As you celebrated New Year’s Eve with a chorus of “Auld Lang Syne” at midnight, you probably didn’t have your customers in mind any more than Robert Burns did when he wrote the poem in 1788.

Many business owners make annual resolutions to grow their businesses, and most are thinking about acquiring more customers, not letting them go. Growing your company sometimes requires taking a close look at your customers and making hard choices. Do you bring value to each other? If not, it may be time to think about parting ways.

Unlike customer acquisition and retention, there’s no playbook or top 10 list of statistics for firing customers. Taking action requires assessing the red flags in your customer data, deciding to let go and carefully planning a conversation. You can start the process with questions in three red-flag categories.

Unprofitable // Is your profit margin low or negative? Does the customer insist on deep discounts? Did you acquire the customer by discounting your pricing? Are they unwilling to value the products or services you provide, or have you avoided the pricing conversation? Are they a low-volume customer, or do they yield a low dollar value per purchase? Do they pay you, and pay on time?

High maintenance and high dissatisfaction // Are they eroding your profitability by requiring a higher level of service and time than most customers? Are they hard to please? Do they refuse to follow the processes of your business and require frequent attention or on-demand service? Has the relationship declined because you didn’t set mutually agreeable expectations?

Not a good fit // Has your business changed over the years, and is the customer no longer a fit for what you currently offer and how you do business? Have they crossed a legal or moral line that compromises your business? Are your divergent business values getting in the way of a cordial business relationship?

If you answered “yes” to the questions in at least one of these red-flag categories, it may be time for a respectful and candid conversation with your customer.

» Have your conversation in person if possible, in a neutral location.
» Express your appreciation for the opportunity to work with them.
» Explain that your business has changed and that the direction you’re taking is not a good fit for the two of you to continue doing business together.
» Provide them with an end date, a process for winding down your relationship or both.
» Where possible, provide them with an alternative supplier.
» Wish them well.

You can follow up with a letter or email based on your conversation.

Counterintuitive as it may seem, letting go of an unproductive customer relationship frees your business to grow in intentional ways and allows you to focus your energies on customer relationships that bring mutual value. Add another resolution to your new-year pledges: Don’t put off that conversation with the customer you know you must fire. Then get busy growing your business.