Tweet

Should I fire my bad clients?

Guest post by: Sue Barrett

Article Overview: Run a mental checklist over your client base right now. Who fits into the ‘good’ client list and who falls into the ‘bad’ client list? It all really depends on what you define as good and bad. As we know not all clients are good for your business. Some clients are a wrong fit for your business but could be a good fit for someone else; therefore in of themselves they are not necessarily ‘bad’. However, others are just downright bad for your business.

Should I fire my bad clients?

Run a mental checklist over your client base right now. Who fits into the 'good' client list and who falls into the ‘bad’ client list?

It all really depends on what you define as good and bad.

As we know not all clients are good for your business. Some clients are a wrong fit for your business but could be a good fit for someone else; therefore in of themselves they are not necessarily ‘bad’.

However, others are just downright bad for your business.

It is important to consider how much your ‘bad’ clients are costing you in terms of time, money, frustration, people and product resources, lost productivity, bad press, angst, legal fees, and tarnished reputation?

If you have too many customers falling under the ‘bad’ column you need to ask yourself, “How did this happen?”

Have you set yourself up as a magnet for overly demanding, time consuming, nit picking, miserly clients who do not see value in what you do or offer and seem to want a slave rather than a legitimate business partner?

Have you set yourself up to be taken advantage of by unscrupulous and unethical people looking for victims?

It is difficult to focus on your best clients if you cannot shed your ‘bad’ ones.

For example, there has been recent media attention on the rise in Businesses Pheonixing; the act of Phoenixing is where a new company is formed to buy the assets, contracts, and goodwill of the failing business for a reasonable market rate. The legacy debt is left within the old business which is then liquidated thus allowing the new Phoenix business to trade on, debt free. Creditors and Suppliers to the old business are often left with unpaid debts which may in turn lead them to suffer their own financial difficulties. I am sure no one wants to be put at the mercy of Businesses Pheonixing (‘bad’ clients) if they can help it.

Chasing the ‘easy’ or ‘quick’ sale may be more trouble than it is worth especially if the prospect or client is not properly investigated in relation to their legitimate needs or their intentions are clearly defined.

So, what constitutes a ‘bad’ client?

Besides the obvious impact of bad debts, there are other criteria which constitute ‘bad’ clients. Here are some examples:

• They are bad credit risks with a track record of always paying late or not at all – they can be checked out by using reputable credit agencies that keep track of people and companies’ credit ratings.
• They are a poor fit with what you offer and what they need thus leading to misunderstandings, poor relationships and confusion – this is usually due to a poor sales approach and not properly understanding your client and their needs in the first place.
• They are overly demanding on your QA or Customer Service departments – the ‘nothing is ever right’ syndrome and all they want to do is complain.
• They ask for expensive prototypes or very detailed proposals with little probability of a significant purchase – what is usually happening here is that they are siphoning you for your Intellectual Property at no cost to them so they can either do it in-house or get someone cheaper to implement your idea.
• They only want to deal with ‘you’ and expect levels of service that do not go with their purchasing level – they expect first class service when they are buying ‘no name’ or house brand products at very small volume.
• They complain loudly, often, and publically to anyone who will listen and usually only for ‘effect’ not fact.
• They do not keep their promises and break contract conditions regularly.
• They take your IP and claim it as their own.
• They say one thing and then another – you never know where you stand with them and they seem to play games, trick you or set traps.

Don’t be fooled by these types of clients they are not worth it, no matter how attractive they look on the surface and how desperate you might be to get a sale. Unfortunately, when times are toughest we can fall prey to these types of prospects or clients which can lead to more stress and less return on investment.

An experienced business banker once told me a story about an entrepreneur and business owner who was looking for a new bank to work with. On the surface this individual and his business looked plausible, charming and sincere, but when the business banker did his investigation, he discovered a litany of evidence – failed businesses, bad debts, frequent changing of banks, poor staff retention and staff legal issues and a myriad of other things that did not bode well for this prospect becoming a valid business banking client. As you could imagine the aforementioned business banker did not proceed with that prospect.

If these types of business people continue to behave in this manner they will eventually run out of legitimate business suppliers or partners to work with and sadly if they do, they will usually pull up stumps and go and find fresh victims to exploit.

Another tell tale sign is that they will not have a history of any longstanding, viable relationships of any value or substance.

Many people have slated the sales profession as being ‘shifty’ but in truth most sales people and their clients are out to do the right thing by each other. So, it pays for the sales person to also be on the lookout for the potential ‘bad’ client and do proper investigations. So don’t believe everything you hear. Do your homework.

So why not have a conversation with your sales team and run your collective eye over your client base to see if you do have any of these types of ‘bad’ clients on board? Then work out a strategy to let them go, learn from your mistakes and don’t get mixed up with these types again if you can help it.

Maybe it’s time for a client spring clean. It might just free up your time to find and work with more productive clients

Related Articles
  LEADERS HAVE BLOOD GROUP OF FIRE POSITIVE.
  LEADERS LIVE WITH BLOOD GROUP OF ” FIRE POSITIVE.”
  Becoming An Online Entrepreneur: Keep Your Fire Burning
  Keep Your Fire Stoked
  3 critical elements of a research survey. Part 3 – Analysis.
  Car Insurance - Fire and Theft Coverage
  Extreme Value Theory and Jeff Smith
  Trimming Startups, One Inscrutable Position at a Time
  Building Bares All - Property Insurance
  From Our Q&A “Can I deduct my Gun”
  Attract More Clients By Dumping the Junk – Your PITA Clients!
  How To Know When To Fire A Client Or Customer, According To Your Strategic Thinking Business Coach
  The fire alarm rings during your presentation
  Marketing in Tough Economic Times
  Smart Women Develop a Mindset Ready Fire Aim
  Marketing: Don’t they know it’s good for them?
  Building Fires - What Leaders Do
  What Comes First? Ready..Aim..Fire?
  Time Management: A New Approach From Ancient Greece!
  Four Marketing Ideas for Client Retention

Article Tags: assets, business partner, contracts, creditors, financial difficulties, frustration, goodwill, legacy, legitimate business, magnet, media attention, mental checklist, old business, phoenix business, product resources, productivity, reputation, rsquo, time money, unpaid debts



Related Forum Posts
Firing Customers - Hi Evan, It's funny that you ask this question because there was a time I wanted to fire my whole customer base and start over. I inherited clients from my dad's tax preparation business, and boy I was dealing with a rogue group of people. As bad as I wanted to fire all of them I had to keep on serving them to keep the bills paid. Eventually they wore me down and I fired myself, and let them move on to be someone else's problem. It was a tough decision, but hey I needed to rebuild my client base with clients in my target market and not compromise my mission for the sake of earning a buck. Hard lesson learned, but it has certaintly payed off.
Re: Tactics for Blog Traffic - Hi members, This is a great post and worth discussing our various viewpoints. The common thread is content, search engines thrive on fresh content which I liken to a log fire. If you put an occasional log on then the fire will keep going but only just and will eventually fizzle out. Plenty of fresh content (or logs) will keep the fire blazing and will be seen more easily by the search engines so keep those fires burning folks, LOL. regards, Mal.
Describe Your Inspiration/Motivation - I'd like to open up discussion with the group to identify how us entrepreneurs keep you goals insight without loosing Inspiration for what got you going initially. Being an Entrepreneur can be a lonely road at times and I'd like to dig up and have people describe the fire they hold inside. I'm hoping that through this exercise I can acknowledge and become aware of my fire that I'm having trouble verbalizing.
Re: restaurent - Hey Trig, Restaurants don't work with the lack of a heat shield. There is a requirement by law in most states that there is indeed a heat shield and fire suppression system installed. My family has owned restaurants all our life and I would not recommend using that type of stove in your home unless it was professionally installed and had a heat shield and fire suppression system that was inspected as well. .
Re: Time to get rich in real estate? - I have a good friend who owns a home and works for himself. He was planning to get a loan to buy a second house and the plan was to rent out the first - at a profit of course. But, then one evening a couple of months ago, the building where his shop is located caught fire. His portion of the building was spared from the fire, although he did a lot of cleaning and some replacement to get rid of smoke and water damage. Problem is that the building needs quite a bit of work to be feasible for the business. He wants to buy the building where his shop is and has now figured out that this is not the time to buy a second house. Things are not going real smoothly, but it shows how quickly things can change. Chris


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How do you keep it together on a daily basis?

The State of the Sustainable Furniture Industry

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.