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  • Writer's pictureBenjamin

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Updated: Apr 29, 2023


To cross a set of monkey bars, you must first let go and move your hand forward to the next rung.


With a bad client, you may feel like you have to hang on to them. You don't. In fact, letting go may be the best way to move forward.


While it may feel counterintuitive to fast growth, firing a client can be part of recognizing the worth of your business and realizing your full value. It also focuses the conversation on your ideal clients, allowing you to allocate resources to the best opportunities.


A disruptive client can upset your progress and negatively impact your team. One bad client may even distract your attention and resources from other clients and prospects.


โ€œToxic business relationships can suck the life

out of your company and prevent growth.โ€

โ€“ John White


In this post, we will look at the following considerations around firing a client:

  • The reasons to fire a client

  • How to decide

  • How to fix the Issue

  • How to fire a client smoothly

  • How to prevent this from happening again



The Reasons to Fire a Client


While you may have a vague sense that a client is having a large, negative impact on your business, deciding whether or not to fire a client should consider your company's values, finances, and overall business. The following are often reasons for deciding to part ways:


Values

  • The client is morally or ethically challenging (ranging from dishonesty to harassment).

  • The client behaves in ways that lead to disruption and stress.

  • The client brings down your reputation.

  • The client ignores your expertise or is argumentative instead of collaborative.

  • Overall, you worry that the client is severely impacting your vision.


Financial

  • The client pays late.

  • The client argues over agreed-upon fees.

  • The client goes beyond scope.

  • Overall, they overwhelm your resources (e.g., you spend excessive time preparing invoices rather than on the actual work).


Business

  • The client micromanages your efforts, which disrupts the process and costs time.

  • The client argues and disagrees with your ideas and process.

  • The client acts indecisively and causes you to do more work.

  • The client communicates poorly or refuses to give you the resources necessary to complete the project.

  • Overall, you can never satisfy their demands. For instance, they may seem to need everything right now; the work for them may consistently require something more than planned; or the deliverable may seem to never be right in their eyes.



How to Decide


These criteria are useful in the abstract when considering whether or not to let a client go. However, if you want a more objective measure, start by examining the relationship from all aspects, just as you would with any other important connection in your life.


Make a list of attributes you desire in a client based on the above considerations, such as the following:

  • Causes no stress

  • Pays on time

  • Communicates effectively


You may add many other criteria to the list and even weigh them based on importance. Once you have a list of criteria, assign a number between one and ten to each characteristic and then total the score. If the score is less than โ€œpassingโ€ you may decide that something needs to be done.



How to Fix the Issue


You can never control others, but you can control yourself. Sometimes, it really is you who can or should adapt either your communication or your approach to growth and minimize disruption. I canโ€™t emphasize enough with founders that relationships go in both directions.


Consider these approaches when dealing with troublesome clients:


Relationship. If the problem is around the relationship, have you tried pointing out the conduct that bothers you? In one instance, the client was yelling and cursing at me nonstop for five minutes. I calmly told them that we couldnโ€™t fix the problem while they yelled and asked if we could discuss solutions. The person was still angry, but we were able to move forward. Sometimes, the other person may not realize what theyโ€™re doing or the impact it may have. Done respectfully, being direct can help.


Cash flow. If the problem is financial, be clear on your goal and offer potential fixes. For instance, if the client is paying late, consider offering a small discount for paying early, accepting credit cards, or using a platform to manage payments.


Responsiveness. Have you tried being firmer around expectations? I suggest positioning these discussions around what the client is looking to accomplish. Once, I pushed back on a large client that was not providing the assets needed to complete a project. They were a large source of revenue, so I was nervous, but I told them decisively that the project will not be done on time unless they hold up their side of the agreement. I got what I needed soon after and they remained a client for a long time.


Self-awareness. Determine if your client is truly terrible. Sometimes, a second opinion is great. Try having another manager reason with the client. If the client is following the rules of engagement but also pushing your buttons, can you be flexible and possibly even grow? Find a way to adapt. For instance, if itโ€™s a personality conflict in customer service, try switching account representatives to someone whose temperament is a better fit.


Vulnerability. Most people have some level of compassion. If framing issues around the business doesnโ€™t work, identify the human impact. For instance, โ€œI enjoy working with you, but this one area causes my team a lot of stress. Can we talk about it?โ€ Your openness can be a catalyst for change.


In any approach, be direct and clear. So many bad relationships arise from poor communication. If expectations are off, call it out as soon as possible. โ€œI havenโ€™t been clear how our business operates, and we need to address this matter now.โ€


Lay out the problem, how it impacts your team and business, and the expected behavior. You may need to be clear about the consequences, such as increased costs or termination of the relationship. By calmly and clearly identifying the impact on your business and the consequences to the client, you may see a stronger positive response than you expect.



How to Fire a Client Smoothly


Before and during the process of letting a client go, here are some steps to keep in mind:

  • Review the statement of work or services agreement. Be clear on the formal terms.

  • Ensure the timing is right. For instance, firing a client days before a major deliverable reflects poorly on you.

  • Reach out with a call or video chat. Then follow up with a formal email.

  • Stay calm, rational, and respectful. Find the right time to talk (e.g., not right before a board meeting).

  • Offer objective reasons for your decision. For instance: โ€œIโ€™ve run the numbers and based on the time our team has committed the last six months, weโ€™re losing money on your account.โ€

  • Be strategic if you canโ€™t be direct. Sometimes, the situation calls for being ambiguous. In these cases, provide a vague justification such as that youโ€™re moving in another direction or youโ€™re drastically changing your fees; however, whatever you say, make sure youโ€™re covered if the client offers to agree to updated terms or fees.

  • Resist escalation. The client may get angry but remain calm and stay focused on your decision. Focus on letting them go versus the temptation to โ€˜let them have it.โ€™

  • Suggest a replacement company or service, if possible. Sometimes itโ€™s truly just a bad fit. You charge a fixed amount, but another firm charges hourly and is happy to spend extra time with the client, for example.

  • Set expectations for what comes next. Discuss the transition and finish any outstanding work.

  • Create and send a final close-out list. You may need to contact other people who work at the clientโ€™s company. You donโ€™t want to assume your business contact relayed the message or knows their transitional needs, so wait for a few business days and if you have another contact at the clientโ€™s company, reach out directly.



How to Avoid This Happening Again


After firing a client, you have a chance to improve your process and avoid this reoccuring.

  • Qualify better. Screen out clients who will not be a good fit. For instance, if you have net 30 terms and a small business is fighting for net 90, thatโ€™s a bad sign. Check references. If you sign a client and their payment is late, call it out immediately.

  • Set expectations. Ask tough questions about the timing, quality, and quantity of deliverables. Clarify any gaps in your understanding since those questions may come up negatively later.

  • Test them. For example, if you need responsiveness to complete a project, demand some basic information upfront. If there are technical requirements, provide a checklist before signing the deal. Paying attention to their responses now could prevent future problems.

  • Revisit pricing. If you offer a project rate or retainer, include examples of exceptions such as fast turnarounds, out-of-scope work, or meetings after normal business hours. These demands will result in extra fees because they will put additional strain on your team and resources.

  • Review lead sources. If many bad clients originate from the same channels, you know what to do.

  • Beware of long-term promises without commitment. If the client is not response to your immediate needs, thatโ€™s a bad signal.



Key Takeaway: Itโ€™s tough to let go of a paying client both financially and psychologically. However, when a client has a corrosive and oversized impact on your business, firing them shows support for your team and enables you to identify and focus on ideal customers.


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Photo by madsmith33 who can be found here.


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