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When Should You Fire a Client?

If you have ever sat with a bunch of CEOs or company Presidents for any length of time, this is a topic that will come up. Most of us have some experience with clients that are time-wasters, don't pay their bills, or even companies that only buy a very small amount yet suck resources. These are the easy cases ... why would you continue to waste valuable company resources servicing these accounts, resources that could focus their energy on developing real clients.

What about the tougher situations? How about the client that is in your top ten list and is abusive to your company and your staff? Do you grin and bear it because they are a big client, or do you confront them? If you can't resolve it ... do you fire them?

How about the company that continues to devalue your service? Year after year negotiating your margins down to the bone ... and demanding more and more service. At what point do they become expendable? Can you plan to transition such situations such that they become ex-clients? How do you replace a top ten client?

Then there is the classic huge client that squeezes margin, demands service beyond reason and decides to implement a basis of payment that is extremely favorable to them. Oh yes, and they change the terms and conditions of the contract to remove any protection you might have for your assets. Wow, that is a tough place to be!

All of these are real situations and as a business leader, you have to work with your management team to balance the needs of your shareholders (shareholder value, growth, returns etc.), the needs of your people and the needs of your clients. At the end of the day, I believe it's your core values, mission and vision that should guide you in making these decisions. Some of the hardest decisions can ONLY be made if you are guided by your principles. Maybe if the people in power at Enron felt the same they wouldn't be facing jail time!

Having made a tough decision such as to fire a client, there is a burning need to have a real plan for replacing that revenue (and more importantly, profit)! That does not happen overnight, and maybe the "firing" needs to be managed over time to reduce the impact. Makes for an interesting time ... anyone want to be a CEO?