Why Saying No to Clients Could Mean Saying Yes to Your Business

When you are starting out as an entrepreneur, be it as a coach or a writer, a web designer or a retailer, all you want is to land that important first client, to make your very first sale. But as time progresses, you might find those first clients becoming more of a burden than an asset. It may be time for a breakup.

If you haven’t been in the business for a long time, saying goodbye to long-term clients might seem counterintuitive, maybe even unfair. But for most self-employed people, there will come a time when the cost of doing business with someone is actually higher than the rewards you gain from it.

Fewer customers, higher revenue.

The Pareto principle, also known as the 80/20-rule, is often used to explain this. It states that approximately 80 percent of the effects come from 20 percent of the causes. Or 80 percent of your sales come from 20 percent of your customers.

Someone who speaks highly of the Pareto principle is Tim Ferriss; author, and entrepreneur. He advocates upping your prices to get rid of time-consuming cheapskates.

“If you shift to a higher price and sell half as many units, you may still make more money, but I would emphasize that all things being equal – I would rather have fewer customers making me the same amount of money. It means less headache, less customer service, and fewer returns,” says Tim Ferriss.

Why saying no will benefit you.

Less headache also means more time. By letting low-value clients go, you will free up valuable time. This can be used either to secure higher paying clients or on serving and re-selling to the 20 percent of your customers who are bringing in 80 percent of your revenue.

Dropping the dead weight clients can also help build your professional self-esteem. We often tend to identify with the people we are surrounding ourselves with. It was the late Jim Rohn who used to say, “You are the average of the five people you spend the most time with.”

So take a look at the five people you spend most of your time within a vocational capacity. Are they ambitious and professional? Or are they small-minded money pinchers? And are you happy to be a product of those five people?

The four soul-suckers.

If asked to pick one client to say goodbye to, most of us would know instantly who that would be. It would be the one laying claim to most of your working hours (and private time too, if you let them) while paying only for a couple of hours. It would be the one sucking your will to live as if they were trying to feed on your creativity. It would be the one who makes your heart sink when you see their name in the inbox or on the phone display.

But in case you have no idea who your soul-sucking client, here are four soul-sucking clients to kick to the curb:

Ms. Revisionista.

Ms. Revisionista is always editing, tinkering, and changing. Just when you think she has finally agreed on the finished product, she calls you up to let you know that she has changed her mind and would like the first edition but with the third version ‘feel.’ Meanwhile, you can feel your hair turning gray as your clenched jaw is bringing on a monster headache.

Solution: Inform her that your rates include only 1 revision and any further revisions are to be paid on an hourly basis as well as agreed upon in advance.

Mr. Cheapskate.

Mr. Cheapskate is always looking for a bargain, trying to pay as little as possible for as much as possible. If you started out in places such as Fiverr or Freelancer, you might find yourself stuck with clients who are more preoccupied with paying cents than earning dollars. Mr. Cheapskate will make you spend more time negotiating the fees, both before and after, than you do on the actual project.

Solution: Hike up your rates and watch him magically disappear like morning fog on a hot day.

Ms. Technical Inept.

Ms. Technical Inept seems incapable of learning the most rudimentary of technical skills. She’s the one who will call you up all flustered to ask you how she opens an e-mail attachment, despite you having told her three times before. That is if she even realizes that there was an attachment. Most likely she has already been on the phone, huffing, and puffing, wanting to know where the so-and-so is, which you then explained was in the attachment.

Solution: Let her know that you will have to start charging her for any technical help not directly related to your services.

Mr. You-Should-Be-So-Lucky.

Mr. You-Should-Be-So-Lucky comes with a grandiose sense of himself and his project, and he makes sure to let you know that you should count yourself lucky to be getting his business. He will grab hold of any opportunity to make you feel small, and he seems to think that paying you for your professional services makes you more or less his servant.

Solution: No, you should be so lucky, pal. Goodbye!

Does any of these sound familiar? If so, then it might be time for a Dear John letter.

Have you ever had to turn down clients? What tips do you have for saying no?

Sesselja Bigseth is full-time trade journalist working from home, nurturing a serious coffee addiction.