This might be a slightly long story, but I really would appreciate any help you can give me here. I am a young entrepreneur and currently run a struggling website development / software company.
About a year ago we gave an estimate for a project that we estimated would cost the client $100,000 and take approximately one year for my small development team to complete. My team at that time was 3 people, and we were young and somewhat inexperienced. We mistakenly thought we would easily be able to complete this project for the estimated amount.
The project has been a struggle from the beginning and has never been on track. The client and I communicated very infrequently in the beginning, and specs on the project were constantly changing. New features were being requested, and I did not do a good job specifying for each new feature, what it was going to cost in terms of the contract price.
Our development team was also in constant flux, with only myself and one other member around for the entire project.
Now the website needs to be ready to launch in less than one month and I don't believe there is any hope to launch it to meet the client's expectations. Also, the client no longer has the budget to continue paying for the additional development, even though I mentioned we were going to be over budget and have to cut some features.
I really would like to be able to finish this project, however, my company now has very little revenue coming in. Is it reasonable for our client to expect us to continue working on the project for free? I understand that it was our mistake on providing an incorrect estimate, but if my company continues to work on this project, then we will not longer be able to find the other projects necessary to continue the business.
I am one of those people who do not generally accept failure, so I have been working tirelessly on this project as well as trying to do other projects at night to keep the lights on, but 80+ hours a week is taking its toll and I am not sure how much longer I can physically or mentally keep this going.
If we do not continue the project and just provide the client with what we have completed so far. We would be able to work on enough other projects to keep the company afloat. However, I fear that would open up the potential for a lawsuit. However, if we keep working on the project, there is no guarantee we will finish the project on time anyway. Also, within the next month our company will no longer be able to continue running as we will not have enough money to pay our personal (or business) expenses.
We are in a tough situation, because we don't have enough money to go talk to a lawyer, or would we have enough money to hire a lawyer to represent us in court (if it came down to that).
I have never had a software project that I could not finish so I am not sure what happens at this point. What are my options? Is there anything I can do to try to protect myself and my company.
If the worst were to happen and my company was to go under, what effects would this have on my ability to start a company again someday?
In the end, the projects failure is due partially to the clients failure to follow up, communicate, and most importantly provide clear direction (he changed his mind constantly). But also, in major part, because of the failure of me personally, along with the failure of my development team, to be able to perform the task required based on the contract.
Any advice would greatly appreciated. Thank you very much in advance.