Dodging Bullets: Restructure for Success, not Failure!


Last month we had a little chat about detecting when it might be time to restructure. The four signs we talked about were:

• When profit growth comes to a standstill

• High turnover (both with clients and employees)

• Evolution in your industry

• Antiquated or inefficient systems in place.

If you missed out on last month, you can read it here.

This month I want to delve a little deeper into other areas of your business that may require restructuring and when it is time to do that. This aspect of restructuring is geared more towards who you retain as clients, what clients you should “release,” and knowing when a client isn’t the right fit for your company structure.

Portfolio Ratio & Psychographic Characteristics: The keys to the right

client mix

Portfolio ratio

Your portfolio ratio is how much of your revenue depends on each client. While you do want to have an anchor client or two (a client who can provide a large chunk of monthly revenue on a recurring basis), you don’t want to rely too heavily on that income. Anything can happen at any time and you don’t want to be left floating off to sea when your anchor disappears!

This is where many companies go wrong. They land an anchor client, who, let’s say, makes up 50% of their revenue in a month, and then they stop prospecting. They get too comfortable and don’t prepare for the inevitable. Ideally, your anchor clients won’t make up more than 25-30% of your monthly revenue and you will continue to prospect with your networks so that, if the anchor client goes away, it doesn’t sting too bad.

Psychographic characteristics

Psychographic characteristics, are typically considered the intangible things that make up personality, values, opinions, attitudes, and interests.

Finding clients that align with your psychographic characteristics will greatly increase the odds of them being a good fit. This is more important than most people realize. Generally, you will find that when you have the same characteristics as someone else, things will just seem to flow better between you and you will tend to be on the same page.

Compare this to the times when you have had clients that you just don’t mesh with. We’ve all had that. It might not even necessarily be that you don’t like something about one another, or that they get upset with you; it may just be that everything always seems so much harder than it needs to be. You know what I mean… You just did a project with “Jane Smith,” but the same project with “John Black” is making you wish you were a “Jane Doe!” There’s no need to have things be that way.

Knowing when to say no

Paving the road to business owner bliss, where you mesh well with all your clients and target your perfect prospects, is so much simpler than you think. For example, if you’re super down-to-Earth and hate fake people, and you meet some guy at a luncheon that is super phony, don’t prospect him. I promise you, you will thank yourself later. Just don’t do it. It’s that easy!

Restructuring your target client causes evolution in your business. You have to treat the “high on his horse,” phony luncheon dude like crack and stay far, far away. Taking that guy on as a client will not only destroy your soul slowly every day, but will also bring down the morale of your entire team. Let’s be honest, even if you were feeling desperate for business, and did take him on as a client, the end result is always the same. They will try to negotiate the living hell out of your prices, and then be a huge time suck and your biggest headache. Ugh, who wants that?

Instead, create a blueprint of your ideal client. What type of characteristics do they have? Are they happy, outgoing, and enjoy the same hobbies as you? Do you share a similar business outlook? Do your company cultures and values align? Depending on your product or service, that may make them the perfect fit for you if those are your psychographic characteristics, too.

Know your ideal client and build your targeting around that.

Do this, and you will have restructured how you prospect and build clientele.

When to say goodbye

Knowing when to let go of a client or employee is essential. When we hold onto people, ideas and situations that no longer work for us, it is business suicide.

Client conundrum

I think as far as the client aspect, we’ve pretty well summed up how to restructure so that your incoming clients are the right fit. But, how do you know when it’s time to release a client you already have on board?

Well, take a look at your relationship with that client over the last two months. Do you dread communication with this person? Do you feel as though you’re doing a stupendous job, but all they ever do is criticize? Do you two just have polar opposite viewpoints on how things should be done and compromise leaves you banging your head on your desk? If you answered yes to any of these, it may be time to consider releasing this client; it’s just not a good fit and you’ll both be better off and happier for doing so.

If you answered yes to ALL of these… RUN. Seriously, don’t just contemplate it; catapult them as far as you can and never look back!

If you’re not sure where to start on identifying your ideal client or how to release clients who aren’t the right fit - actions that can greatly increase your bottom line - give us a call!

Accounting Girl to the rescue!


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