Philly “BloggerGate”

Last night I attended the “Bloggergate” Happy Hour where city officials tried to answer questions and provide explanations of the current city tax regulations and how they are applied to members of the creative economy and freelancers.  There is an excellent writeup on the Phillyist site, so I am not going to summarize everything that was discussed.

I posed a question that seemed to be on the minds of many of the local bloggers I know –
The current Philadelphia revenue regulations require that anyone conducting business and receiving revenue in the city of Philadelphia is required to have a Business Privilege License.  An issue that arose among the blogger community is not the requirement to have the license and pay taxes on actual income.  The issue is the “recreational” blogger who does not blog for income.  They may place an ad on their site and charge just enough to cover hosting and domain renewal costs.  They are now being told because they receive revenue (the payment for ad placement) that they are a business and are required to have the Business Privilege License and pay taxes.  Obviously because it is a break-even financial arrangement, they will not owe any taxes, however, they are now being required to buy the Business Privilege License which likely amounts to much more than the amount they are charging for their blog ads.  Is this issue being looked into?

The city indicated that, because of situations exactly like this one, they are looking into the relevancy and applicability of the Business Privilege License.  They made no promises that change would come, but they are considering options.   They genuinely seemed to have had their eyes opened to some of the differences in conducting business in this new creative economy.   That the old ways of regulation and collecting taxes have to be re-evaluated to better apply to how a large majority now do business.  It is a start.

Several other freelancers and business owners asked questions and expressed their frustration with the current tax system and the complexity of starting a business in Philadelphia.  To the city officials credit, they listened and did their best to explain the current system.  The city gets props for showing up on “our” (the tech community’s) turf, National Mechanics (as opposed to say a stuffy room in City Hall), for listening to the questions and complaints and for, at least appearing to, trying to understand the issues and questions.  No one got the answers they wanted last night, but anyone who came expecting instant results was being unrealistic.   As I said to KYW’s Robin Culverwell,

“The fact that they called this meeting tonight, they’re willing to come out, they’re willing to take questions of any kind is a positive step forward.”

50 Ways to Leave Your…Client

You just slip out the back, Jack
Make a new plan, Stan 
You don’t need to be coy, Roy
Just get yourself free                        (50 Ways to Leave Your Lover – Paul Simon)

Every once in a while we come across that situation with a client that we know we just can not make work.  Whether it is an unreasonable client, changed expectations or just personality differences that are preventing us from doing our best work, the reality is that sometimes we just do need to fire our clients.  For our reputations, for our pocketbooks and most often for our own sanity or the collective sanity of our teams, we just need to walk away.

Unfortunately, like any relationship, we have usually gone into these business relationships with high hopes of this being “the one”.  The long term client that we enjoy working for, doing work that intrigues and inspires us and making a decent buck doing it.  Now, like a bad boy/girlfriend, we have to figure out how to disentangle ourselves from this client.  Just like you would in a romantic relationship, do a truly honest evaluation for yourself. Is this an irretrievably broken situation?  Are there changes that could be made on either side to change the situation and make it reasonable to continue the work?  If you have done that and still feel that you must fire the client, then the sooner the better.

It is always a tricky situation.  The first thing you must do is look at the “out” (cancellation, exit or termination) clause in any agreement or contract you have with this client.  What are the terms that allow either of you to exit the relationship and what actions have to be taken before you are released from your contractual obligations?  Don’t have an out clause in your contracts/agreements?  Get one. Now!  Consider it your prenup – we never want to think about getting divorced, but if we aren’t protected before the rings go on, we can lose it all.  Make sure you understand the contract cancellation terms and that you fulfill them to the letter.  Do you not leave yourself open to claims of breach of contract because your agreement required something as simple as delivery of written notice to a specific address and instead you sent an email to your contact at the company.

Second, you must make sure that you have performed all of the work that you have already been paid for.  Either that or be prepared to issue a reimbursement to the client for any prepaid, uncompleted portion.  You never want to leave them in the position to say that you were paid for work that you did not do. Have all the financial details worked out before you communicate to the client that you are ending the relationship.  Know exactly how much has been paid, for what specific work and be able to clearly and accurately communicate that to your client.  Also be able to articulate how much may still be due to the client (or in some cases to you), what it is due for and when you expect to issue the reimbursement to them (or expect payment to be issued to you).  Also, be prepared, per the terms of your agreement, to turn over any and all documentation or work product belonging to the client or that is a result of the work done for the client.

Third, if there is uncompleted work, have a contingency plan ready to give the client.   Be the kind of contractor that you want working for you.  Don’t leave them completely in the lurch (unless they have never paid you, then maybe they deserve it).  Lay out what additional work may need to be done.  It does not have to be a detailed plan for them, that is their responsibility, but at least be able to say, “I was retained to do X,Y & Z and only X & Y have been completed, you will need to make alternative arrangements if you still wish to proceed with Z”.  Simple but courteous.  Often clients have hired us because they don’t know what to do, at least if they have a direction, they can take the steps necessary to replace you. And you take less of a risk of the client badmouthing you to anyone who will listen.

Now to the tricky part, telling them.  The best way to accomplish this is to be short and sweet.  Don’t get into pointing fingers or accepting blame.  Don’t go into any deep details, only those that are necessary to conclude any outstanding business.  Just advise the client that you no longer feel that you are in a mutually beneficial relationship.  Always stress that you regret taking this action, but you feel it would be in both of your best interests to dissolve the relationship.  If you have someone else that you can refer the client to, that is always a nice way to end the communication.   If the client comes back and wants to know why, then be prepared to be tactful, but honest.  You are probably doing them a favor by telling them the truth.  Be sure to have examples ready if they question you.  Also be prepared to stop discussing it.  Like most difficult breakups, some clients will keep trying to get you to go round and round, basically trying to wear you down. Before you get into the conversation, know your stopping point so you do not get frustrated or angry and leave the conversation on a bad tone.

Try to do the “break-up” in the manner in which you had most of your communications with the client – ie. by phone, email, face to face.  It is only respectful.  If you feel it will be accepted better in writing, then do so. If you end the relationship face to face or via telephone,  I also recommend following up with a letter or an email just reiterating what you said, confirming that any prepaid work has been completed, any final details that have to be resolved (payment, document or work transfer, etc…) and wishing them the best.

This is never an easy or pleasant situation to be in.  it is however necessary to know how to handle the situation in the most professional, mature manner possible.  Your reputation depends on it.  The client will probably not be happy, but if you can walk away on civil terms with no one screaming lawsuit or breach of contract, it’s probably a win-win.