While most coaches focus on building their practices, it is worth reminding you of times when you do not want to accept money from a prospective client. Sometimes, even if your practice is only at the kick-off phase, saying "no" to a client saves time, trouble, and the opportunity cost of preventing your from working with better clients on better engagements.
Following are ten warning signs that you might not want to take money from a prospective client:
1. The client might be involved in unethical activities. If you are working with a client and it becomes clear that they are being unethical or even engaged in illegal activities, get out fast. You do not want to be associated with them. I worked with a rapidly growing technology firm and it became clear that the leadership team was misleading investors about how far along their technology was. They were lying to investors even as a public company. This led to sleepless nights. Do I contact the SEC? Do I blow the whistle? The one thing I was clear on was that this was not a client for me. I resigned immediately.
2. The client might polarize your target market. Some clients are controversial. Consider certain political parties, non-profits that do activities that do activities that many in your community disagree with, and businesses that are not known as stewards of the community. Even if you disagree with the controversy, remember that perception is reality. It is hard enough to get visible in the market and build a solid reputation. There are plenty of organizations that are perceived favorably, or at least neutrally, in the market. Why put your reputation at risk by having a client who is polarizing?
3. The client will be stingy with referrals. Most coaches rely on referrals from clients to build our practices. Most clients are glad to help, but I have found that some are stingy, no matter how much value they agree that they get from you. I would rather refuse a client that won't give referrals to leave time for the many clients who are generous. In fact, my coaching contract includes a clause in which the client agrees that — if they are getting value — they will have at least one conversation with me about referrals.
4. The client will be "one and done." Similarly, I seek out long-term relationships with clients, not one-time engagements. While this depends on how well I deliver results with the client, going in I want to get a sense that this is a client that will work with me for the long haul, that they want more of a trusted advisor than a commodity vendor.
5. The business development phase was challenging, with lots of complaints, negotiating back and forth, and conflict. If the courtship is difficult, the marriage will be horrible. If I get a sense during the business development phase — the courtship in a business relationship — that this is going to be a tough client, my instincts are almost always correct. I will tell the client that I don't see a fit. Interestingly, this often causes the client to want to work with me even more. In the past when this happened, I priced the engagement higher than I normally would, at the break-even point where it was worth it for me to work with this client. That way, the ball was in the client's court to either say "no" or to pay a premium for being difficult. As my practice has advanced, I stopped doing this and just refer the client to a competitor that I don't particularly like. It's not worth it to be in a lousy marriage!
6. Your practice has advanced beyond the client. Good coaches keep moving forward. Sometimes a long-term client, or a potential new client, is not going to be enough of a challenge for you, be able to pay enough, or represent the work you want to be known for in your current practice.
7. You are thinking of discounting your fees for this engagement, in the hopes of raising them with the client on the next engagement. Good luck! Once a client negotiates you down, they are already telling you they don't value your work. You have instantly told them you are not on equal footing with them and you can expect that — if there is a next engagement — it will be very hard to negotiate your usual fees.
8. The client is uncoachable. When an organization tells an employee they need coaching, that is already a red flag. Make sure that the employee is coachable, the sponsor will set you up for success, and that all parties are aligned and on board. Otherwise, run.
9. Something tells you that you don't want to work with this client. Every time I have not trusted my instincts early on, the engagement has gone poorly. If you get a bad vibe, walk. See point #5 above.
10. The client doesn't have a big enough issue to justify your fees. I won't take on a client or engagement if the solution to their problem isn't worth 5 to 10 times my fees or more. Otherwise, the client doesn't have enough skin in the game to participate fully in the coaching. You won't get results, the client won't be happy, you won't get referrals, and your reputation could suffer.
As noted above, there is a silver lining to all of the above instances where I might not take on a client. Now I am much more on equal footing during the business development phase — and clients feel this and respect me more. It is almost like I am interviewing clients to find out if they are a good fit for me, rather than the other way around (although of course we are both assessing fit). I coach clients through the decision process, and if it doesn't look like a fit for me, I am open and honest about it. As a result, prospective clients seem to respect me more and want to work with me even more than they did before I adopted the above guidelines.