In the recent past I have sub-contracted for someone who owns their own IT Support business. A situation recently arose where he referred some potential work to me for a product that he wasn’t familiar with, even though I am now (loosely speaking) in competition with him. At first I thought it was a courtesy to the customer, a bit like when someone at Bunnings recently referred me to a nearby competitor because Bunnings was out of stock, and a courtesy to me as someone who has worked with him in the past. But then after I took down the details of the lead there was an awkward pause like he was waiting for me to say something… followed by “of course they will still be my customer and I expect 25% of any revenue” (the same revenue split we agreed to when I sub-contracted for him).
I was taken aback. From my point of view:
- this was a new client with whom he did not have an existing relationship
- …for whom he couldn’t do the work (and he originally turned them down)
- …plus he expected me to put in the time to win the business
- …and he expected me to handle invoicing, billing and chasing up payments
- …and he expected them to remain his client for any other needs outside of this
In other words it was nothing like our previous arrangement where I was temporarily servicing his existing clients, utilising his payment infrastructure and making use of his tools and equipment.
I was caught off guard so I agreed to his terms on this occasion but I’m glad this came up early in my consulting career (and I’m also glad the lead didn’t pan out) because it got me to think about it.
In the end I decided I’m not comfortable paying or receiving any sort of finders fees, kickbacks or commissions unless they are completely transparent to the customer. Those are the rules for financial services in Australia and I see no reason why my customers should expect any less.
That doesn’t preclude me from sub-contracting, it just means I will need it to be very clear up front who I’m working for, the customer or the contractor.