I have to agree with Jiri and what he has said. I think the tough part would be creating a non confrontational enviroment where you can discuss these problems with her. I suspect she gets very defensive when you try to raise issues.
If she is abrasive with clents it can quickly ruin your business. Poor service can spread like wildfire through a community.
The above said, i feel your pain and frustration. I've turned down management opportunites in the past because i loathe the part you are having to deal with no. It's never easy to have to discipline employees
I hope things work out for the best.
Btw....the title under your username is priceless
