Do you have a client that needs to be fired? Does that question cause you to recoil?
I know it seems counter-intuitive. You feel like you can’t possibly do that; you need the work and you don't want to tarnish your reputation. But hear me out.
I’m not saying you should cancel a contract mid-season, though that may be appropriate at times. What I’m talking about is reviewing contracts at the end of the season and rating them based on a few different criteria to ensure it makes sense to continue a working relationship with them.
We can often feel like we need to take all the work that comes our way because, well, we need to make money. The problem with that mindset is that we can get booked up with small jobs that aren’t especially profitable and then don’t have time to complete the bigger, more profitable jobs that come our way.
An article from Landscape Management listed these six variables to take into account before you renew contracts:
Revenue size. Generally, larger accounts are more valuable. Small accounts can be difficult to profit from. Even if they’re profitable, the total dollars generated might not be enough to contribute significantly to your overhead.
Gross profit. This number is the profit remaining after the materials and labor costs. The higher the gross profit as a percent of the revenue, the higher the rating.
Extra sales. Sales above the base contract make clients more valuable. Generally, there’s little or no competition on these sales, which should be profitable. The more extras, the higher the rating.
Location. You don’t make money driving; you just incur risk. Closer clients rate higher than distant ones.
Connectivity. Rate how connected your clients are to other clients or opportunities. The greater the connectivity, the higher the rating.
Ease of doing business. Clients who are unreasonable or abusive suck a lot of energy and time out of you and your employees. Your efforts may be spent better elsewhere.
The article also goes into more detail on how to weigh out your current clients and how to fire them in a professional manner. You can read it in full HERE.
The other piece of this scenario is learning how and when to say no to hiring a client in the first place. HERE is another article (older but very relevant) that gives you a simple way to rate potential clients to ensure you’re getting your ideal client.
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