Firing a client is one of the most difficult decisions a business owner will ever make. And when push comes to shove, few actually do the deed. First of all, firing clients goes against everything a business owner knows. Clients keep the business going. Clients put food on the table. Clients spread the word and bring in more clients. So, when you consider firing one, it feels like youíre purposely harming your business. Second, itís a hard, uncomfortable conversation to haveóthatís why so many business owners never do it; they just hope the bad clients will eventually go away.
The truth, however, is bad clients hurt your company a lot more than they help it. Often, getting rid of them frees you up to do so much more productive work toward building your business that cutting that one terrible client loose means you can bring in several other better clients.
So, how do you do it? Here are seven rules to follow when firing a client:
1. Do it in a measured, planned way. Firing a client should not be a quick decision. If youíre angry, cool off before you even think about having this kind of conversation. When you decide to do it, avoid using the words, "Youíre fired."
You need a plan. You need to know exactly what youíre going to say ahead of time so bad feelings and harsh words donít come into play. Once youíve decided to fire a client, create a plan. Think about when itís best to do it (will a project be coming to an end soon?), where itís best to do it (should you go to them or meet in a neutral location?), and how itís best to do it (what will you say?). Then do it quickly, succinctly, and move along.
2. Line up a replacement first. Close a new client. Once you have new business secured, sit your old client down and say, "Weíve recently begun work with a new client and due to time constraints we will no longer be able to continue our work with you. We recommend that you reach out to [insert competitor]."
3. Phase†them out. Explain that youíre taking the business in a different direction, and as a result, youíre transitioning away from certain projects. Bring any projects you have with them to a closing point and then opt not to renew the contract.
If you can, give them a time frame. For example, "In three weeks, Project X will be complete. At that point, we must devote our time to other clients. We wanted to let you know now so that youíll have plenty of time to find another vendor."
4. Hand them off. Set them up with your competition. Yes, you read that right! At first glance, it may seem odd to hand your competitors a shiny new client, but think about it. Youíre not exactly handing over a gem. Let your competitors deal with the clientís bad habits. While they do, youíll be growing a much healthier business.
The great thing about handing clients off to your competition is that you can do so without permanently burning any bridges with the client. Tell them, "Iíve changed the direction Iím taking my business. I think youíll find that [insert competitor] will be better able to meet your needs at this time."
5. Call it like it is. If a relationship with a client has been especially contentious, the best route may be directness. You might say, "I think youíll agree that our working relationship has become strained. I donít feel that my company can satisfy you. As such, I believe it is best if we cut ties. [Insert competitor] provides similar services to ours. I recommend that you reach out to them for your ongoing needs."
“They might start to promise that this time theyíll really change, offer to pay more, give you a bigger chunk of their business, and on and on. Donít give in.”
6. Tell them how youíll wrap things up. Clearly state how youíll be bringing your work together to a close. If any of these details are unclear, you run the risk of drawing the separation process out, which wonít be pleasant for you or your client. Tell them what duties youíll fulfill and give them a hard end date. Meet those fulfillments and stick to your deadline.
7. Stay strong. Itís not uncommon for bad clients to suddenly realize just how wonderful you are as youíre showing them the door. They might start to promise that this time theyíll really change, offer to pay more, give you a bigger chunk of their business, and on and on. Donít give in. Know that chances are a year from now youíll find yourself in the same situation with them. Let them go and focus your time on clients who appreciate you and your company from the get-go.
Michael Houlihan and Bonnie Harvey, authors of "The Entrepreneurial Culture: 23 Ways to Engage and Empower Your People" and the New York Times bestseller "The Barefoot Spirit: How Hardship, Hustle, and Heart Built Americaís #1 Wine Brand", started the Barefoot Wine brand in their laundry room in 1986, made it a nationwide bestseller, and successfully sold the brand to E&J Gallo in 2005. Starting with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles and create new markets. They now share their experience and innovative approach to business as consultants, authors, speakers, mentors, and workshop leaders.