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5 Reasons Your Startup is Losing Business (and How to Stop It)

According to Don Draper, the day you sign a client is the day you start losing him.

But if you’re a small business owner, you can’t afford to have that attitude. It doesn’t matter how many clients your startup has; losing even one is bad for business.

In addition to lost billings, losing a client also means missing out on potential references and positive word of mouth. If you’re continually losing business and you don’t know why, it’s time for some serious introspection to identify the problem and correct your mistakes.

The 5 Biggest Reasons Startups Lose Clients

On the surface, clients leave because they’re unhappy or they no longer need your service. But in reality, there are some more specific reasons that could indicate a deeper problem:

  1. You think and act small. Being a small business doesn’t mean you should act like one. The only coffee shop in a one-stoplight town can afford to make customers wait, but a Starbucks on Michigan Avenue can’t. Acting small as a startup could mean dressing too casually, responding informally to clients, using crazy business titles (e.g., Master of the Universe), or communicating poorly.
  2. You’re impatient or inflexible. You can’t expect your clients to drop everything to talk to you, and you must be willing to make some concessions. You don’t have to say “yes” to every request, but do some calculations to decide whether the client (or a referral from that client) is worth negotiating with.
  3. You’re socially awkward. It’s fine if you feel more comfortable behind a computer screen than in front of a client, but if you can’t entertain clients and network, hire someone who can.
  4. Your books aren’t in order. If you can’t bill on time or provide assurances through financial documents that you’ll be around for the next 12 months, don’t expect clients to stick around.
  5. You oversold your value. Don’t commit to anything you can’t deliver. Don’t promise KPIs you can’t achieve or agree to unreasonable deadlines. Clients respect honesty much more than a failure to perform.
How to Avoid ‘Don Drapering’ Yourself out of Business

The key to avoiding these problems is developing your business in a way that encourages clients to stick around.

  1. Stay in touch. You’ll never see a departure coming unless you regularly touch base with your clients. Email doesn’t cut it. Have regular phone calls and in-person conversations with your most important clients, and hold in-person quarterly reviews.
  2. Surround yourself with experienced people. Hire a well-rounded team of people who have done this before. If your budget is small, hire part-time employees and create a plan to bring them on as full-timers.
  3. Get involved. Get together with your team, clients, and other leaders in your industry. If being social isn’t your thing, start small with a group you feel comfortable with and expand from there.
  4. Make time to think. Set aside time to dream and brainstorm new ideas for your business. Even if your ideas don’t solve problems immediately, they’ll at least kick-start the process.
  5. Hire an accountant and a lawyer. Hire full-time or contract people to keep your books in order and review your contracts. You should also have a CFO to oversee financials.
  6. Grow up. Far too often, I see a business owner’s immaturity kill a business deal. Being a 20-something CEO doesn’t mean you get to act like a rock star. It’s not uncommon for potential clients to run background checks on executives, so make sure you don’t do anything that could embarrass your company or your clients.
Of course, sometimes you’re doing everything right and clients still leave. If you’ve done everything you can to build strong relationships and a trustworthy business, it’s time to look at your messaging, offering, target audience, and sales funnel.

Talk to your clients to diagnose the problem. Ask them what they value most about your company. You might need to rebrand or tweak your offering, but at least you’ll be one step closer to fixing the problem.

What’s the biggest reason your business loses clients, and what are you doing to fix it?

Published: August 11, 2014

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Jason St. Peter

Jason St. Peter is a senior business development advisor for the Dell Center for Entrepreneurs. Much of Jason’s day is spent talking to startups and consulting with them on selling to enterprise customers. He has been with Dell for 12 years, working with everyone from small business owners to Fortune 50 companies. Connect with Jason on LinkedIn.

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