Well, other than late payments, I had a great relationship with them. They were pleasant and honest, and the work we did for them was quick and easy and always went off without a hitch. I knew whatever work they fed me I could complete without any snags.
The only snag with dealing with them, frankly, was slow payment. They always paid, just late. Like, consistently late.
(And, truth be told, I had known these two customers for so long that I almost felt obligated to work with them no matter what.)
I had a ritual where I’d call ten or fifteen days after their payment was due to kiddingly harass them. We’d joke about it, commiserate about the state of the construction industry, and then, usually five or so days after that conversation, I’d get paid.
During slow times, I reckoned it was better to do work for a trusted customer and worry about getting paid later than it was to drum up new business with companies I didn’t know, like or trust. That’s how I justified continuing to do business with the slow-payers.
After awhile I smartened up. I realized the profit I made from one of their jobs didn’t even cover my time spent calling to harass them for payment. (Margins in construction are razor thin). Sure, they were good companies to deal with, but they represented only a small percentage of my overall sales revenue. I only did a handful of jobs a YEAR for these companies, yet I spent more time chasing down payment from those one of two slow-paying clients then I did for all my other clients combined. What little work they gave me didn’t justify all the work I had to do to get paid.
Plus, if they truly were good companies to work for, and if they valued the relationship I had with them, they’d pay me on time, every time. But since they didn’t, and because I always had to follow up on payment, were they really good customers after all? Or were they taking advantage of my patience and understanding and the long-standing relationship we had?
So you know what I did?
I fired those two customers.
I did it in a nice way, of course. I crafted a nice letter explaining what I was doing and why. I followed that up with a phone call once I knew they had received the letter. One conversation went well; they understood, claimed to value the service we provided them, and promised to try harder to get their act together. I was able to retain them as a customer and they did indeed start paying on time.
The other conversation didn’t go so well. He claimed our competition was more than willing to work with them, didn’t mind waiting weeks for payment, and then he threatened to take all his business elsewhere. After I hung up the phone I wondered why I hadn’t fired him a long time ago. I haven’t heard from him since.
You can say I fired my bad clients, gave them the old pink slip. I prefer to say I weeded out all the clients who ignored my payment terms or took advantage of the relationship I had with them. I chose to no longer prescribe to the “good ‘ol boy” construction industry mentality where you work with people out of obligation or desperation for little profit and deal with whatever shenanigans they throw at you.
I realize that’s not always possible, and it’s impossible to find an industry or business model with zero risk. I still dabble in construction, and I’m still dealing with some of the aforementioned things. And I continue to struggle with certain aspects of my decision to fire bad customers.
Which is partially why I started TCI Advisors in the first place: because no industry is zero-risk and every company needs a safety net as protection from defaulting customers.
Tell me: have you fired any of your customers and if so, how did it go?
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