“You’re Fired”

Most of us associate those words with the popular television show, The Apprentice and the colorful entrepreneur, Donald Trump.  We tune in, at least in part, because we appreciate the brutal honesty of the phrase “You’re Fired”.  Where it is not words anyone looks forward to hearing, as entrepreneurs, they are words we need to use more often.

Sometimes we need to use them with team members who aren’t living up to expectations.  These can be either those on our actual payroll or even service providers from vendors to graphic artists to the cleaning service you use.  It’s never easy to fire someone, but a culture of mediocrity is far worse.

Sometimes it’s a CUSTOMER you need to fire.  Monday night at an event featuring several entrepreneurs from the University of Washington Center for Innovation and Entrepreneurship, I was chatting with a woman running a young company.   While her company is growing, it’s still at the fragile stage where even one out of the norm expense such as attending a trade show makes the difference between being profitable or not.

In the course of our conversation, she said she got profitable by “firing” a large percentage of her existing customers.    If that sounds like shades of “the Donald” that’s probably because it’s a bold, but often necessary move.

To improve the profitability of your business, take the time to analyze your existing customers.  Divide them into 2 lists, those who are profitable for you and those who are not.  Focus on those that are NOT profitable.  Why are they not profitable?  Do they not value your goods or services enough to pay what they are worth?  Do they cost you money because they don’t pay their bills on time?  Do they simply monopolize the time and resources of your team so that you can’t develop new business?

Once you’ve identified WHY they are not profitable for you, ask if there is something you can do to change the situation.  Would converting them to a different product or service improve the profitability for you?  Would having them pay in advance or COD reduce collection costs and improve cash flow?

If there is something you can do – do it.  If not, send them to your biggest competitor!  I learned a long time ago that there are some customers NO one can please.  They will always want everything for nothing and make you crazy in the process.  Those customers should be “fired”.

Of course, the nice way is simply to tell them you feel bad that your small company is not in a position to serve their needs in the way a larger company could and then give them the name, phone number or website to visit.  This will free you up to continue to develop new customers who will contribute positively to your bottom line – and your peace of mind!

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