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7 Signs It's Time to Drop a Client

By April 21, 2008

Have you ever been fired by a client? It's painful, embarrassing and even a bit depressing when it happens. It can completely throw your confidence as an entrepreneur.

And yet, it may be the best thing in the world for both you and your client.

But why let it get to the point that they have to fire you? Don't you want to be the one in charge of the relationship? Don't you want to end it on your own terms, as much as possible?

While you may feel like you really have to hang on to the client, whether for your own cash flow or out of your sense of commitment, there are several signs that it may be time to terminate the client relationship.

In some cases, the problem really is with the client, and you should just fire them:

  • The client is a jerk. Life's too short. Dealing with jerks is stressful, and if you're stressed, not only will it affect your mental and physical well-being -- it will also affect your ability to serve your other customers well. It will affect your relationships with employees and business partners. And if they're that difficult, odds are that they're not going to be a good referral source for you anyway -- they may even be a liability.
  • The client drains all your time. You may have heard of the Pareto Principle, aka "The 80/20 rule". In this context, it's the idea that 80% of your profits come from 20% of your customers, while 20% of your profits come from 80% of your customers. Now I'm not suggesting you should drop your smallest clients, just the least profitable ones. Sometimes it's difficult clients, but sometimes it's the nicest ones -- the ones who can talk you into doing just a little bit more, then a little more, then more, and so on. Scope creep! Try to draw the line with your client, but if it continues, you may have to cut them off.
  • The client doesn't do their part on time. In most projects, the client has deliverables as well as you. Just as the client relies on the project schedule to plan their business and cash flow, so do you. Their failure to meet deadlines is potentially just as detrimental to your business as your failure to do so might be to them.
  • The client doesn't pay on time. Sure, they pay eventually, so you live with it. A few days once or twice may be forgivable, but if it's a pattern, or if it stretches out more than a few days, you probably need to drop them. Remember, the time you're spending on them is time you could be spending finding and working for a client who pays on time.

In other cases, though, it may be more about your own situation than about the client:

  • You're spread too thin. If you're trying to manage too many clients and other projects, you clearly have to be less effective somewhere. If you don't take something off your plate, someone else will do it for you. Be proactive and make the decision as soon as possible so that you can be the one who decides what stays and what goes.
  • You've lost all passion for the project. While I certainly think you shouldn't stay in a business you're not passionate about, I'm not suggesting you should drop every client or project for which you've lost enthusiasm. But at some point, that's the case. Imagine you're working as a campaign manager, and something happens that causes you to stop believing in your candidate. Do you really think you can continue to do the best job for them? Isn't it your responsibility to let them find someone else who can really put their heart into it?
  • You've outrun your own capabilities. Maybe the project calls for expertise that you don't have. Or perhaps you can't deliver the quantity the client needs -- whether that's manpower or product. You may be able to find a partner to help you meet the requirements, but you also want to consider whether that's really the best option. Can you still operate at your best in that situation? If so, great, but if not, it may be best to just let it go.

These latter cases are especially difficult, because we feel a sense of responsibility to our client -- we've made a commitment and we want to keep it.

But isn't your real commitment to do right by your customer? If your client is happy with you, they may have a hard time accepting that you want to drop them, but in the long run, it's almost certainly in their best interest. Explain the situation and help them find your replacement. You may have to give up the current business in order to save the relationship, but in the long run, the relationship is more valuable.

Comments
April 25, 2008 at 9:02 am
(1) Yvonne Finn says:

Hi Scott,
I think your comments are right “on the money” as they say.
But these insights do not only apply to clients, they could be for any business or profesional relationship.
Couldn’t they?
As an example:
Employees hang on to jobs that they have long outgrown, while they really do not give it their best and could be let go at any moment.
Employers often just keep an employee around because they are much too busy to find a more suitable replacement or they are afraid of the lawsiut that could ensue.

Regards,

Yvonne Finn

April 25, 2008 at 3:58 pm
(2) Emmanuel says:

The title is very important in today’s business environment cause some clients can really weigh you down with very little to show for it. But i want to know if you are conversant with the Nigeria business environment cause clients mostly have their way. I run a small scale printing business.

April 25, 2008 at 5:54 pm
(3) Liz Handlin says:

Great article. And so true too…especially the first one. I am getting better at pre-screening clients to figure out if they are going to be jerks before I even start working with them. Life really is too short!

Liz

April 27, 2008 at 1:06 am
(4) erlich5 says:

I own a business and this week I too had to terminate a difficult client.
it was hard, but the peace of mind that ensured afterwards was priceless..

April 29, 2008 at 10:24 pm
(5) Sean says:

With the 80/20 principle, I think you mistyped. I think everyone knows what you mean, but it’s “80% of your *work* comes from 20% of your customers, while 20% of your customers produce 80% of your profits”

April 29, 2008 at 11:16 pm
(6) entrepreneurs says:

Actually, I meant exactly what I said. If 20% of your customers produce 80% of your profits, then by simple math, the other 80% of your customers only produce 20% of your profits.

While what you propose may be true, Sean, it’s attempting to draw a second conclusion, and I was only trying to make one.

May 19, 2008 at 2:25 pm
(7) Mike Michalowicz says:

You grow more by what and who you say no to, then what and who you say yes to.

- Mike

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