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Why You Should Fire 80 Percent of Your Clients

Why You Should Fire 80 Percent of Your Clients

We’ve all got a few clients who make us want to tear our hair out — the ones who blow up your phone at three in the morning demanding revisions by tomorrow, those who keep pushing for deeper discounts, or those who openly tell you how to do your job. This article is definitely about why (and how) you should fire those clients, but they’re not the only ones who are holding you back. You’ve also got nice, respectful clients who just can’t afford to pay what you’re worth. This article is about a close friend of mine. He’s an entrepreneur who I will refer to as John. He’s the perfect sum of many entrepreneurs and business owners that I know.

Last year, John dumped almost every client in both of the categories that I listed above — 80 percent of his client base.

Since then, he’s made more money, built more satisfying client relationships, and had a lot more fun at work. This article is about why you need to fire those clients, and about how to use the newfound time you’ll have once you’ve fired them.

But first, let’s talk about why these clients are causing you problems.

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The problem

When John first launched his company, he took every client he could get. It didn’t matter to him how low the pay was, how tight the deadlines, or how extravagant the demands — he wanted a track record of good work so he could go out and score the clients he really wanted. In the beginning, there’s not necessarily anything wrong with that approach. The problem is that, as we get caught up in the day-to-day tasks of running a business, we lose sight of our longer-term goals and go crazy trying to make all our clients happy.

In certain cases, though, your happiness and the client’s happiness are mutually exclusive. Some clients think you’re outrageously overpriced, despite the fact that you’re undercutting most of your competitors, and will only be happy when you work for pennies. Others are convinced there’s no real skill involved in the work you do, and they could do it much better if they only had the time, so you should stop making such a big deal of it.

Some of your clients have told you these things outright. Others have strongly implied them. If you’re picking up vibes like these from any client, it’s time to put them in a box labeled “Box A: Definitely Fire.” Not only are they costing you money and time that’d be better spent working with clients who value your skill, but they’re also causing you stress, which is harming the quality of your work whether you realize it or not.

Aside from the clients in Box A, you’ve also got clients who aren’t actively pulling you down but are still dead weight. This isn’t always easy to see, which is why you’ll want to quantify the work you do for each of them. Grab a time tracking app and tally up the hours you put in for each client — not just working on projects, but (this is crucial) also chasing them down and communicating with them. Compare those hours to the amount they’re paying. Maybe they’re paying a flat rate or a lower fee structure from years ago. Maybe they pay fairly for the work, but not for the hours you put into chasing them down.

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Those clients need to go in a box labeled “Box B: Fire As Necessary.” They’re costing you money and time, but some of them may be worth the effort of a salvage operation.

Now let’s talk about how to handle each of these two groups.

The dump

The most important thing is to get the Box A clients out of your life as quickly as possible. They’re active drains on your resources, no matter how much they’re paying you.

Imagine John has got an absolute client from hell who pays a steady $500 every month but costs him $1,000 every month in anger therapy bills. Most client-related stress isn’t that simple to quantify, but the point remains: your success depends on the amount of creativity, positive energy, clearheadedness, and time you bring to every project, and any client who’s sapping an unfair share of those resources is chipping away at your bottom line.

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John fired his Box A clients (luckily he only had a few) as soon as he’d finished the latest stage of their projects and they’d paid for that work. There’s no point trying to satisfy these clients before you dump them because they’re never satisfied anyway. Don’t wait until they make you angry again, either — you’ll only say something you’ll regret.

Just send them a polite email as soon as they’ve paid, explaining that you’ve decided to focus on a specific subset of customers going forward, and this means you won’t be able to continue the relationship. All of that is perfectly true. You can leave it at that, or you can refer them to your competitors if you like. This will boost your professionalism in the client’s eyes and make them someone else’s problem.

However, John took a little more time to finesse the Box B clients. He sent them very polite emails explaining that he’d switched to a different fee structure, and while he deeply valued the relationship they’d built, it was time to focus on clients who’d pay the new fees. Would they be willing to make the switch? Most said no, of course. A few said yes. John referred some of the no’s to people he’d mentored, those trying to build up their client bases as he once was. At the very least, he asked all his Box B clients for referrals, which almost all of them gave freely.

Once that was done, it was time to upgrade John’s client list.

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The result

The first thing John did was lighten his workload for a couple days, just to get his creativity and positive energy back to normal. He stayed in close touch with the clients he’d kept, and for those couple days, he did something he’d always sworn he’d never do: John only worked on their projects at moments when inspiration struck and he could work passionately.

The quality of his work improved immediately. As he got back to his regular workload a few days later, referrals started to come in. His remaining clients had noticed the boost in quality and were sending John their friends. He emailed and Skyped with those friends and had a blast learning about their projects. He sent them bids that valued his time highly. Almost every single one of them accepted those bids.

Many of us falsely assume that firing a client will lead to an immediate dip in revenue. In other words, we assume there’s a linear relationship between clients, time, and money, and that the only sure way to make more money is to spend more time with more clients. You can see how false this is when you think back to your launch days. You spent a certain percentage of your time working for clients and, at the beginning, a much larger percentage of time crafting pitches, reaching out to leads, and cultivating relationships. This is exactly how you should use the time you free up when you dump your deadweight clients.

Nowadays, John’s client list is back up to about 50 percent of its original size — and every one of those clients is a person he genuinely enjoys working with. Every one of them pays him what he’s worth and treats him as an equal when they talk. John’s monthly income has nearly doubled for roughly the same number of work hours. He sleeps better, he works more happily, and he keeps bringing in the referrals.

This is why you should fire 80 percent of your clients. Not because they’re all evil, or because they’re all ripping you off, but because your worth is so much higher than they think. In the end, those deadweight clients are robbing you of your potential. Fire them, find better ones, and find out how high that potential goes.

Featured photo credit: Put’em Up by Dave Meier via picography.co

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Last Updated on June 13, 2019

15 Best Entrepreneurs Books to Start Reading Now to Be Successful

15 Best Entrepreneurs Books to Start Reading Now to Be Successful

Knowledge is power, and you’re going to need a lot of it if you’re going to be able to steer your business to success.

Without further ado, let’s take a look at the 15 best entrepreneurs books to get inspirations about success and grow your business.

1. Think and Grow Rich by Napoleon Hill

    This book has been dubbed the Granddaddy of All Motivational Literature, and it was actually the first book that gave a prescription of what it takes to be a winner.

    Napoleon Hill draws from the stories of millionaires like Henry Ford, Andrew Carnegie, and Thomas Edison to illustrate the principles he put forth.

    Get the book here!

    2. The Lean Startup by Eric Reis

      A lot of startups end up failing, but many of these failures are actually avoidable. The Lean Startup provides a different approach that is now being adopted all over the world and changing the way that companies are developed and products are being launched.

      In The Lean Startup, Eric Reis describes what is required for a company to penetrate the fog of uncertainty in order to discover a path to a sustainable and successful business.

      Get the book here!

      3. The E-Myth Revisited by Michael E. Gerber

        In a revised edition of the 150,000-copy bestseller, The E-Myth, Michael Gerber refutes some of the myths that surround starting your own business and shows just how commonplace assumptions can end up getting in the way of being able to run a successful business.

        Gerber succeeds in walking the reader through the steps that occur in the life of a business, from infancy, through the pains of growing as an adolescent, to the perspective of the mature entrepreneur.

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        Get the book here!

        4. Rework by Jason Fried

          Most of the business books that you get today will give you the same advice: draft a business plan, study the competition, look for investors, and all that.

          However, Rework shows you a more effective, easier and faster means of succeeding when running a business. By reading it, you’ll be able to know why some plans are harmful, why you don’t really need to get investors, and why you’re better of shutting out your competition.

          Get the book here!

          5. How to Win Friends and Influence People by Dale Carnegie

            This is one of the most successful motivational books in history, selling well over 15 million copies since it was released in 1936. The book is timeless, and it appeals to businesses, self-help startups, and general readers.

            Carnegie believes that a lot of successes come from an ability to communicate rather than having brilliant insights. In his book, he teaches how to value others and make them feel appreciated and loved.

            Get the book here!

            6. Outliers: The Story of Success by Malcolm Gladwell

              Through this amazing book, Malcolm Gladwell is able to take the reader on an intellectual journey through the world of ‘outliers’. He asks the question of what truly differentiates high-achievers.

              His answer to this question is that we tend to pay too much attention to what successful people are like, and less attention to where they are actually from.

              Get the book here!

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              7. Rich Dad, Poor Dad by Robert T. Kiyosaki

                This is the best personal finance book ever written. It tells the story of Kiyosaki and his two fathers; his real father, and that of his best friend (his rich dad), as well as how the two men helped him shape his opinions on money and investing.

                It refutes the myth that you need to earn high to become rich, and it distinguishes between working for money and having money work for you.

                Get the book here!

                8. The Ascent of Money: The Financial History of the World by Niall Ferguson

                  Niall Ferguson, in this book, follows the money to tell the story behind the evolution of the word’s financial system, from the beginning way back in ancient Mesopotamia to the latest occurrences in what he had dubbed Planet Finance.

                  Fergusson also reveals financial history as the backstory behind our very own history, with an argument that the evolution of debt and credit is as significant as the history of technological innovation and the rise of civilization.

                  Get the book here!

                  9. Liar’s Poker by Michael Lewis

                    Michael Lewis landed a job at Salomon Brothers after getting out of the London School of Economics and Princeton within three years, he had risen to the rank of bond salesman, making millions for the firm and cashing out steadily.

                    Liar’s Poker is the amalgamation of these years — a look behind the scenes at one of the most turbulent times in American business. His book is Lewis’s account of an era where greed and gluttony were the order of the day.

                    Get the book here!

                    10. Drive: The Surprising Truth about What Motivates Us by Michael H. Pink

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                      A lot of people see money as the best motivator. Michael pink says it’s a mistake.

                      In this provocative book, he asserts that the secret to high performance anywhere is the need to direct our lives, to learn and create, and to do better by our world and ourselves.

                      Get the book here!

                      11. Getting Things Done: The Art of Stress-Free Productivity by David Allen

                        Outdated methods don’t work in today’s world. In this book, Allen shares some awesome methods for stress-free performance that he has shared with thousands of people all over the world.

                        His premise? That productivity is proportional to your ability to relax.

                        Get the book here!

                        12. The 7 Habits of Highly Effective People by Stephen R. Covey

                          In this book, Stephen Covey presents a holistic approach for overcoming both professional and personal issues. With insights and anecdotes, Covey presents a way to live with integrity fairness, service and dignity.

                          Get the book here!

                          13. The 4-Hour Workweek: Escape the 9-5, Live Anywhere, and Join the New Rich by Tim Ferriss

                            In this book, Ferriss dishes on the tips he has learned from studying the New Rich, a subculture of people who did away with the deferred life plan and mastered time and mobility to developed luxury lifestyles for themselves.

                            If you’re looking to make your way in this revolutionary new world, this here is your compass.

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                            Get the book here!

                            14. Delivering Happiness: A Path to Profits, Passion, and Purpose by Tony Hsieh

                              The CEO of Zappos shows how a unique kind of corporate identity can help deliver a huge difference in the way results are being achieved — by creating a company that values and delivers happiness.

                              Get the book here!

                              15. Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way by Richard Branson

                                From Virgin Atlantic Airways, Virgin Records and V2 to Virgin Cola, Virgin Megastores and a wide array of other companies, Richard Branson is the rockstar billionaire that a lot of us want to be.

                                Branson, however, did business by following a simple philosophy:

                                “Oh, screw it, let’s do it”

                                Losing My Virginity is an unusual, borderline outrageous autobiography of one of the greatest business geniuses in the world. Branson and his friends named their business “Virgin” because that was what they were — virgins at the game.

                                Since then, he’s written his success rules, creating a global business that has no headquarters, no management structure no corporate identity as it were.

                                Get the book here!

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                                Featured photo credit: rawpixel via unsplash.com

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