Entrepreneur Beginners Guide
“Fire Your Worst Customers”
Successful organizations (and I include churches and political parties on the list) fire the 1 percent of their constituents that cause 95 percent of the pain.
—Seth Godin, entrepreneur, author
When most entrepreneurs start their business, they take every customer
they can get. This approach reminds me of my obsession with scoring in my elementary school basketball games. As an adolescent benchwarmer with almost no playing time, I would rush to shoot once I finally received the opportunity to play. The more shots 1 took, the better my chances of scoring and declaring success. The overall score and team strategy didn’t matter. I rarely scored, and I looked like a headless chicken as I took the most ridiculous and inelegant shots. I was so focused on getting and shooting the ball that I once made a basket for the opposing team while on defense. Similarly, entrepreneurs often do more damage to themselves and their team by making haphazard attempts to score every potential customer.
Every veteran entrepreneur has scored for the other team, so to speak. In other words, we have all had customers who take advantage of us, and we allow them to do so. In some cases; this situation can be perfectly fine, but it is not ideal when your business loses money. Frequently, we only realize at the point of no return that the unfavorable situation in which we find ourselves could have been avoided; we could have passed on the customer altogether.
Making the decision to pass on a customer is especially difficult for young or new entrepreneurs who are hungry for business and revenues. However, choosing bad -customers can cause a lot of frustration, drain resources, damage your reputation, and eventually put you out of business.
To help you decide what customers are worth your time, consider four important signs which indicate that you should not take a client and gracefully move on from the relationship. These signs apply .especially to entrepreneurs who run a service-oriented or consulting business.
- Be skeptical of a client who seems not to know what is needed or who constantly makes changes. For example, if you have a web or graphic design company, explain clearly your creative process and the time needed for the project. Quantify all expectations. Some designers, for instance, agree to do three prototypes. After-ward, the client must choose from those three prototypes. Avoid at all costs a situation in which you are designing or creating indefinitely, only to have the client make a choice on the tenth iteration. Also, a client should be comfortable with your capabilities and what to expect from you. Find out from new clients what attracted them to your work. Show your portfolio.
- Be careful i f a client is not willing to pay an hourly rate or a piece rate of some kind. Agreeing to a fixed cost for your work is not bad per se. However, it’s not so great if you end up doing more work than you anticipated. Many clients encourage you to lower your cost to lock in a good rate. In a gesture of good faith, some-times the client will pay you all the money up front. That way, you are beholden to the client until it receives a deliverable it likes. These types of arrangements can be especially stressful and strain a relationship to the point of litigation.
- Avoid any client who hesitates to sign a well-written agreement. This is a true test of whether a client is worth your time and effort. An agreement or contract protects both parties and outlines expectations. Without a comprehensive agreement you have no way to protect your interests, assess the progress of the work you have done, and verify the deliverable.
- Take heed of any less than good feelings you have about a potential client. I have learned to accept my business intuition, and I would say that 80 percent of the time it leads me to make better decisions about a potential client’s value.
I recently received a request for my company’s services from a former client who cost me a lot more money than I made. In fact, the experience of working with the company was terrible. As a result, I respectfully rejected the overture and recommended another company. I learned the hard way the first time and decided that I would do all I could to avoid the agony next time. Don’t be afraid to fire a client. Just because some customers want you doesn’t mean you need them.