𝗙𝗶𝘃𝗲 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗙𝗮𝗶𝗹𝘀 / 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀

90% of startups fail. How can you ensure yours thrives?

Over the next few weeks, we are covering the five crucial execution pitfalls in your startup and how to avoid them. Today is our second execution pitfall in the series: customers.

"Toxic business relationships can suck the life

out of your company and prevent growth."

- John White

Just as pruning dead branches encourages tree growth, you may need to remove customers who hinder progress and distract your team.

Many founders obsess over customer acquisition, so letting go of any customers might feel counterintuitive to growth. However, it’s necessary if you want to get your next series of funding.

Pruning problematic customers reaffirms your startup's value and frees up the resources you need to focus on your target market.

First, let’s dig into reasons to fire a customer.

Reasons to Fire a Customer

Here are three circumstances that will force you to make a tough decision:

They don’t share your Values – The customer is morally or ethically challenging (e.g. dishonesty and harassment), disrupts your operation, or ruins your reputation.

They clog up Operations – The customer asks too much (e.g. daily support tickets), which costs lots of time in requests and responses.

They’re hurting Finances – The customer goes way beyond the payment terms (e.g. unauthorized shared access across many people).

Can You Fix the Issue?

Sometimes, the problem can easily be fixed with better communication.

Perception – Some customers do not realize they are being disruptive. They need to be told about the issue clearly, firmly, and calmly.

Connection – Some customers need a new approach to change their behavior. (A strong successful team can do this, as well as increase retention and upsells.)

Funding – Some customers are embarrassed by their inability to pay. You may create an agreeable payment plan or lower their tier.

How to Fire Smoothly

If you decide the customer needs to go:

• Stay respectful in your messaging

• Offer objective reasons for your decision

• Suggest a replacement option, if possible

• Remain focused on the next steps, even if they get angry

I have seen many transitions handled respectfully, and later, the customer returns and even refers others.

Avoid This Happening Again

An entrepreneur’s life is a series of lessons. Here are a few I’ve learned to help you avoid being in the position of needing to fire a client:

• Determine who is not a good fit early in the process based on objective criteria

• Set clear expectations of what they will and WILL NOT be getting

• Review lead sources and see if there is a common source of bad customers

It’s tough to let go of paying customers, but their negative impact can erode your business. Prune as needed, maximize your growth.

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This post was written by me with AI editing. The illustration is generated by AI.

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