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Is it Time to Fire your Client?

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27 / Sep / 2012

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Every small business has them.  The client that makes you wish you hadn’t got out of bed this morning.  In these tough economic times we think we need to hold onto every sales dollar.  But the hidden costs associated with some difficult clients outweigh the return.  It’s important to keep an eye on these clients and know when to give them the bullet.

Signs its Time

Obviously you don’t want to pull the trigger every time a client seems difficult or irritating.  But there are some warning signs to look out for.

Margin Whittlers

If there are constant demands for a discount, the scope of every project always creeps beyond the original brief or the client is never quite happy and requires never-ending adjustments and fixes then your margin is being whittled away.  At some point you have to recognise that the return is too stingy – it really isn’t worth getting out of bed in the morning.

Energy Sappers

You know these clients: the customers that make constant unreasonable demands, call you outside of work hours, think they know it all and won’t respect your professional advice or simply can never made up their minds about anything.  You might not think their irritating behavior is impacting your bottom line, but think again.  Chances are your own time and energy is your company’s most valuable resource.  If you weren’t expending time and energy with this client, what else could you be doing?  At some point you will discover that your energy would be better invested elsewhere.

I.O.U. Clients

These are the clients that keep giving you the business but are incapable of paying on time.  Sometimes as small business owners we have to work with our clients when financial circumstances require.  But we should never have to put up with clients who simply don’t pay until you have harassed them incessantly and finally threatened to cease work.  As well as the cost of money, there is the emotional and financial toll incurred by constrained cash flows and the increased administrative costs associated with chasing your money.

Abusive Clients

Rude and bullying clients are not simply painful; they may have a direct impact on your bottom line.  First there is the potential impact on your staff.  If your clients are making your workplace undesirable you may find it difficult to retain good staff.  Second there is the impact upon you.  If nasty clients are demoralizing you, then you may lose the drive and self-belief you need to continue building your business.

How to Pull the Trigger

Once you’ve made the decision that it’s time to let go of a client, it’s important that you manage the disengagement in a way that will minimize any repercussions to you and your business.  Here are some ideas.

1. Set Boundaries

To allow yourself time to find clients to replace this one, a good way to start is to carefully review your contract and then set clear boundaries.  Remind the client of the contract terms and advise that you will charge for any extras, or that you do not have the time to work outside the contract.  You may find the client leaves of their own accord.

2. Announce a Massive Price Hike

This is another way to persuade the client to walk away on his or her own terms.  Just make sure that the price you quote is one at which you would actually be willing to work with this client on the off chance they says yes.

3. Offer Alternatives

Where possible refer your client to other suppliers, or find some other alternative method of getting the job done.

4. Be a Grown Up

Don’t act like a pimply-faced kid breaking up with his girlfriend via text message.  Meet the client face to face and keep the conversation professional.  There’s no need to give them a litany of their faults.  Simply tell them you are no longer have the time to service their business.

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