CUSTOMER SELECTION

CUSTOMER SELECTION

1. In business for at least three yearsThis is generally enough time for the client to become established, prove he or she has some management skill, and appreciate the importance and need for professional assistance.

1. Pleasant, outgoing personalityThere’s no point in spending time with unpleasant people. In our experience, pleasant, outgoing people seem to have more successful businesses. Their personalities are unquestionably a contributing factor to their success.

1. Willing to listen to adviceEven nice people don’t always listen to advice. You will be wasting your time if the person you’re working with “knows it all” or refuses to take your recommendations. Be careful not to use this to rationalize your inability to sell your service potential. More often than not, a person doesn’t listen to advice because it hasn’t been communicated in an understandable manner or the payoff hasn’t been clearly stated.

1. Positive dispositionUnfortunately, the business world is full of people who have had such a hard time the only way they can live with themselves is by blaming everyone else for their problems. If a client refuses to take personal responsibility for the condition of the business and is unwilling to look positively at the environment and existing opportunities, you’d be well advised to look elsewhere for clients. Of course, your ideal client will be a positive person who is not simply an ambitious dreamer. It’s important to maintain a balance between ambition and potential. Rome wasn’t built in a day, they say. Nor are great businesses.

1. Technically competentIt goes without saying that all the fancy marketing, management, and performance standards will come to nothing if the client’s product or service is technically flawed.

1. Business is profitableBusiness Consultants typically are called in to assume the role of company doctor for an ailing business. Naturally, many of the approaches and skills required to turn a business around are the same tools used to make an already sound business better. However, it is much smarter, in terms of the success probability, to work with businesses that are already profitable – but underperforming – than with businesses in a loss situation (unless that is your specialty). Clearly you need to consider this criterion individually for each potential client.

1. Business is not chronically undercapitalizedThis will generally apply only to relatively new businesses that have experienced rapid, uncontrolled growth or to businesses that have experienced several periods of sustained losses. Again, you need to consider this criterion individually for each potential client. But, other things being equal, pass up this opportunity for an easier one.

1. Business is not dominated by a small number of customers or suppliersThis is a strategic issue. If a business is subject to severe buyer or supplier dominance and it does not otherwise have any significant competitive strength, you might be less than excited to take it on. In these circumstances, it is very difficult to do much because margins are often dictated by the supplier or the buyer. Unless there are immediately obvious ways for the firm to create and retain value, it’s hard to do much for the business.

1. Clearly established demand for the product or serviceThere is no question that new products or services have the potential for very substantial rewards. The first successful entrant into the industry usually has a big payoff. But statistics speak for themselves. New product or service ventures have a high failure rate. Furthermore, innovative entrepreneurs generally commit all their resources to the design concept. So there’s not likely to be much left over to cover your investment and the costs involved in creating a market. As with the other criteria, assess this one individually for each potential client. You may decide to take such an assignment as an entrepreneurial investment of sweat equity (e.g., stock options), but limit this type of investment in your client portfolio (and be sure it doesn’t detract from your firm’s overall mission).

1. Business has a scope for product or service differentiation through innovative marketingAnother strategic issue. If you believe you could significantly affect margin or volume through a sound marketing strategy, the client would be ideal – given other factors, of course. If, on the other hand, you’re not really sure you’d start, then you may want to pass up the opportunity.

1. Business has scope for improved productivity through innovative management planning and controlA business that fails criterion #10 could score well on this one. Think about what you could do to improve internal efficiencies. Specifically, note that where performance is not being systematically measured, there’s almost always scope to improve it. A cursory review of your potential client’s internal management information system will give you a very good idea of the potential here.