The number one goal of any new company is to generate business. Hungry startups are often eager to work with any client to establish themselves. But this hunger for business can actually hurt a company’s growth over time. It’s important to understand how to grow a business strategically to achieve longer-term goals.
Let’s use Bob Parks of BP Architecture as an example. Bob struck out on his own just after the economic downturn of 2004–05. He founded his business with the understanding that it’s crucial to build up a vast client base to help him weather the bad times. So he built a strong base of clients over the years, even as he worked to build his expertise in designing high-end hospitality spaces.
Ten years passed, and Bob began to realize that more of his time was being spent on work outside of this area of expertise. His early clients—to whom he had always been loyal—expected him to take care of any design need for the same low cost. Although his client base had grown, Bob felt he’d lost sight of the goals that made him want to launch his own firm in the first place.
Bob’s not alone. Many companies gripped by the desire to grow lose sight of how they want to grow. But unmanaged growth can result in a company being treated like a commodity. Moreover, it may prevent a company from gaining the technical expertise that will attract the clients that are really wanted.
While generating new business is important for every company, it’s important to have a strategy in place for growing your business. This includes re-evaluating the clients you have and identifying the clients you really want.
Exploring the Growth You Want
It’s not easy to say no to prospective business or walk away from an existing client. But when you strategically and thoughtfully grow a business, you can divest of clients that don’t advance your firm. To do this, you must explore where you are and where you want to be.
Step 1: Understand the clients you have—and the ones your want to have.
To determine which clients are providing the growth you want—and which may be holding you back—consider categorizing clients into one of three tiers:
- Tier A clients are likely your favorites. They ask you to do the kind of work you want to do. They also typically pay on time and have the resources (whether its ample cash flow, geographic reach or broad connections to other prospects) that can help you to grow your business.
- Tier B clients want the services you provide, and perhaps even the ones you aspire to provide. But they may not always pay on time or fit all the criteria of your target clientele.
- Tier C clients have been with your business since its beginning. They ask you to do any work that seems to fall within your scope, even if it’s not what you want to be known for. They also continue to expect the low rates you offered starting out. By spending time on these clients, you are losing out on projects that befit your talents, add to your bottom line and help you grow your business.
It is important to understand how each of these client tiers views your work and the value you provide. Tier A clients likely view you as a partner who can solve high-level challenges—and they are willing to pay more for your expertise as a result. Tier C clients, on the other hand, see your business as a commodity. They pay a lower price because they’re asking you to do work that any firm could do.
By understanding your perceived value, you can identify what you need to change. Employ brand research to better understand the client-side perception of your professional services firm.
Step 2: Consider your place in the market.
Take some time to explore where you want to be in the market. What services do you want to provide that will help you differentiate your business? Who are your competitors? Identifying your competition will help you to better reorganize your business in a way that will make it stand apart.
With a better sense of your target market, you will understand how your existing clients fit into your goals and which clients might help you grow your business strategically.
Step 3: Transform your company by improving your client base.
Your goal should be to work only with Tier A clients. But this doesn’t necessarily mean cutting loose all Tier C or Tier B clients. Instead, consider whether there are ways you can convert these lower tier clients into helpful Tier A partners. For example:
- Talk to clients about the challenges they face. Listen to their needs. Are there areas where you can achieve your goals by helping solve challenges outside of the services you currently offer these clients? Help them to view your firm as more than a commodity.
- Demonstrate your expertise through storytelling. Build examples of your visible expertise in your target growth area (through email marketing, research papers, video case studies and other offerings) and make sure Tier C and B clients are exposed to the full range of value you can offer. Remember, it’s your job to figure out where your firm can help them…not theirs!
- Explore what other value these clients can provide. Can they provide referrals or connect you to the companies you want to reach? And explore any partnerships that can come of the relationship. It may result in new growth opportunities for both parties.
In some cases, it will be necessary to walk away from the work you’re providing your Tier C and B clients. If these clients aren’t willing—or able—to support your growth, then they are holding you back. By letting go of this commoditized work, you can devote more time to reaching out to growth-generating prospects. After all, time is money. If you want to see high returns, you have to maximize the time you spend on the clients who will help you grow.
The Importance of Strategy When Growing Your Business
It’s not easy to walk away from business. And it’s not necessarily a quick change. It will take time—perhaps 5 to 10 years—to convert your existing clients or divest on good terms and build a new base of preferred clients. But when done strategically, you can limit the effect on your bottom line. In time, each client you serve will become a strong partner capable of helping you to grow the business and reputation you want.
- Discover what today’s most successful professional services firms are doing right in the research summary 2016 High Growth Study.
- Find out more on becoming a sought-after expert in your industry by downloading a free copy of The Visible Expert℠ book.
- For more hands-on help on becoming the next Visible Firm®, register for our Visible Firm® course through Hinge University.
How Hinge Can Help
Hinge is a global leader in helping professional services firms grow faster and become more profitable. Our research-based strategies are designed to be implemented. In fact, our groundbreaking Visible Firm® program combines strategy, implementation, training and more.