Tech & Work

Taking on a marginal client: Will it help you grow your business?

Before you pursue a new client, it's important to consider whether the experience will be a learning opportunity for you and your employees. This chance to broaden your skill set is why John McCormick recommends taking on marginal clients.


When looking at a potential new client, one of the most important things you need to ask yourself, after you check to see if they pay their bills, is whether you will learn something that is both new and valuable if you take the contract.

Deciding whether or not to pursue some potential clients can be a no-brainer. For example, if a potential client's needs exactly fit your current set of skills and it's a lucrative job, then you run to sign the contract. You need to take a lot of these types of jobs to be a success. This is where the gravy is in consulting—selling essentially the same solution to dozens or even hundreds of clients with similar business models and needs.

This is also the reason you need to keep expanding your knowledge base—both your technology skills and your knowledge of different business models.

Accept less profit if you’ll learn from the experience
For most consultants, there is a strictly limited universe of potential clients who have the same kind of businesses and therefore have nearly identical needs. If, for instance, you currently work with new car dealers, there are only so many you can ever serve. That's why you must work to increase not just the number of clients, but the kinds of businesses you serve.

So, what do you do if you're looking at a marginal account, one where you will just break even or perhaps make a small profit in part because it involves a lot of work you've never done before?

If you're on the ragged edge financially, then you probably have to pass up such jobs. If you are doing well, however, and want to become more successful, then you will need to look at more than just the bottom line on this individual job.

If you have surplus staff time at the moment, this decision is easier. After all, taking a small loss on a contract is better than paying people to sit around and play Solitaire.

But even if you can come up with other, higher-paying work for these employees, and even if you know the potential client will never be a big moneymaker in the future, it's sometimes a good idea to take one of these marginal accounts even if it means passing up a more profitable job elsewhere.

Deciding just when this is a good move can be the difference between whether your business really grows or just plods along.

There’s a right time to take on a marginal client
One factor I always look at carefully is whether the new client is essentially offering to pay me to learn something that will be valuable to others in the future.

Expanding the skills in your organization is always important, and there is absolutely no better way to do this than to have someone else pay for it!

I'm not suggesting you tackle a consulting job you haven't any hope of fulfilling. What I'm describing is the sort of marginal contract where you get to stretch your skills and knowledge just a bit, where you know you can satisfy a client within their time frame, but where you also get to learn something new, whether it's a new technology or a new client business model.

Both will almost inevitably lead to profitable new business in the future, whether it means you have another tool you can apply to the problems of existing and new clients, or that you have gained an in-depth knowledge of a new kind of business that you can add to your client list.

Perhaps you always work with retailers. Consider taking a marginal job with a building contractor, or vice versa.

Deciding in what direction to expand your business can be one of the toughest and most important choices management can make. But taking chances can often mean the difference between being a struggling business and successful one.
If you have a question or suggestion for John McCormick, e-mail him at siliconsamurai@usa.com. If you have a general comment, e-mail TechRepublic.

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