When should you consider turning business away?

When should you consider turning business away?
Simon Rigby
Simon RigbySME Assistance

Posted: Wed 8th Sep 2021

Believe it or not, there are times when it’s best to consider turning away a new customer. It can be hard, especially when you’re trying to grow a business, but sometimes it can be the best option. 

The last thing you want to do is to turn a customer away and then regret it. So what should you consider before you tell them no? Ultimately, you want to protect the customers you currently have and concentrate on other new customers who are the best prospects for the future.

Go through the following steps before you make a decision. It isn’t an exhaustive list of reasons to consider and it does depend on the type of business you run, but it should get you into the right mindset.

They are a bad credit risk 

Do you allow your customers to pay after delivery of your products or services?

If the value of business would seriously impact your business if they didn’t pay then get a credit check done – there are several websites that offer this service. Another option is to use a credit application form, though the unscrupulous will only give their friends as references. 

Sometimes people will come to you only because they have exhausted their credit limit with one of your competitors. If they don’t check out and you still want the business, ask for a deposit or full payment up front.  

The potential customer doesn’t align to your values

Are they rude, pushy or demanding, do they cancel appointments and want free samples even before you’ve given them a quote? Do they want to haggle over the price?

Don’t compromise on your values – it will end in tears. If you get a bad feeling about potential customers, don’t just ignore them or you could risk ruining your reputation. Politely say no thank you, or price yourself out of the market.

They have a short deadline 

If their deadline is too soon then their rush job could become your rush job. A quick deadline can be a legitimate reason to say no, but there may be other options here too. 

Ask yourself the following questions before you make a call:

  • Is there potentially more business to come if you help them out of a jam?

  • Will you have to compromise quality?

  • Is it worth pulling out all the stops to get it done? 

  • Could you sub contract the work out? 

  • Could you charge more to cover overtime? 

You’re too busy and could only deliver an inferior service or product

Letting your standards slip on the quality of your product or services can lead to losses in the long-term. If you’re concerned that new business will detract from your current customer’s requirements, consider the following:

  • Is this trend in new business likely to continue, and if so, is it time to take on a new employee to allow you to keep up with demand?

  • Would the new customer agree to a longer delivery date?

  • Could you reduce the specification of the job/product?

You can’t afford to do business with them 

If the new work requires you to buy materials or stock up front, consider asking them to pay a deposit in advance to cover your costs.

Another scenario could be that you have under-quoted, and the work won’t be profitable. It’s not easy, but you will need to go back to the customer to quote again – chances are you got the job because you were the cheapest in the first place. 

It’s best not to start adding extras onto the invoice without discussing this with the customer, though. This could end in an argument and possibly non-payment of part of the invoice.

The work is out of your remit

Perhaps they’re asking for something that’s too far from your main products or services or they are based outside of your geographic area. If you can’t see any benefits to taking it on, try to pass the lead onto someone else. You’ll make two people happy and they may pass business back to you in the future.

If they want your product or service out of your normal operating hours, look at pricing at a higher rate to compensate for the unsociable hours. 

The job is too small

Small jobs can take an inordinate amount of time and effort. If this is the case, is it something you could pass on, or could you set a minimum charge?

There are often workarounds to situations where new business may appear to have few benefits. But if you do end up turning down a new customer, remember to keep the door open to future opportunities – you may welcome their business when circumstances are different.

Want more business advice from experts like Simon? Join Enterprise Nation to connect with our network of advisers.

Simon Rigby
Simon RigbySME Assistance
I have started, bought, run, grown and sold businesses for over 40 years. I know what works and what doesn’t. Also as a business owner I know the sort of support a business owner needs and how valuable that support can be. Take the sweat out of fast tracking your progress to a healthier business and income by calling me to find out more. You will get practical, nuts and bolts advice and strategies that can be implemented today and make a difference today. Lets get going and move your business forward today! Book a discovery call for an initial chat.

You might also like…

Get business support right to your inbox

Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.