A couple years ago, I came across an article about the Japanese art of growing apples and it struck a chord with me. Shortly after reading it, I was driving down the highway and it hit me: there was a parallel between this process and what is necessary in running a business.
When you hear the term “pruning,” you might picture a sunny garden and a person gingerly tending to plants, but pruning is also something that every business must do – especially ones with repeat business.
Merriam-Webster defines the verb “prune” as this: “To cut off, or remove, living or dead parts (of a plant) to improve shape or growth.”
Let’s think about that for a second. There are times when we must remove living – perceptibly healthy – parts to improve growth. It can seem counterintuitive, but this is a concept with which I whole-heartedly agree. I am firm believer that by pruning our client lists, we can:
1. Be more profitable
2. Free up more time
3. Improve the lives of ourselves and our employees
In Japanese apple farming, cultivators use an extremely time consuming and labor intensive process to harvest apples. The ultimate goal is to yield a crop of perfect specimens, not to sell as many apples as possible. Part of this process is to place each apple in a paper bag to protect it from pests until it has grown quite large. This results in a white albino apple that can later be perfectly sunned to uniform redness.
Another part of this process is to cull the herd down to only the best candidates. A tree that begins with 4,000 flowers will be pruned down to only 200-400 flowers. Then when the fruit first starts to form, any blemished apples are discarded. The aim: to encourage only the best apples to grow, resulting in a fruit that is 30% larger than those found in the US.
This same philosophy applies in business. We must cut to grow. There are clients that consume too much time and energy in return for little payoff – in terms of both firm revenue and value perceived by the client.
When I read this article, we had several clients like this. The workload was heavy. The clients were demanding when they waited on us and unresponsive when we waited on them. To make matters worse, the work always appeared in the peak of busy season.
At this point, you’re probably thinking the fee must have made it all worth it. However, this is where logic goes out the window; the fee we were charging them essentially reflected an 80% discount. In fact, even the idea of raising the prices was scoffed at.
You know this kind of client. It’s the kind where you end up figuring out you only earned minimum wage after all the time you spent on it.
My stance was this: we’d be far better off eliminating these clients and using that time for new and more valuable clients; yet, we always kept them, in hopes of (wait for it) being referred more clients like them. I used to think, “Are you kidding me? We want more?” The logic was baffling.
It wasn’t just that these clients were unprofitable from a financial standpoint, but they also strangled the life out of our employees. The people who worked on these jobs dreaded the work and it stole their ability to do their jobs. They needed to recover before returning to normal work.
The author of Implementing Value Pricing, Ron Baker, even coined a term for this – Baker’s Law – which states “bad customers drive out good customers.” It happens more than we care to admit. It’s during that recovery period when great, high paying clients get ignored. It’s not even intentional; it’s just a result of fatigue.
In the book Positioning for Professionals by Tim Williams, Tim does a great job of summarizing why this is true. He states “not every dollar is a good dollar” and in regard to low value clients he says,
They often treat your team with a lack of respect, thereby creating a relationship characterized by lack of collaboration, mediocre work, and strained nerves.
This one line captured everything I felt was wrong with these clients and everything that was being ignored by the partners of the firm.
Most business owners are afraid to lose a client because it means less cash in the door. Sure, you are losing that cash, but you are gaining the opportunity to work on better clients. By failing to reduce the drag, or friction, we strain our teams – slowing them down not only while working on that low value client, but also on the next client.
It’s all too easy to fall into the “same as last year” mindset, but it’s clear that every business needs to review what clients it has, whether they make money, and what they do to morale.
What I took away from the Japanese apple farm is this: I would much rather grow fewer apples and proudly sell them for $10 a piece than get burnt out selling a whole bushel for $2.99 a pound. It’s time to make some cuts.
Bryan is a recent cliff jumper looking forward to running a firm his own way. He aims to catalog his experiences here for future generations of cliff jumpers to learn from. Starting in January 2015, he will also be the Visiting Instructor in Accounting at Assumption College located in Worcester, MA. Bryan is also the co-host of a new podcast, Ctrl Alterego, which follows the saga of two new businesses in different stages of development. He has joined forces with Barrett Young of The Green Abacus for this adventure. Follow along atwww.ctrlalterego.com.