Not all clients are created equal. Some are a joy to work with because they value your expertise, respect your time, and pay promptly. Others … not so much. Yet when you are building your firm, it’s tempting to say “yes” to every client, even the ones who drain your energy. But here’s the truth: The wrong clients could be holding your firm back from achieving its true potential, as well as taking up more capacity than expected.
You’re reading the third article in a three-part series designed to help you to reclaim your time, empower your team, and focus on what really matters in your accounting and bookkeeping firm. You can read two articles leading up to this one, streamlining your workflows to free up capacity and the second article on eliminating scope creep, on the Firm of the Future blog.
Client selection isn’t just about who you work with; it’s about the kind of firm you want to build. By grading your clients and understanding your ideal client profile, you can create a portfolio of clients who align with your goals, respect your boundaries, and drive profitability.
This post explores how to assess your current client base, develop a strategy for improvement, and build a firm centered around clients who truly value your work.
The problem with "any client will do"
When you accept every client who comes your way, you set yourself up for a range of challenges, including capacity strain, team frustration, and opportunity cost.
Simply put, difficult clients demand more attention, leaving less time for high-value work. Demanding clients also cost more because their frequent, urgent requests can consume as much time as two or three ideal clients.
Having to work with difficult or demanding clients also has a negative effect on your team’s morale. Team members may express frustration, or worse, silently endure their feelings until they suddenly announce they are leaving the firm.
And of course, every minute spent on the wrong client, is a minute that could have been spent serving your best clients or pursuing new opportunities.
The Solution: Grading your clients
To build a sustainable, rewarding client portfolio, start by assessing your current clients.
Step 1: Create a client grading system
A simple A-to-E grading system can help you evaluate and categorize your clients based on key criteria. Here’s an example criteria to consider:
- Revenue: Does the client pay the right price, do they pay on time, and will they buy more?
- Behavior: Do they respect boundaries, and do they share our values and deadlines?
- Alignment: Do they value your expertise and align with your firm’s goals?
- Ease of work: Are they organized and communicative?
Example of grading definitions:
- High revenue, they respect your boundaries, and are aligned with your ideal profile.
- Good revenue, are reasonable to work with, and have the potential to become A clients.
- Average revenue, they have occasional issues, and some require more effort.
- Low revenue, there is frequent scope creep, and they cause frustration for your team.
- Actively harmful to your business: They drain time, morale, and resources.
The grading process must be done at least annually because we all know things change. A few firms we work with update their grading on a quarterly basis, while more firms do it every six months.
Step 2: Develop a plan for each grade
Once you’ve graded your clients, decide how to manage each category. Your exact steps may vary, but in general here are some good guidelines to follow:
A Clients: Focus on nurturing these relationships. Offer them premium services or exclusive perks to deepen loyalty. Do everything you can to make them happy and remain with your firm.
B Clients: Identify what’s needed to move them to A status, then act on that. For example: They may need better onboarding or clearer communication about scope and expectations.
C Clients: Set boundaries to prevent them from slipping into D status. Consider raising your fees or limiting the services to make the relationship more profitable.
D Clients: Re-evaluate the relationship, and consider re-negotiating terms or referring them to another provider.
E Clients: Have a clear exit strategy, whether to sell as a block of fees to another firm or simply to ask them to find happiness elsewhere. Send them a nicely worded letter as soon as you can stating something along the lines of, “Thank you for working with us, but we’ve reassessed our capacity and are unable to continue supporting your needs.”
In a nutshell, it’s essential to have clear plans on your service levels, client and internal communications, the firm’s up-serve steps, the find happiness elsewhere steps, and continuously updating the client grading.
Step 3: Define your ideal client profile
Building a client base full of A and B clients starts with knowing what you’re looking for.
Key questions to define your ideal client:
- What industry or niche do they operate in?
- What’s their business size or revenue?
- What challenges do they face that you’re uniquely positioned to solve?
- What’s their communication style, level of organization, and responsiveness?
- What values do they prioritize? Examples include growth, collaboration, or efficiency.
Your ideal client profile acts as a blueprint for marketing, onboarding, and deciding whom to work with. It’s not just about saying no; it’s about saying yes to the right people and actively working to attract more of them.
By the way, I know many firms who have solid C clients. For them, their C clients are profitable, they follow the process of being a good client that the firms explained when taking on these clients, and they don’t take time away from A and B clients.
Building a client selection strategy
With a grading system and ideal client profile in place, you can take actionable steps to refine your client base.
Step 1: Audit your current portfolio
Go through your entire client list and grade them. Identify the trends. For example, are most of your clients in the A-B range, or are you spending too much time on C-D-E clients?
Step 2: Focus your marketing
Tailor your messaging to attract your ideal clients by highlighting the specific problems you solve and the value you deliver for those types of clients. Example: If your ideal clients are restaurant owners overwhelmed by cash flow management, emphasize your advisory services in this area.
Step 3: Build better boundaries
Use engagement letters to set clear expectations about scope and fees, and regularly review client relationships to ensure alignment with your goals. Make certain your staff is empowered to flag an out-of-scope request from a client the minute it occurs.
Step 4: Transition away from low-grade clients
Start with your D and E clients—and be professional and respectful when ending the relationship. Ideally, refer them to another firm that is a better fit for them, and ensure the offboarding is done in a professional manner.
The payoff: A sustainable, rewarding client base
When your clients align with your ideal profile, the benefits are profound. Because serving the right clients takes less time and energy, you’ll actually increase capacity that frees you to focus on high-value work. Your team will be happier because they get to work with clients who appreciate their efforts and align with their workflow. Your profitability will go up because “A” clients often bring in higher revenue while requiring fewer resources. Done consistently, your firm can grow in a strategic way. With a curated client base, you will have the capacity to explore new opportunities such as scalable advisory services.
Building a firm of A, B, and C clients doesn’t happen overnight, but every step you take brings you closer to a practice that’s both sustainable and fulfilling.
The clients you serve define your practice. By grading your current portfolio and focusing on your ideal client profile, you can create a firm that’s built around respect, alignment, and growth. Better still you’ll free up capacity that was spent on those E clients who took up the most time, didn’t want to pay for it, and the team found it hard to work with.
Imagine a practice where every client values your work, respects your time, and contributes to your profitability. It’s possible—if you take the time to refine your approach to client selection.
What’s your client grading strategy? Start today by identifying your top five clients and what makes them great.
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