When starting a new business and in running an established business, every opportunity can seem to be the difference between success and failure and every new client is viewed as a step closer to the ultimate goal of profit and self-fulfilment. The truth is nothing is ever completely black or white and nowhere is this more obvious than in business.
Knowing how to recognise a bad opportunity or when to turn down a good one is as important as any other aspect of your business. Choosing to take on an opportunity, which may not be right for your business can severely limit your future and foster unhappiness among staff, while making these calls correctly will help you to better define your brand and strengthen your business. Here’s how to recognise it’s time to say “no” to an opportunity.
Anyone who has ever started a business knows the feeling a new enquiry can generate. The excitement that things seem to be working, may make the new entrepreneur set aside their concerns and leap at any opportunity. The sad news is that this excitement to help anyone who asks could be diluting the brand, lowering the quality of output and even damaging the business’s ability to grow. Here are the signs it may be time to say no to an opportunity.
When you don’t have the capacity
Your hours are stretched as it is, but now a potential new client has come calling and you are determined to make it work. In the early days clients are a lifeline to a business, but there will come a point where taking on new responsibilities could see you dropping the ball when it comes to your other clients. With each new arrival, it is therefore important to carefully analyse your resources, and options and determine whether you can truly do justice to their needs, and those of your other clients, with the capacity you have. If you can’t, and you try, then you will only end up damaging your reputation for good work and harming your business in the long run.
When you don’t have the skills
Knowing what you can’t do is as important as knowing what you can do. Don’t assume you will learn as you go. Taking on work under your brand banner that you are incapable of delivering will be a death knell to your business.
When the long-term cost outweighs the short-term benefit
A new client has come in with a promise to pay you more money than you have ever seen for the next three months, but they need you to drop your other clients to do it. This is a perfect example of short-term gain being outweighed by long term benefit. Sure, these next three months will be good, but those clients you currently have won’t come back and worse, will tell others that you dropped them. Six months down the line, the new client’s money will be gone along with your original clients.
It’s not making financial sense – saying no to “barnacles”
Traditionally, it is thought that loyal customers are the heartbeat of a business, but increasingly studies are finding that businesses need to ask their accountants to regularly evaluate the value versus effort that these loyal clients are bringing to the business. Harvard business review suggests that some “loyal customers” may in fact be using more of your resources for less of your profit, preventing you from servicing other potentially more lucrative clients. These customers who use up your resources, perhaps through continued complaints, returns for changes, or negotiations for better prices, are referred to as “barnacles” and like barnacles on a ship they can slow down your business growth. Sometimes it might be better to have a frank discussion with these customers to see whether your business still fits their needs rather than simply saying yes to everything they ask, because they have been loyal.