Small Business Advice: How to Spot Difficult Customers

Small Business Advice

Small businesses depend on regular customers who return to the business again and again for services. And in order to grow, entrepreneurs are always on the lookout for new customers in need of the services the business offers. But one bad customer–one who doesn’t pay bills, who makes impossible demands or who requires inordinate amounts of employee time— can drain the business. Learning to spot these difficult customers ahead of time and head off problems can save more time and resources for the kinds of clients that will help the business grow and succeed.

The Micro-Manager

This person wants to control every detail of the project. There’s certainly nothing wrong with a customer who cares about a project and wants to be involved, but presumably the client hires a contractor because of the contractor’s expertise. Customers who demand constant accounting, who want numerous meetings and frequent detailed reports may eat up more time than the project warrants.

Signs the Customer May be a Micro-Manage:

  • Insistence on numerous (unpaid) meetings before the client is willing to make a commitment.
  • Frequent changes/additions to the details of the project in the planning phases.
  • Insistence that things be done the client’s way, even when the client isn’t an expert.

The Penny Pincher

Everyone wants to save money these days, and to survive, small businesses must be competitive. But stingy clients may be reluctant to pay bills on time or in full, and can leave a contractor with more headaches than the job is worth.

Signs the Customer May be a Penny Pincher:

  • Insistence on ignoring regulations, permits, or safety in the interest of saving money.
  • Excessive cutting corners.
  • Numerous complaints about rates, supply costs, etc.

The Scam Artist

Most businesses are honest, but occasionally contractors run into scam artists who set out from the beginning to cheat them. Some people think they can take advantage of small businesses, which may be more desperate for work or who may not have a corporate legal department behind them. Scammers lie, don’t pay the bills, and may disappear without notice.

Signs a Customer May Be a Scam Artist:

  • Has a bad reputation with other contractors.
  • Changes stories often or is evasive about basic information such as where to send bills or who will be paying.
  • Frequent turnover of employees, addresses or bank accounts.
  • Unwilling to offer references.

Solutions for Problem Clients:

  • Refuse to do business with them. Especially avoid scam artists.
  • Ask for partial payment up front.
  • Build in extra hours/money in the contract to allow for more meetings, phone calls, time spent on certain jobs.
  • Detail all expectations and consequences in the contract.
  • Call their bluff. Some micro managers and penny pinchers will back down if alerted from the start that their behavior is unacceptable.

Small business owners should always trust their instincts when dealing with clients. If the client sets off alarms early in the relationship, it might be best to look for business elsewhere.