2019-02-22 04:00:01 Business Growth English As a business owner, letting go of work seems counterintuitive. But, sometimes you need to fire a problem client. Here's how. https://quickbooks.intuit.com/r/us_qrc/uploads/2019/02/How_to_Fire_a_Problem_Client_featured.jpg https://quickbooks.intuit.com/r/business-growth/how-to-fire-a-problem-client/ How to fire a problem client

How to fire a problem client

9 min read

Managing client relationships is never easy, but you have one client in particular who seems intent on making your life hard.

You’re beginning to think it’s not worth the hassle and that you should call it quits. But, how? What should you consider before ending the relationship? How can you do so in a way that doesn’t damage your reputation?

As the old saying goes, “Breaking up is hard to do.” Here’s what you need to know to fire that problem client.

When to fire a problem client: 5 warning signs

Just because a client is challenging doesn’t necessarily mean they should be shown the door—not every project or relationship will be a breeze.

However, if your client exhibits one or more of the following red flags, you’re better off cutting your losses.

1. This client never pays on time (or at all)

You’ve made your payment terms explicitly clear and you always send reminders when payments are due. Yet, your client never pays your invoices on time—and you even have a few that are still unpaid after several months.

If you’re spending more time chasing down money than doing the actual work, it’s simply not worth the effort and anxiety.

2. This client’s rates are no longer competitive

Perhaps you started with that client years ago when your rates were lower. Or, maybe they’re a smaller client with a more modest budget.

When you crunch the numbers, what you’re making from their projects is nowhere near competitive with what your other clients are paying. You’ve had conversations about raising your rates, but that client has made it clear that they can’t go any higher than what they’re currently paying.

If you’re concerned about your bottom line, it makes more sense to free up that time for more lucrative work.

3. This client’s projects aren’t cost-effective

This problem client is the master of scope creep. You decide on the deliverables and the price at the start, but then excessive feedback, changes, and rush orders add way more to that project than you were anticipating.

Projects that start at a fair rate end up snowballing to the point where you’re not earning nearly enough to justify that amount of work.

Plus, those constant changes and eleventh-hour requests are taking your stress levels to the extreme—to the point where you’re filled with dread any time an email lands in your inbox.

4. This client is disrespectful to you or your employees

We all have bad days, and your clients don’t need to be sweet and complimentary to you at all times. However, nobody deserves to be blatantly disrespected.

If this client has shown a pattern of behavior that’s rude and insulting toward you or your employees, parting ways is often the only way to show that type of treatment won’t be tolerated.

5. This client no longer fits with your business model

Your business evolves, and that can mean that some of the clients you took on when you started are no longer a good fit for you or your offerings.

Maybe you’ve continued to serve that client as a professional courtesy, but have finally reached the point where it no longer makes sense for you to continue doing so—in fact, it’s only causing confusion in terms of your mission and your services.

Outgrowing clients happens, and it’s usually better to part ways so that you can both find a better fit.

What to consider before breaking up

Even if it’s obvious that you and your client aren’t a good fit together, terminating the relationship inspires a mix of emotions, including relief, worry, shame, and self-doubt.

Those sorts of feelings can cloud your judgment. so, before reaching out to your client to break the news, take a step back to think through these practical considerations.

What does your contract say about terminating your agreement?

It’s not always as simple as saying “goodbye” and walking away—most client relationships have a legal aspect to them.

Familiarize yourself with any termination requirements that are outlined in your contract. Do you need to provide a certain amount of notice? If so, how much? Do you need to put the notice of the contract termination in writing?

Ending a client relationship is tough enough without having to worry about legal repercussions. Check your contract so that you make sure you do everything by the book.

What do you know about this client’s temperament?

Telling a client you’re moving on is anxiety-inducing, especially since there’s no way to know how they’ll react to the news. It’s easy to start picturing all sorts of worst-case scenarios.

To better prepare for that conversation, consider what you know about your relationship and that specific client’s personality.

Does it seem more likely that they’ll be sad to see you go, yet wish you the best? Or, have your previous interactions given you cause to believe that they’ll fly off the handle?

Visualizing how that situation could play out gives you at least some idea of what to expect so you can choose the best method. For example, perhaps you’d rather let them down on the phone so that you have an easy way to remove yourself from the situation if things escalate.

Do you need to replace the income?

When there are so many emotions at play, it’s easy to get so wrapped up in those that you forget about the finance side of things. Releasing a client doesn’t just mean letting go of a stressful or dynamic—it also means you’ll be letting go of a paycheck.

Will you be able to stay afloat financially without that money coming in? Or will you need to replace that income stream quickly? If so, how will you do that?

You don’t need to compound your stress by putting yourself in a tough spot financially, so make sure you’re prepared for any monetary fallout ahead of having that conversation.

Breaking the news: how to end the relationship tactfully

You’ve weighed the options and determined that you can no longer continue with that client, and your stomach is in knots about how to let them down easy. Below are some tips to terminate that relationship—ideally without doing major damage to your reputation.

1. Choose your time and method

As with any sort of break up, timing is everything. If you’re currently in the middle of a major project or you know your client is on a family vacation, it’s probably not the best time to share the news.

While you can’t keep delaying the inevitable (as tempting as it might be), give some careful consideration to finding a time when you can both provide adequate attention and energy to that important conversation.

Additionally, give some thought to the best communication method. Do you and that client have a close, friendly relationship? In those cases, letting them down in an email can seem impersonal and a face-to-face meeting would be better.

But, if you and that client have almost only ever used email or phone calls to interact, then a method like that is perfectly acceptable.

2. Start with gratitude

Regardless of whether you’re sending an email or having a live conversation, start with something positive and appreciative.

Even if that relationship didn’t play out the way you had hoped, that client was still an important part of your business growth—and that’s worthy of some appreciation.

This doesn’t need to be an endless monologue. Something simple like, “First, I want you to know how much I’ve appreciated the opportunity to work with you” is more than sufficient.

3. Explicitly state that you’re moving on

Too much sugar coating won’t do you or your client any favors. This conversation shouldn’t be confusing, and it’s up to you to make it explicitly clear what your intention is.

It might feel overly-blunt, but you need to explain in unmistakable terms that you’ll no longer be working with them.

Following your opening statement, move on to something like, “However, I am no longer able to serve you as my client.”

4. Provide a brief reason

Your client deserves some closure, and they shouldn’t be left wondering why they’re being kicked to the curb. You don’t need to give all of the dirty details, but be prepared to offer a concise explanation like:

  • I’m spread too thin and need to let some of my clients go.
  • My business focus is shifting, and will no longer support this type of work.
  • Your rate is no longer competitive with my other work, and I need to focus on more lucrative projects.

What should you say if you were truly dealing with the client from hell? In those cases, it’s best to keep things general and say something like, “I don’t believe we’re a good fit together, and I think it’d be best for both of us if we went our separate ways.”

5. Tie up loose ends

It’s not always possible to have a clean break, and you should be prepared to end that agreement with as little confusion or disruption as possible.

Here are a few questions you should be prepared to answer during that conversation:

  • When will you be done serving that client? Provide a firm date.
  • What will you finish? If you’re currently working on projects, what deliverables can they expect from you?
  • Do you have access to any proprietary documents or tools that you should hand over before exiting?
  • When will they receive their final invoice and when should payment be submitted?

Walking away without burning bridges

Putting the above steps into play will help you end that relationship in a way that’s polite and professional. But, if you’re truly concerned about leaving your client in a lurch, you can make the transition even easier by providing a referral.

Keep in mind, if that client was truly terrible, a referral would only mean unloading them on some other unsuspecting business owner (which you obviously don’t want to do).

However, if you’re parting ways for other reasons, offering a recommendation for another business can help them move forward following your absence—and also improve your relationships with other business owners who are actively seeking work.

Before initiating the breakup, put some feelers out to your network of business owners to see if any of them are taking on new clients and would be interested in an opportunity like this one.

If you find someone, you can offer to make an introduction when ending things with your client. It’s a great way to leave things on a more positive and productive note.

Breaking up is hard to do, but problem clients need to go

Firing a client is never easy, and it can seem counterintuitive to let go of work when your intention is to grow your business. But, there are plenty of circumstances when it’s better for you and your business (and even your client) if you part ways.

If you’re in that situation, use this as your guide and you’ll hopefully move on to bigger and better things—with your reputation intact.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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