Not every client is good for your business, and that’s okay.

When you’re just getting started in business, you’re probably willing to work with almost any potential client who comes your way. However, not every client is worth keeping and nurturing a relationship with. The best way to grow your business is to let go of those clients who are holding you back. How do you figure out which clients are worth the emotional and mental energy?

What are your core values?

Make no mistake, core values are critical if you want to create a long-lasting, successful, and motivating company and workplace. Your company culture, even if it’s just you for now, can either be a great strength or a harmful weakness. Values are the driving force of a company, and not having core values means your business is likely to continue on without any sense of direction. To ensure long-term success and long-term client/employee retention, it’s crucial that you create — and live by — certain non-negotiable company values. 

Is it important for you to enjoy the journey and make sure your team feels appreciated and valued? Do you want to operate with transparency by communicating with unwavering honesty and respect, and expect the same in return? Do you prioritize building long-term relationships and delivering results within a certain niche? Be honest with yourself, which clients are not a good fit? 

Just because a client is paying you money doesn’t make them worth it.  When the amount of revenue doesn’t matter as much as it once did, shift your attention to the kind of work you really want to do and the environment you want to do it in.

Who do you like to work with?

A bad client relationship can keep you from enjoying your craft as well as negatively impact the work you do for other clients. Maybe you don’t have a bad client that’s sucking out all of your mental and emotional energy, it’s just that you have too many clients pulling you in different directions, so you have no focus.

Many small business owners arrive at this point when they’re getting ready to incorporate. For service businesses, the right clients make the difference between gratification and aggravation, especially when the business is based on extended, ongoing work. Zero in on the type of person you want to work with. Your qualification process should transition to chasing the right work, not just dollars. 

While you might think you make great decisions based entirely on instinct, A Client Scorecard is a tool that can help you rate your clients and their fit for you. This tool will give you a feel for the client’s strengths and weaknesses, so you can pick the clients that best suit your business moving forward.

Rate your clients:

A: They’re your focus. Love on them and you will start earning more money
B: You support them and are happy to maintain a relationship
C:  ⅓ of them don’t really respond to you and don’t really care, so raise prices and see who’s left
D: Fire them gently and see if you can help rehome them to another service provider

What makes an A client for you? Can you identify what they all have in common? 

Here’s are some of the factors you can use:

Unreasonable Demands: This is the client who acts like you are their dedicated employee. Or the poor planner who always expects you to save her with last-minute work. Or the nightmare guy who calls your cell late on a Saturday night. They are “D” clients because they don’t respect you and your time.

Too Many Days to Pay: Check your accounts receivable at the client level to see the days it takes to receive payment on your invoice. Most pay according to your terms, but some don’t. You may already know the ones, off the bat, that you have to call and say, “Hi, it’s me again. Just sent you another invoice…“. If a client is late invoice after invoice, and requires reminders every time, then it’s time to move on.

Financial Benchmarks: Is there a certain revenue level that brings a better ROI to your work? Figure out your client gross margins, the revenue received from a client less the direct cost of delivering the work. Who brings more profit with less work? Keep the clients that have already reached a certain size and are investing to grow to the next level. Dump those bad contracts you entered when you were desperate for work as well as those old clients you’re still serving even though you’ve grown and/or shifted focus.  

Just Not Working: Examples of “not working” include your personality not gelling well with theirs, they’re not in the same headspace as they once were, they grumble about every invoice, they ask for extra work outside your initial agreement, or you just don’t like doing that type of work anymore. Move on.

Ask to renegotiate, or up your prices on the next contract, if it’s simply about adequate compensation. If the work is not your focus, or is too small, refer it to another provider. 

How To Get Over Fear?

Sometimes you know that it makes sense to fire a client and you believe that it’s the right thing to do, but you are still afraid to take the next step and actually do it. Don’t let fear and guilt win. There will always be someone who values your work.

1) Schedule a 10 minute touch base call.
2a) If they don’t want to talk with you, simply email “my business is going in a different direction. Here are resources where you can find someone who is right for you.”
2b) Gently rehome the client during the call. It’s a good idea to have 4-5 people who you can refer someone to. Give the client options, as well as a month’s notice to help transition to a new provider. A successful transition gives you more time afterwards, even if you’re super busy during that transition month. Satisfying the outgoing client and a referral partner is a win-win.

A bad firing leads to bad online reviews. Here’s how to respond if you do encounter one.

1) Acknowledge them. “Thank you for providing your feedback and letting us know about this issue.”
2) Offer to discuss the issue offline. “Please reach me personally by phone at your earliest convenience so we can discuss the issue.” Ensure the client feels that their complaint was heard.

If you ignore negative reviews altogether, it may turn off potential clients. As well, the former-client may continue to share their negative feelings about you with others offline, which can cause damage to your business’s reputation in the community.

Be a Pro, Demand Pros in Return

The best way to grow your small service-based business is to let go of those clients who are holding you back. Figure out which clients are worth the emotional and mental energy by recognizing your core values and the type of work that really fuels you. Remember, your bad clients can end up costing you money. If they pay late or haggle over fees, they’re interrupting your cash flow. If they routinely have unreasonable demands, then they’re eating into the time you have for your other clients and growing your business. Incorporating a client scorecard can help you identify the best types of clients to work with going forward, so you can develop lasting partnerships that benefit both parties. Let go of your “D” and even “C” list clients by scheduling a call to gently let them know that you’re moving in a new strategic direction, and then refer them to another provider who is a better fit. If you have any questions about prioritizing your client list and growing your business, contact us.