Weeding Your Client Garden

Weeding My Client Garden - Lessons Learned, Episode 42

Once my consulting business was up and running, I spent a little time each year reviewing two related things:

1) Who is our ideal client? What do they look like?

2) What are the minimum requirements for someone to be our client?

Many people will argue with me on this, but I believe you need to have a minimum level of income from a client. In the big picture, a client who gives you $300 per year is taking more of your time than you are being compensated for. 

They're clearly not on a recurring revenue program. They must have problems during the year that they are fixing themselves, or having Cousin Larry look at. You do not control anything in their environment, and you will be held responsible if anything goes wrong.

The most common arguments against having minimums come from two sets of people: 1) Consultants who believe they have to pick up every nickel they find and take in every dog left on their doorstep. and 2) Coaches and advisors who claim that a certain number of these businesses will grow to become major corporations with lots of licenses, and you'll be their tech support.

To the consultants, I'm sorry, but I have some tough love for you. If you believe you have to take all clients and all jobs, no matter how small, you have a poverty mentality. The reality is that you cannot run a successful business based on these clients. 

Let's say you're a sole proprietor and  need to bring in $120,000 per year so you can take home $100,000 profit. How many $300/year clients do you need? Answer: 400. You literally cannot build a business on that - especially since these clients have demonstrated ZERO loyalty to you or your service.

To the coaches and advisors who advise that you to take all clients, no matter how small, I would ask how many $300/year clients they keep on their books. In round figures, it's also zero.

Anyway . . .

About once a year we look at whether we should increase the size of our client minimums. For example, will we take companies with one user, or do they have to have five or ten? Alternatively, what's the minimum monthly financial commitment?

Note: You might not change these minimums every year, but it's worth considering every year. Similarly, you should consider raising your rates each year (or just do it).

Bottom line: From time to time you will need to get rid of some current clients to make room for new clients who are closer to your ideal client. Ultimately, the primary reason you have an "ideal client" is so you can market to those companies and get them onboard.

About twenty years ago, I started referring to this process as Weeding Your Client Garden. Since them, many other people have adopted that term. In the big picture, you're going to establish (or update) your minimum requirements, and you're going to weed your client garden, making room for larger clients to fill the gaps.

Note: It's possible that you won't drop any clients. That would mean that all of your clients fit in to the "ideal" category. Congratulations. But the process is still useful because you need to reaffirm that you want to keep those clients!

How to Weed Your Client Garden

Step one is to identify your ideal client.

Step two is to set or verify your minimum requirements.

Step three is to determine who needs to go.

Unfortunately, you might have a few clients that you just want to get rid of. Maybe they don't pay on time. Or every little visit turns into a major (unprofitable) project. Or they're not nice to work with. All of those thing violate the ideal client vision.

Those folks are easy to get rid of. Write a letter and tell them that you can't provide them technical support anymore. You don't have to give a reason, but if you feel that you should, just say, "We've decided to focus on a different market segment." 

If you feel you can hand them off to another consultant with a good conscience, do so. Don't worry, you won't get any push-back on this. These people might not even consider your they're IT person!

Remember, also, that there's no benefit in delaying. If they DO consider you to be their IT consultant, it won't be nice to drop them when they call and say the server's smoking. You need to pass them off before that, so they have someone (else) to call.

Note: If you've gone this far and only identified one or two clients who need to be cut, consider raising the minimums a bit more. You need to make room to hire at least one client who is the size of your favorite ideal client. You can't be over-committed when that new client comes onboard. And you'll have more time for prospecting once you clear out some clients who are too small.

Eventually, you'll have monthly minimums. For example, $1,000/month means a $12,000/year client. That's a good minimum, in my opinion. And a good start to recurring revenue.

Remember, you're not looking to slash half your clients. If most of your clients are under $1,000 per year, you really need to get larger clients. So get rid of a few clients, make room, and then go get one more (larger) client. Once you sign a new, larger client to a monthly plan, it will be much easier to replace the next three.

Enough about money.

If business were just about money, I'd probably be into offshore gambling or running a doggy day spa). But life isn't about money. And, if you're honest with yourself, business isn't all about money either.

Life and business are about enjoying what you do, working with people you enjoy, and having fun. Yes, you need to make money, but you can probably make money doing anything you want. Why do you want THIS business?

Aside from the money question, we have our employees give feedback on each client. If we love working with a company, then we definitely want to do what it takes to keep them. If they're a pain in the neck? Well, then we'll cut them loose. 

With a little examination, I guarantee you have at least a handful of superstar clients that you'll work very hard to keep and a handful of losers who are a pain in the ass to deal with. 

You literally improve your life and your mental health when you get rid of clients who you don't like working with. And you improve the work environment for all your employees. Ideal clients are great to work with!

All comments welcome.

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Episode 42

This Episode is part of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

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