Thanks, But No Thanks. Under What Circumstances Should You Turn Down Business?

I’ve just turned down the biggest contract of the year so far for my business.

The client wanted to give us the work and we were excited at pitching for it. However despite travelling up and down the country several times whilst negotiating the deal and having beaten off the competition, I decided to walk away at the eleventh hour before pen was put to paper.

Why would I do this in the current economic climate? Surely I must be one wave short of a shipwreck?

You may think so; however being in business for nigh on 8 years now has taught me many things, one of which is knowing when to turn down business.

So what are the triggers that give any business owner like me, the confidence to say “thanks, but no thanks” to a potential contract?

1. Too Little Time. If your workload is choc-a-block, then don’t try and cram in any more just because it arrives on your plate. If you do, you’ll end up letting the client down which can lead to conflict, unpaid invoices and in extreme circumstances; litigation. If you can successfully sub-contract the work out, then fair enough – go for it; or if you can schedule the job in for a later time when your workload is less, all the better. Otherwise leave it alone!
2. Insufficient Budget. If the client beats you down on price, but still demands the same level of service as your premium clients, then it’s a sign of trouble ahead. In circumstances like this you’ll either end up making a loss on the project and deliver sub-standard work into the bargain, or the client will run out money midway through the contract. In several instances like this I’ve seen clients go out of business partway through the delivery of a project leaving the service provider in limbo and out of pocket. If you must discount heavily to obtain the work, make sure the client understands that the services or product you offer will be similarly downsized to compensate for the ‘improved value’ of the deal.
3. Limited Skills. We’ve all picked up business from our competitors because they have over-promised and under-delivered. Don’t become one of them. When scoping out a project, be thorough with your client and make sure you’re in a position to deliver what is required of the project and to the client’s expectations. If you feel you can’t, be honest with your client and politely decline their business. They’ll respect you for it and you’ll both walk away with your dignity. I myself have even picked a referral from a declined client as he appreciated my honesty. In other words, my credibility was still buoyant with the customer even though I had declined his business.
4. Ethics. We all have ethics to some degree or other (unless you're a member of the cabinet of course). Refusing to work with some types of client in the “adult” industry is fairly common, but to what level do you practice what you preach with other sectors? For instance it may be okay to work with a UK distributor, but if you know they are practicing unethical manufacturing strategies abroad; do you turn a blind-eye? Similarly do you work with two companies that compete directly with each other to such an extent that a possible conflict of interest arises. For example, my business offers Search Engine Marketing services and we have made a conscious decision not to take on client-websites that are competing against each other in the same region. It’s just not workable.
5. Personalities. People buy from people. The reason why you bought your BMW X5 (or whatever) from one salesperson rather than another is generally down to “personality compatibility” with the winning salesperson rather than differences in the car or its cost. It’s the same with any client-provider relationship. If you plan to work with a particular client over several months, it’s critical that you both like each other. If you don’t or you get a negative vibe during the negotiations stage, then….well, you know the rest.
6. Financial Stability. In today’s economic climate it’s vitally important that you do your financial homework before you get stuck in! Use online credit checking agencies such as Equifax, Checksure or Experian to make sure your potential new client, has the ability to pay your bills. If necessary take up credit references and if they are well known, ask around to see how promptly they pay their other suppliers. Such homework can save you grief later on and will help you avoid the “project millionaires” (people who want everything that’s on offer but don’t actually have the money to pay for it or end up paying your invoices on 120 days or more.) Many banks now offer small business credit checking and management facilities so it’s worth investigating.
7. Process Deviants. Many businesses operate customer relationship management processes. That is to say they have a tried and tested process within their business that is designed to effectively manage their customers and how they deliver services to those customers. If you find that your new client doesn’t want to stick to your tried and tested processes, then alarm bells should start to ring in your head as such aspects are indicative of a difficult project ahead. Get to recognise the signs and get ready to pull-back or walk away if you have to.