I have been through this scenario a dozen times.... to the point where I thought to myself, "When will I learn?". Over the years, i have learned quite a bit actually, and have learned that the time to bail-out is early in the problem stage! A "bad" client can BREAK you, financially and emotionally... and can ruin your business by withholding payments, demanding immediate 24/7 service and bad-mouthing your work to everyone they meet. The longer it drags on, the more ammunition they get to bad-mouth! You are in a no-win situation!

Several years ago I attended a seminar (Great Plains Software) in Fargo, ND that changed all that! The presenter suggested that 80% of a consultants revenue, job satisfaction, demands, problems and pain came from 20% of his clients... and it wasn't necessarily the same 20%. In other words... Unless carefully managed, you can easily spend all your time looking after a client that is causing you 80% of your problems while providing only a small percentage of your revenue.

His advise? FIRE 20% of your clients every few months!! Determine which 20% are causing you 80% of your problems and FIRE THEM! What you will be left with, after only a few months is the time to recruit NEW clients that better fit your working style, and the cream-of-the-crop clients that pay on-time, appreciate your service, and give good references to other businesses! Good references are worth $$$$$!!!

I'd like to suggest several ways to FIRE them, in a professional manner, while preserving your good name. (Ignoring problems, not returning calls, telling them off, does nothing for good word-of-mouth... you can be sure they will let everyone they know what a lousy job you do! and it will come back to bite you! Assigning the client to a junior consultant or co-worker doesn't work either, since the bad publicity this client is giving you still reflects on your company)

Here are my suggestions: (all of which work wonderfully and have interesting side benefits)

1. Refuse to work until past-due invoices are up-to-date. If payment is being withheld due to "unsatisfactory" performance get those issues resolved before investing more time in the project. The higher the receivables, the more you give up negotiating power! Better to right-off a few hundred dollars than go broke trying to collect it!

2. Raise your prices. This will either move the bargain hunters elsewhere, or make it financially feasible for you to meet your demanding clients demands! Higher prices will help establish you as a successful and sought-after consultant as well. This took me a long time to learn... but just look at lawyers... If you could afford it, would you rather be defended by a $600/hr lawyer or a $100/hr lawyer? If my life depended on it, I'd go for the most expensive one I could afford!

3. Fill your appointment book! Being busy is good for business and it puts the client in a waiting line. They realize that your business is not dependant solely upon them. "Our earliest available appointment is in 3 weeks" gives the client little to "bad-mouth" about except that you are too busy... which really sends a pretty good message to other potential clients. If I was looking for a consulting firm, I would want the busy one! And I would wait to get them.

4. Refer them to other firms. "Due to an increased workload", "other responsibilities", whatever... you are unable at this time to provide the client with the service they require. "We suggest you contact XYZ & Company, who will likely be able to better fill your needs!" Its professional, doesn't leave the client without an answer to his problems and generally improves your image in the community. The company you refer them to may be a closer fit for the client. It can become a win-win-win situation.

5. Sell the client to the competition! (This one has a satisfying irony to it) Let your competitors know that you have a client that last year generated X dollars in revenue, but that because of growth in you business you are unable to properly service the client. If you can sell it for a percentage of future revenue or flat fee, then you end up passing your "problems" to your competitors and getting paid for it!! Life is grand! :-)

Putting them into practice has provided me with a satisfying and rewarding experience in the consulting/systems integration business for over 10 years. I have a client base that pay well, and on-time. and appreciate my work. I have time-off for family, I get invited to parties, I get hugged, I enjoy serving them. I have zero receivables, I sleep at night!

Leigh Sheppard Micro Pacific Computer Corporation