Do You Know When it’s Time to Fire Your Client?

In my opinion, one of the biggest challenges in running your own business is to ensure it is cash flow positive. This means your revenue should be greater than your expenses. Although this may appear to be a simple equation, depending on the company or industry, revenue is the lifeblood of the business. The prudent business owner has to work hard to ensure the company stays a float and is sustainable despite the fluctuations in the economy and the respective market.

Especially in the beginning, during the start-up phase, there are challenges to ensure the expenses are manageable. At times, whether due to inexperience or other circumstances, the likelihood that a new business will fail in the first five years is extremely high, despite the best of intentions. The odds for failure are high, therefore noticing the sign when a customer becomes unstable is important to the survival of the venture. This calls for focus and objectivity so a sound business decision can be made, one that is best for the company overall.

Some may say, how can you fire a client when revenue is the lifeblood of the business?

Although this is true, when the client no longer pays their invoices based on the agreement, this is a sign that there could be trouble brewing. Being an optimist, thinking that things will be better is good, but being a realistic is better. Perhaps something more serious is happening. When the client becomes past due immediate action is needed in order to identify the steps to take to resolve the matter.

Below are some simple things to keep in mind to determine if it is time to fire the client?

Is There a Delay in the Payment of Invoices?

Adjusting and moving the terms of payment could be a symptom the client could be experiencing some changes within their organization. Perhaps they could be using the cash to expand their business or purchase more inventories or facing some other challenge. Although the tendency is to wait, thinking it could be an oversight or a mistake. It would be prudent to follow up and determine the cause. Through this conversation, addressing the problem early on, can save you heartache and pain in the future. If the situation will not change in the short-term and something more serious is at stake, then it is time to inform the client you are very concerned about the matter and a wise cause to follow could be to reduce the services or product offered.

Is the Client Work Taking You Away From Your Core Focus?

Most entrepreneurs want to take on as much business as possible. However, not all business is best for the company. There are clients that can drain your energy, resources, time and dreams. They fit in the “bucket” called Customer Drainers. These are clients that can rob you from handling opportunities that can bring in the revenue, but are not expensive to maintain. Although this can be a hard decision, the business owner will need to determine if they are a client that should be fired.

Could There Be a Reputation Risk?

There are some clients that carry a poor reputation in the industry. Even if they pay their invoices on a timely basis, they have a poor reputation in the industry. If your other clients are potentially your business is impacted, then making the decision to fire them as a client could be a prudent one.

Obvious this is a short list of points that could be considered when evaluating whether a client should be terminated or not. Ultimately the decision lies with the business owner or management team. With time many things change and what is an issue today, in a few years, may not exist. The key point is to be objective and make the decision on facts and not emotion. Many entrepreneurs are emotionally connected to their business and although the signs are clear they become oblivious to the facts. Soliciting the advice of someone objective and not connected to the day to day can be helpful.

At any rate, terminating a client at any point in the relationship could be hard but when worth it, if is drains your business and becomes an obstacle preventing growth.


Written by: Wayne Brown (Founder & CEO of The Walker Group Media – a marketing and business development company serving the financial services and FinTech companies. Our varied market segments helps us to identify synergies and opportunities to stimulate growth as we partner with our clients to build their business. Through our one-on-one CEO Advisory Services we have help companies to navigate through key business problems, increase sales, build new revenue streams and gain new customers.) For more information contact Wayne Brown at [email protected]

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