I’ve been self-employed for much of my career. This was an on-again off-again arrangement earlier on, but has been my permanent situation for about fifteen years now and will be forever more.
I’ve written before about the realities of being self-employed, such as the hit to your taxes, health costs, and more. But another important thing to consider from the business side of things is how to deal with clients, and specifically how to go about dropping a client.
I talk about this a bit in another post, but I’ll elaborate on some reasons here and also talk about some points to consider when actually dropping a client.
Why drop a paying client?
It’s hard to wrap your head around it, because a big part of being self-employed—at least for those of us providing services—involves always looking for new business to keep you busy and thus keep food on your table. But there are some very good reasons why you might need to part ways with a client.
Too much work.
Having a large percentage of your business income come from just one client is a risk for your business: First, you’ll be in big trouble if that client suddenly drops you. Second, while you have focused entirely on that client, you may be getting rusty in other areas or not being very active in your professional network.
In this scenario you should first try to reduce your work commitment with this client, but they might insist on all or nothing. You will have to decide if keeping them is worth your risk, as losing the work from this client will mean you’ll have to do some serious hustling for different gigs. Take a look at your contract with this client to see how much notice they must give you before ending the gig—perhaps they would be open to guaranteeing plenty of notice. Speaking as someone who once lost a major client with only two days of notice, I learned about adding notice to the contract the hard way. Now I try to target no more than 50% of my income from any one client.
By the way, some clients, when a contractor/freelancer asks for their role to be downsized or to otherwise work less, may respond by dismissing you entirely. Be ready for that, just in case.
We all hear that stress is bad for your health, but this is no joke. I know someone who was so unwell that her doctor wondered if she had MS. But her health improved as she made changes in her work, and she and her doctor came to the firm conclusion that her illness was caused by stress.
Having a client that constantly stresses you out is not only bad for your business, it is bad for your health and for your family’s happiness. It is not worth it! Of course, if you have a stressful client who is also the source of an appreciable portion of your income, then obviously you need to drum up other business before you can drop them.
Your reputation is one of your most valuable assets, so being associated with a client that is doing unsavory things is bad for your business. And not only is it a detriment to your own personal ethics and integrity, it can put you in legal risk.
I had a client in the 1980s for whom I managed their IT and their data entry staff. The company collected household demographics and other information from people just moving into new homes then sold it to local businesses. [Yes, personal information was bought and sold pre-internet!] When I learned (and confirmed) that they were faking more than half of the data they sold, I told the business partners first, then went to the CEO and quit on the spot. I was essentially unemployed after that, as I’d not lined up other work before leaving, but this was a case of having to cut the cord immediately.
Having a gig that you don’t enjoy or from which you are not learning anything is bad for your business, because it’s bad for you. So many people work every day at something they don’t enjoy, and that is not a sustainable model. Work doesn’t have to be drudgery: you are not a hamster on a wheel. One could argue that this situation isn’t as urgent as the others reasons I list above, but it is something that needs to be looked at closely.
Is there a way you can change what you are doing to make it more nurturing to you either emotionally, spiritually, or intellectually? If not, you should start looking for a new gig to replace this one.
So how do you drop a client?
In a word: carefully. Well, let’s use a second word: professionally.
Your goal is to drop the client in a way that doesn’t hurt the client, preserves your reputation, leaves relationships intact, and keeps a foot in the door for potential future work or referrals. If your reason for dropping the client is because of ethical issues, then keeping the relationship intact matters far less and then creating distance between yourself and the client is another thing you need to do.
In any case, it’s a process to be planned and executed carefully.
There is no script for how to do this, as it depends heavily on too many variables, including what your relationship is like and what contracts you have in place. However no matter what, in all things with your interaction, be as professional and positive as possible, and keep documentation of every communication. (Also, you will not be remiss by having a lawyer review your exit plan, especially if the relationship is at all contentious.)
When you think you’re ready to go, here on some things to consider:
- Review your contract (if there is one) to make sure you honor any agreements. You may need to stall or even jump before you’re ready in order to meet contract requirements. As I said above, consider consulting your attorney.
- Make sure all work products are ready to hand over to the client on request (or within a reasonably brief time). This includes source files for any deliverables you produced.
- Be prepared to hand over any hardware belonging to the client as well as licenses to software of theirs that you may be using.
- Part of splitting up professionally is to make it as easy as possible for the client to replace you. You may even offer to help to find your replacement and to help that person spin up. Typically this would be billable time, but it’s up to you if you want to give any of that time away.
- Briefly document the things you do, just a bullet list will do, and be ready to send it over. Things needing more documentation, such as instructions, contact lists, etc. can be separate.
So that’s it. There are very good reasons why it may be a good idea to walk away from a client, even if it means walking away from some income. It’s scary, but try to imagine yourself a year later looking back on the decision.
Will you be happy you made the change? Then you know what to do.