In my nearly ten years of small business ownership, perhaps one of the most advantageous lessons I’ve learned is that not every client is the right fit for my business. It doesn’t matter whether I’m going through a dry spell or thinking about my long-term cash flow, there are certain clients that I know I can’t afford to take on.
After all, if you’re a service-based business owner, the chances are that you are going to spend quite some time with them. Your clients end up having a big impact on your business culture, your work/life balance, your bottom line, and the direction you take.
That’s why it’s incredibly important that you pair yourself with the right kind of client. It takes time, but the payoff is significant. Here are five client types that I’ve chosen to avoid doing business with, or when I do I put mitigating measures in place to deal with their quirks!
The Client with No Clear Plan
As a consultant, 70-80% of the leads I get are from businesses who have no clear idea of their needs. Whether it’s a lack of a business plan, marketing plan, or whatever, they have a vague goal in mind but haven’t thought through what it’s going to take to get them there. So they panic, pick up the phone and try to find out what you can do for them. Often they want free advice “what will it take for me to do XYZ?”.
While there may be an opportunity there, I find that it’s best to be honest, let these clients know what you specialize in, how you’ve helped other companies in similar industries or challenges, and then move on. If they are serious, they’ll call you back, but don’t sweat it. This client doesn’t have any real business for you, yet.
The Client that Flinches During the Money Conversation
This client crosses everyone’s path and in some industries bartering is ok, but as a serious business owner, with a very clear sense of my value, and a stable of clients who see that value too, I don’t need a relationship with someone who questions that value from the get-go.
The Slow Paying Client
These are hard to spot until you’re locked into a contract or scope of work, but, oh boy, there are lots out there. Often it’s through no fault of the person that you’re working with directly. Sometimes good old bureaucracy, slow processes, or cash flow management practices on your client’s part can translate to problems for you. There are a few things you can do to mitigate this, like making your contract work for you by including options like a deposit, kill fees, late fees, and milestone payments.
Sometimes these won’t get you anywhere, and like I said, these late payers are hard to spot until it’s too late. In these cases, make sure you invoice often, that your terms are clear, monitor payment status diligently, find out the name of the person who cuts your checks, and chase. Here are some more direct, yet diplomatic ways for dealing with a slow-paying client.
The Client Who Knows Best
Clients have every right to get what they want, but if they hire you to guide them towards their goals and then constantly question your expertise and insist that you do it their way instead of yours, you’ll run into trouble. Not only does the relationship become tricky to manage, but you’ll actually find yourself trying to fit in with a way of doing things that is contrary to your proven framework for client success.
The Unresponsive Client
You know the one. This client doesn’t respond to emails, doesn’t review your work, and gets in the way of you doing your job and billing for it promptly. I once had a client who needed a piece of work yesterday; I delivered, but it sat in his inbox for six weeks, leaving me high and dry with an open project that I couldn’t invoice for. I’ve since learned my lesson, as soon as a client becomes unreasonably unresponsive I promptly bill for work done either at a milestone phase or as soon as I sense that the client has gone underground. An invoice is often more effective at capturing their attention than another reminder email.
The Bottom Line – How to Cut them Loose
Finding the right client is incredibly important to your well-being and bottom line. Your clients are often an extension of yourself or your team, so recognizing the signs of a dud client is one of the most important lessons you’ll learn. If you get stuck with a client that you just can’t afford to hold onto, you might want to cut them loose. A few ways to do this include:
- Raising your prices so that they are forced to look elsewhere
- Tell them that your bandwidth is constrained and that you need to cut back on services or time
- If you’re dealing with a non-paying client, tell them that you need to revisit the payment terms of your agreement. If they can’t commit to paying to an agreed schedule, you have your way out!