Praying to the business gods

Personal finance

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Where does new business come from?  If you are a business owner, where do you find new clients and customers?   If you are considering going the entrepreneurial route, how do you plan to generate new business?

In a small business, there are generally two-types of client models: 1) relying on volume; or 2) relying on a few good clients/customers.  Of course I’m simplifying.  Also, the ideal would be to have both volume and consistency.

Volume Business

If you’re in a volume business such as me, there is always a concern as to where the new business will come from.  You have to actively seek referrals, hope for repeat business, and implement other strategies for finding new targets.  But relying on these methods can be stressful.  You have to hope that new business will continue to be generated, but you never know when your phone will ring or a prospective client will shoot you an email.  I equate this to the “rain dances,” of native american and other agrarian cultures.  I market, set up my website, write articles, and hope for referrals, but at the end of the day I’m still left praying to the business gods.

Focusing on a few Key Clients/Customers

There seems to be more security in having a few good clients/customers who retain you on a monthly basis.  For instance, I own a professional service firm and most of my clients are individuals rather than businesses.  Once I complete a transaction for my client, it’s over.  My brethren who have solid industrial/business clients, however, are often called upon on a weekly or monthly basis.  So long as they keep their clients, they don’t have to worry as much about where their next meal is coming from.  The danger here, of course, is an over-reliance upon a few key clients.  If one (or two) of them should leave, you might find your entire business is irreparably harmed.

The Middle-ground

One of the great things about a professional services business (i.e. doctors, lawyers, accountants, etc.) is that success begets more success.  The more clients I have, the more (potential) referral sources I can count on to potentially bring in new business.  If I have a roster of only 40 clients (past and present), then I am limited compared to someone who has 1,000 (past and present) clients.  If you are just starting out (like me), then no matter how good of a job you do, very little of your new business will be generated by present or past clients—-which are the best source of referrals in most fields.

That’s why I am more proactive than other people in my industry with trying to find other sources of referrals.  I take people in my industry (or related industries) to lunch.  I try to speak at events or take on leadership positions in local clubs, professional groups, etc.

Nobody is Coming to the Rescue

One of my mentors told me he used to keep a sign on his desk that said: “nobody is coming to the rescue (perhaps and old Brian Tracy line).”  In the early days of his business, with a family at home counting on him and little contacts starting out, he knew it was on him.  Indeed, nobody was coming to the rescue.

I find myself thinking about that line quite often.  During the times when I am sitting around waiting for the telephone to ring rather than working on activities that will increase the odds of that happening, I see the blunt truth in that statement.

If you have a few great clients, you can’t allow yourself to be complacent.  As they say, desperation is a bad cologne.  If you wait until you need to find new clients (because your old ones left), it may be too late.

At the same time, having a few pillar clients can’t hurt—–particularly in a volume business where there will be up and down months.  Some consistency can help a business stay the course during a rough patch.

I know two attorneys who specialized only in real estate transactions.  For twenty years, this was a successful and high-volume practice.  Both attorneys lost almost all their real estate business during the Recession.  The one attorney, however, did a little business law and had a few clients to help him weather the storm.  He now does business law and has switched his volume practice to bankruptcy work and real estate transaction.  The other attorney lost his business, worked a while for another firm, and finally retired earlier than he wished to.

Conclusion 

A lot of what I’ve written isn’t anything new.  It’s a matter of common sense.  But it’s also a common sense I have to constantly remind myself to follow.  I hope that, by bringing it to your attention, it helps some of you the way it always helps me in planning my business goals.

 

 

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Richard Meuret

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