Eight in ten SMEs missing out on income with ‘friendly’ clients

SME owners know the importance of building solid relationships with clients, but could it actually be losing you money? New research by Yell has found that 85% of SMEs are losing on average almost £80 per appointment due to ‘friendly’ relationships with clients.

The study, which surveyed just over 250 small businesses owners in the UK, explores how business owners separate their professional and personal lives and the impact this can have on their finances – particularly at a time when many small businesses may be struggling to stay afloat.

The nature of small business means owners often engage with the same customers on a regular basis, developing closer relationships with them than the average high street brand would.

According to the survey, 86% of SME owners work with clients that have become friends or already were – with numbers rising to more than 94% for those in the beauty sector, and 90% in the trades.

In addition, 75% of SME owners said they find it hard to set boundaries with their clients.

The vast majority (82%) admit that they take more time with ‘friendly’ clients, spending an extra 25 minutes on average with each of them.

Outside of lost earnings, the blurring of personal and professional lives is also taking a toll on business owners’ free time – 98% of those surveyed admitted to replying to business queries within their personal time, with that figure growing to 100% for the beauty and trades sectors.

Many SME owners said they find it hard to tackle the issue or have been put off from doing so due to bad experiences when trying to enforce time boundaries or payment terms – 59% said they’ve received negative responses from customers in this scenario.

Setting boundaries with clients

Sarah O’Rafferty, head of PR at Yell, shares tips on setting boundaries, getting paid and separating life and work.

Communication is key

“A lot of business owners can immediately be on the back foot when an appointment is overrunning, because they haven’t already communicated any extra costs that will be incurred to the customer,” says O’Rafferty.

“Having to backtrack and try to get this extra fee paid after the time has been spent is where a lot of these negative responses can come from as customers could feel ‘cornered’ into paying more, or that they haven’t agreed to the additional spend.

“If you feel your session might overrun or are mindful that previous sessions have done so with that particular client, it’s always best to communicate before this happens of any additional fees, or that you are simply unable to spend the time due to other commitments.

“This way, both yourself and your customer will be in agreement, and there’s no grey area no matter how close your relationship is.”

Visualise these boundaries

“Detailing any policies on your website and directing all new or existing customers to these – and any changes in them – will go a long way. You can then refer to these during appointments too to continue to set the boundary.

“Having these policies present on a website or even social media bios can be particularly useful for customers that contact you out of your working hours. Listing these clearly manages expectations of when you will and won’t respond.

“There’s a reason large companies have their customer service opening hours clearly displayed wherever you can find contact details for them – it should be no different for your business, no matter how big or small you are.”

Separate work from your personal life

“It isn’t all up to your customers to read your website, your policies and when you are available to answer phone calls or reply to messages – you need to manage your time too.

“When starting up, many business owners opt to use the same phone number and email address for the sake of ease. However, ignoring calls or messages when they’re right there in front of you is easier said than done.

“Setting up a business email and purchasing a low-cost work phone that you can switch off once the working day is done will go a long way to solving this problem.”

 The power of saying ‘no’

“A big skill to learn in any business is being able to say no,” adds O’Rafferty. “There can be a tendency to want to agree to everything, please everyone and take every job on, but it simply isn’t possible.

“Remembering that you’re the boss and that you make the rules is key. Politely declining a request or making it clear up front that an appointment needs to finish at a particular time will help to manage expectations with your customers and, in the long run, help them to respect you and your business more.”

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Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, TNW, UKTN, The Business Magazine and Maddyness UK. She also works closely with agencies such as CEW Communications to develop content for their startup and scaleup clients.