When you first started your small business, you were probably overjoyed when you landed your first customer. You were grateful for the work, and their belief in you validated the reason you became your own boss.
Then you got your first bad client — you know, the one that makes you cringe when they call. The Mr. Nothing’s Ever Good Enough or the one who believes shouting into the phone is a perfectly normal way of conducting business.
Soon, you realize that the customers who are causing you grief are also costing you money. For all the time you’re spending trying to fix the unfixable, you could be pursuing your dream clients. Everyone has the occasional bad customer, yet it’s important to recognize when they’re costing your small business big.
Before you decide that firing a client is the right step to take, do your due diligence and plan for the event in advance.
1. Determine whether your client is actually terrible or just challenging.
Although both may drive you to tear your hair out, the difference between terrible and challenging clients comes down to communication and collaboration. Bad clients don’t respect your expertise, time, or work ethic, while challenging customers might simply have a work style that clashes with your own, or they’re dealing with unnatural levels of bureaucracy, or they’re likely raising the bar for the work you’re able to produce. For example:
- Terrible clients communicate on polar ends of a spectrum. You’re either dealing with the nonresponsive, disappearing artist or the clingy, nitpicking client who fires off 30 emails in an hour and phones, texts, and issues an APB wondering why you haven’t responded to their request to adjust a pixel on an image. Whereas challenging clients will respect your boundaries and give clear direction in terms of tasks and expectations, but perhaps their communication style might be lacking.
- Problem clients believe that every project is “easy and quick” because they don’t understand the complexity of what you do. The know-it-all client requires constant education and a constant defense of your fee and the time needed to complete the project. Challenging clients, on the other hand, understand and respect that they’ve hired an expert, and they’ll push you outside of your comfort zone to get the best-ever work of which they know you’re capable.
You can adjust your style and process to the challenging client, but the horrible one will never be a true partner.
2. Evaluate whether this is the right time to fire.
It may be hard to fire a client if your income depends on them, or if firing your client would be either unethical (that is, you’d be leaving them in a bind without a replacement) or a breach of contract. As a small business owner, if you’re just starting out, or if your pipeline is not full, it may be difficult to decide if firing a client is the right decision.
If firing the client is not the goal, then, as a first step to address the situation, you can raise your rates to pay for the pain (and throw in some small extras to counter the sticker shock). Or, you can offer a transition period where you volunteer to find and train your replacement. However, if neither of these tactics works, realize that the situation is only temporarily sustainable and map out your exit strategy. Think about how you felt when you gave notice at your 9 to 5. Create and commit to an end date and then the day-to-day won’t feel as terrible.
After studying all your alternatives, if you determine that firing the client is your best solution, we’ll show you how to cut the cord with the right plan and three stress-free scripts.
3. Observe the client-firing ground rules.
- Schedule a time to meet in person or chat via a video conference call. You met the client face-to-face, so it’s important that you give them the respect of ending the relationship face-to-face.
- Don’t make it personal. This is a business decision. Show how ending the arrangement is beneficial to them.
- Be calm and professional. Don’t engage their anger or play the blame game. No matter how heated the conversation gets, be polite and professional. Your industry is small and people talk. Let them remember you were the graceful one in the situation.
- Set expectations for what comes next. Don’t leave them frantic and stranded, no matter how terrible they are. Remember, this is your reputation. Deliver all remaining work as defined by the terms in your contract and allow for a reasonable transition period.
4. Create the three scripts.
There are three routes you can take when firing a problem client. Customize the scripts when you speak with them, and always close with a solution and defined next steps.
- Script #1: You’re Shifting Focus. In this scenario, you’re letting them know that you’ll no longer be working in your field. “Cathy, it’s been an honor to work with you. I’ve been evaluating my business over the past year and I’ve decided to pursue [new focus] rather than [current work]. As a result, I need to reshape my client base to have more of a work-life balance while I focus on my new business direction. Unfortunately, I’ll no longer be able to work with you as of Y date. Please know that it’s been amazing working with you and I appreciate your understanding as I enter this new phase of my life. I know you have a lot of work in the pipeline, so I’d be happy to help you find another partner who can give your business the attention it deserves.”
- Script #2: You’re Raising Rates. In this scenario, you want to double (or more) your rate to guarantee you’ll price out your bad client. “Mike, it’s been a privilege to work with you and your team. I know you had other options on the table and when we learned you had chosen us as your partner, we were thrilled. Over the past [five years], we’ve achieved X and Y goals together. Recently, I’ve evaluated my pricing and have decided to change my rate structure. My business has grown astronomically over the past year and, to meet this demand, I’ll be changing my rates to X as of Y date. Let me know if this will work for you. If not, I’d be happy to refer someone who would be more in line with your budget. Please let me know if there’s anything I can do to make this transition period easier for you.”
- Script #3: You’ve Had Enough. “Jim, I really appreciate the opportunity to work with you. I’ve given this a lot of thought, given our partnership and how long we’ve worked together. Over the past few [insert time], I’ve noticed issues in our working relationship, and I’ve come to the conclusion that we’re not the best fit. This isn’t an easy thing to say, but it’s important that you have the best partner who will be able to be on the same page with your vision and expectations. I’d be happy to connect you with someone in my network.”
Regardless of the scenario, your close should be concrete and clear about what happens next. Present a list of next steps, including a hard end date, expectations re: deliverables, and the associated timing for completion. Communicate that you’ll outline your discussion in a follow-up email.
Firing a client should be your absolute last resort, and you should only do it when you know that the relationship is beyond repair, or if it’s hurting your team or other customers. If managed well, your professional reputation will remain intact. Being clear, direct, and honest about the arrangement and why it needs to come to an end may be less painful than you think. However, don’t waver on your decision, and don’t leave the door open for negotiation or discussion.