Oftentimes, the keys to success are the opposite of what seems natural.
For instance, many people believe that if you want to earn more money, you should make more sales.
But what if I told you that some clients are actually WORSE for your business?
It’s true. And it’s something I’ve learned the hard way more than once in my business.
Mike Michalowicz, founder of 3 multi-million dollar businesses and author Profit First: A Simple System To Transform Any Business From A Cash-Eating Monster To A Money-Making Machine put it this way:
“All revenue is not the same. If you remove your worst, unprofitable clients and the now-unnecessary costs associated with them, you will see a jump in profitability and a reduction in stress, often within a few weeks. Equally important, you will have more time to pursue and clone your best clients.”
4 Nightmare Scenarios That Could Happen If You Take on the Wrong Client
I’m a positive guy. I like to look for the best in people, and I often assume that because I value doing business the right way… other people will too.
Unfortunately, that’s not always the case.
Nightmare Scenario #1: The “Not Paying” Client
In the course of my 7 year+ career running a marketing agency, this single “nightmare scenario” has cost me over $150,000 by itself.
Growing up in California, I’ve always leaned the way of doing business with a handshake. 2 parties come together for mutual benefit, with mutual trust and respect.
However, the more you charge and the more success you get, the higher the stakes. And that can make some people sacrifice their integrity in order to sustain or grow their bank account.
The lesson learned?
Use simple contracts that clearly lay out the expectations and responsibilities of each party. And always make sure you get paid in full before the project is fully completed and the deliverables are fulfilled on.
I’m a better entrepreneur for these experiences, and our processes have been tightened so that our team is protected from this type of nightmare client.
Nightmare Scenario #2: The “Scope Creeper”
Everyone likes to get the best possible bang for their buck. They want to feel like they got a deal.
But some clients take this to the extreme with “scope creep”.
That’s when you promise to do XYZ… but through the course of the project, the client keeps asking for more (without paying more)…
And you wind up doing XYZABCDEFG.
Suddenly, a project that was supposed to take 2 months and net you $5,000 turns into 4 months with $0 profit.
Meanwhile, your other clients and projects suffer, and you’re unable to focus on sales and marketing, so your business stops growing.
The key here is to set clearly defined project scopes and timelines, and if a client wants more… they have to pay for it.
Nightmare Scenario #3: The “Limbo” Project
A “limbo” project is where you take on a client and everything starts off on a good note…
They pay you, everything is organized and setup for success…
And then they disappear.
These projects are more annoying than harmful, because they can drag on forever…
They don’t cost you money in an obvious or tangible way. However, they turn into weekly “reminder emails” that take away a portion of your team’s attention and brainpower.
Frankly, I think there will always be some clients like this. The best you can do is try to get them excited to get their project completed as quickly as possible, and keep growing your business in the meantime.
Nightmare Scenario #4: The Sneaky “Customization” Project
Here’s something that not many people talk about…
It’s a sneaky little type of project that looks appealing at first, and then winds up costing you profit, time, and energy.
In fact, the single type of project can kill your business (or at least seriously stunt its growth) if you allow it.
This is the client that comes to you and likes what you do. They want you to do it for them, with a twist.
Maybe that means different tech systems and software, or a different marketing strategy or sales process.
Whatever it is, if it’s not your team’s core skillset, then they have to go learn something new. And that takes more time and energy away from them than would normally be budgeted for the project.
Also, if it’s the 1 and only time you build this type of custom project, then you lose efficiency because your team has to figure out a bunch of new stuff… and it’s only used once.
The lesson here is to clearly define the type of services you provide, and stick to them.
Your marketing and sales efforts will be more efficient and successful.
And your onboarding and fulfillment process will become a fine-tuned machine, delivering consistent results to each and every client.
At the end of the day, easily duplicatable products or services are the key to scaling your business and achieving your dreams.
Speaking of which, here are…
3 Dream Scenarios That WILL Happen When You Take on More of the Right Clients
Now that we covered the nasty nightmare stuff… let’s talk about the fun stuff.
The kind of scenarios that lead to you spending more time with your family, hanging at the beach, and doing the kinds of things you set out to enjoy when you started your business.
Dream Scenario #1: Sales Fly In Like Crazy
When you clearly understand your ideal customer and create scalable, repeatable offers for them…
Selling becomes easy!
It makes perfect sense when you think about it.
When you sell the same 1-3 packages over and over again, do you think you’d get better at the sales process?
Would you get better at qualifying customers and finding the right ones?
Would your messaging become clearer and more persuasive?
Remember, every time you allow a “nightmare situation” to happen, you’re slowing down your own progress to this dream scenario.
Dream Scenario #2: Your Clients Get Better Results
This piggybacks off what I just mentioned with the sales process.
If your team only had 1-3 different types of projects to build…
And they did them over and over again for the same type of client…
They would obviously get better (and faster) and what they do!
It’s a win-win, because your team cranks projects out faster, allowing you to get more sales faster…
And the client wins because they get a high quality product quicker than imagined.
Again, the lesson is to say “NO” to the wrong type of client (and project)…
So that you can say “YES” to more of the right ones.
Dream Scenario #3: You Build a Scalable, Sellable Business
The first 2 dream scenarios make doing business a LOT more fun.
And this one is icing on the cake, because you’ll not only be able to grow faster, be more profitable, and do a better job for your clients…
You’ll also build a business that’s easily sellable.
Investors and entrepreneurs want to buy businesses that have sustainable systems running like a finely-tuned machine…
And predictable monthly cash flow.
This is exactly what you’ll have when follow these lessons I learned the hard way…
And say NO to bad clients.
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