Fire Your Bad Clients

This article was written by Pam Newman of Entrepreneur.com

Got a few bad-egg clients? Maybe you should fire them. That's right -- I said "Fire them." Cut them loose. Give them the heave ho. Tell them goodbye and never look back.

I know you think I'm crazy -- why would anyone say goodbye to hot prospects -- but when you realize the positive impact it could have on your bottom line, you'll wonder why it took you so long!

As business owners, we often feel that we should take on every client who comes calling. But that's not always the best choice: Just because someone comes to you who's interested in a business relationship doesn't mean they're going to be a good client. In order to make your business as profitable as possible, you really need to assess your client relationships and ensure that they're win-win opportunities for you.

This is where the 80/20 rule comes into play: You should be focusing your time on the clients who are most profitable and who fit within your reason for existence. And you need to learn to say no to a potential or existing client when they don't fit within your business model. Most recommendations are that you should fire the bottom 10% of clients (in terms of profitability) each year so you can focus on your more profitable clients with your limited time.

Not sure this is the best idea for your business? Here are five types of clients you need to fire who are causing your business to be less profitable:

Focus drainers. In order to make the most of your time, you need to focus on your core competencies. Clients who don't fit within your targeted service or product focus may be costing you money. Have you started offering products and services that aren't a fit with your core business strategy just to keep some clients happy? If that's the case, perhaps you need to reassess whether that's a smart business move.