Have you ever owned a business and tried to balance the books when they don't quite balance? The problem, you find, is that your worst customer still hasn't paid that outstanding invoice. So you now have a choice, continue chasing payment and balance the books, or write it off as a bad debt and effectively pay the money yourself.

At the end of the day, your business exists to make money and if it doesn't make money, you can't pay the bills. You need to be able to make tough decisions in order to make a profit and if you don't make a profit, you're not in the right business.

The problem with bad customers is simply that they're bad. It doesn't matter how much money they're potentially able to generate and what your profit margin might be, if they're bad, they're bad. If they don't pay on time or don't pay at all, it means that you have to pick up the problem. This costs more in time and money your time and money so lowers efficiency and profit. If their accounting system doesn't match yours, it's their problem. By firing these customers, you'll be left with those who are reliable, trustworthy and pay on time, thereby generating greater revenue.

Firing bad customers also send a message to those you have left: sort yourself out or you could be next. No-one likes a bad reputation and the chance of getting one can be a signal to others that they need to change. By encouraging your good customers to be even better, you can increase trade and so increase revenue.

Similarly, there are some customers who have the most ridiculous requests and can become annoying with their constant pestering. By no longer working with these people, your time and effort can be put to much better use on existing customers or generating new sources of income.

Not working with some customers, maybe those who generate the least income, will give you an opportunity to diversify and expand in other areas of production which could increase sales and produce greater revenue.

Conversely, reducing your custom base could allow for specialisation and filling that niche market which is more lucrative than mass production of a million products that someone else is also trying to sell in direct competition.

Your staff is the most important asset you have as a business, followed closely by your customers. If you don't ensure you have the best customers and give the best service, you will soon lose them; and sometimes the best way to look after customers is to give them the attention they deserve. If this means having fewer customers but providing a better quality service, you might soon find yourself attracting the kind of customers you want, your business expands and your revenue increases.

Learn more about this author, Ben Hughes.
Click here to send author comments or questions.

---

Add your voice

Know something about How firing some customers can lead to greater revenue?
We want to hear your view. Write now!