You Can Fire Clients, But Should You?

Run your own business long enough and you will have ample opportunities to fire clients. Whether they’re not paying, or there’s a personality conflict, to numerous other reasons; firing a client is a fairly common decision all business owners must make. At the time of decision, though, is always the question: is it the right move to fire this client?

Don’t get me wrong, firing a client can be even more satisfying than signing a new client. The visceral reaction can emotionally carry you for days. That said, you should have strict guidelines by which you decide to willingly remove that revenue from your P&L. Where my mantra for hiring employees is “hire slow, fire fast,” my mantra for firing clients is “sign fast, fire slow.”

At the most basic level, your relationship with customers/clients is all about the revenue they generate for your business. Client Y puts X dollars into my coffers on a monthly basis. In a vacuum, that number alone would be enough to determine which clients stay and which should be given a pink slip. But like all things in life, it’s a more complex relationship. There are a lot of factors that go into assessing your customer relationships, and not all them can be calculated on a spreadsheet.

Like an iceberg, most of a client’s value lies below the surface. Is the client a good referral source? Do you or your employees cringe when you see a customer’s caller ID on your phone or name pop into your inbox? Is the client a willing candidate for upgrades or new offerings? Does the customer’s name offer a certain recognition to your business? Can you trust the client to treat your employees with respect? There are other questions, but think you can see the pattern.

Soft and hard costs play a big role in your client relationships. Too often as business owners we take the easy view of hard costs to make customer decisions. That’s shortsighted. The actual relationship can carry more weight than any revenue number. There are residual impacts – both good and bad – from these relationships and they all have to be examined before any action is taken. Be prudent and non-emotional about your customers, because once a connection is severed, it’s virtually impossible to put it back together.

Sean O’Rourke
About Sean O’Rourke 6 Articles

Sean O’Rourke is a Cyber Liability Insurance (CLI) consultant for Combs & Company, a full service insurance brokerage firm headquartered in NYC. Sean works with small- and mid-sized businesses to mitigate the myriad of risks posed to their technology and data. Sean has worked in the technology arena for 20 years, so he has a unique approach when discussing the value of CLI to businesses. Sean can be reached at sorourke@combsandco.com or 646.736.3737.

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