How to avoid problem clients and customers

Have you ever wished that when you started your business you had known then what you know now? I certainly have, but sometimes we have to learn the hard way. However, if you are starting your business now or very shortly, and you are reading this then you have an advantage that I did not have when I started.

This week I went to see a new prospect. I knew that there might be something I would not like, but it is better so see for oneself rather than turn down what might have been a good opportunity. The prospect business-person told me over the telephone that he was afraid his accountant wasn’t claiming everything he should. In general this is unlikely, especially with a smaller business. After all, once you have prepared a proper set of accounts you know more or less what you should be claiming.

I have learned from experience that a gripe over a financial issue such as that, and especially when coupled with the next comment, “a friend told me I should be claiming for this and for that”, indicates a likely problem client. Firstly, they are no more likely to trust you than their previous adviser (and trust is important) and secondly they are going to be very fee-resistant and will not appreciate the excellent service you will deliver.

I looked at the “records”, a plastic tub of receipts, concluded that the unfortunate but adequate accountant had already been driven too low in the fees he charged, and decided not to offer to relieve him of his agony. It was an easy decision, based both on instinct and on logic. Neither of these qualities was as fine-tuned when I started out in business and when I was anxious to gain every new client I could. Now I knew I should walk away.

As it happens, I have a job which I grabbed in the very early days of my business and with twenty-twenty hindsight wish I had turned down. Far from responding to my advice on record keeping and on paying the right people at the right price for the things the client is not good at himself, he just seems to be getting worse. He is making it harder for me, and pushing up my fees which would not have happened if he had invested suitably in qualified help on the administration side. Given that he does not like spending money buying in help, he takes the same attitude with me too. Frankly we are getting to the point where it is not worth the headache for my firm to carry on.

Unless the client has a road-to-Damascus style revelation as to the error of his business ways I am afraid we will part company, and I am sorry also that I introduced a friend to help him who is getting the same resistance in terms of fees and attitude.

I now know that when we meet a prospect we have to ascertain that the person will pay a proper price for our offering, that they will accept our advice and act on it, and that they will not cause us to worry. Bad clients can endanger our business well-being and our health, and even if they pay whatever we ask for our service, sometimes it is just not worth it.

Trust your instinct with clients and with prospects. Actively think about how you feel about them, and if you are not comfortable, walk away. There are plenty of nice likeable people to have as clients, and they will trust and appreciate you more.

© Jon Stow 2010