Why my business failed: ex-advertising entrepreneur offers a first-person account of the demise of his New York agency - Charles N. Jamison, Jamison and Associates Advertising Inc

Black Enterprise, June, 1994 by Charles Jamison

Calculate what your contribution is to your client's bottom line and then charge accordingly. Many people will want your services at reduced fee because they perceive you as hungry or as offering a service that can be derived from other sources. This perception may also be influenced negatively if you are black.

If our agency had charged our clients what the value of our services were really worth, we would have been profitable before the tough times hit. You also need to charge a rate that takes into consideration what it costs you to service a particular client. Some accounts required so many agency man hours that we wound up not getting paid for the actual amount of overhead we were investing.

In other words, set your fees high enough to reflect what those services really cost you to provide. Be prepared to make a case for why your charges are what they are, and stick to it. Obviously, I am not suggesting inflexibility. You should make adjustments in what you would charge a Fortune 500 company, compared with a mom-and-pop store. But keep in mind, all clients will demand your best work, no matter what price you agree on.

8. Turn down bad clients. You won't know whether someone is going to be a good or bad client until you start working with them. However, as soon as you recognize that you've landed a bad client, get rid of them--no matter how much cash you are letting walk out the door.

Recognizing them is a lot easier when you're supplying goods and products as opposed to services. In the product industries, a bad client is someone who doesn't pay within 30 days.

In the service industry, someone who's paying within 30 days could still create havoc in your business. How? By placing demands on the business that, in the process of fulfilling the work requirements, end up poisoning your work environment.

This poison can take a variety of forms, but let me mention one example so you get the flavor. We had a packaged-goods client with top executives who had a need for control. Every time we would work on this client's account, these executives would pit one of our staffers against another. Each person who was working on the account would end up getting criticized to another staffer working on the account. The result was that they were demoralizing my people.

Everyone in your company can get tangled up in it when there is a client who is consciously trying to manipulate egos.

All the usual ways of stopping any intentional miscommunications are done routinely in large companies through written reports. In a small business, few have the time to write "CYA" memos.

Why would any client try to undermine your business in this way? The worst clients create trouble so that they either can get more services for free or can justify not paying for services already rendered.

If you want to learn from my experience, save yourself the mental anguish. Resign the account and keep your sanity.

9. Make sure you save for a rainy day. The advice here is tricky. Once you start a business, you must realize that the business is not you, and that as soon as you bring other people into the venture, it takes on a life all its own. Like any newborn, it has an insatiable appetite and will take all the nurturing you have to offer. That nurturance comes in two forms: capital and psychic energy.