I’ve been in business since 1987 and it took me many years to realise I was consistently making the same mistake. This mistake cost me time, money and much trauma. So, here’s my biggest mistake in business & how to avoid it.
It’s very simple really and goes like this. Not all customers / clients are equal and some customers / clients are simply not worth having.
When you start in business and when times are difficult there is a belief that any extra work is good, but is it? If a new piece of business comes your way the first question you should ask is “is it worth it?” Clients / customers who are only interested in a basic job for as cheap a price as possible or who want “freebies” are a big NO. The exception to that is where you are deliberately offering something for free Free Can Be Effective I can honestly say that when I have taken on work or done business with anyone that falls into the free or cheap categories I have lived to regret it. The ones who have come to me because they genuinely want what we do are the ones where we have both benefitted. You want customers / clients who want you because you do something that they find remarkable Why Being Remarkable Is Effective and are happy to pay a fair price for a fair job.
Here’s the problem, and we’ve all been there. Work is short or a contract is coming to an end and there is nothing else in sight. You have machines and employees idle and you know that in order to cover your overheads you need income. Along comes that piece of work to fill the gap. It’s at rubbish margins with a customer who is super demanding but doesn’t want to pay premium or even normal rates, but hey it’s work. The problem is if you do it well you will probably get more of it. If you rush it because it is not worth much it will go wrong and it is often the case that complaints come in inverse proportion to profit. In other words someone who wants something for nothing or just wants a “quick, cheap” job is the most likely one to complain, find a reason not to pay or resort to legal action when something goes wrong.
It’s really difficult to say no to business. It’s really difficult to “fire a customer” but if you want an effective business this is what you must do. Effective businesses choose their customers, not the other way round. Identify those with whom you want to do business and go after them. This may mean that you don’t “grow” as fast as you would like in the short run. It may lead to calculations that show you are unproductive or inefficient in the short term but, get it right and you will be effective and you will profit in the medium to long term. The problem is that you must do all of this before you get desperate. Desperate times lead to desperate solutions and that’s never good.
It took me a long time to work out my biggest business mistake and how to avoid it. Hopefully you will be quicker off the mark. All customers are not equal and some are not even worth having.
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