What follows below is our first-ever outside guest post.  (My colleague at Winning Workplaces, Jason Ticus, has contributed several guest posts on employee engagement and team building, all of which you can access by typing his name in the search box on the right.)

Emily Lonigro is the owner of Chicago-based LimeRed Studio, a firm that specializes in concepting and producing marketing and branding creative for community- and environmentally-focused organizations and small businesses.  As a small business owner who has dealt with her fair share of both clients and freelancers over the years, I asked her to expand on our usual discussions of employee engagement activities to talk about customer engagement.  Enjoy:

Recently, I Twittered that I have the best clients in the world.  And I do!  I enjoy my clients almost all the time – something rare in the self-employed/small business world.  They welcome ideas, are excellent collaborators, just the kind of clients everyone wants right?  Right.

But finding and retaining them wasn't luck, it was deliberate searching and sifting.  I've also had my share of conniving, dishonest clients, or have done one or two design projects for someone just because I needed to pay the rent.  Over the six years I've operated LimeRed Studio, a design company that caters to small businesses and nonprofits, I've learned to use the following guidelines to find and retain the best clients.  These aren't necessarily the clients who are going to make you the most money, but will help you find the people and companies that are best for a long-term relationships and glowing referrals:

1. Trust your gut instinct.  If something rubs you the wrong way right off the bat, trust it and address that feeling right away.  If it doesn't go away or if the conversation is less than honest, move on.
2. Discuss budgets immediately.  People who don't talk about money don't make money.  And people who skirt the issue probably won't pay their invoices anyway.
3. Work with the right person.  Find out if you are talking to the person who is going to make the decisions that affect your project.  If you aren't, find that person.
4. Get everything in writing and if possible, get a signed contract.

A note about contracts: I had one client four years ago who was reluctant to sign contracts for the simplest projects and I passed it off, thinking, "This is so small, why should I worry about it?  This person is an entrepreneur like me, of course he'll come through in the end."  But in the end, I wasn't paid for that and many following projects.  I also had an initial bad feeling about this client and he was reluctant to talk about pricing.  I was young, inexperienced and starving for clients.  I ended up being bullied and losing thousands of dollars.  No portfolio sample is worth that.

We've all fallen into this trap: wanting to do the work and willing to sacrifice or overlook for various rationales.  But if you are going to truly succeed, you have to hold onto your principles.  In the long run, you will cultivate a working atmosphere of respect and good business practices, sift out the bad clients, and keep the most valuable ones for years to come.

Bonus for eagle-eyed readers who made it this far: Emily will be teaching workshops as part of Community Media Workshop's spring 2009 trainings.  Look for her there.

What do you think of Emily's tips?  What customer horror stories have you experienced?  More importantly, how have your employee engagement best practices and workplace team building helped to turn those around?