As the owner of an IT solution provider or managed service provider (MSP) business you need to realise a difficult truth: some clients are bad for your business.
When you first started your business you were probably grateful for ANY business that came along – the opportunity to gain experience, build a reputation and earn some money was too good to say no to.
But as your business has grown you’ve probably found yourself in a position where some of these earlier clients don’t fit what you’d now consider an ideal client profile.
It’s your job as the business owner to know which clients are worth working with and which you should break away from for the good of your business.
Here are top three reasons that you may need to fire a client.
Have you ever had the telephone ring and when you’ve spotted it’s a certain client, your heart has sunk?
Or you’ve received an email from a client and dreaded opening it.
Both of these indicators are big warning signs that you hate working with the client and that it’s time to move on.
This feeling doesn’t happen overnight. It’s built up over weeks, months or even years of the client talking down to you, not taking your advice, ignoring your suggestions, penny pinching on quotes, raising their voice to you when they don’t get their way, questioning everything you do and treating you with a lack of respect.
In some cases you can challenge the client and redefine the relationship. Like most bad relationships, familiarity can breed contempt. Tackling the problems head-on can reset the relationship and ensure you’re showing each other due respect.
But redefining a long-term relationship can be difficult. It may be time for you to fire the client and free up all the time and energy you spend worrying about them and redirecting it into clients you DO enjoy working with instead.
The clients you picked up in the early days probably worked with you because you were convenient and the price was right. Let’s be honest here – in those early days you probably didn’t have a reputation to speak of, and you weren’t exactly in demand – so why else did they choose to work with you? Because you were cheap.
The challenge with these early clients is that over time you will have begun to appreciate your true worth and raised your prices with other clients you subsequently won. The problem is, in the vast majority of cases of MSPs I work with, they don’t keep older clients rates on a par with newer clients rates. This leads to a disparity between older clients on cheap rates and newer clients on more realistic rates that feels awkward to address.
In this scenario you really must have an open and honest conversation with your longer-term clients. Explain that your business has moved on since you first started working with them, and as a result, your rates have increased.
If the client values your expertise, they’ll agree and things move on.
But don’t be surprised if they don’t agree. If they worked with you because you are cheap, they’ll probably have no compunction about leaving you for somebody who is cheaper.
Stay the course. Hold the line. If they don’t agree to the price increase, then thank them for their business in the past and move on. Trust me when I say there are plenty of clients who will appreciate your value and pay you for it accordingly.
At some point in the growth of your IT business you’ll come across the client who doesn’t pay.
To begin with they’ll drag their heels – paying invoices a few days after the due date.
Then they’ll pay you a month or so after the due date and only after you’ve reminded them.
Then they’ll ignore your reminders and not pay you at all.
Let me be clear; in the vast majority of cases, failure to pay is an oversight at your client rather than an attempt to avoid payment at all. But be aware that when you find yourself in a situation where the client is repeatedly overdue and is ignoring your phone calls or emails about payment – yet conversely still wants you to do more work for them – you need to be full and frank with them. Advise them they need to pay all outstanding bills before you can continue working with them.
Even if you eventually get payment, the trust you had built between you and the client has been broken. At best you must put up-front payment terms in to ensure the client pays you for your time and expertise, but in my experience few of these types of clients will agree to this. In most cases, you’re better off drawing a line under the working relationship and firing the client rather than risking doing further work for free.
Working with clients who you don’t enjoy working with, clients who don’t pay you what you’re worth or indeed don’t pay you on time – or at all! – are all signs that you need to address the relationship with the client.
While in each of these cases you’re best advised to have an open and honest conversation with the client to try and tackle the issues, ignoring them will drain your time, energy and enthusiasm. In these cases you’re better off firing the client and concentrating on working with those clients who fit your “perfect client” profile instead.
Want to know the best fire a client then read this blog