Hi everyone! I’ve just filed my first LLC & am planning to open a vintage boutique in my city- I’m completely new to owning a legitimate business of my own. I thought this would be a great question to ask as I know I’ll be making many mistakes in my first year of business.
Please feel free to comment your favorite mistake!
Your least profitable customers will be your biggest headache.
Don’t be afraid to get rid of customers if they’re too much hassle, even in the early days and you’re worried about cash and profit.
This is definitely true in my business
I wish I learned this sooner. You actually have to “fire” customers. My dad always taught me to “take in everything you can, money is money” and that was such terrible advice. I own a 3 bay garage and I remember back in 08’ when we were dead and I had all 3 lifts filled with those cheap customers. Was making peanuts on all 3 cars combined. An actual REAL profitable job showed up and I couldn’t take him in at the time and he went some place else. Then I’ve had guys who would being me “favors” all the time and then I realized he never gave me anything real. Always said his customers were just broke and couldn’t afford more. I know now that he was cheap with me and would charge his customers like crazy. 20 years and I’m learning every day.
I love that expression ‘firing customers’ !
This is so true. We added 60-80 customers in 3 years and have spent the last 9 rightsizing and firing. We now have 27 customers and 5x the gross revenue and profit is way less stressful.
I’m probably going to fire a client next week for the first time. She is such a time suck. Not profitable. She spends hours of unbillable time asking dumb questions about my very detailed proposals. If she approves, it goes through magnitudes of revisions, then she fights the bill. It literally says “as bid” and reflects the proposal cost. No idea how she thinks she has a leg to stand on. She can go waste someone else’s time
Refer them to someone else, it has to seem to be genuine (give a solid reason for the referral) or they will really change gears and start selling themselves as a client.
how does one go about firing a client? “thank you for your interest in my work… but we’re not a good fit” or similar? Good luck in any case.
Yep pretty much this. You got it.
I fired 2 clients recently. Politely told them that the charges would go up by 50% next month onwards due to the level of service expected by them and hours spent on their accounts. Was a gamble really, if they agreed I’d make more money. If they left, I wouldn’t have the ‘guilt’ of having fired a client.
Pretty much. “We do not appear to be a good fit for what you’re looking for, we wish you all the best in finding a provider which better suits your needs” etc etc
I’m still thinking about how to phrase it. Part of me wants to just say that we’re too busy. Which is partially true. We are too busy to deal with her. She loves to suck up our time. Writes vague emails asking dozens of questions. Follows up with more questions for every answer. Gets on 2-hour long meetings where nothing is decided on her end. Nobody has time for that. She’s also threatened to replace us with a freelancer when she didn’t like a price on a proposal. Good luck lol. I’ve heard that before and it never goes anywhere. One person cannot replace the results that are derived by a team of dedicated on-staff experts. My job is to literally help her and if she doesn’t like the price there’s no reason to treat people this way
If I say we are too busy for her then it gives the indication of exclusivity, which I wouldn’t mind fostering that type of brand. In the future if she wants to expedite her marketing strategy or pay a premium for it then I’m happy to accommodate, but in my experience, people rarely change the way that they treat their vendors
Raise your price dramatically, she may go away, she gave you a hint about that already. Implement a new rule that the first hour consultation is free, all other is invoiced at a high price. Track it, invoice her and insist on incremental payment or no more work. Meetings with endless questions and no decisions now make you money. You get to choose how your business operates.
I’d go a step further…get more people and her in particular on a retainer and then burn hours against it.
Saying you’re too busy just says come back later.
Perhaps proposing billing for quotations and inquiries about items not clearly listed on a quote? Consulting on the quote or revision changes, etc… Either you’ll get to bill for the time, or they’ll go to someone else.
Absolutely.
Plus you don’t want to have the reputation of being able to be pushed around either. Working with customers is good but having a hard line is gooder.
Yeah absolutely- I bent over backwards for this customer, and turns out she repaid me by taking advantage of me. Wanted to negotiate on price after we’d signed the contract.
It’s a shame because I’ve now become firmer with other customers across the board, maybe a little too firm. People really are shit. You need to protect yourself, because no body else will and people will take advantage.
Too true. I rent kayaks. My best customers: rent a bunch of kayaks, have used them before, just need the equipment. Easy dropoff and signature for me. They usually rent all day cause they know they might be out for a while.
My worst customers: Don’t know where to go, what kayaks to rent, and how long to go for. Easy 15 min phone call. At dropoff they take forever to get their stuff together, need instructions and help getting in water. That’s another 30 minutes at least. Usually these people rent for 1 or 2 hours and try to squeeze people on a tandem. More time, less money. These are the only people that ever complain too. One guy wore jeans and complained that he got wet…
I’ve raised prices on shorter rentals, made online booking easier, give clear and concise info on confirmation, added free to longer distance/inconvenient dropoffs, and am not afraid to just say no when it’s not worth my time.
Or convert them, and they will tell their friends.
So much this!! Understanding that there are some people even as customers that aren’t a right fit for your business. Specially at the beginning that you want to please everyone.