Knowing When To Quit ‘Em

Identifying your worst clients and knowing when to fire them.

The hardest lesson I’ve learned running an agency is that not all money is good money.

Every new client isn’t just revenue; it’s brain space, physical space, and even digital space. There’s no such thing as free money, and each new client means multiple new things or people to manage. And not always for the best.

Yes, we were signing new clients. But we were drowning in expenses to do so.

As I took a hard look at my business over the last year, I wondered: rather than managing 35 clients unprofitably, could we manage five or six clients profitably?

That meant letting go of clients, and it wasn’t always easy to determine which ones to lose.

For some, it was obvious: if a client wasn’t paying us well or consistently, we let them go. If the answer to “Is this client still paying us?” was no, the decision was easy.

I know that may seem obvious, but agencies can fall into the trap of never-ending work. A client who paid us for an odd job six months ago, or whose project was completed and who comes back for “one more quick question,” is no longer a paying client. Sometimes that’s harder to see in the moment than it seems on the surface.

In my industry, the belief that perpetual work should be the norm is pervasive.

So over the last year, I’ve gotten better at saying simple things like, “Our engagement has ended, but I’m happy to turn the files over to you or someone else on your team who can pick things up from here.”

And thus, firing the non-paying clients became obvious: if they weren’t paying, they were out.

But what about the client who only paid every now and then?

For those, I realized it was a math test, with my agency often coming out the loser. For instance, we had one client who emailed unpredictably and urgently with odd jobs throughout the year. We grossed about $15,000 from this client annually. But to properly service their unpredictable requests, I needed an employee standing by earning $85,000 a year plus benefits.

Sure, I could try to stack enough clients like this one to justify that one employee. But to what end? Wouldn’t I be better off without the drama?

Turns out, yes. Firing this client actually improved our bottom line. I wrote about this in “Hamster Wheel.”

But not every bad client fails the math test so cleanly.

There’s a subtler bad client: the client who professes to be fair but rarely is. The ones who say, “I’m going to take good care of you” or “I’ve never not treated you fairly.” The ones who keep dangling future work that never materializes.

In a healthy client relationship, there’s a fair exchange of value and money. You can provide something they actually need, they feel it, and the compensation reflects that.

These bad clients fail that test, and they know it, which is why they keep reassuring you.

Many bad clients fail all three tests: unpredictable work, dangling the prospect of “better” work in the future, and always needing just one more thing.

These aren’t just bad clients; they are existential threats to your business. The sooner you dump them, the better off you’ll be.

I’m not going to pretend that firing clients is easy, but after the initial excitement of closing a new deal, more is rarely more.

In the months since shedding two-thirds of our clients, I’ve never been more excited about the work. The clients I’ve kept are the ones where the fit was obvious, and I wake up eager to dive in with them each day.

There’s more risk now. Instead of diversifying across dozens, I have to work harder for the handful I’ve kept, but that’s how it should be. Their success has to be my success.

This is the sweet spot.

That’s the goal.