When you’re just starting out as a new entrepreneur it’s pretty scary not knowing where your next dollar will come from and that uncertainty often drives new entrepreneurs to want to say yes to everyone and everything just to make sure that revenue is coming in the door. This is a strategy that will almost certainly backfire, however, as it makes it impossible for you to stay focused on what you really excel at and it allows bad customers to contaminate your business.

We’re all familiar with bad customers: they’re needy, they’re demanding, they’re opinionated, they’re impatient…basically it often seems like their goal for the day is to ruin yours. You do not want those customers in your business, especially when you’re just starting out, no matter how much they pay, for a number of reasons:

Firstly, building a business around bad customers is not sustainable. It takes way more time and energy than it should to service these bad seeds and that cuts into productivity, morale, and margins.

Secondly, dealing with bad customers prevents you from focusing on your good customers – you know, those people that behave like human beings and allow you to get enough work done that you can actually make a profit. These good customers may be understanding, but they’re not going to stick around forever if you’re neglecting them because the bad customers are sucking up your time. If you’re not careful, you’ll look up and realize you only have bad customers left.

Thirdly, bad customers often coerce you into taking the entire business off track strategically. Maybe they ask you for an additional product or service that you didn’t intend to provide, maybe they want to negotiate special payment terms, maybe they insist on extra features being added to your offering. Whatever it is, trying to please bad customers can quickly lead you down a road that slowly takes you farther and farther away from your strategic path.

Now that we understand why these bad customers are actually even worse than no customers, how do we avoid them?

Of course, sometimes these bad seeds can slip in undetected but, more often than not, they showed signs of being more trouble than they’re worth from the beginning and you should have declined to work with them.

• If a potential customer asks for a product or service that you don’t provide and don’t want to provide, decline to work with them. They’re already taking you off track and your relationship is just beginning.
• If a potential customer is super needy during the sales process, decline to work with them. I know that some would disagree with me here but, especially if you provide a service, a person who is needy before they’re a customer will stay needy once they’re a customer and they will suck up way more of your or your staff’s time than they’re worth.
• If a potential customer is aggressively bad-mouthing their other service providers, decline to work with them. I don’t mean someone who says another company was unable to meet their needs should be rejected, but if someone describes the last people they worked with as morons, idiots, imbeciles, a*holes, incompetent, or any of these other very, very aggressive names, you should expect that they will bad mouth you around town in exactly the same way – unless you decline to work with them and don’t give them the opportunity.
• If a potential customer wants special features or a special payment structure right from the beginning, decline to work with them. If someone asks for a volume discount because they’re buying up everything they can, great, give it to them if you can still achieve acceptable margins. If, however, someone wants a discount or special payment terms just because they think they deserve to be treated better than anyone else, decline to work with them. They’ll only keep asking for discounts and special treatment.

Now we know why we need to avoid bad customers and how to spot them, but how do you actually tell a potential customer you don’t want their business?

• Be honest. If you don’t provide service X, product Y, or payment term Z, just tell this prospective customer that you can’t accommodate that request. If she walks into McDonald’s she doesn’t get to say she’d rather pay $1 less for the combo meal or pay tomorrow for the french fries she’s going to eat right now. If you have set offerings, stick to them.
• Provide a referral if you can. Just because you don’t offer a particular service doesn’t mean you can’t point the customer to someone who does offer it. Develop partnerships with complementary service providers so they send customers who aren’t the right fit for them to you and you do the same for them. It’s a win-win for you and the other entrepreneur and it allows you to still be helpful and earn some good will from the customer.
• Be polite. There’s no reason someone you decline to work with should feel rejected when you do so. I may have told you to avoid bad seeds because they cause nothing but headaches, but you certainly don’t need to convey that. Always be professional and courteous.

Staying focused on your ideal customers and not wasting time with bad customers may seem scary at first – turning away customers and revenue certainly doesn’t seem like a good idea when you’re just starting out – but it’s the right long-term strategy for building a successful and sustainable business.

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