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If you’ve been in business long enough, there’s a good chance you’ve fired a client or customer. When you’re first getting started, you often need any business you can get. But once you get past that point, you usually realize that not all business is good business, and sometimes the best strategic decision for your organization — and for your own sanity — is to fire a client or a customer.
I’ve started several businesses, and with each one, I was eager to bring on anyone I could early on. Not only are paying customers needed to keep the lights on, but they can bring credibility to your enterprise. They can provide much-needed validation to the market and help you attract new business by communicating, “Company X bought from us, so you should too.” They also can provide a confidence boost to your team, allowing you to say, “Company X bought from us, so we’re clearly doing something right.”
Regardless of the stage your company is in, parting ways with business is rarely, if ever, comfortable. Whether you run a small business or a Fortune 500 company, you likely understand that your customers are elemental to your success and hate losing any of them. I’ve never enjoyed firing clients or customers, and I always try to keep them and make them happy if possible. But sometimes that’s either not possible or it’s more trouble than it’s worth, and then you have to consider giving up and moving on. A problem customer can sap you of time, energy and resources. They can take a toll on your happiness and your mental health. The costs of working with a bad client can far outweigh the benefits.
Two examples from my entrepreneurial career illustrate this phenomenon:
Several years ago, we started a new venture and were eager to get any kind of business we could. We understood the importance of credentialing our company and needed signature projects to do so. While we were focused on building a business around larger projects, we took on a relatively small one and went out of pocket for it. We tried doing everything we possibly could to please this particular client, pouring an inordinate amount of time, energy and effort into the endeavor. We ultimately realized, though, that it was going to be impossible to ever make this client happy and that he would only make our lives more difficult with passing time. We were out hard costs on top of our opportunity cost, but we knew that we had to cut our losses. Firing the client allowed us to move on with our lives and our business and utilize our time in a far more productive manner.
The second example took place more recently. My office furniture company got a call from a person in need of a few chairs for his office. While his order wasn’t going to make or break the business, we aim to provide every customer with white-glove service. The company manager invested a significant amount of his time with this individual, going above and beyond our protocol trying to please him. When it became evident that this person was virtually impossible to satisfy and would always be more trouble than he was worth, the manager made the decision to terminate the relationship. He didn’t want to fire this customer — by that point, he had spent a lot of his own time and his team’s on him — but he knew that it was better than channeling even more resources toward someone unworthy of them. I strongly supported the manager’s decision, and while I didn’t fire the customer directly, my employee’s ability to make the hard but astute call was just as meaningful to me.
While it can be difficult to determine whether you should fire a client or customer, there are a couple of hard-and-fast rules I suggest you follow when trying to decide:
1. If the client or customer is making your life miserable, move on. Life is too short to be miserable.
2. If the price of keeping the client is higher than the price the client is paying you, move on.
The first example clearly met both of these rules. Sometimes, as in the second example, when the situation may not be quite as charged, trust your gut when making what is ultimately a tough, but important, judgment call.
March 7, 2019 at 09:06AM
Forbes – Entrepreneurs