Small Business Protecting Your Income

August 22nd, 2008 | Category: Funding, Grow existing business, Sales, Start new business, Success

Posted by: Paul Stanford

Protecting your income

One of the biggest areas of weakness that I come across time and time again when visiting small businesses is regarding the contracts they have..or to put it more accurately … they don’t have with their clients and suppliers.
We all know how important clients are to businesses. If we don’t have any clients then we don’t have any income and eventually we don’t have any business. Many small businesses that I see have a few large clients that they rely upon for a large percentage of their income which is supplemented by business from other smaller clients. So given that these “contracts” with the “large” clients are so critical to the business why then are there not written contractual arrangements in place? The vast majority of the small businesses I see do not have any written contracts with their clients. This may be fine when everything is going well but it is so risky and vulnerable to change. For example what if your main client contact changes and the successor has a preferred supplier that is one of your competitors?
So what to do about it? Well I agree that written contracts wont protect you against all eventualities and to take a client to court over a breach of contract is generally not recommended and potentially costly for you as a small business. But I do believe they serve a purpose and provide a degree of security. So please do yourself a favour and get a set of formal terms and conditions of contract signed by your clients – at least your most important ones. They needn’t cost you a lot of money to produce. You can either look at someone else’s and copy paste the relevant paragraphs or a good place to download templates for a nominal fee is www.clickdocs.com
Paul Stanford is a Director of 4Momentum http://www.4momentum.co.uk. 4Momentum provides business advisory services to small businesses, charities and social enterprises primarily in Sussex. Services include advice on starting a business, growing and transforming a business and selling a business. Clients typically contract 4Momentum for short periods of an hour to long term consultancy over many months for advice on subjects such as mentoring, business planning, sales and marketing advice, bidding for contracts, raising finance and general business advice. Paul is approved by the UK Government to deliver business advice on their behalf through Business Link and is a member of the Institute of Business Consultants. Visit his blog at http://www.paulstanford.co.uk/blog

Copyright 2008 Paul Stanford

 

 

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Small Business Good Client Bad Client

August 05th, 2008 | Category: Grow existing business, Marketing, Sales, Start new business, Success

Posted by: Paul Stanford

 

What’s in a client?

Many businesses believe that they need to find more and more clients and go all out to get as many clients as possible. Whilst it is generally a very good idea to have several clients so that you are not reliant on one or two clients or those in one particular market sector, I believe there is a case for turning away some clients. Yes you read that right – I am advocating turning away some clients.

 

OK my reasons for this are two fold. Firstly as small business you may not be able to service many clients at one time. You might not have the resources to be able to serve them well. So I say rather than try to service them all you turn some away to keep it to a manageable number. Growing too quickly can mean that customer service levels drop which will lead to your business getting a bad reputation. Word gets around very quickly about a business that has a bad reputation. Whereas building a good reputation takes along time. So it’s not worth risking getting a bad reputation just because you have taken on too many clients.

 

My second reason is that not all clients are good clients. By that I mean some clients are more profitable than others, cause us less stress, are much nicer to do business with, pay on time and don’t take up huge amounts of time to manage. While others are the complete opposite. For anyone that has been in business a while – ask yourself how often have you dealt with a client that has taken up a disproportionate amount of your time. Were they profitable? By taking on “bad” clients what is the lost opportunity costs? In other words how many other potential “good” clients have you missed out on because you were too busy servicing “bad” clients?

 

So next time you take on a client – just think about whether this client is likely to fall into the “good” or “bad” client category. If you start having doubts then my advice would be to politely turn them down and move on to potential “good” clients

 

 Paul Stanford is a Director of 4Momentum http://www.4momentum.co.uk. 4Momentum provides business advisory services to small businesses, charities and social enterprises primarily in Sussex. Services include advice on starting a business, growing and transforming a business and selling a business. Clients typically contract 4Momentum for short periods of an hour to long term consultancy over many months for advice on subjects such as mentoring, business planning, sales and marketing advice, bidding for contracts, raising finance and general business advice. Paul is approved by the UK Government to deliver business advice on their behalf through Business Link and is a member of the Institute of Business Consultants. Visit his blog at http://www.paulstanford.co.uk/blog

Copyright 2008 Paul Stanford

 

 

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