Most consultants don’t have a clue when it is time to fire a client. Most never even think of the idea.
When should you fire your client
You should fire your client, when they are neither ideal nor profitable.
Client Profitability is something you should evaluate regularly. Do you have a way to evaluate your client profitability and compare it to other metrics Your challenge is to consider each client on a profit basis and be disciplined enough to honestly make the tough decisions.
Some clients may be very profitable, others may be costing you money. The problem with most consultants is that they think that any business is good business. Not true and the same consultants who believe that, may have not done a client profitability profile to know the difference.
Usually 20 percent of your clients will contribute 80 of your profits. Thus, the question then arises, what do you do with your least profitable clients who absorb your most valuable resource – your time
Not all clients are profitable. Let me repeat that. Not all clients are profitable.
Additionally, not all clients are equally profitable. Taking on bad business is normally worse than having no business. You may think it is great and grand to say work with a large fortune 100 company.
But many of these large companies will attempt to grind the consultant down in price and will treat them like product person or vendor of services, such as trainer or coach. By the way, there is nothing wrong with being a trainer or coach but those labels tend to put you in a box that includes revenues below what great consultants generate.
If they see you that way and treat you like a commodity, they may not be your ideal client and you probably have a lot to do with the perception and relationship being that way in the first place.
Get out pen and paper and evaluate each and everyone one of your clients on your client profitability scale or metrics.
Look at the total time of your involvement and investment with each client, including prep time, delivery time, product creation, etc and then look at how profitable each client is.
If any are not profitable, consider changing the relationship and business engagement so that it becomes profitable for you. If that doesn’t work, then consider the ultimate sacrifice. Fire your client
Tags: bad business, client profitability, fortune 100 company, pen and paper, profit basis