Knowing when to walk away from business
“It’s not me, it’s you.” Learning when to walk away from existing clients and say no to prospects is a skill, but get it right and your business will flourish and you’ll feel less burdened by your working life.
We all love to win new business. There is nothing like the buzz of pitching, signing a contract and kicking off a great partnership, but as we enter a new year, it’s worth taking a step back and considering your relationships with existing clients and learning to say ‘no’ to new clients who might be hindering, rather than helping your business grow.
Learning when to walk away from existing clients and say no to prospects is a skill, but get it right and your business will flourish and your Monday mornings might not be such a drag.
If you want to enjoy working with your partners or clients in 2012 and increase the amount of new business from companies you actually want to work with rather than those you don’t, consider the following:
1. Has your potential client got unrealistic expectations?
All of us have met people who like to throw their weight around and expect the earth. If you think your prospective client’s expectations are unrealistic, don’t be afraid to say so. But before you do, be upfront with them and let them know how your business works. Winning business is a two-way street so make sure your prospect understands it’s a partnership from the start.
2. Is there a cultural fit?
If your business is small, agile and results-driven, it could be a big mistake taking on a corporate client driven by process and characteristically caught up in red tape. The most successful client relationships I’ve had have been with like-minded companies. The worst may have paid well, but getting simple projects over the line was a constant struggle.
3. Do they have a good reputation?
There are good businesses and bad businesses. Some pay their bills for example, others don’t. Some treat their staff with respect, others don’t. Do your homework and find out which category your prospective client falls into. If appropriate, find out why they ended the relationship with their previous supplier or partner.
4. Can you add value?
It’s always tempting to take the money and run, but it’s not a good idea in the long term. Ask if your company can provide a product or service that will really add value to that customer. Not only should they have a good reputation but you need to protect your own. A business’s reputation is precious. It can years to build up but can be ruined in seconds.
5. Do you think you can work with them?
It’s an obvious question but something I’ve learnt to do more of since I set up my business is trust my judgment. If I don’t think we can work with an organisation, they may be too focused on process, for example, or refuse to listen to advice. Yes, you can learn to compromise, and no organisation is perfect, but no amount of money is worth a customer making you and your team unhappy.
6. Do they have the budget?
When starting out, your gut instinct is to take on any new business that comes your way. A company might do something really exciting, offer the latest product or service, but if they can’t pay their bills, all of your hard work will be for nothing. This can be tricky when working with start-up businesses but you’ll soon resent working for fees below market value. If you have your doubts, consider shortening your payment terms or asking for a deposit upfront.
7. Does the new business conflict with existing contracts?
Perhaps the new customer is a competitor to an existing client. Is it worth the risk? It’s a small world and it is quite likely your clients will cross paths. Be upfront with your existing client about the prospect. They may not have an issue and this approach will safeguard you from having to come clean, and risk losing a valued client, further down the track.
8. Are your customers growing with you?
This article has focused on turning down new business but if you have ongoing agreements with customers, then it might be time to walk away. If your fees have stayed the same for a number of years, and they still expect your undivided attention, then it might not be an effective use of your time. This is a tough decision, but if your time could be better spent trying to win bigger accounts or servicing other clients, it might be the right decision for you.
9. Will it be fun?
Yes, we’re talking business but if you run a business, chances are you work long hours. So it’s a good idea to try and enjoy as many of those hours as possible. If the prospective business doesn’t interest you or get you fired up and happy to leave your bed in the morning, what’s the point?