I am sure we have all heard that “Customer is always right” and “Never say NO to a customer”. Most commonly this thought process is acted upon by startups during the early stage when the company is hungry to sign up it first few customers. And, there is an obsession with getting more and more customers. But, often entrepreneurs, in their attempt to sign up every prospect, do more harm to their business than good. Many times the team morale also gets compromised. We have all made these mistakes and then had to get out of a business relationship with that customer in bad taste.
It’s tough to say NO to a business, specially for young entrepreneurs and businesses, but then its better than regretting, getting frustrated, losing money and feeling stuck. I have been into consulting business and have lost money / not received full payments in some cases, and now when I look back, I can clearly see that I was blind to the following signs that warned me against a bad client. I would like to share some of these very early signs with you below:
- Not knowing what they need: Such clients do not have document that scopes their requirement (or are shy to work on one) and are not clear of their objectives. They may have it in their mind, but are unable to put it on paper. This is common in branding projects, designing projects, web development, market research, strategy consulting etc. The requirements undergo changes at every stage and the project gets into a circle with no end. These clients tend to take you for granted and expect unending support and add on work and it hurts when the chips are down or when you start losing money on that client.
- Avoidance of agreement with clear terms. Agreement is a way to protect each other’s interests. Sometimes, not signing an agreement with clear terms is an easy escape when there is lack of clarity. As a consultant time is you inventory.
- No paying you your worth. It’s ok to work on project basis, but there needs to be an additional cost built in case there is more work required in addition to what is defined in the scope document. While it is absolutely fine to negotiate and include additional deliverables at no extra fee, but if the client avoids to discuss this and keeps it open ended, you can be rest assured, that in most cases the work will remain incomplete and your final payment will be at risk. Not only will you lose money, but also your relationship.
- Listen to your heart: I have always benefited whenever I have relied on my intuition and have lost money and relationships when I have ignored doing so. Also, if you have co-founders and / or close family member who is affected by your work / participates in your work, hear what they may be feeling. They may be wrong and be unnecessarily worried, but most times we have blind spots that others can see clearly. Consider them and choose to act mindfully.
- Research your client. Reputation travels fast. Start with basic Google Search on your client and find references to know how it is to work with the client. In most cases it is not difficult to get a sense of what your experience would be like with the potential client.
Saying a “NO” does not have to be necessarily by using the word “NO”. Customers usually don’t like to hear this word, and many times ego sets in, which may not be a comfortable situation to be in. As a startup or a consultant, you don’t want to be marked as “arrogant”.
There are multiple creative ways to say no and yet keep your future options open for a future relationship. Some of the ways could be to handle the situation in way that:
- You show empathy for the clients pain point (the reason why they need your service)
- Let them know that you value the opportunity they offer
- Show regret in your inability to take on their business
- Maintain a positive attitude and offer to help by referring other companies that could help the client.
My last suggestion is for you to remain confident and remain open-minded. If the client open to a candid feedback, share your concerns, may be they resolve the situation to bring comfort by bringing clarity and signing detailed agreements.
