It may be for the best. Unless you’re a really good fit, it’s probably wise to part ways—right now. Sound crazy? Read on.
Opportunity cost is defined as the loss of potential gain from other alternatives when a single option is chosen. Applied to your customers, it means you will often have to choose between clients due to your limited resources.
“Opportunity cost is defined as the loss of potential gain from other alternatives when a single option is chosen.
This might raise an alarm when you think, “Hey, as a business owner, I want to cater to any and all customers. Why should I eliminate potential paying clients?” Want and can are two different stories in the business world, and you’ll soon realize that not only is it impossible to cater to all customers, it’s not even something you’ll want, on down the line.
You only need to know one thing when faced with the situation of “ditching” a potential client. Your most important customers are not the ones who generate the most revenue, but the ones who can provide the greatest value for your business. Depending upon the nature of your enterprise, this could be the end-user—or even intermediaries, such as agents or brokers. The customers who generate the greatest value are the most deserving of your resources.
“Your most important customers are not the ones who generate the most revenue, but the ones who can provide the greatest value for your business.
This is especially important if your business is a project-based startup that has you working with your customer closely for extended periods of time: weeks, months, or even years. Your resources are, inevitably, limited, and if your business requires you to be able to handle only a limited number of projects, you will have to concentrate on the more profitable ones—now and in the long run. You will also have to pass on certain projects due to their size, timing, etc.
Why else would you turn away customers? Simple: if you feel like the customer is not a good fit for your business and will likely create more friction than revenue, find a way to “offload” them. If you take on a customer who doesn’t fit your personality or work style, this will cause you to put in a less-than-stellar effort—and will, in the long run, affect your reputation in the market. It will also detract from the kinds of customers and clients you have more in common with. These clients, by the way, are the people who will spend more money with you over the long term, and they will form the core of your business relationships—not the customers you take on because you “need the money.”
How do you turn away customers while maintaining a positive relationship with them? You can either postpone their project starting date, or be truthful and honest with them by stating that the resources are just not available at the moment. You could even go so far as referring them to someone else. The customer will appreciate your honesty, and might take any of the above options all whilst maintaining positive idea about you and your business.
