Kick 'em to the Curb: When to Dump Bad Clients

dump-bad-clients

You are busy.  You don’t have time to waste on people (and businesses) that don’t add significant value to your bottom line.  Do you have trouble making enough time for all your clients AND marketing?  Are you having trouble deciding for which potential new clients you should offer special discounts?  Then this exercise is perfect for you. This month I am introducing a quick trick to help you decide which of your clients you should “kick to the curb.”

Whether you have a one-person business or are running a multinational services firm, you probably have some clients that are more trouble than they are worth.  They don’t pay enough, or don’t pay on time.  They are constantly demanding more of your time and generally being a pain in the neck.  Especially in a less-than-booming economy, firms are hesitant to “fire” their clients.  So, let me ask you this. It is now June, almost half way through the year, is your business on track to meet its 2011 financial goals?  If so, congratulations!  You rock, and your coach must be very proud.  If not, you are probably still fabulously awesome, but take five minutes to try this exercise.  Or don’t, it’s up to you.  If you are fine with profits, costs and morale continuing the way they have been, thanks for reading thus far, and I’ll see you next month.

First, make a list of the qualities that make an ideal client. This is subjective.  There is no right answer, but a sample list might look something like this:

  • Pays on time
  • The fee for my services is satisfactory
  • Doing business with this company will increase my visibility, credibility, etc.
  • The client is in my preferred niche (i.e. energy sector, international non-profits, etc.)
  • Our personalities work well together
  • The majority of the actual work can be delegated to my staff
Screen shot 2011-06-01 at 5.28.45 PM
Screen shot 2011-06-01 at 5.28.45 PM

Next, make a chart and rate your best three clients on a scale of one to five, assessing how well each of them meets this criteria.  Then rate three of your least favorite clients.  See the chart below as an example.  Once you have created your own chart you will start to see patterns.  This is a simple but multifaceted tool.  When I work with clients, we may use this to create some long-term business development goals, identify areas for individual and organizational development, design a simple system for deciding which clients to accept and under what conditions, etc.  Even without a coach, you should be able to use this to clarify priorities, figure out which areas require improved communication, and simply determine which clients you are better off without. While this tool is designed for insight, of course the real results don't come without action.  If you have created a chart and next steps are unclear, or if actually moving forward seems challenging, give me a call and I'll help you sort it out.