In the early stages of your firm’s growth, revenue is king. You may take on clients you shouldn’t work with, accepting projects that are not the best fit for your services in order to improve your cash flow.
Ultimately, though, you can’t scale if you take every deal that you can win. If it’s painful managing clients when you’re small (say under $5M), then just imagine what doubling that pain will look like (to get to $10M). It’s time to STOP CHASING EVERYTHING and pursue the clients that are a good fit for you.
Define What Deals You Should Go After
Step back and look at a few key things:
- Which clients have you enjoyed working with the most, are most satisfied with your work and always giving you more?
- Which clients are most profitable for you?
- Profile your client base – for revenue (theirs), vertical, size/duration of project, fit for your services, revenue for you, profitability, and … anything else you want.
- Assess whether your best and most profitable clients tell you something about your client base – who you should and should not be working with.
- Now profile your target client. (Define what you want your client base to look like going forward.)
- Check your pipeline – which deals should you be walking away from?
Now Clean Up Your Pipeline
You’ll dramatically increase your chance of closure if you pay close attention to the deals that are a fit for you. Decline to bid on the wrong deals – focus on the right ones. Be prepared to lose a lot and even see a slight dip in revenue.
This short-term pain will pay off. It’s a necessary step to becoming a healthy (larger) firm. As you focus on closing deals using the criteria outlined above, your business development efforts become both strategic and revenue-generating. The services you deliver now will align with your long-term roadmap for growth.
Let me know what you think. Have you ever tried to clean up your pipeline? What were the results?