Ep. 39 | 3 Steps to Take When Something Goes Wrong

As a business owner, you'll inevitably have a situation with a client or a contractor where things don't go according to plan: a client misses a payment, a contractor doesn't meet your expectations, or maybe you even make a mistake on a project. Tune in to hear three steps you can take to evaluate the situation and move forward toward a resolution.

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Transcript

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Inevitably, working with other people, working with clients, working with contractors, something is going to go wrong. We are all humans, and that means we make mistakes, we make bad choices. So there are gonna be situations that go sideways, that don't go the way that you wanted or the way that you planned. When a client disappears on you, or you make a mistake working in a project, or a contractor doesn't meet your expectations, it's gonna happen at some point. So here are three steps that you can take when that happens to try to resolve the situation and make the most of it. So you can grow your business with confidence knowing you've got it all covered. Let's dive in. Alright, I said there were three steps, but I guess there are actually four because the first thing that I want to say is that when something goes wrong, you can get really activated, you can get into anger or resentment or whatever feelings come up, and it's easy to react from that place. But I want to encourage you to first take a step back, take a breather, process. Allow yourself to process whatever feelings come up before you do anything, before you get into action, just fill your feelings. It's really easy to assume that someone is trying to screw you over. It's really easy to assume that someone is out to get you, but 99% of the time that's not the case. Other people make mistakes, they make bad choices, they get themselves into bad situations, not on purpose, and it has sometimes it has absolutely nothing to do with you. So it's important to take a step back and try to move forward from a neutral feeling as much as you can instead of from a place of resentment or hurt feelings, anger, whatever it is. And people are more willing to negotiate, they're more willing to try to work something out when they feel like they're being treated fairly. So if they feel like they're being attacked, you're not gonna get anywhere. Even if they were the one to do something wrong first, right? So first step, take a breather. Once you're calm, once you've taken a few deep breaths or taken a day or two to cool off a little bit, the first thing that you need to do is look at the contract. What happens when something goes wrong largely depends on whether you have a contract and what that contract says. So that means figuring out, first of all, if you have a contract and who that contract is with. So do you have a contract with the person that you're having a problem with or not? If it's a client, that's easy. You probably have a contract with them. If it's a contractor and you're having a problem with one of their employees, that contractor contract would still cover you. If you're doing work for a company, but you are having an issue with another contractor on that same project, you might not actually have a contractual relationship with the other contractor. So first step is to like figure out what that dynamic is, who is the contract with, who is obligated under that contract, and who versus who are you having the problem with. Once you've identified the contract and you have a contract with the person that things are going wrong with, then it's time to read through it with a fine-toothed comb and figure out what's required by the contract versus what's actually happening, what's going wrong. So that might mean reading the whole thing. It might mean looking at the parts of it that are relevant to what's happening. So if it's a client not paying you on time, look at the payment terms in the contract. If they aren't giving you the info you need, check if it's required in the contract and how specific the requirement is. So if they're not filling out your onboarding form and you can't actually get your work done until they fill out your onboarding form, the contract might not specifically say, okay, they have to fill out this specific form, but it might say that there is going to be information you need from them in order to do your job. So that might be enough to point to. Once you've identified the relevant piece of the contract that says what's required, then you need to check if there are consequences outlined in the contract for this behavior or for the specific situation. So again, find that relevant piece of the contract, payment terms, services, deliverables, and see if there are consequences outlined for what's going wrong. So if a client's not paying you and payment was due on a certain date, and there's maybe the contract says there's a late fee if they don't pay within five days of the due date. That's a consequence for the thing that's going wrong, right? If they're not filling out your onboarding form, maybe there's a consequence in maybe there's an abandonment clause that says if they don't get back to you with the information you need within 10 days, you're allowed to put the project on pause or terminate the agreement entirely. So check the relevant section, the section that talks about whatever's going wrong for you in the contract, and then also look at the termination section and the alternative dispute resolution section or anything about mediation that might be in there. These might give you first action steps or a specific consequence that you can point to, or even the ability to end the contract. So what you're looking for is what went wrong, and then a consequence for that, and what you can do next because of that. And right now we are just gathering information, right? So the first step is to look at the contract, figure out what's required, whether that requirement was broken, and what the consequences are for breaking that requirement. So to spell that out again, look at the payment section. Payment is required on X date, that's the requirement. Was the requirement broken? Yes, they didn't pay by X date. What's the consequence for that? There is a 5% late fee if they don't pay within five days of X date. Okay, five days have passed. That means that there's a 5% late fee. Requirement, has that requirement been broken? And what's the consequence? Now there may be more than one consequence. If a client doesn't pay you, that might be a reason to charge a late fee, but also to terminate the contract. But we're just trying to figure out in this stage, what are you allowed to do? What is the default response to this situation based on what you've already agreed to in advance? And that is the benefit of having a contract, that there's already outlined actions in place that you can take when something goes wrong. So you can look at that contract. You don't have to have feelings about it. It just already says what's supposed to happen. And if you don't have a contract for whatever reason, then you can do this same thing, but with whatever written documentation you might have about what the rules, requirements, and consequences might be. So if you have written expectations anywhere, regardless if it's a formal contract or not, that's what you're looking for. So that might be emails, texts, shared meeting notes, uh, even your onboarding documentation. If you have like an onboarding pamphlet that lays out expectations, like a PDF or something that you sent over, even if you don't have a contract, that is at least a place to start to figure out okay, what did you expect? What did I expect? What did we agree to when we got into this relationship? Now, once we have all the information on what is expected, what went wrong, and what the consequences might be, then we consider what your options are. What is your ideal resolution to the situation? And is that the same or different from the consequences outlined in your contract or your written communication? That might be easy because when it's a mispayment, because your goal is to get paid and compensated for the time you spent on the project so far and for the time you spent chasing down the money, right? If it's an interpersonal issue or something else without a clear solution, it can get a little bit more complex. And that's when you might have a situation where it's either not mentioned, this issue isn't mentioned in the contract, or you really just want out of the relationship because you're done, but that's not contemplated in the contract. So again, we are information gathering and figuring out your goals. So what is your ideal resolution? What in the best case scenario would happen? And then what is another, maybe come up with a couple manageable solutions. So best case, and then okay, what would be good enough? And then also on the other side of it, what is not acceptable to me. Now, something to consider and maybe self-edit here is is your response proportionate to the issue? So again, taking a step back, taking a breather and thinking through what you want versus what the situ what has happened. Um, so for example, if you are totally sick of a client because they're super slow to respond to your emails and you want to just end the project and dump them, that might not be a proportionate response if their answers are just slower than you want, but they're not actually interfering with your ability to do the project because they do answer you. So you might need to start with just better boundaries and better communication before going straight to just dumping them as a client. And another thing to consider is the potential consequences of your goal, of your ideal resolution. So if you want to withdraw from a project, but your contract doesn't allow for it in this specific situation, then what are you going to do to incentivize reaching your ideal result? You might have to offer a refund or offer some alternative in order to be able to withdraw. If you don't have justification, if it's not contemplated in your contract, you might have to offer something in order to get your goal. All right, once you have all of the data around what is in your contract versus what went wrong, what your options are in the contract versus what you actually want to happen, the next step, step number two, is to open the negotiation process. This is something that I think people forget about too often. Contracts are always negotiable, they are there to back you up if you want them to, but if the terms aren't working for you and the other person anymore, you can change them. You just have to agree to the change. So we already established your goals, you know what you want, you know what's not acceptable, you've thought about what you might have to compromise or how you might have to compensate the other person. So now we take the next step of actually doing something about it. And that is ideally always gonna start with negotiation. So start with reaching out and expressing how your expectations weren't met and what you would like to happen going forward. And it's always unless things have gone really horribly wrong, it's generally a better idea to start with kindness, kind but firm. My negotiation professor in law school would always say, kind but firm, be reasonable, use kind language, and you're more likely to get somewhere. So just express how your expectations weren't met and what you want to happen going forward. If you want to put a little bit more teeth behind it, you can reference places in the contract where they agreed to do what they didn't do. You can point out, as it says in our contract, payment was required on this date, reference the contract or specifically point out the paragraph, and potentially even point out the consequences of not doing what they said they were gonna do, as it says in the contract. And so that depends where you are in whether this person has been pushing boundaries with you already, whether they have been taking advantage of previous kindnesses. But generally for a client who just misses a payment, a kind reminder, hey, your payments due is the place to start. And then maybe after that, hey, your payment was due two days ago, I'm adding a late fee, here's the invoice, pay it by this date, or I will have to put your project on hold. And you get more firm the more you have to bring it up. If somebody has already been pushing your boundaries, that might not be the place you want to start. So just use your judgment, think about your relationship so far, and you can start maybe a little bit more aggressive if you think that they're gonna respond to that or need that in order to respond. Now, if it's not something as simple as payment, of course, it might take multiple emails and back and forths to come to a resolution, especially if you are not going with what the contract said, but have an idea for a resolution that is different than the contract. That might take some more conversation, but it might ultimately be what's better for both of you. Now, of course, there's always a potential that they'll just not answer you or refuse to compromise at all. So if asking nicely and trying to negotiate doesn't work, absolutely get more firm. And you can also threaten legal action if the contract backs you up. I would recommend only threatening legal action unless you're actually able to follow through on it. So you need to have justification there. So a place in your contract that they are blatantly violating. Or if you don't have a contract, something black and white like you did work and they didn't pay you. Now, again, if your ideal situation isn't contemplated in your contract or it goes beyond what you think the other person might be open to, then you might have to offer an incentive to get them to agree to your solution. For example, if it's a coaching client who you just are not clicking with and your contract doesn't give you like a trial period to begin with or something, and they paid up front, maybe you have to give them a prorated refund, even though their your contract says no refunds. If you want to quit in the middle of your six weeks, give them you know 50% back or something like that. Because if you just bail when you promised six weeks of coaching and they paid you for six weeks of coaching, then they can sue you, right? So you want to make sure that you actually come to a solution that you both agree to, and that might require incentivizing them. Now, as you do this, just make sure that you're keeping it all in writing as much as possible. Obviously, sometimes a miscommunication requires actual face-to-face conversation or Zoom or phone call conversation. That is an easier way sometimes to talk through an especially an interpersonal issue. So if it is that, you can record the conversation, although that can feel kind of aggressive sometimes. So after the call, you can, you know, write up your notes on what happened and send them over and say, hey, this was my understanding. Was it your understanding of what we came to as well? And then you have a written record of it, as well as agreement from the other side that that is what happened. It's also important as you do this to be clear and explicit with exactly what you want and what you expect. So don't allow people to read between the lines, make it really direct. So including deadlines, next steps, and consequences specifically, and make it as easy as possible for the other person to follow through on whatever you want them to do. So instead of just saying, Hey, your last payment failed, say your payment failed, use this link, buy this date to pay. And if you don't, I'll have to put your project on pause. Exact steps, deadlines, and consequences. Now, if negotiation doesn't work for whatever reason, if the client is just not answering you, or if you can't come to a solution, you always have the option of getting a lawyer involved in escalating things to taking legal action. So that is the third step is escalating to legal action. Now, I kind of want to make step three an or because you can escalate to legal action or you can leave it alone. You always have the option to give up. And I don't mean that in a negative way. Like, think about is it worth your time, energy, and money to pursue this before you go for it? Is it worth it? Because you can always just drop it, especially if they're just not answering you, or it's an interpersonal thing where nothing is gonna get resolved because you just clash with the other person. But that option is always there for you. You can get a lawyer involved. This just depends on your desired outcome, right? So a lawyer can help you get money, they can help you get a refund, they can help you get out of something, but they might not be able to force someone else to take an affirmative action. So they might not be able to force a contractor to do a project that they backed out on, right? They can't force them to do that, but they might be able to get you a refund for the part of the project that wasn't done, right? So legal action can look like a lawyer sending a formal demand letter. And so all that is is a letter that they write on letterhead, legal letterhead. It looks intimidating and scary and generally gets a response because it shows that you actually hired a lawyer and are taking this seriously. And it also can threaten an actual lawsuit if they don't do whatever you're asking for. Now, a lawyer is only gonna do this if they think that you are justified in whatever you want, right? So your contract or your written communications have to back you up. Legal action could also look like sending a client to collections or filing suit in small claims court if you just need some money back, if they just owe you money. So it can look a few different ways. But one thing to remember before you try to do this is that a lot of contracts include an arbitration clause or an alternative dispute resolution clause or a mediation clause. So make sure you read that or point it out to your ask your lawyer to check because that can limit your ability to file a lawsuit until you negotiate or you participate in mediation or file lawsuit at all, prevent you from filing lawsuit at all, be and require you to submit to arbitration instead. Arbitration is it's like court, but it is a less formal, less expensive process. So especially big companies generally prefer arbitration because it costs them less money. But it can be just as binding as a lawsuit and a decision from a judge. Your contract also might have a choice of law or a venue clause that tells you where, what state and what court you have to file suit in. So that's another thing to consider. So check for all of these and talk it over for with a lawyer before you file anything. So that's the three steps. Number one is data collection, check your contract, figure out who it's with, figure out what was required versus what went wrong and the consequences versus what your actual goal is. Try to negotiate if you can, and remember that you can escalate to legal action or you can back out. It's kind of the end. If you can't resolve it with negotiation, you kind of either escalate it or leave it alone. Now, a few more thoughts on this. I say this all the time, but you gotta remember the human side of it. Remember that there is a person on the other side. People are not out to get you, they just make mistakes. Another thing my negotiation professor would always say was assume incompetence before malice. So assume that somebody is just being an idiot before you assume that they are out to get you. And generally that works really well. Another thing that's important is to communicate like a screenshot of your email could end up on social media. So always be respectful, always be courteous because that could happen. Or even if it's not social media, if it does rise to the place of a lawsuit, text messages are admissible, emails are admissible. The way that you talked to that person, if you were respectful and kind is gonna weigh heavily towards you in a lawsuit. Juries don't like jerks, right? And that that sounds glib when I'm saying that, but so be nice for the sake of being nice, but also because it could come back to bite you if you're not. And finally, again, some things aren't worth the headache. Yes, negotiate, yes, try to come to a resolution, but also is it worth your time, money, and mental energy and emotional energy to pursue how far do you really want to go? And of course, that is going to depend on the relationship, on the investment, on how much money they owe you or what actually went wrong. But sometimes it's just not gonna be worth it. So consider that before you commit yourself to a whole rabbit hole of hiring a lawyer or suing somebody or taking it out on them on social media or anything like that. Alright, that's all we got. If you are in a situation like that, I feel for you, I'm sorry, but you got this. Everybody goes through it, everybody gets through it, and you'll get there too.