I remember when I was first starting out in business back in 2008. Thinking about it, maybe it was not a good time to start a business in the middle of a recession! But I had a bad habit and I can’t say for sure that was because of the economic climate. My bad habit was that I would take on clients, take on work, all work and any work that came my way.
Does that sound familiar?
Well, to have a profitable agency that’s fulfilling and enjoyable I’m inviting you to pull a Mayweather.
Let me explain. If you’re a boxing fan you’ll know Floyd Mayweather Jr has a record of 50-0 wins, 27 KOs and was the highest-paid athlete in the world for a couple of years on the trot. His extraordinary talents over the years started some chatter that maybe he would cherrypick fights that he knew he could win. Well, he did buy himself out of his promoter’s contact to become his own promoter and that means he could pick his own fights.
I’ll leave it up to the keyboard warriors on the internet to call him the number one cherrypicker of all time. There’s no doubt he’s a brilliant boxer but he followed the money creating his own destiny and arguably he’s a brilliant fighter and business owner.
When it comes to your business, you should be the number client cherrypicker of all time!
My last few blogs have been talking about retaining clients, sales process and growth but there’s been an underlying message about profitability. And I want to continue down that road for a little while as it’s my greatest desire that you crack the growth code to get clients and pave your path to permanent profits.
So let’s pull a Mayweather.
Let’s get a KO on your squeaky wheels
Yes, my last blog was a strategy for retaining clients. Of course, we want to keep the aligned clients and best buyers but you are going to have some weak clients. There are the clients who are squeaky wheels and need the most oil (a name has just popped into your head right now hasn’t it, you know who I’m talking about). They give your team a hard time, send an email at 4 pm on a Friday asking for something super urgent and no one likes to take their phone calls. Weak clients can be good people but they can also buy the same non-profit making services over again, every project or job is like pulling teeth, they bicker on price and don’t pay their invoices on time ever.
I had an agency-client once that was on a retainer (a big retainer which was a significant proportion of my total turnover, another topic for another day). I had it up to my eyeballs with hearing the team moan about this client and let’s say something happened and it was the straw that broke the camel’s back. I called the client while standing in the middle of the studio in front of the whole agency and fired that client. I fired them so hard. Sure the team were happy I made a stand for them but after hanging up I exploded and put it on the team to replace that client’s revenue one way or another. In the weeks that followed the client came back to me and said they realised they’d not get the same level of expertise, service or price anywhere else and so we level-set expectations which luckily led to a better client and stronger relationship. That time I was lucky.
It’s not my recommendation to take a blow torch to bridges. The older, wiser version of me says that there are better strategies to resign or retire a client without a dramatic show of force. I understand the hesitancy to fire a client and the concerns over refunds, replacing the lost revenue stream and your reputation if the bitter client leaves a bad review.
But you are losing money servicing clients who are not a good fit! They are not profitable and the projects that are going well are just funding the projects that aren’t going well. You are taking away time and energy from developing opportunities where there’s plenty of value to be added for clients you love and bring in profit.
You can finish the project and walk away, you can have an open and transparent conversation, you can hike up your prices dramatically to cover pain in the ass tax. One way or another you can resign a client with respect, calm and warmth. Take the time to do that so it doesn’t damage either of your businesses. I urge you to do it. The opportunity cost of continuing to serve a client who’s not a good fit is not worth the perceived loss in revenue.
Cherrypick Your Clients
In my blog on the seven mistakes I made in my agency business (trust me there were more than seven), I covered off servicing the squeakiest wheels and not niching down which I resisted like a toddler with her broccoli. The one thing I didn’t cover off, and it took me a while to figure this out, was to clone your best clients.
You want to be profitable and enjoy your business, which means working with your aligned clients and best buyers exclusively. There will be enquiries that land in your inbox and that imposter syndrome telling you to “take the work, you don’t know where the next client is coming from” leads you astray. Resist the urge. If you have a gut instinct that a client might not be the right fit, that they might be a total pain in the ass then I invite you to listen to that instinct.
When you serve clients who are aligned, they’re the right fit you can become super efficient in your business or agency. Everything becomes a lot easier. Don’t end up with more squeaky wheels that you have to inevitably resign.
As creative entrepreneurs, it’s so easy and tempting to want to try new things and provide new verticals to clients. I have an agency client who does everything from branding to website design to apps, to exhibition design and I’ve had a real hard time getting them to pick a lane or two to stay in.
As the variety of things you do expands, your profit will shrink. It takes time to figure out new services, to create new processes, all while carrying on with your existing services means you spread the team thin. Selling more things is often the most difficult way to make more profit. So before the shiny object syndrome takes hold, be selective about the services you sell.
I’m not saying that you won’t develop, expand or add new innovations in the future. That’s something to look forward to when your business is permanently profitable and you’re off that boom and bust rollercoaster. Sales without being selective and making sure services are profitable first is a risky little game.
Resign bad clients, cherrypick ones to work with, be selective about the services you sell and watch your profitability grow.
If you’d like to talk about growing your business or help to get over any obstacles and move forward faster, DM me on social media or email me firstname.lastname@example.org and let’s chat. I’d love to hear what big and exciting plans you have so I can support you with resources that I think will help.