Have you ever heard of Baker’s Law? If you haven’t, here it is. It’s so simple, but business owners grapple with it all day, every day:
Bad customers drive out good customers.
That’s it. Easy, right? No, not so much.
Ron Baker is one of the most gifted strategic thinkers I’ve ever had the pleasure of meeting, and he has written THE most authoritative book on value pricing. I have referred to his articles and his books on many occasions in my CPA practice. I heard Baker’s Law for the first time in 2012 and I think about it every time we begin thinking of working with a new customer.
Anytime you say “yes” to work with a new customer, you are saying “no” to something else. So, it’s an absolute fact that you should WANT to work with the customer you are saying “yes” to so much so that you don’t mind forgoing the opportunity to do something else.
So, why do we find ourselves working with customers that are not utter and complete joys to work with? There are two reasons: Because we stink at saying “no,” and because providing solutions to people who need them is why we exist. Those are dangerous traits when you run a knowledge business.
How could you apply Baker’s Law to your business?
We’ve discussed how difficult this is with our clients, often in the early stages of business ownership. New business owners are especially prone to accepting ill-fitting customers in the beginning because revenue is paramount in the early years of any business. But if you’d like to hear more about our experiences with applying Baker’s Law, or want to share your own, let us know, or comment to this post. We’d love to hear your cautionary tales!
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