While most freelancers would probably like to work for a large company, the truth is that a lot of freelancing gigs come through small to medium-sized companies. Often, these companies change hands–sometimes in the course of a project.
What’s a freelancer to do when the company they are working for changes ownership?
Client ownership changes are common in the freelancing world. It’s happened to me, not once–but three times. A change in client ownership can be serious, because sometimes it can lead to a loss of work for the freelancer.
In this post, we’ll discuss steps that a freelancer can take if their client company is sold. I’ll also share more about what happened to my projects when my client sold their company.
What Would You Do?
This is one of those posts where we ask for your feedback up front.
Seriously, don’t peek at the rest the post. Instead, leave a comment outlining the steps you would take if your client were about to sell his or her company. Later, we’ll compare your steps with the ones that I’ve thought of.
What Happened to Me
As I mentioned earlier, this happened to me three times.
The first time a client company was sold it went very smoothly. The original client contacted me and told me that he was selling the business, but that he was working with the new owner to ensure that I would continue on as a contractor despite the sale. A few weeks later, the new client contacted me and we agreed upon a price for my services. I look at this experience as the ideal scenario.
The second time it happened, it started out in a way that was similar to the first. The original client contacted me and told me that they were selling the business. However, in this case, I had been about to increase my rate (they were my lowest paying client). I mentioned the coming rate to the original client. After the sale, I sort of expected to hear from the new owner, but I never did.
The final time the client company was sold, I was in the middle of a project. I was never informed of the sale and turned my work in on time. Sadly, it was only after I attempted to collect the balance on my invoice that I learned that the company had been sold. I had a great deal of trouble collecting the money due to me.
Mistakes I Made
In retrospect, I made some critical mistakes in the last two examples. If I had a do-over, I would definitely follow some different steps when dealing with these situations.
In the second scenario, I should not have informed the original client of the upcoming rate increase. What did they care anyway? They wouldn’t be paying me. Rather, I should have negotiated directly with the new owner. Also, I should have taken the initiative to contact the new owner rather than waiting for an introduction or email from them.
In the third scenario, there wasn’t much I could have done since I was unaware of the upcoming sale. However, there are some steps I should have take with all clients to protect myself from this situation.
Steps a Freelancer Can Take to Protect Themselves
Here are some steps that freelancers can take to protect themselves (and that I’m going to consider adding to my process):
- Modify the contract. For large or ongoing projects, adjust your contract language to cover any future changes in ownership. A legal professional can help you get the language right for your country or state.
- Stay in communication. Even on long-term projects, it’s important to stay in regular touch with your client contacts. Ask questions like, “do you foresee any changes that might impact the project?”
- Break Large Projects Up. For large payments on long-term projects, break the project into phases. Make it clear that you will not move on to the next phase until you are paid for the earlier phase.
- Be Proactive. As soon as you learn of an impending change of ownership, contact the new owners as soon as the sale is final. Don’t wait for the old owner to introduce you or for them to contact you.
Has this ever happened to you? Without naming names, share your experience.
Image by missrogue