How do you know when a prospect should be a client?
This is really a hard question to answer for every business. I made the mistake years ago when I had an office downtown, to accept every client that came my way. It seemed like common sense. If someone wanted your services, you put a proposal together and if they accept it you do business. Man that got me into a ton of trouble. Things would have been a lot better if I used the system I now use. In late 2005 I started to adapt a mindset that not every client was right for me. Much of this realization came from the fact that I had some real characters as clients and I decided that I didn’t want that again.
In the initial sales call I found that prospects were a bit perplexed that I was asking so many questions about them on the first call. I am open and up front with them about my prescreening process. If they are interviewing me for the job they need, I am interviewing them to see if they are a serious client. Sometimes that sets people back but I want to be sure they are a client that can pay and I want to be sure that they are not the type of organization that is looking to take advantage or has taken advantage of a competitor in the past.
As I think more about this subject, I think that many people new in business decide to just take on clients because they need the cash like they need air. This is a recipe for failure because your vision is short term. What happens when you don’t need that cash as bad? Is this still a customer you want to work with or is this a dead weight now? I was talking to an attorney about this very concept as it related to these “creative” individuals who build websites right out of college or in college. He was explaining to me his frustration that sometimes after the project has gone on for a while the “creative” disappears never to be found or he experiences difficulty getting them to work.
These individuals are perfect for this exercise. Although it needs to be noted that I have met some very creative people in college that do not have this personality trait. As for those who do, they are in a position with a low amount of capital and they are using cash flow to run their business. (It’s probably best for them becuase if they were offered credit, they would be in a really bad position.) They accept customers to fulfill their immediate need and now that that need is met they realize they took on too much work. This can be a huge problem now cause the client might be demanding and the developer does not have time to work with them. Now the developer has some cash flow and looks back at all his clients thinking, I really should not have taken this one on. This person is milking me.
That happened to me. It was no one’s fault but my own. The art of prescreening clients is not common sense. Rather, its something you learn out of experience. This is something that is very hard to do when you need money like air but you will be glad you said no to a potential client if you calculate the cost upfront.
In the Real-Estate business, pre-screening is key. Every deal is screened for potential. I once told a seller that I was trying to determine if they were serious or not. She was very upset that I would suggest that she was not serious about selling her building. I told her that if she was asking what she was, certainly she was not serious because it was too much. After we discussed why the price was too high she came back with a lower offer. So it pays to pre-screen people. In this case she was serious.
Whatever formula you have stick to it, even in bad times. As I mentioned earlier you might have multiple streams of revenue and for each stream you should have a list of criteria. Try not to change those criteria as you see fit when you need the money. It will keep you out of trouble in the long run!
Man, what a rough week. Microsoft, Citigroup and Clearchannel all annouced major layoffs. What next? Experts discussing the idea of nationalizing banks!! WHAT? That not sticking salt in an open wound, thats stabbing with a pencil and twisting it! I think we should learn from our friends overseas. The British Pound Sterling has seen losses of 1/3 within the last few months. If banks are nationalized its going to kill the dollar just like it killed the British Pound.