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Aug 30, 2021

Identify Toxic Clients Before They Poison Your Business

Chan_James21_90x90By James W. Chan, PhD


Some clients are just more trouble than they are worth.

Service providers are taught that “the customer is always right,” but it’s important to our sanity, and our bottom lines, to recognize that some prospects are wrong for us. Even poisonous. Here are some of the tell-tale signs of a potentially toxic client.

Lack of Respect in Their Voice

I don’t blame strangers for sending me emails during the weekend. I don’t mind that a prospect ignores the time we set for a phone conversation and instead calls at his convenience. I will tolerate prospects not giving me the whole story in initial consultations. But a red flag goes up for me when a prospect begins a conversation with, “Oh, you are one of several providers that we’re talking to.” That shows a lack of sensitivity and respect. When we prospect for new business, we would never say to potential customers, “You are one of a number of prospects I’m calling.” It is a bad omen when a potential client engages in power play in the early stage of a relationship. The insouciance in their voice is palpable if you pay attention. You know the outcome is likely to be bad.

They Are Cagey

Man in shadow at a boardroom tableWhen prospects tell you clearly why they called and what they need, that’s a good sign. Often, you can hear the sincerity in their voices. This is not the case for bad prospects. Recently, someone called saying he needed my help entering the China market, but was unwilling to tell me his problem. Even when I probed, he spoke only of “footprints” and “parameters,” spouting business jargon designed to obscure, not elucidate. It is hard to work those who have something to hide, even as they are seeking your help. I advised him to look elsewhere.

The Ability to Pay Has Been Compromised or Is Dodged

I was inexperienced and unwary when I began my practice in 1983. A former colleague put me in touch with a friend who needed me to translate some material from Chinese into English. The person did not specify a budget or give me a purchase order. Admittedly, I was not wise enough to ask for one. I did the work and sent a bill. The client never complained about the invoice or contested the sum; he just never paid. Months went by and I wrote a letter asking for payment. He wrote me an angry letter in which he threatened to sue me for dunning him. In a fury, I dismissed him as a deadbeat. Several months later, I got an $18 check from him in the mail, which bounced. My bank fined me a sum almost just as much. I learned my lesson and am now much more careful in figuring out if a prospect can pay before I start work.

Once a multinational company engaged my service to do work on a China-related project. The manager, who had taken a three-day course on China in a public seminar, liked me and wanted my help. Although I could not imagine that a multinational corporation would have problems paying its vendors, to be prudent I proposed a three-phase project. I completed the first phase, and I was paid. One day, unbeknownst to me, the manager was fired. After he was gone, no one followed up on my work. When I called the company, the manager’s boss was very rude, he screamed at me, but he did not tell me to stop work. I sensed something was amiss. I paused the work on my end, and I never heard from them again. The company had severe financial troubles and filed for bankruptcy protection in 2012.

They Go to the Bathroom while Interviewing You

In my early 40s, my career had hit a wall and I needed work. A New York company wanted to interview me. I took the train to New York to see the owner. Without advance warning, he opened our meeting by giving me a math test. Then, during our interview, he told me he had to go to the bathroom. He disappeared for 45 minutes. When he finally returned, we ended the meeting and I went home to Philadelphia. Two months later, after I had accepted a good offer from another firm that was much closer to Philadelphia, the secretary of the bathroom-dwelling owner called me and told me that they would like to offer me the position. I was relieved that I didn’t have to work for that man.

They Make Your Blood Boil

A former client changed jobs and was now vice president of a manufacturing company. He recommended me to the company’s owner. I proposed a retainer to the owner to help him market his products to China. Three years later, he discontinued the retainer. Two years after that, he called wanting to see me again. During our meeting, he complained about the need to spend money on me to make money from the China market. I was shocked that he would treat me with such overt disrespect while seemingly trying to rehire me. He made my blood boil. Whenever I feel that way, I know I should leave the prospect or drop the client. I returned home and wrote him a cordial letter telling him that “my plate is full” and I could not find time to take on his business. If I force myself to do work while feeling angry and resentful, I know that sooner or later I would take out my frustration on those who don’t deserve it, including myself.

Toxic clients simply are not worth the potential damage they can cause.


James Chan, PhD, is president and founder of Asia Marketing and Management (AMM) in Philadelphia. AMM consults with U.S. firms that want to market their products and services to China and Asia. He can be reached at jchanamm@comcast.net.


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3 comments

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  • Jim Murphy | Sep 09, 2021
    I really enjoyed the article. Mr. Chan is right on.  And I've seen toxic clients at a large marketing agency I worked with, at another small businesses, and on my own.Highlights (or lowlights): the client who "put a moratorium" on payments and stopped paying the small business I worked for; and the business owner who abused my contacts in the middle of a meeting about his website. I refused to work for him any longer. 
  • Allen Zaklad, Phd | Aug 31, 2021
    Loved the article. A caveat: sometimes you can do all the right things, build a great relationship with your client, and you can still get stiffed. that happened to me once. nevertheless, ' guidance is spot-on.
  • Jim Shulman | Aug 31, 2021
    Devastatingly accurate assessment.  One of the benefits of self-employment is the ability to fire or not hire clients who aren't a good fit, since in the end a bad client is always too expensive.  Shakespeare was right: to thine own self be true.  

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    Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.