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4 Types of Clients Your Growing Business Can't Afford to Work With It may seem counter-intuitive, but firing certain types of paying customers could actually help your company grow.

By Mike Kalis

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


You've probably heard the saying "cash is king" 10 million times. Well, that's because it's a true statement -- and it applies to businesses of all shapes, sizes and ages.

But, for young businesses in particular, every dollar that comes in the door is especially vital to your long-term survival. According to new data from CB Insights, "ran out of cash" is the second most common reason startups fail.

With that in mind, growing your roster of clients isn't just important -- it's exciting. When people are willing to pay for the product or service you worked so hard to create, you don't just feel validated; you also form a special bond with each client. These are your early adopters, and they hold a special place in your heart.

But, what will you do once one of these first clients becomes a problem child and begins monopolizing your team's time, resources and sanity?

To save or to sever?

When you're trying with all your might to grow your revenue, cutting ties with a paying customer is probably the last thing on your mind. Instead, you'll do everything in your power to salvage the relationship, because if the client leaves, so will a hefty chunk of your revenue.

Related: 10 Sales Platforms to Help You Boost Revenue in 2017

I used to think the idea of "firing" paying customers was preposterous, but I quickly changed my tune after seeing one too many of them kill my margins and spray the internet with inaccurate negative reviews about my company.

To help you avoid my mistakes, here are four types of paying clients who could be doing your business more harm than good:

1. The bully

This customer thinks he's the most important person on the planet. Every time he calls with a question or complaint, he demands to speak with a manager -- or worse, with you. If your reps push back and refuse to transfer him to your personal line, he'll yell and scream and curse -- and maybe even threaten legal action.

Bullies cause workplace stress, and the longer you force your team members to tolerate them, the more likely they are to quit their jobs. According to research from Monster, 42 percent of U.S. workers have changed jobs at least once, to escape a stressful work environment.

Given the high cost of turnover, you're probably better off keeping your great workers and firing your bullies. Each time I have made this difficult decision, several employees have come to my office to thank me for having their backs.

2. The time-sucker

Right after launching my property management firm, I began working with an accountant to make sure all our finances were in order. I paid him about $100 a month, and I definitely got my money's worth. I constantly called and visited his office to pick his brain -- until one day, he sat me down and said, "Mike, I like you a lot, but unless you start paying me more, we're going to have to part ways." As a small startup, I couldn't afford to pay him more, so he ended up firing me.

At first, I was furious -- but after thinking about it, I realized he taught me a very important business lesson: Be wary of small clients who eat up large amounts of your time.

Related: 5 Ways You're Wasting Time Without Even Realizing It

When you devote too much attention to overly needy, underpaying clients, you end up neglecting your larger, more significant relationships. If you're not careful, you could lose happy clients who didn't feel like they were getting the attention they deserved.

Don't let this happen to you. Proactively reach out to your largest, happiest clients. Ask them how you can better serve them, or just thank them for being loyal and easy to work with. Simple thank-you notes can go a long way. In fact, as one charity found, notes make people 38 percent more likely to donate again down the road.

3. The nickel-and-dimer

Some clients will treat your company like it's a vendor at a flea market. They'll try to bargain every time you send a quote or invoice. This isn't just disrespectful; it's dangerous. Remember: Cash is king.

A healthy partnership should allow for occasional wiggle room on pricing, but once price breaks become the norm, you've reached unhealthy territory. You're probably better off replacing this client with a new one who will recognize the true value of what you have to offer.

In another scenario, perhaps you'll come across a client who always drags his heels when it comes time to pay his bill -- or maybe he'll just stop paying altogether. Unfortunately, this happens much more often than it should. Last year, Atradius found that 47 percent of B2B invoices were paid after their due dates.

To avoid getting stuck with a partner who doesn't pay the tab, create an immovable policy. After a set number of days, cut off all communication and service until payment is no longer delinquent. If you keep working and let the invoices pile up, you are much less likely to collect what you're owed.

4. The online complainer

If a client would rather complain on the internet than collaborate with you to resolve an issue, he or she is putting your company in serious jeopardy. Your online presence is vital to secure new customers. According to BrightLocal, 92 percent of consumers consult online reviews before making a purchase. Further, Cone Communications found that four out of five consumers surveyed said they'd reneged on a purchase decision because of a negative online review.

We once had a non-paying tenant post more than 50 negative online reviews about our company. He would call to scream at our reps about anything he found unsatisfying, and immediately after hanging up, visit a dozen websites to repeat his complaints. There was literally nothing we could do to make him happy, and even though his long ramblings didn't make much sense, the multiple one-star ratings he gave us definitely deterred potential customers.

Don't wait for the situation to get out of hand like I did. Proactively pull the plug if one of your clients becomes a serial online complainer -- and also ask your happy customers to post about their positive experiences. Today, I'm proud to say we maintain a 4.5-star rating on Google.

Related: 6 Ways to Make Online Reviews Work for Your Business

It may seem counterintuitive, but firing certain types of paying customers could actually help your company grow. Working with bullies, time-suckers, nickel-and-dimers and complainers will result in unnecessary turnover, lost revenue and missed opportunity.

By cutting ties with these clients, you can use your newfound freedom to keep other clients happy and pursue new business.

Mike Kalis

CEO of Marketplace Homes

Mike Kalis is the CEO of Marketplace Homes and one of Crain’s Detroit Business’s “Top 20 in Their 20s.” 

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