How to Recognize Clients that Might Not Be Right for Your Business

| July 3, 2015

How to Recognize Clients that Might Not Be Right for Your Business

If you’re in the service industry, it is more likely than not that you would have had the line “the customer is always right” emblazoned into your bones.

More and more business owners, however, are finding the grit and the tenacity to say no to their potential profitable clients.

For small business owners, saying no to a client might seem like a huge risk to take. However, sometimes, it is actually the best thing you can do for your business.

Why should you refuse a client?

For a small business owner, even losing a potential paying customer can mean taking a significant loss in profit. With so much at stake, most entrepreneurs simply agree to offer their service. Here are a few reasons why you might wish to reconsider:

  • Don’t take on a project that is beyond your capabilities. If a client comes to you with something that your business isn’t equipped to handle, let them know from the outset. Unless you’re looking to expand your business to able to meet such demands, don’t stretch yourself and your resources to accommodate them.
  • You’re offering a professional service to your clients and more often than not, you’re the authority on the matter, not your client. If they have their own ideas on how the service needs to be conducted and are reluctant to take any of your advice, it is best to walk away before you need to assume liability for a faulty end product.
  • If it isn’t a financially sound decision to serve the client, don’t. If they live somewhere remote and for you to offer them your products or service, you might need to incur considerable expense, don’t take on the project.
  • If the client company’s ethics and culture conflicts with your own, don’t attempt to compromise on your values. It will ultimately prove to be an unprofitable investment in the long run.
  • In the even that you are forced to say no to the client, you can easily recommend someone else, maybe a colleague or a business connection.  This way you do your connection a favor, avoid alienating the client, and don’t harm your business in the process.

Some less obvious reasons to say “No”

Sometimes, it isn’t that your company is in conflict with the client or you have a sound reason to decline their proposal. Sometimes, it all comes down to being cautious.

  • You see hints that there might be some problems with the client’s finances that could lead to missed payments. As a small business owner you can’t afford to have outstanding account receivables for too long.
  • If you spot any safety or security concerns about the client, stay clear of them. Even if it is your instinct that’s forewarning you.
  • Avoid clients with a history of unhappy business relationships or a tendency for taking people to court or filing law suits

Often, by saying no to your clients, you actually save yourself a lot of hassle down the line.