Turning Down a Client - for Service Based Businesses

In the world of small business, it can seem almost criminal to send away a potential customer.  And it can be all too tempting to accept work, any work, based on your financial needs rather than the work itself.  But there are times when it's better for everyone when you don't.

5 Reasons to Turn Clients Away

1. Different Financial Needs

Setting prices is a daunting task in its own right, but how to handle customers that complain or haggle?  It depends.  If your price structure is flexible or you can cut costs in exchange for limiting services, you might be able to make it work.  But in a lot of these cases, attempting to work for an amount that won't adequately cover your time and expenses will only foster resentment, which isn't a healthy working environment.

2. They Require Services Outside Your Skill Set

I am all for learning on the job!  But it's important to know your limits.  I've divided these into 3 categories, each of which I approach a little differently:
  • Overlapping Services: Overlapping services are the ones you've already touched on lightly, but don't have extensive knowledge of.  Generally it's not a huge stretch to pick these up on the go and any additional time spent outside of your cost compensation is at least spent acquiring valuable knowledge.
  • Bordering Services: These services are just outside what you offer, and usually strongly related.  Without being able to guarantee the end product, it's probably best to have a frank discussion with your client about different potential outcomes and risks (if any), and maybe even offer it at a discounted rate to cover your learning curve.  This is often a gamble, but frequently a profitable one.
  • Distantly Related Services: On the (hopefully rare) occasion that you do find that a bordering service is actually too far out of reach to pick up easily, it's best to stop offering it, rather than providing a subpar service.  You might decide to pick up the knowledge more formally, with a class, or you might decide it's not advantageous enough to your business to spend the time on it.

3. Incompatible Personalities

A great deal of customer service is focused on making (and keeping) clients happy.  But even if you subscribe to a "the customer is always right" philosophy, personalities don't always mesh.  In the case of a large company or corporation, customer/employee disputes can be handled by shifting the discussion to a different employee or manager.  But in a small company or sole proprietorship, you don't have that luxury.  If a customer constantly has your teeth on edge, or you notice that your efforts never seem to make them happy, it might simply be best for them to seek out a personality that meshes with their own.

4. Payment Issues

Some customers will take longer to pay than others and, often, the bigger companies with payment departments are among those who take the longest.  While it's often difficult, especially for the confrontation-avoiders among us, it's important to follow up and, at a certain point, cease tendering service until payment has been made.

5. Business Model Changes

Oftentimes a jump to bigger clients is a great sign for your business.  As your competence increases, your client base expands, and you're able to charge more for your services.  Unfortunately, this also means that your initial clients aren't necessarily able to keep up, especially if you began as a solopreneur, or started up in your own home.  While it may be hard to part ways with those clients who helped you get to where you are now, it's also necessary if your business is going to continue to grow and they can't afford, or don't need, the full cost and range of the services you now offer.

Obviously, in all of these scenarios, you want to let your clients go as gently as possible.  No sense burning bridges!  My approach is typically something like:
  1. "I regret that I'm not able to be flexible with my prices, but they're set based on my time and skill level and to accept less I'd have to be willing to reduce quality, which is not something I can do."
  2. "I no longer offer that service but I know someone who does..." (a referral is always better than just turning someone away)
  3. I've been really lucky here and haven't had to break with a client over personality issues, but my suggestion would be, "Things have gotten really hectic lately and I'm worried that I [haven't been/won't be] able to perform to your or my satisfaction.  Let me refer you to..."
  4. "I'd be happy to work on this project - I'm just waiting on payment for [last project]."
  5. "Just so you know, my prices have gone up a bit..."

In all of these cases, it's important to weigh the value of these customers against the time spent managing their projects.  And, whenever possible, keep the focus on revenue-generating activities!

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