This week Oliva Stefanino helps her clients realise that discounts can be a false economy.

Working in the same office for nearly 14 years, Sue and Jane not only were able to cover for each other over holidays and sickness, but they had also built up a great friendship too.

When their boss had retired, he had sold his engineering business – with the result that Sue and Jane found themselves being made redundant. Both had been given a generous redundancy package , and after lots of discussions late into the night, they had decided to set up their own business offering highly skilled secretarial services.

At first, eager to build up their business, the pair had offered their clients special rates – in the hope that they would be able to put up their fees at a later date. Like many people before them, they were soon to realise that it is harder to put up fees than to discount them – and as a result Sue and Jane were working increasingly long hours for little return.

Neither woman had stopped to think about the efficiency of their business but matters came to a head when Sue’s husband issued an ultimatum. “It’s either me or your business,” he told Sue. “I’m sick of spending so much time on my own and frankly, it’s not as though your business is even successful!”

Initially Sue had been hurt by her husband’s comments but as she calmed down, she began to see that he had a point. Realising they needed help with their business focus, they had booked a session with me in a bid to see where they were going wrong and how they could improve matters.

At first, Jane was adamant that the company was thriving, “We must be,” she said. “We have a full diary – and even have prospective clients desperate for us to squeeze them in.”
Jane also believed that the amount of repeat business that their secretarial company had generated was proof of the organisation’s success. Sue though was now beginning to have doubts. “It’s true to say that we provide an excellent service, however I’m not sure that I would put all of our clients in the same ‘excellent’ category.”

Recognising that Sue had put her finger on the problem, I asked her to continue. Addressing her comments to Jane she said: “Well, if you think about it, we got many of our clients in the first place because we were prepared to undercut our fees. While this did gain us some clients, when I look back on it, those who pay the least expect the most!”

Jane accepted this truth gracefully – and the pair of them welcomed my suggestion that we list all of their company’s customers and categorise them according to whether they were “good” or “poor” clients. Jane began to laugh as she put a couple of their most troublesome clients into the “poor” category. “Do you know, to be honest, I’d be happy not to work for some of these people ever again,” she said.

”But how are we going to tell them, without offending anyone?” Sue asked. “After all, it wouldn’t be very good for our reputation if people get to hear that we’re in the habit of firing clients!” It was a valid point. “How about being honest with them?” I suggested. “Tell your ‘poor’ clients that you can now no longer afford to continue working with them. You may want to suggest that you’d understand completely if they wanted to source another cheap supplier – however, if they want to continue using your services then they will have to pay the proper rate.”

Sue looked a bit daunted by the thought of the conversations that lay ahead. “What do you have to lose?” I asked. “Think about it, if the ‘poor’ clients take your news badly then are they really the kind of people you want to do business with anyway? After all, negative and difficult people can really sap your energy. And I think you may be surprised – and you’ll find that most of your ‘poor’ clients will readily accept your new prices if it means they can retain your services.”

As we continued our session, Sue and Jane worked on creating a plan for creating future win:win deals. I also suggested that the pair should agree on an optimum number of ‘good’ clients for their business. “This way, you’ll learn to say ‘no’ – and to charge a professional fee. And by only taking on a certain number of clients at a time, you’ll also be able to ensure that you finish on time – and can spend time more with your husbands!”

* Olivia Stefanino is a leadership development consultant and executive coach. To find out more – and to download your free e-booklet “128 ways to harness your personal power”, visit www.beyourownguru.com.