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Boni and John Wagner-StaffordHave you ever had that feeling, when talking with a potential client, that they’re going to be trouble? And then you do business anyway?

There are many stages for the business owner between the crazy, adrenaline- and hope-fuelled startup and business maturity. But none is as powerful as the shift between accepting any and all business and attracting – and keeping – the right business.

“A good business relationship is like any relationship. It has to be a two-way street and mutually beneficial,” says Ilan Cooley, president at Loud Mouth Communications. Thirteen years ago, Cooley started Loud Mouth, which specializes in public relations, sponsorship and event management for lifestyle and entertainment clients. “If the relationship is not working, either party should be able to end it as long as they are following the terms of the contract to do so.”

Cooley knows well that as a business owner you get to pick who hires you. Here are four key ways to reduce the risk that you end up at odds with a client:

  • Know your business goals, objectives, model and values, and select clients who are a match.
  • Develop a solid service or sales contract that includes payment terms, copyright and intellectual property rights, and a termination clause. It should also support how you work and how you expect to be treated by clients.
  • Set rates that adequately reflect the quality of your products or services. The temptation to low-ball the competition can backfire and bring problematic clients out of the woodwork.
  • Ensure you have scope documents that go into sufficient detail around project parameters, milestones, and level of contribution required from you and the client. Some small business service providers find that merging the contract with the proposal and scope documents helps eliminate confusion.

But no matter how careful you are with the steps above, it’s not a guarantee. Sometimes things just don’t work out and you have to end the relationship.

“I do sometimes have to fire a bad customer,” admits Ellen Varner, global trademark strategist and owner of E-Trademark Universe, which has provided trademark services in more than 80 countries, including Canada, since 1998. “When they want more than I can provide, which means simply that they are increasing my costs through inefficient use of my time.”

If you’re not sure if you’re just having a bad day or your client may indeed be a problem, remember that numbers don’t often lie. You’ll develop a better understanding of how each customer relationship impacts your profitability when:

  • Your accounting system attributes both revenue and costs to each customer.
  • You are able to assign cost of goods sold and acquisition costs, including direct marketing to each customer and customer group.
  • You can track the time you – and your staff, if applicable – spend serving and retaining each customer.
  • You can compare the revenue/cost ratio for each customer.

Often the numbers will support what you already knew in your gut. Still, it can be difficult to think about turning revenue away, especially in the early days of a business when it’s important to pick up momentum as quickly as possible.

“I decided to pick clients and projects based on wanting to deliver results and I didn’t think I could do that if I was taking jobs just for the money.” says Cooley. “For me, the stress of having to work in a negative environment is not worth dealing with so I choose only projects that I feel good about.”

Taking all possible measures to attract the right clients, and paying attention to your internal responses when first negotiating with new ones, will help keep you in business relationship heaven.

Until they don’t.

Breaking up with bad clients may be tough but by doing so, you’ll clear away the clutter and the negative energy that lies in the path of your success. The sooner you can make that shift, the better off you and your business will be.

Between them, Boni and John Wagner-Stafford have five decades of experience as entrepreneurs and/or providing consulting services to other small businesses across Canada. Boni and Joni are the authors of Rock Your Business: 26 Essential Lessons to Plan, Run, and Grow Your New Business From the Ground Up.

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