As a service based business – particularly a professional services business like law, marketing, communications, accounting, event planning, copywriting, and so on – it’s easy to fall into the trap that all business is good business. This is especially true if you are a new business owner.

Let me give you a scenario:

You just opened your new business-to-business company and you get a request from a prospective client. They agree to meet for a consultation, you send them a quote, and (HOORAY!) they decide to hire you.

Maybe you see a couple red flags. Maybe something just feels “off” about the situation. However, you’re a new venture and it’s hard to turn down any source of incoming revenue when you only have a couple of clients on the books. So, you take any prospective client that comes your way. You sign the deal.

Fast forward a month (or a week – I’ve seen it happen that quickly too) – and you are spending an excessive amount of time and effort with this client. Far more than you originally quoted them. You’re frustrated. The work suffers. The client becomes more demanding. Eventually, the relationship deteriorates to the point where one of you closes the deal in a huff. Now, you, after all of that trouble, are gifted with one of the worst things that can happen to a new business – a public bad review.

To add insult to injury – because you had to spend all of that extra time dealing with this particular client – you had far less time to go find new clients. So, not only are you stuck with a bad review, you are also now losing revenue and behind on your goals.

Does this happen to everybody? Yup.
Was this avoidable? Absolutely.

As an entrepreneur, you want your business to grow. However, the concept of accepting any business that comes your way is not borne from a growth mindset at all. In fact, it comes from a place of scarcity and lack. It is rooted in the subconscious belief that if you don’t take this deal, there won’t be enough after it to sustain your business.

I want to share two core concepts I’ve learned from a successful 16-year career in the professional services industry:

1) There is always another opportunity.
2) Trust your gut.

That is the very base level of selecting clients for your professional services business. Let’s take this a little deeper and look at three aspects of this process. We’re going to explore:

1) How do you know if a lead will be a good client?
2) How do you turn down a prospective client without damaging your reputation?
3) What do you do if you’re already working with a client that isn’t a good fit?

Let’s begin.

How do you know if a prospective client or lead is right for you?

We’re going to go over some common red flags for prospective clients in the professional services industry. This is by no means and exhaustive list, but – I want to make sure we cover the “big” issues.

Client Red Flag – They Fight You on Price

As a professional services business owner, your core commodity is your time and expertise. The right client will respect both of those aspects of your service – it’s why they are hiring you, after all. You don’t see people at Target trying to haggle with the cashier over the price of an armchair. The price has factored in overhead, production, and so on – and people accept that’s just what the product costs. Your price should be fixed based on the time it takes you to complete a given project, and set in stone. If a client does not respect that, they are not the right client for you.

In fact, the more they try and haggle, the more likely that they will either not pay you in a timely fashion or will continue to undercut your value throughout the relationship.

If you don’t have that expertise to make that time valuable enough to make a living, then you need to go back to working for another company in the industry until you do. You may want to also consider pursuing additional credentials in your field. You need to earn that expertise; and once you have it, it becomes easier to stand your ground when it comes to your rate.

Client Red Flag – They Know Everything

Y’all: I have been in communications for 17 years, I have more than 200 clients on my books, I have a college degree with top honors in my field, I have won multiple awards, I’ve been featured on for my work in the industry – and I still have prospective clients with zero experience mansplain basic marketing concepts to me.

There are situations where I can throw in a little flash and dazzle and convert the client – but every single one of those prospects had an element of struggle in the relationship. I had to constantly remind them that I did – in fact – know what I was talking about. Moreover, they were paying me for that knowledge, so it was in their best interest to let me do what I do best. It’s exhausting, and if you’re in the industry – you’ve probably been there. It is extremely challenging to help the client succeed in that type of environment because they won’t get out of their own way. Then – when they’ve spent all of that money with you but not made any substantial progress – they will blame you.

Unless you are willing to constantly remind someone of your value (just like the price haggler) – it’s best to pass on a client who feels the need to overrule you due to their own ego.

Client Red Flag – Every Other Service Provider They’ve Worked with Is “Terrible”

This is like dating advice, right? If the guy or girl you’ve just started dating portrays themselves as a saint while all of their exes were horrible human beings with no redeemable qualities – you probably shouldn’t date them. The same goes for client relationships.

It’s normal for a lead to describe a bad experience with another service provider (or two), but if they go on and on about how they’ve worked with multiple people in the industry and none of them made them happy – there may be another issue there. If you are familiar with the market – this is where collaboration can be beneficial to you. I work with a lot of other agencies in my local markets. There have been times where I’ve had a prospect come to me and say horrible things about one or more of these businesses. There have been times where one of these other agencies have had clients come to them and say negative things about me.

This is where you can take the power back. When that happens, I usually reach out to that service provider and tell them what was said and ask for their side of the story. My industry partners show me the same respect. We don’t have to take what the client says at face value, and often – there’s something else going on there that can help us protect our own business.

For example, a client who complained about not receiving a deliverable may have left out the fact that they were 90 days behind on their bill. Alternatively, the personalities may not have meshed and both parties were simply left feeling bitter about the situation. That doesn’t necessarily mean we don’t take that client, but we are able to enter the relationship with a clear understanding of what’s going on and how we can sustain a more productive environment for the client.

In the professional service industry – being able to check your client’s “reviews” is just as important a client’s ability to check your reviews. The best way to do this is to trust, but verify with your industry partners. I go in depth into building these industry relationship in First Dollar Feeling.

Client Red Flag: They Have a Reputation for Being Inappropriate

If you have employees, this one is so important – especially in the current climate. It’s also a bit harder to identify in our Zoom-chat remote environment. If you see a prospect or lead berate an employee, or share overly personal information about an employee without their consent, make inappropriate suggestive comments to people around them, or make racial/gender-based/socio-economic slurs – run away. If they will do that to their own employees, customers, and vendors – they will do it to yours as well.

As a business owner, one of my jobs is to sustain a safe working environment for my employees. If I allow a client to create an uncomfortable environment for my employees – that can hurt my business. More importantly, it’s not something I ever want my team exposed to. That one client is not worth the risk.

How Do I Turn Down a Client That Doesn’t Fit My Business?

So – you’ve established that this prospect or lead isn’t right for you. How to you turn that client down without damaging your reputation?

If you’ve decided that this client just isn’t the right fit for you, I am sorry – and, congratulations! That is not an easy decision to make and it’s a learning process for many entrepreneurs in the service industry. I’m proud of you for standing your ground and doing what’s best for your business and your team!

Now, all you have to do is tell the prospective client. What you want to avoid here is making this rejection feel like a personal attack. Unless it’s that last red flag I mentioned – then, by all means, tell them they are not welcome as your client – just be prepared to respond to the inevitable nasty review they will leave on your social media outlets.

For 99% of your rejected client prospects, a simple but warm message telling them that you want the best for their business, and you just don’t feel as though your company would be the best fit is sufficient. If the issue is that they cannot afford your rates or if the personalities simply don’t match, you can leave them with a list of other service providers who may be a better fit for them. But, remember – you don’t want to send a bad referral to another industry partner, so make sure you’re selective about this step.

If you are not comfortable referring them to another professional, you may consider sending them links to resources for do-it-yourself training. I have had perfectly lovely client prospects that simply couldn’t afford my rate appreciate that I took the time to give them options and it left the door open for when they were able to afford my fees. Saying no isn’t always a negative thing, it’s all in your delivery.

Whoops! You read this blog too late and now this ill-fitting client is already working with you. What do you do now?

If you’re in the middle of contract, sometimes you are going to have to just grit your teeth and get through it. The exception is a client who is belligerent or making your staff uncomfortable. Otherwise, a contract is a contract – and you agreed to do the work for that set fee.

If you are in that situation, hopefully you have a defined scope of work or list of services in your contract. Hopefully you have defined exactly what is expected from you and the client in what timeline. That way, you can continually refer back to that to keep everyone on track. If they veer off of that, you can come back and add additional fees to cover your costs. Be polite, but firm – remember, your time and expertise is your product. The client cannot pay for one thing and take as much as they want, this is not an all-you-can-eat buffet. If they have to keep spending money, they may back off and stick to the agreement.

If you did not set up a clear contract with a defined scope – you definitely will for the next client, right? If you are stuck in a project will a client that wasn’t the right fit – take it as a learning experience. Adjust your contract. Get advice from your mentor or your industry partners. And be more selective about who you take on in the future.

Walking the Tightrope

It is common as an entrepreneur to find yourself frequently walking that tightrope between hunger for success and desperation to avoid failure. If you are in the professional services industry and you are taking every single prospective client that comes your way, check that you’re not veering into that desperate mindset. One of the best things you can learn for your business is when to say “no” to an opportunity.

For more information about finding the right clients, building your networking, finding a mentor, and improving your sales process – order First Dollar Feeling: Stories from the Trenches of Small Business!