I remember the first time it happened – we turned a customer down. And this one even had money, ready to pay us. We referred them to someone else. It wasn’t because we had all the money we needed, that’s for sure. At the point they came to us, we were maxed out on our capacity. True, we could have tapped contractors to help with the project, but our workload wasn’t the only issue. The project they proposed for us was neither within our core competency nor was it something we aspired to be. It just didn’t make sense. A few of my employees thought I was smoking something to leave money on the table, but my vision was longer term than just fast dollars (which may have made me a bad or foolish entrepreneur, but I stand by my decision!).
Saying no to a customer is good when:
- The work is not strategic nor within your capabilities. If you have been in business for a few years and you’ve never said no to a potential customer, you need to look at your strategy. Do you even have one? And if you do, are you weighing customer opportunities against them? Many entrepreneurs are in such a fury to get customers that they don’t realize that not all customers are created equal.
- The cost of serving the customer outweighs the price. Sometimes, customers can cost you money even when the projects or products appear profitable. Are they difficult to deal with? Do they cause turn-over within your company (which costs money and morale, especially in a small business)? Are you spending a lot more resources on them than you’re charging for? Unless you are keeping good records, you may never know who the most profitable (and unprofitable) customers are. How, then, do you know where to prune?
- You just don’t have the resources. If taking on a new customer would cause a decline in the quality of your product or service, think again. As a small business, we often only have our reputations to go and and can’t risk that. Rather than an outright no, try giving them a date by which you can deliver and let the negotiations go from there.
- They are asking for something for free without giving you anything. Even if it is a good reference or a referral, if you give too much away, you risk decreasing the value you or your products hold in your customers’ eyes. Sometimes as entrepreneurs have to give or discount in the beginning, but make sure you are getting in return.
Many women entrepreneurs especially seem to have a hard time saying no. But just like pruning a tree prompts better growth when done correctly, so trimming the customers your company services can also result in revenue growth.
