At first glance, it seems to be an odd proposition. How can saying ‘No’ to customers improve a small business? Several weeks ago I attended Podcamp Halifax, which is a conference for small business owners discussing various ways to improve their business. One presenter explained the premise that saying no to customers can really help a business grow. Most business owners understand this principle, but it is interesting to take a more in-depth view. Note that the examples below are most relevant to consulting or project-based businesses, but it is applicable to most other businesses as well, with some tweaking of course.
Reasons to Say ‘No’ to Customers
- Increased Focus – Saying no to more customers allows you to focus on the projects and services which you are best at.
- Increased Happiness – Saying no to more customers allows you to focus on the projects and services which you enjoy the most.
- Increased Referrals – Performing more of your best and most enjoyable work increases the odds that clients will be impressed by your services, increasing the likelihood of a referral. Additionally, your referrals will become more and more focused toward the work you do best, since people will eventually stop referring the type of work which you continuously turn down.
- Increased Profitability – Focusing on the projects and services which you are best at means that you are more efficient, thereby taking less time to complete projects. In essence, you effectively give yourself a raise. Consider two projects. Project A produces $2 000 worth of profit taking 100 hours to complete. Project B produces $1 000 worth of profit and takes 20 hours to complete. Which project is more desirable? The table below outlines how Project B is more than twice as profitable per hour worked!
Recently, I made a business decision to turn down a project worth $3 500. My reasoning for turning the project down was because it was too far outside my business strategy. I was capable of performing the work, but it was not my specialty. I would have taken a long time to stumble through the project resulting in a very low profit per hour. I reasoned that it was not worth taking the time to learn these skills since it was not the direction I wanted to take my business.
Now it’s time to tell your story. Have you said no to a project in order to remain profitable? Or maybe in hindsight, you should have said no to a project because it turned out not to be profitable? Either way, we’d like to hear about it. Leave your comments below!