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Five reasons to fire a customer

BUSINESS
By Entrepreneur | April 17th 2021

Customers shopping inside Naivas Supermarket. [Samson wire, Standard]

Is it ever okay to fire a customer? The answer is yes. Sometimes (in rare cases) ending a tricky business relationship is the absolute right thing to do.

This concept is challenging for young companies, especially since most founders have to move heaven and earth to book and retain business. However, when a customer relationship is damaging, it may be time to part ways.

These circumstances demand action.

- The customer company or its employees are engaged in illegal activity, violate the intent of the law, or behave unethically. Do not do business with a company that you know is breaking the law. Seek legal counsel.

- The customer treats your employees or theirs disrespectfully. Successful companies create a culture of dignity and respect. Your duty to your employees extends to customer interactions. Some behaviour — harassment or bullying — is always wrong.

- The customer demands commodity pricing. Startups succeed based on value-add, not on margins that are razor-thin. Venture capitalists typically do not invest in commodity businesses. They know that selling more units at a lower price does not fix the bottom line.

- The customer does not pay the bills. Accounts receivable always indicate when something is out of whack. Dig into the issue with the customer. Can you reach an agreement that is equitable to both? Cashflow is challenging enough for a new business without financing someone else’s company through your receivables.

- The customer is never satisfied. Many perfectionists live in this world. Some of them will be your customers. Learn to recognise the difference between a client who refuses to acknowledge a job well-done and a client who appreciates accomplishments and keeps raising the bar.

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