Published: January 2026
What if the secret to growth is not more clients, but firing the wrong ones?
Most business owners think they need more customers. What they actually need is better customers. Wrong-fit clients cost you more than lost profit. They consume disproportionate time, create stress, and prevent you from serving clients who would actually grow your business.
This article helps you identify who should not be your customer, and what to do about it.
Here is a reframe that might be uncomfortable: your customer count is not necessarily an asset. It can be a liability.
Every client requires attention, administration, and relationship management. If that client is profitable and pleasant, this investment pays off. If not, you lose money every time you interact with them.
Aha moment: In most businesses, the top 20% of clients drive 80% or more of profit. The bottom 20% often cost two to three times more time than the top 20% generates in profit. Your worst clients are actively subsidised by your best ones.
Wrong-fit clients create cascading problems:
Every hour spent on a bad client is an hour not spent on a great one.
Not every difficult client is a wrong fit. But these patterns indicate a structural mismatch:
Before taking on any new client, run them through this quick filter:
Three or more red flags means proceed with caution. Four or more means walk away.
Every client has a cost to serve including direct time, communication, revisions, and payment collection.
Calculate effective hourly rate for each client: total revenue divided by total hours including all meetings, emails, and chasing payments.
You do not need perfect data. Estimates are enough. The bottom 20% often cost two to three times more time than your top 20% generates in profit.
Key insight: Your best clients might deliver an effective rate two to three times higher than your worst. The worst clients are not just less profitable. They are often unprofitable when you count hidden time costs.
Do this today:
For many owners, this reveals that one or two problem clients cost tens of thousands annually in lost profit and wasted time.
A digital marketing agency turning over $1.5 million had grown by taking any client who would pay, including small retail shops wanting cheap websites.
These smaller clients represented 25% of the client base but caused 80% of support complaints. They negotiated prices down 40%, demanded three times as many revisions, and took 60 plus days to pay.
The decision: They created a minimum package price too expensive for bargain hunters and stopped marketing to small retail entirely. Instead, they focused on mid-size professional services firms with recurring needs.
The results: Conversion rates jumped from 15% to 35%. Average project value increased 60%. Support load halved. Revenue grew while working fewer hours.
An electrical contractor generating $900,000 took every job: small residential call-outs, one-off fixes, and commercial maintenance.
Small residential jobs averaged $300 to $800 with high travel time, thin margins, and no repeat business. Commercial maintenance contracts paid $2,000 to $5,000 monthly with scheduled, recurring, profitable work.
The decision: Stopped advertising to residential customers and raised minimum job to $1,500. Over six months, replaced 40 small clients with 8 maintenance contracts.
The results: Revenue up 15%, profit up 40%, fewer headaches.
Now that you have cleared the weeds, define who you actually want.
Highest priority:
Medium priority:
Lower priority:
Many owners decide based on how much they like someone. This is a mistake. A likeable client who pays late and haggles still damages your business.
Use this script:
"We are focusing our business on [specific type of client]. We can no longer serve you as effectively as you deserve, but I would be happy to recommend [alternative provider] who would be a better fit."
Be professional and honest. Most clients respect honesty. The ones who react badly are confirming they were wrong-fit anyway.
Set aside one hour:
If the answer is no, decide: exit, restructure with higher prices and clearer boundaries, or continue subsidising them.
How do I identify my worst clients?
Calculate effective hourly rate by dividing annual revenue by total hours including meetings, emails, and payment chasing. Lowest rates indicate worst clients.
Should I fire unprofitable clients?
First consider restructuring with higher prices or clearer boundaries. If impossible or refused, exiting frees capacity for better clients.
How do I turn away clients without damaging my reputation?
Be professional and recommend an alternative. Most clients respect honesty.
What percentage of clients should I expect to be unprofitable?
Typically 10% to 20% are actively unprofitable. Another 20% to 30% are marginally profitable. The top 20% to 30% generate most profit.
How often should I review client profitability?
Annually at minimum. Better businesses review quarterly.
Identify your single worst client by margin and headache. Calculate what replacing them with a clone of your best client would mean for profit. Make a decision this week.
Scale Suite helps business owners understand which clients actually make money and which drain resources.
We set up reporting showing profitability by client, track debtor days, and highlight where time goes. When you see real numbers, decisions about pricing, boundaries, and client selection become clearer.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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We’ll show you the full cost of an internal hire vs our embedded team – and exactly how much you’d save.
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