Grow your small business the right way

For entrepreneurs, the goal isn't merely to expand -- it's to seek out new business that's truly worth your time.

Target the right customers

small business watering

To determine which clients are most valuable, score them not just on profits, but on profits per effort, says business coach Yoon Cannon.

Use the worksheet below to calculate each customer's score value -- then rank them, with the highest being the best.

VALUE SCORE

WORKSHEET

Total revenue from Client X: $______
Cost of acquiring client*: $_________
Total job costs**: $_______________
Profit for Client X: $______________
______________________________

Total hours worked: _____
Profit per hour: _________
_____________________________
Relationship bonus:*** +_____
_____________________________
Value: $_______

* Tally up all the marketing costs: direct mail, presentations -- even wining and dining.
** Include only materials, mileage, shipping, and labor (including your own) directly tied to that project.
*** Aggravation counts, but so do frequency of work, length of relationships, and number of referrals they bring. Score clients on a 1-10 scale, 10 being best. Then turn the bonus into a percentage (5 becomes 50% or 0.50, for example) and multiply by profit/hour. The example below is based on a score of 10.

EXAMPLE

Total annual revenue from Client X: $20,000
Cost of acquiring client: -$1,000
Total job costs: -$13,000
Profit for Client X: $6,000
_____________________________

Total hours worked: 100
Profit per hour: $60
_____________________________

Relationship bonus: +$6
_____________________________

Value: $66

  @Money - Last updated November 11 2013 12:12 PM ET
Join the Conversation
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.