Fire A Client? But I'll Lose Money!
One of the hardest things to do in business is to fire a client. Especially if that client is paying you a decent price for your monthly services. Recently, I had the unpleasant experience of having to do this and after reflecting, I think I did a pretty good job of this. Let me show you the five Rs I used, and hopefully this can help you in your business.
R1 - Refer Contract To Client
Make sure to have is a signed (and dated) contract between you and your client. The contract should have an outline of your exact responsibilities. Specify what is not included with your services or a caveat that says something to the effect that anything beyond what’s in the contract will need to be discussed or renegotiated.
This is the first R. When things start going south and your client begins to ask for more or something different than discussed, REFER the client to their contract. We all forget things that were discussed during the “dating” stage and a simple reminder can bring things back on course quickly.
So what happens if this doesn’t solve the issue?
R2 - Resolve Issue With Client
Fire the client? Not yet! Sometimes, things are simple misunderstandings. Now, before you go buy a book on “Solving CONFLICT resolutions” or “How To Negotiate With Crazy Clients” (hmmm, great title for my next blog), you need to pause. Ask questions. Find out what the client believed you were supposed to be doing for this particular challenge.
If it’s something easy to do and doesn’t take extra time, I’ll let the client know that typically we charge extra for this, but in this case we’ll do it. The reason I say this is because now they know they just can’t expect extra things in the future. They’ve used there “freebie card” up and there will be a fee for the next “misunderstanding”.
What if the issue is bigger than a quick resolve?
R3 - Renegotiate With Client
Before you decide to fire the client, here’s what I like to do next. Send them an email with main points of the contract (and attach the actual contract as well). Explain without emotion, the reason why you can’t or won’t do what the client is asking. Let them know that you’re not being difficult or unreasonable and that you would be more than happy to do “x” for them, but it will mean that you’ll either
- make a new contract
- make an amendment to the old contract
- make a separate contract for the new work
I like to give the client options so they understand I’m flexible and willing to listen but now we’ll both have more clarity on expectations.
What if they refuse and still expect their “demand”?
R4 - Retract Contract from Client (last effort before you fire a client)
The most IMPORTANT thing you need to have is a TERMINATION CLAUSE in your contract. I’m not a lawyer, so please discuss this with yours and find out what legal language you need to say so that they don’t have any legal grounds to file a lawsuit against you.
Now it’s time for a little pysch 101. I use this as the last resort before I fire a client. The key here is to keep the temperature from rising. You need to let the client know how much you value them and how much you’ve enjoyed working on their project. Let them know that you see so much potential for their business and your work will help them succeed quickly.
Now you have to let them know that it’s just impossible for you to move forward with their expectations and what you initially agreed upon in the contract. I like to give my client an opportunity at this point to walk away on their own.
Here’s what I say. “Look, I understand we’ve hit a wall here and both of us are not on the same page obviously. So, if you want… I’m ok if you want to end the contract. There won’t be any hard feelings on our end. I’ll be more than happy to refer you to somebody who might be able to do what you’re expecting.”
What Can Happen?
One of two things are going to happen.
1) The client takes a step back and realizes that you’re ok with losing the business. The client isn’t ALWAYS right, and you are not their employee. This takes away their so-called power that they actually thought they had over you. Their attitude changes in a split second and they come to their senses quickly. They tell you that it’s okay or they’re willing to pay for the extra work or (you move back to renegotiate with them).
2) Their temperature elevates and things boil over. To be honest, this is okay and natural and you prefer this to happen because it make’s it actually easier for you to fire the client!
So, when all else fails…
R5 - Remove Client a.k.a Fire A Client
Now this is never easy. Again, try your best to keep the emotions stable and move forward with intent. You have to make sure in your mind that you’ve tried everything and that it’s just not worth having this client in your business (or your life). They are either sucking up your valuable time or just being too big of a headache to deal with over and over again.
The ideal thing to do, especially on a month to month contract is to let them know that you’ll be ending the contract with them at the end of the month. The more time you give them, the better it will be. If possible, keep working as best as you can so that you keep your integrity in check. I have found that you don’t have to give them a reason (as they already know why!) and for the most part, they’re ok with it as well.
If they threaten legal action, send them over the contract again, HIGHLIGHTING your termination clause and this will usually pop their final bubble of anger. Most businesses are busy and just want to move on.
Finally, if they ask for a refund, this will be up to you. Evaluate your time and effort.. but if you’re like me and you take your payment at the start of your month and you finish off the month then they get a big NO. If they tell me to go away now and there’s a week left, I might give them some money back as a token of my good will and keep them hopefully from bad mouthing my company. Again, this will be up to you.
I hope this gives you some clarity on actions to take when it comes to how you fire a client. It’s not an easy topic but one that definitely comes up in any business. Also, this is just my way of doing things. If you’re looking for another perspective, here’s Joe Kindness’s opinion on the topic.
Any questions, please feel free to Contact me.
Hope this helps,