By Claire West

There is nothing like the buzz of winning new business, particularly given the current economic climate. It may sound controversial, but business gurus, Julia Payne and David Bowler, at Incisive Edge warn SME owners to be more selective now about the clients they choose to take on, and that they shouldn’t be afraid to say ‘no’ to potential new business.

Payne and Bowler advise: “There are times in a business’ growth when it becomes necessary and beneficial to turn down a potential new client.

“SME owners and managers need to appreciate the types of clients that will help to develop their company, and those which will hold it back. But — more often than not — they adapt to their client’s needs (no matter how difficult or uncompromising they may be).

“Businesses today need to look at how clients can help to bolster their reputation as being a specialist in a certain field, as opposed to simply creating more work for them, that has no end result or gain for the company.”

Payne and Bowler believe that it is vital for SMEs to select the custom they really want, and which will support the overall business strategy and growth plans. Failure to do so will result in losing sight and falling into obscurity.

They add: “Next time a new business opportunity comes your way, think twice. Whilst having a client, any client, may seem appealing, do you really want to get into managing a ‘long tail’ of high maintenance, low margin clients? Owners and managers need to think about driving revenue and potential shareholder revenue.”

Incisive Edge’s top tips on when and how to turn down new business:

1. Consider firstly whether this client is actually within your target market — are they within your ‘niche’?

2. Consider whether they are willing to pay your market rate — discounting is a downward spiral and clients tend not to place such a high value on your work if you’re prepared to discount at the first opportunity

3. Are they adding to or detracting from your margins? Remember to factor in the human cost element of your team servicing them

4. What is the lifetime value of your customer? Are they just going to buy once, or are they going to buy more frequently?

5. Think about whether you can you sell them other products or services?

6. Will they be a good source of referrals and/or testimonials?

7. Are they going to be high or low maintenance?

8. Do you actually want to work with them?

If you decide a client is not right for you:

1. Explain the reasons why you think you are not right for them.

2. Try and provide added value; refer them to a source that may be able to help them now.

3. If they could be a future client — the timing’s just not right now — ask whether you can add them to your mailing list, or keep in contact with them

Incisive Edge is a business consultancy which specialises in helping companies to make more money. It has a unique systems-based approach to consultancy by driving revenue and shareholder value.