Setting up an "exit strategy" without upsetting or causing troubles to clients

Question

I am a web designer / developer (front end and back end). I do that proficiently since more than 10 years, and I am appreciated and good skilled in designing and programming. I work alone in a home office.

My target business are local clients, small to medium companies, hotels, shops, restaurants, etc.

I don't do any marketing, clients come to me by word of mouth by other satisfied clients.

My area of business is very inflated and now there is a lot of offer for web design / development and not that much demand, so the prices are getting lower and lower and I know there are some freelance or studios that for getting new clients redo sites for free (or almost) then apply a yearly price for maintenance.

For that reason I am moving in other areas such as product photography for e-commerce and other similar things at fair price to make me and clients happy, and seems that this is going in a very good direction since I have already a small but good photo studio and I have a good experience in Photoshop post production.

Now my problem is that when I started as freelance (and later too) I used to get all the possible clients because I needed to make money, so I took also some not good ones including some friends, friends or friends, somewhat relatives, and other common people but known in the town.

I would like to stop working for many of them, because although they were useful for me in the past years, now they are more a loss of time and very little earning, in some cases I do even updates for free since years, or in other cases there are companies who refuse to pay small invoices while they would pay for bigger works, or they don't answer emails for billing, etc.

(I also have very good clients of course, along with these not good ones.)

In some cases I have contracts and other I don't.

I would like to set up an exit strategy that will free me from them but that also will not cause problems to the client's business or upset the client, because I work mainly in the local area, I always worked for good reference of others and if I upset one or more, they have the power to spread bad news about me, also in other cases they are people that I may meet with friends and family so I don't want to create any unpleasant situation.

What I have thought is to talk with some other web agency or freelance, and when I am contacted from the "bad client" I would inform him/her that they will talk to that new freelance for the work. But I am not very covinced because: 1) is not easy to take agreement with competitors; 2) who would have the wish to get all the "bad clients" of another freelance?

Another thing that I thought about is to inform these clients that I have changed job and don't work anymore in this field, but this is actually a lie and people would know sooner or later.

What is the best "exit strategy" in this situation?

Answer 1

This is where networking with other professionals would help.

I've "exited" a few clients by recommending them to some other colleagues I've worked with in the past. It has been a reciprocal agreement, and we essentially "trade" clients. I don't mind talking to other people in my field, so I can still help them out if needed.

As for the reason? You can use anyone that doesn't make the client think you're firing them. "I have just been awarded a very large contract, and need more time available to deal with it" is one possibility.

Now, the underlying part of your question about clients who don't pay their bills or answer emails... They would be my first to go. I choose to Freelance to do my passion, not to hound clients for payment. The clients who make it easy for me to do my job, I keep those ones, anyday!

Answer 2

Your question is quite layered so lets take it apart a bit. You have a few different kinds of old clients only some of which I would really call "bad".

Friends and Family

Those are hard to negotiate with but not bad as such (or so I hope). Once you start to work for friends for free they expect that it will always be the case. In turn I personally find it very hard to ask friends to pay for my work. This is something you can only fix in a case by case way I'd say. But basically it comes down to the question whether they would be willing and able to pay somebody at all for the job - if so, why not you? You can still give a friends discount if you enjoy working on the project. And I will never charge my family to fix their messed up PC I guess :-D

Clients not worth the time

If you have old contracts (whether written or verbally) with a bad revenue/time ratio you need to update those. Of course not everybody can afford to pay full rates for a developer but maybe you can find a balance between those who can pay full and those that need to be subsidized a bit. My company sometimes takes smaller jobs from start-ups at a lower rate but only when we have someone to spare. In general those who pay the full rates get priority and we are open about this with those we offer discounted rates to.

Clients that don't pay

Yeah well - no pay, no play. Let those clients go. Do not directly refer them to anyone because it would ruin your reputation. If you referred someone to me that notoriously doesn't pay and/or has horrible communication habits we would stop working together.

Don't lie!

Just don't. It will always backfire one way or another. You are to busy to take a job? Be honest about it! Client does not pay? Tell them you will stop working for them if they don't! Client has bad communication habits? Ask them to change those or tell them you will need to charge them for the extra time.

Networking and Cooperation

As @CanadianLuke pointed out try not to see people working in the same field mainly as competition but as professionals with related expertise. Usually there are more people needing coders then there are coders. Maybe you can check whether somebody is willing to take on some of your older clients to get the business started same way you did in the beginning.

Hope this helps a bit! Cheers.

Answer 3

If you're only unloading your 'less favorable' clients, then I suggest you create a relationship with a web agency that is hungry. Competitors aren't competitors if you're giving them business, then they become partners!
Just because they were not favorable clients for you, doesn't mean another agency won't love them...

I would hesitate to refer 'less favorable' clients to other freelancers as it just passes the problems to them, however, if an agency can/does provide comparable services, and are a larger company that can absorb some of the overhead of 'less favorable' clients then go that route. You can also refer 'favorable' clients differently, to other freelancers if you prefer.

As for informing your clients, wait for them to reach out to you next and tell them something like 'I am currently involved in other ventures and can no longer provide you services, I will happily refer you to XXXX for any future needs you have'

Best of luck!