How to Know When It's Time to Break Up With a Client

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This story appears in the November 2013 issue of . Subscribe »

Q: How do I know it's time to break up with a client?

A: Say what? Why would any entrepreneur turn away a surefire revenue stream? Harry Herington can answer that one.

Last year, as chairman and CEO of Olathe, Kan.-based NIC, which helps government agencies conduct online transactions, Herington walked away from a $7 million contract with the firm's second-largest client, the state of Virginia.

"What they wanted to do is basically ‘generic-ize' my business," he says.

For entrepreneurs feeling the squeeze from clients, Herington offers three nuggets of advice.

First, be wary of dubious demands. Second, don't allow customers to nickel-and-dime you. Third, make sure you foresee revenue coming for the full term of every contract.

"I tell my children all the time, ‘Follow the passion; don't follow the dollar,'" Herington says. "All my customers know I will walk away if I don't see value for them and don't see value for me."

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