How to Solve the “Too Many Clients – Not Enough Money” Challenge

Pareto’s principle states that 80% of your business comes from 20% of your clients. The other 80% of your clients are probably costing you money…it doesn’t matter what business you’re in. All business owners can normally reel off names of clients who consistently complain about how long you take, how much you charge, want to return goods because they ordered the wrong ‘widget’, then take months to pay. Sound familiar?

Many South Florida business owners tell us, “it’s hard to get good clients.” It’s not hard, it’s just that nobody ever taught you how to attract the right type. After all, how many hours do YOU spend a year learning about technical or product issues? Now how many hours do you spend learning about better selling and marketing? If it’s not about half/half, you’ll probably find your potential for success limited by your ‘personal exertion’ and that your ‘creativity’ is copying ideas your competitors come up with.

Here’s how you can progress down the path to attracting better clients…

Define Your Clients …

The definition of your clients involves working out what makes a client profitable and at what point they become a cost to your business. Many businesses put up with clients that consistently pay late, change their minds or appointments, expect miracles in terms of timing, insist and haggle over discounts, and are just downright stressful to work with. It should be a privilege to do business with you, not a right. Clients that are not profitable should be ‘fired’ or at least discouraged from using your service or buying your product. The first step to doing this is to define at what point a client stops being profitable.

Firstly, your clients can be classed from A to D, with A’s and B’s being profitable and C’s & D’s being a cost. Start by looking at your most profitable and ideal clients, what do they do, what characteristics do they have? Then look at your worst clients and list their typical traits. As a rule of thumb, you should end up with about 20% of your client base being ‘A’ grade, about 30% being ‘B’, 30% being ‘C’ and 20% being ‘D’ grade.

Once your clients have been defined into four classes, the As & Bs should receive a letter of appreciation telling them they are your best clients and encouraging their custom. It will make all the difference. The Cs & Ds should be sent a letter explaining the situation, and encouraging them to become A and B clients by making it clear what you expect from them in return for your products or services. If there is no change from a C or D client after a couple more contacts, you should cease doing business with them; refer them to your competition! They are costing you money!

Your first step is to develop a 90 Day Business Plan, and defining your clients is an integral part of this plan.

To learn more about how to develop a 90 Day Business Plan and how South Florida Business Coaching will work for you, contact John Layzell at [email protected] or 305-899-9963.

John Layzell
South Florida Business Coaching

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