One of the most common mistakes business owners make is to accept money from anyone who is willing to pay for their product or service — even if the customer is not an ideal fit for their business. Whether you're a startup or a large corporation, taking on a new customer who doesn't match your ideal customer profile can be a big mistake. Here are seven situations that indicate when you should say no to new business. If you don't heed this advice, you will be in serious danger of having a database of customers that can take your business into bankruptcy.
1. Your gut instinct says "no."
Your intuition is a powerful weapon that is always worth considering . . . even if it isn't always logical. You should never ignore a nagging feeling that something isn't right. When you hear that little voice inside telling you to turn away new business, you should listen to it or you could regret your decision later.
There may not be a logical explanation for why you don't trust the situation. Just remember that if you get that inner message, don't let your financial greed overrule your first impression. Try to figure out what your instinct is telling you. Do further investigation, ask more questions, or just mull things over. Whether you're a business owner, a sales professional or a corporate executive, your gut instinct is the best resource you have. Listen to it at all times.
2. The customer does not appreciate the value of what you offer.
While some people make decisions based upon price, the most profitable business for your company will be from customers who appreciate the value of what you offer. Value includes your expertise, credibility, service, knowledge, reliability and guarantee. Anyone who selects your company based on price alone views you as a commodity, not a valued service provider. A customer who is more concerned with price than value will switch very readily to any competitor who undercuts your price. The likelihood of repeat business from a customer who doesn't appreciate the value of your products or services is not good.
3. The customer expects you to invest time and resources into pursuing their business without any financial commitment on their end.
Anyone who is just shopping around looking for free advice is not going to be a good customer. You should determine how much time and energy you are willing to give away for free before you ask the prospect to make a commitment. Giving away products or services for free before the prospect makes any financial commitment diminishes the value of your company. It also raises the level of what they expect beyond what you would normally deliver.
4. The customer does not treat you in a courteous or professional manner.
Profitable business is based on strong relationships between you and your customers. This doesn't mean every customer has to be your best friend, but in essence your best customers will be those who respect and value your professionalism. Anybody who constantly questions your recommendations, nit-picks at your pricing, or questions your credibility or judgment is not interested in developing a long-term relationship with your business. There is no opportunity for trust here. Your business is being viewed as a commodity and the customer is clearly showing he does not value your business.
5. The customer asks for products or services you don't provide.
There are times when someone will approach your business for products and services that you don't provide. They value your relationship and ask you if you would be willing to venture out into new opportunities. If this new opportunity is a stretch on your capital resources or your existing operational structure, or it is not congruent with the mission of your company, it is best to decline the business. Before you instantly accept a new challenge and opportunity, make sure it will not stretch your resources and develop into more headaches than successes for your company.
6. The customer's requests are too large for your operation.
If a customer approaches you to provide something that stretches your company beyond its current capabilities, consider the cost to expand your operations versus the profit potential. Take into account any new capital expenditures, additional employees, training expenses, material costs, and the cost of other business lost while you are meeting the needs of this new customer. Controlled growth for your company is more manageable and typically more profitable than a large increase in business within a short time frame if you are not currently set up to manage that quick growth.
7. The customer does not share your values.
The right customer for you is someone who shares your values. It will be very apparent by the manner in which the customer treats you if you share common values. Don't lose sight of your company's mission and values even if it means turning down potential business. When you compromise your values to pick up new business, it will not result in profitable business for your company in the long-run.
