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Salt Lake City Bookkeeping Blog

Is Firing a Client Bad For Your Business?

Posted by Matt Roberge on Dec 22, 2014 7:00:00 AM

Fire a Bad CustomerUnless you are pretty green to the small business world at some point you have probably had to fire a customer of yours. So I pose you with the following question: is firing a client bad for your business? People that are new to business are probably thinking to themselves, "Why would you ever fire a client? That is refusing income. What a stupid decision."

On the surface firing a client can seem like a bad business decision. However, firing a bad client can be necessary; and a good thing for your business. So why would you ever fire a client?

It's Necessary

Sometimes firing a customer is just the right thing to do. Let's face it some people just don't work well together. Rather than trying to make it work, sometimes it is easier to end the business relationship before it gets ugly. A good customer relationship should not be something that you have to work at; it should be a natural good fit.

You may also have to cease service to a customer if they outgrow your services. If a customer is becoming too big that can be a bad thing for your business. Bigger customers, mean larger needs and revenues for you, but also increased risk. If any customer makes up 10% or more of your overall revenues I would consider that a risky client. Ending these relationships is easier because you can explain that they no longer fit well with what your services offer.

Lastly, is the bad client and this is just a no brainer to end the relationship. These types of clients are just a pain to deal with. They aren't accountable but they are needy. Bad clients are bad for your business and you shouldn't hesitate to end those relationships. Better yet don't start relationships with bad customers. I will talk about this a little later on.

But is it Good?

Sure, sometimes it is necessary to end a relationship with a customer. Whether they just don't work well with your services, outgrew your services, or are just flat out a bad client, you need to get rid of them. Firing a client is not easy and many people are not good at it because they become too emotionally involved. The key is to stay professional and try to end the relationship on as good of terms as possible, but also quickly.

However, I have another important question to ponder. Is firing a bad client good for your business? Many people are probably nodding there head yes and saying "Yes, absolutely. No question about it." But are they right? What would be your concerns with firing a client?

Obviously you would be worried about what they would say to their business network. Also, they may post negative reviews about you online. In the service business relationships are everything. Your reputation as a small business is so incredibly important and one bad review can tarnish it.

Work with Only the Best

Now you are probably thoroughly confused. So sometimes it is necessary to fire clients but you may ruin your business reputation by doing so? What the heck? So what is the solution?

The solution is to only work with the best clients, the ideal clients. The best fits for your service. But how do you find them?

First, you start by identifying bad clients and bad fits in the sales cycle and disqualifying them. You need to be picky and it is ok to say no to certain prospects. Again, newbies may not understand this but you can always find out the hard way and find yourself following the instructions above.

Second, identify which customers are good fits for your business. This is also known as buyer personas. Really drill into the details of who makes a good customer for your business. What education level do they have? How much income do they make? What are their interests? Etc, etc. 

Lastly, market to those customers that are ideal fits for your business. Don't market about your business and what you offer because that is going to attract all sorts of customers. You don't want all sorts of customers; you only want the best customers. Market to attract your ideal customers; don't market to your entire audience. 

Firing a client is necessary sometimes and it can be bad for your business. However, if done right firing a bad client can be a positive move for your business. The better plan is to avoid bad customers altogether. 

Have you ever fired a customer?

Why? What did you learn?

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Topics: Sales Advice, Small Business Growth, Grow Your Business, Scaling A Service Business, Scaling A Business