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Saying No to Non-Ideal Clients

May 11, 2007

"Start saying no to non-ideal clients." I read that phrase today in a blog entry by Guy Kawasaki. This has been a hard lesson for me to learn, and I am still learning it - but I think I am getting better at it and I’d like to share with you why. I don’t often go into the person (and the psychology) behind my business, so enjoy this special treat!

When we first started out about six months ago, I was so afraid that we’d never get a single client - let alone a steady stream of clients - that I pretty much sought out and accepted any job I could find. I had a company to run, and in order to get there, I had to start somewhere. Although it has taught me a valuable lesson in who my ideal client actually is (and I am grateful for that), it was a hard lesson to learn.

Lessons from Early Experiences

In the early days, I did a lot of different things to get clients. See if these sound familiar to you:

  • I competed on price, undercutting what I was worth so that I didn’t lose the sale.
  • I took jobs for free - or worse yet, I took jobs that lost me money because I paid my artist more than I took in for the job.
  • I used sites like Craigslist and eLance to find work, where people are not doing proper marketing and just competing on price alone.
  • I took unfavorable contracts (either ones that had nothing to do with the kind of work I wanted to be doing, or ones that seriously underpaid) because any income was good income, even if the work was tedious or the hours were long.
  • I stepped outside my comfort zone, bidding on projects, writing proposals, and being a “yes” man on everyone else’s terms.

The Psychology of Business

I have often asked myself why I do these things, and I have come to the conclusion that it comes from a standpoint of weakness. When I am feeling low, I tend to scramble to make things "better" for myself (even if it’s not making anything better, really) instead of just waiting out the dip and continuing on with my plan. When I accept less than ideal clients, these are the negative thoughts I have running through my head:

  • If I turn this one down, we will never get another client. How silly is that? There are thousands of new websites that go up every day, and here I was telling myself that this was the last client on earth.
  • I don’t want the client to not like me. This one cracks me up, because it makes me feel like I am 5 years old and seeking the approval of someone I have never met. What I should be doing instead is putting our needs (as a business) and our needs (as a family) first!
  • I don’t want this client to have a negative image of our business, or to let this rejection hurt our business’ reputation. While I am not immune to this (I had an ugly case of it recently), I do try to be as helpful as possible when turning down a project. I can give them some info to help them on their way, point them in the direction of a another developer, or tell them we can’t do the project "within the confines of our current schedule" instead of telling them "never".
  • I am leaving myself without a backup plan. No, I am leaving myself with a space for a better opportunity!

Turning the Tables

So what made me stop? Well, first of all - money. We got a few clients, ideal or otherwise, and I had some money in my account to fund my venture. (I also got my tax return and my husband got his bonus at the same time, both of which helped ease my financial stress.) As I was having a difficult time qualifying for a cashflow-boosting small business loan, this extra money in our accounts was a huge relief. (Small business loans are a Catch-22 phenomena and are difficult to obtain, but that is a subject for another article.)

Another thing I did was join StartupNation, where I found a podcast of a conversation with John Jantsch, author of Duct Tape Marketing. He said something in this podcast that I immediately wrote in big letters on my whiteboard, so that I would see it every day. It was FIND YOUR NICHE - STOP GOING ALL OVER THE PLACE AND COMPETING ON PRICE. I took those words to heart, and every time I feel like dropping my prices or writing a proposal for someone with 5 other bids already in hand, I look at that board and try my best to stop myself. (It doesn’t always work, but life is a continual learning process.)

The NHG Whiteboard Message

I also went back and listened to my Sandler Sales Training CDs. I have found these to be a boost in my morale when I need it the most, as they teach the principle of self-esteem as the foundation for a strong sales system. This helped me go back to my marketing plan, review it, and stick to it. The lessons also reminded me that my ideal clients are ones whose needs I am a good fit for, so I shouldn’t try to be everything to everyone.

Lastly, I talked to someone from the local Small Business Development Center about marketing. The funny story here is that this person really didn’t help me one ounce with her advice, although I know their assistance is life-saving to many new businesses. What happened in my phone conversation is that it occurred to me that I already knew what I was supposed to be doing - I just needed to take a deep breath, stick to my plan, and have some patience.

Concrete Reasons for Staying on Target

So if money and clients are a good thing, why would you want to pass on a certain project? The answer is complicated and varies based on the business, but for us:

  • We have limited resources. Our company runs with me, a full-time artist, and a part-time layout person. This means I have to balance the work out so that everyone has something to do, I need to outsource portions of projects that are too consuming in programming time, and I have to pass on certain projects if our current schedule doesn’t allow for it.
  • We have strict standards for interfaces and coding. Therefore, we stick to our standards and don’t accept projects that require the use of outdated technologies or software that relies on table-based layouts.
  • I’m a busy person. I run a business, run a household, and raise a toddler. If I only have a limited number of hours in a day to get work done, I only want to work on the best and most interesting projects possible.
  • We need clients we can work together with. After speaking with a client or emailing back and forth, I will just get the feeling that this client is not going to work well with our team, and I will pass on the project. This is one of the hardest of the rejection criteria, because it really just involves a gut feeling and instinct - something that is very hard to listen to when you are new and worried about your finances.

The simple answer is this: When you tap out all your resources on non-profitable projects that do not bring you further as a business, you have failed on that project. As a company, everyone should strive to set themselves up for success - not failure. This is why it is important to determine what characteristics of the client and the project make it ideal for your company, and then stick to those guidelines!

As a final note, in what felt like a full circle moment, the quote I started this article with is actually from Guy Kawasaki talking about John Jantsch and Duct Tape Marketing. The article goes into more than just ideal clients, and it is well worth the read.

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Comments

2 Responses to “Saying No to Non-Ideal Clients”

  1. Steve on May 15th, 2007 2:05 pm

    Wow, that was a very intelligent posting. I too bought John’s book, but I have not stopped my world long enough to read it. Maybe memorial day weekend i can sneak a few hours in. The joke about the SBDC is great, I too have had no help from them, but I never looked at it from your viewpoint (that you already knew what to do, you just had to do it), I just always got mad that they were so lame.

    I am impressed and am going to look to see if you have a email newsletter I can sign up for.

  2. Jill on May 21st, 2007 2:00 am

    I totally understand saying no to the non-ideal client when you are in the service industry, but in the online retail industry, a client who buys is a good client. Nobody will say no to a sale.

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