I’ve been reminded several times over the past nine months, that one of the most difficult decisions for any entrepreneur is knowing when to walk away.   Yet every entrepreneur is faced with at least four important opportunities to walk away, which, if done thoughtfully and expeditiously, will ultimately strengthen the company.  These are:

  1. Walk away from the wrong customers
  2. Walk away from the wrong investors
  3. Walk away from the wrong employees
  4. Walk away from the wrong partners

It may seem odd to talk about building a successful company, while walking away from any resource or opportunity, but, in fact that is often exactly what is needed.  This post focuses on customers.  But why would anyone walk away from a customer?

In the first few months after forming our company, I received a number of requests from clients of my previous company, asking to buy services that, quite frankly, I wasn’t selling.  A one-day strategy session was quite attractive in my former company, when I was dispensing advise, but had no financial stake in a) whether they took the advice or b) the financial impact on the company of taking my advice.  But if I were to take that type of work today, I would lose the opportunity to participate in the risk-based upside that is inherent in our current business model, not to mention the fact that I might have been considered in violation of my non-compete agreement.  And while it’s still hard to say “no thanks” to someone that you respect, and with whom you’ve shared much over the past twenty years, who is offering to pay good money to “pick your brain for a day,” ultimately, it doesn’t serve the interests of the clients that see value in the business model we’ve developed.

While this list is admittedly biased by my focus on technology providers and technology buyers, here’s my top-five list of the customers to avoid:

  1. The customer that wants you to make money off everyone except him
  2. The customer that provides no internal champion to support your success
  3. The customer that requires a support level that you don’t currently offer
  4. The customer that requires customization without offering a commitment
  5. The customer that is misaligned with your core business model

Ultimately reputation will become one of the key assets of your company.  It’s as important to know what you can’t do as what you can.  Potential customers from which you walk away today may help bolster your reputation as straight shooters.  And in time, these companies may become good customers, because you focused, as did Bill and Dave, the founders of Hewlett-Packard, on making money today.