Most everyone “gets” that they have to say no sometimes. But that doesn’t mean it’s easy to know when to say it.
Most owners feel that if they’re going to tell their best customer no, they’d better have a damn good reason for it. “What if I say no when I should have said yes? What if I’m just having a bad day, and my no is a knee-jerk reaction? How do I know when it’s the right time?”
With this kind of hesitation, you may never say no, and you’ll always be stressed about it.
If you’re going to turn away new business, you want to be sure you’re making the right choice. So how do you develop the confidence to know that you’re saying no at the right time?
Why Saying NO With Confidence Is Important
Before we get into the how-to, we need to talk about why it’s important to say no to clients — because if you don’t see the value in saying no, why would you ever put yourself through the stress?
Preserve Health and Sanity
First and foremost, you say no to preserve the health and sanity of your team.
Saying no takes care of your team so they’re ready and able to do the next job. It ensures they can do their best work on every job you say yes to. That’s priority number one. It’s a good tactical reason: Set your team up for success, not failure.
This next why is strategic. As you become more and more focused on ideal customers, you want to reserve capacity for your best clients. Don’t fill up your calendar with empty revenue calories. Don’t sell capacity just because you can.
Hold some capacity in reserve so that you can help a good customer or a good prospect with their next job.
If you have just enough capacity to do one more show, you’ll get so much more impact out of reserving that additional opportunity for a strategically important prospect or customer.
But what happens if you don’t sell that job? You’ll still get some value. You’ll know confidently that you have capacity available. And if you’re quoting or dealing with a change order from an existing client, having some wiggle room can make all the difference in the world.
Elevate Value Perception
There are so many good reasons to reserve capacity. One is that being able to say no to a client expresses scarcity.
You want to avoid using scarcity as a weapon or a threat by telling clients if they don’t confirm, you’re not going to be available for them. That’s not the goal here.
Instead, you’re helping clients understand that scarcity is important. You’ll do everything you can to reserve capacity for them, good client that they are, but there’s a limit to how much capacity you have.
You’re communicating to your best customers how you prioritize your time. Even though you don’t want to be, you’re scarce. But you’re less scarce for the right customers. (You don’t have to explain anything to your worst customers. It’s just, “No, thank you, we’re too busy.”)
The benefit of no here is helping your best clients understand how hard you’re working to say yes.
How to Say NO With Confidence
As you start evaluating opportunities for next year, use the tools to evaluate which jobs to quote and which jobs to say no to.
Improve Sales Forecasting
As business owners, we always have to work on being better at sales forecasting. This includes getting better at assessing the likelihood of available business, the density of busy periods, and how much work you’ll likely take on during a period.
This can involve a lot of conjecture and a few leaps of faith, but we’ve talked about several concrete ways to get better at sales forecasting in the past.
It’s important to know what your process constraints are. More than likely, your biggest process constraint is people.
You may have a process constraint of being unable to find enough technical crew to fill out your shows. I would bet, however, that you run out of project managers before you run out of technical crew.
The key is knowing exactly what your capacity trigger is and tracking it carefully.
Know Your Margins
A great way to say no is to really understand what you need to charge for things. In other words, know your margins.
You need to know what you should be making so that, when the time comes, you’re able to say, “No, I can’t do the job at that margin. It’s not fair to me.”
I’ve been in sales meetings where a company is looking at an opportunity and trying to squeeze more money out of a job so that they can get a client to sign on. That’s when I tap the brakes and say, “This is the last job you can sell during that time period, and you’re trying to cut your margin in order to fill it. Why don’t you hold back and use it as your flex capacity? Maybe you’ll find a better client and make a higher margin for it.”
Manage Scope of Work
The hardest thing to do with confidence may be managing your scope of work. It’s a challenging balancing act between not underselling and not overdelivering.
We all have the tendency to tell ourselves a little lie, saying, “We probably have capacity hiding somewhere in the jobs we’ve already promised. Sure, we can manage one more.”
But if your organization is good at managing scope of work, then what the scope of work requires is not fudgeable. There’s no extra capacity hiding in there.
It’s what I call the “It’ll only take a minute” syndrome. If you’re good at managing scope of work, you know things take more than a minute. That’s why you won’t take on a job that “will only take a minute” to manage.
The point of managing scope of work well is that you’re much more honest with yourself about available capacity. And that leads to a more confident no.
As an example, let’s say you have five jobs. Each has a scope of work that’s slightly different but uses a lot of the same resources. You think you can squeeze in a sixth job, but you’re teetering between a yes and a no because part of the capacity for the extra job will have to come from scraping capacity off the other five jobs.
If you’re good at managing scope of work, you’ll know you have no excess capacity in those five jobs. You can’t steal time that’s not there.
This is how you start to understand how valuable that little bit of extra time actually is. If you have extra time, it’s worth a lot. Don’t sell it for average margins.
Fear often shows up as one of two questions: “What if I don’t get the job?” or “What if I do get the job?” Either one could be a negative or a positive.
If you don’t know whether getting a job would be a good or bad thing and you’re just working from emotion, it greatly reduces your chance of making a wise decision. But there’s data readily available to inform you whether or not your fears are justified.
For this reason, the biggest tool for managing the fear that comes with saying no is knowing how to create and maintain a fiscal budget.
You have more data and usable information to make these decisions than you think you have. And if you don’t know how to interpret your data to help with this decision, it’s a great time to call me.