RSS Electronic Edition | Newsletters Subscribe | Customer Service/Contact Us | Community Buy Photos Modmomsclub

Business

Wednesday, Nov. 25, 2009

When customers drain time, resources, morale, it's smart to let them go

E-Mail Print reprint or license

MIAMI — Even in this turbulent economy, some business owners have faced this cold harsh reality: Sometimes the best thing to do is to fire a client.

Of course, customers are the lifeblood of a small business.

But in a recession, the best way to increase profitability may be to rid yourself of those who are too draining on time, resources and morale.

Whether the reasons are financial or emotional, telling someone you can no longer do business with them can be tough. It also may be smart.

"You could be out there getting new clients who will pay you on time or cause you less aggravation," says Bob Preziosi, a management professor at Nova Southeastern University.

He says cutting ties to someone who pays the least and expects the most frees you up to focus on more profitable customers, adding, "You will be more likely to get referrals from them because you are now spending more time with them."

Right now, many small business owners find themselves in angst. They must make painful decisions on whether to cut loose a non-paying or late-paying client hit badly by the economy.

Preziosi says a service provider should not become an accidental banker. His advice: "It's a business relationship first, a personal relationship second."

Fort Lauderdale accountant Randi Grant says money matters are behind her reasons for firing a client. She finds most are asking more for discounts and concessions. But there comes a point, she says, when it doesn't make business sense.

"If you are expected to compete on price and you are a service business, you will lose every time," Grant said. "You have to show them why you are worth the money, and if someone doesn't understand, that's a client you want to cut loose."

Grant tells her clients, "When business relationships don't make sense, don't hang on."

In tough times, companies are stretching their resources to keep loyal customers. But catering to a high-maintenance client who pushes boundaries and pushes his way into your personal time might require taking a hard look at whether the aggravation is worth the fee.

Vivian Conterio, a consultant to child-related businesses, uses this barometer to gauge when to pull the trigger: "When you can't sleep at night because of this one client, it's time to let go."

When she found herself in this scenario, she politely referred her client to someone else.

"I try to learn from those mistakes," she said. "I ask myself, 'How was it that they were treating me like that?' "

Then there's the client who becomes abusive to your team.

Alex Marrero, owner of Fidelity Quick Pay, a south Florida payroll company, says he had a client who used vulgar-ity with his staff and refused to apologize.

"I told him, 'I cannot allow you to abuse my employees verbally and emotionally,' " Marrero said. " 'I don't want to do business with you.' "

Letting go of this disrespectful customer and about five financially troubled customers has proved beneficial. "It's allowed us to bring in new business," he said.

Law firm marketing consultant John Remsen says on occasion he considers it worth an attempt to salvage the troubled relationship, to try to change bad behavior. But he's been in business long enough to realize "some clients you just can't make happy."

He advocates having the "breakup" conversations in person.

"It's tough but it's your reputation and you have to sit down face to face and be a professional," Remsen said. "Don't hide behind e-mail."

While it may not seem obvious, Remsen says the recession is the ideal time to shed problematic clients. "When the economy comes back, you don't want to be stuck with abusive, slow-paying clients who use up your resources."