Grow Your Business Through Events

How I…Grew by Ditching My Only Client, JANUARY 28, 2010

[Summary] To say it was a rough time to start up a tech company after the dot-com bubble of the late ’90s burst would be an understatement. For digital agency Rokkan, which was started in 2000 by two twenty-somethings out of a Jersey City, N.J., living room with limited resources, it was sink or swim. Things looked promising when Rokkan landed their first and only client, a major rock musician who was launching a new clothing line, but it wasn’t long before the project hit a wall. After ditching his only client, Mr. Noe knew he had an uphill battle ahead of him. He sat down with his two partners and they had a long discussion about what to do next. Read the Full Article

The article talks about finding success after ditching a bad client and the struggle the company went through in deciding to sever ties with a longstanding client. Choosing to end a bad business relationship is difficult for any business to do. What many small business owners fail to acknowledge is that as the owner you have the right to choose whom you work with. Whether this means ending a bad business-client relationship or choosing not to enter into one in the first place.

This principle applies primarily to businesses selling a service but in some cases can apply to products as well. Far too often small business owners, especially those just starting out, feel compelled to say “yes” to every deal that lay before them. They believe that declining a potential client is a recipe for failure when in fact the opposite can be true. Ask yourself these 3 questions before accepting a new client:

1. Is it a good fit for your target market? A business should not feel confined or restricted by their defined target market. However, if a client’s needs lie outside of the target market it is important to evaluate whether or not you want to take on this client and the impact that doing so can have on your business. For example, as an event planner I do not plan children’s events. Just a few months after launching Starr Studded, I was contacted by a prospect that needed a planner to plan his son’s 5th birthday party; he had dropped the ball and the party was only a few weeks away so he was ready to sign on the dotted line. Although I already had a couple of contracts this event would have been the first to take place. As I evaluated the opportunity, I realized this could take my new business down a path I didn’t want to go. Once I planned that event and the client was pleased, he would likely refer me to others and I would have photos posted from the event. The next time a prospect calls requesting a children’s party it would be difficult to say “I’m sorry I don’t handle children’s parties”; one referral leads to another and I have a blackberry full of clowns, face painters, and petting zoo’s.
2. Are your personalities a good fit? The type of service you provide dictates the length of a client relationship and how much time you will have to spend with them. Taking into account personalities and work habits are important. As an event planner I spend anywhere from 3 to 12 months with a client; if our personalities don’t mesh that could be detrimental for my company. When I meet with a prospect I am not only trying to sell myself and my business but I am evaluating the client to determine if we are a good fit.
3. Is the potential revenue worth the investment in times and resources? Service oriented businesses have the most flexibility in price. It is therefore easy to adjust pricing in order to land a client. However, in determining if a client is right for you consider the potential revenue compared to the investment you have to make to uphold your end of the relationship. For example, if I have to clients who are requesting services for the exact same events except one lives within 5 miles of my home and the other lives 45 miles from my home. The client that lives further away requires a greater time investment because I have to travel further for site visits, client appointments, etc. If I’m not able to increase my price to cover this investment it is (likely) in my best interest to refer them to someone who lives closer.

If you determine that a client isn’t right for you, don’t hesitate to refer them to someone else. It shows you are connected in your industry and have their best interest in mind. They will thank you for it and likely will still refer business to you.

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