If your firm is making a change in strategic direction or if you have decided to build a micro-niche, deciding which clients to fire might be an important step in the process. The decision might be one of the most difficult steps in the process, as well.

Because profitability is typically one of the reasons many firms cite when making changes in their strategic direction, identifying the firm’s least profitable clients might be the first step in your client firing process. However, it is also important to ask other questions about these clients before making a final decision. These include:

  • Could the client become profitable for the firm?
  • Will the client accept a fee increase?
  • Is the client a good fit for another member of the firm?
  • Has the client been offered an opportunity to purchase additional services from the firm?

If  the client is marginal based on profitability considerations, it is also necessary to consider the client from the viewpoint of new strategic direction. You must ask, for example:

  • Is the client in the type of business or industry in which the firm plans to build a micro-niche?
  • Should the client be fired from the CPA or from the firm?
  • If the client does not fit a micro-niche you plan to develop within the next year or two, is the client a fit for a micro-niche you plan to develop at a future time?

The next consideration of the client must be based on referral history or role in a center of interest. For each client, you must consider how many new clients he or she has referred to you, directly or indirectly. Is the client important in a critical center of influence? Be careful that you do not bite the hand that feeds you.

The decision to fire clients in order to focus on strategic goals and direction is difficult for any firm. Creating a process and a clearly elucidated set of criteria will remove some of the attendant emotion and enable everyone involved in the process to make decisions for the right reasons for the firm. If strategic direction is the guide, developing criteria should be
relatively straightforward. Never rush the process. Each client should be considered very carefully before you decide to fire him or her.

— David Wolfskehl

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