Trust your gut when it comes to new clients

Posted by Jeremy L. Knauff | June 3rd, 2009

Like many others facing challenging times, you may be looking for every opportunity to bring new revenue into your company, but before you find yourself into a situation you’ll later regret, you need to take a minute to carefully evaluate each and every new client. When times are good and business is free-flowing, you can afford to make a few mistakes here and there in choosing new clients, but when business is slow, even just one nightmare client can bring your company to a grinding halt.

It may seem counter-intuitive to turn down potential clients, especially when you need the revenue, but when you look at the long-term implications, it makes perfect sense. A nightmare client can monopolize your time, pay slow (or not at all), frustrate you and your staff and even tie your company up in time-consuming and costly legal battles, all of which make serving your good clients more difficult. This can have a serious impact on your company. The thing is, most of us have at least a gut-feeling long before any of these problems come to pass, but we (myself included) often give the potential client the benefit of the doubt.

Aside from trusting your gut, here are some things to look out for:

• Is the client in an unusual hurry to get a project started? This is often a sign of poor planning on their part and more often than not, it will get worse as time goes on. Things may start off rosy and friendly, but before long they are failing to communicate with you on a timely basis and then blaming you for the delays, making more and more last minute changes and demanding special treatment.
• They ask for special deals right off the bat, claiming they’ll make it up to you on subsequent projects. A spin-off of this approach is when they ask for special deals claiming they will send you tons of referrals. Think about this; people tend to associate with others like themselves and if they can’t afford your products/services, their associates probably can’t either. Do you want those type of referrals?  Save the special deals for your valued clients who have brought your company consistent revenue.
• The client complains that all the vendors/suppliers/contractors/etc. they’ve worked with are incompetent, overpriced and can’t meet deadlines. The chances of this being true are pretty slim, instead, look at the one common denominator; the client.
• The client says their last vendors/suppliers/contractors/etc. won’t return their calls any longer. There is probably a great reason for this.
• The client is flaky. For example, they miss scheduled calls or meetings, agree to project terms but then forget or try to change them at the last minute, fail to provide necessary project information and/or files. If you see this, it’s a sure sign of things to come and you can bet that it’s only going to get worse.
• The client outright lies. Did they contact you claiming to be the sole decision maker, only later to admit that they are just one member of a commitee responsible for making a decision? Did they ask for a detailed proposal based outlining every action, step by step, based on a $250,000 budget, and then tell you that their budget is really just $2,500? If they will lie to you at this stage, the lies will increase and get worse.

You may be tempted by the additional revenue, especially if the figures are quite large, but before you make a decision, look for the signs and trust your gut. You’ll be far better off in the long run.

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2. Beware of the red flags - When your phone rings and you get that potential client on the other end who seems to have gone through...
3. What are you doing to reach your “dream clients”? - Every business owner has a list of some prospects that they would love to have as clients. Maybe it’s because...

1 Comment »

One Response to “Trust your gut when it comes to new clients”

1. claudio alegre
   June 3rd, 2009 at 11:46 am

   Such a good point Jeremy!

   Btw also largely ignored by both small and big business that find themselves in precarious situations and have no choice but resort to making desperate choices, like not doing some serious backgrounding on who you are about to do business with.

   Good piece!

   [Reply]

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