industry forward.  The reason the group is limited to 60 designers is we want every designer to be able to have access while at the same time be strong enough in number to bring meaningful change to the industry as a whole.

All of the details of how The VW COLLECTIVE will operate, what it costs and how to join are are on the site.  Here are a few that are not there: if you join before July 2nd, we will have an hour long recorded call to discuss your business (scheduled at your convenience).  Vicente will also want to talk to you one-on-one about what you would like to get out The VW COLLECTIVE. 

One last thing.  Vicente and I know that there are many amazing professionals that have so much knowledge beyond what he or I could bring.  Media, marketing, licensing, publishing, even color experts who spend their lives immersed in making what they do impact the design world.  These experts will be part of The VW COLLECTIVE once or twice per month and will be paid to do what Vicente and I will do each week— write a post and have an intimate conversation with members that will be recorded.

If you are ready for The VW COLLECTIVE, we are ready for you.  It will be an amazing journey with will take. Together.    I, for one, cannot wait.

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