Termination of Employee Advice

We own a small business, and I had to let an employee go today. This was a hard thing to do, especially at this time of year. Context: This is a project manager who has been with us for 3 years. He has been comfortable with this position, and that has made it so he has made some costly mistakes for our company – so much so that one of the companies we work for will no longer allow him on the jobs that we do for them. Any tips on how to proceed would be greatly appreciated.