SCORE Tip of the Week: When Is It Time to Fire a Customer?

SCORE's CEO, Kenneth R. Yancey, offers warning signs for when a customer may be doing your business more harm than good.

Letting a customer go may seem like a crazy idea in today’s still-uncertain economy, but sometimes it makes both financial and psychological sense. Here are four warning signs that it may be time to fire a customer.

  1. The customer takes up an inordinate amount of time. Some clients demand special treatment without paying a special price. They may expect you to be at their beck and call 24/7 or insist on only working with you, the business owner, when normally an employee would handle their account. If you are putting in extra time, you should be charging extra money—otherwise, this customer may not be worth it.
  2. The customer has ongoing problems with payments. It’s funny, but often the most demanding customers are the same ones who are regularly late on payments, dispute charges, bounce checks or make endless excuses for why the check is “in the mail.” This type of customer should be let go if at all possible.
  3. The customer is rude and unprofessional. An unpleasant customer puts a strain on you and your team, and if the problem is bad enough, it could cost you a key employee. Address the issue with the customer and, if they can’t change, assess whether this relationship is worth continuing.
  4. The customer relationship is not profitable enough. Small business owners often start out charging rock-bottom rates to get their initial clients on board. As time passes, however, those rates may no longer make sense for your business financially. Regularly assess how profitable your various customer accounts are and, if needed, either raise prices or let the customer go.

Firing a customer can be scary, no doubt. But once you take the step, you’ll quickly find you have more time and energy to devote to your good customers and to finding new prospects—and that ultimately means more growth for your business.