Small businesses often use consultants for one-time projects or ongoing training. If you no longer need the consultant’s services, or if the consultant is not performing up to your expectations, it may be time to terminate your relationship with him. Handle the consultant’s termination the same way you would fire an employee -- with professional politeness and tact.

Contract Ended

Most consultants will work with your business on a contractual basis. You may have a specified time for which the consultant is to be retained, or you may have a clause that allows either party to terminate the working relationship with a certain amount of notice. Consult the terms of your agreement to ensure you are not violating an existing agreement before talking with the consultant.

Put your cancellation terms into a written format and present it when you talk to the consultant in person. If you speak by phone, email the document after the conversation and ask the consultant to review and return the paperwork. You might say, “We have greatly appreciated your services, but we are opting not to renew our contract,” or “By the terms of our original agreement, I am providing 30 days' written notice of our decision to terminate contractual services.”

Services Unneeded

You may find you no longer need a consultant’s service because you want to hire someone to fill that role in house or you don’t have enough work to keep him busy. In this case, follow the same steps to terminate the contract as you would to acknowledge the prearranged end of a contract. Buffer the news with a polite explanation for your decision. For example: “While your work has been exemplary, we decided it would be more efficient to have someone on our staff full time to handle this particular responsibility.”

Poor Performance

You may opt to cancel the services of a consultant because of poor performance. In this instance, follow the termination terms of your agreement and be polite and professional. You may choose to outline the reason behind the firing, particularly if you feel it would be beneficial to the consultant. An example of an appropriate approach might be, “Unfortunately, you missed a number of very crucial deadlines in the past six months. While we appreciated your creativity and your upbeat personality, I’m afraid that your inability to complete work in a timely fashion means we must part ways.”

Financial Concerns

Sometimes your small business can’t afford the expense of working with a consultant. If you have to fire a consultant for budgetary reasons, be upfront about it. Say something like, "You have been a great asset to our business, and while we wish we could continue our working relationship, I’m afraid budget cuts mean we can no longer afford your services.”

If you've been happy with the consultant's services, offer to provide a testimonial or make referrals -- this can foster a warm ongoing relationship should you choose to work with them again.