When Your Biggest Client Walks Out

what happens when your biggest client walks out? ybkbs magazine Marc Ford business coach

Never, ever, ever put all your eggs in one basket…

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

By Marc Ford, Coach and Editor at YBKBS

At the start of the recent global pandemic, I received a call from a business that was totally ripped apart. From an amazing start up 18 months ago, to their clients all packing their toys up and going home because mum and dad had told them to come in. 

They were upset. On their knees and didn’t know what they had done wrong. The truth?

Work wise nothing. Excellent at what they did. Great growth. Customer service ahead of the game. But…the had ONE big customer and a few small ones. Unwittingly a precarious business model.

The “EGGS IN ONE BASKET” Dilemma

Most coaches, mentors and experienced business owners agree that having all your eggs in one basket is always a dangerous situation, especially if that customer is a slow pay or even walk away. It’s devastating because by extending credit, you’re becoming their bank. And if you’re tied to one customer and that customer is sold or runs into a problem, they’ll take you down. 

If you’re in this situation, you may not be able to fix it overnight. Set plans or goals to attract additional customers and then slowly work towards those goals. 

Having one customer is a balancing act. On one hand, you’re rooting for the customer and hoping they will continue to like your service. On the other hand, you have to work very hard at building your own enterprise so that the failure of the one customer will not put you out of business. 

Many experts suggest having regular meetings with the customer to monitor how their business is going and to find out if there are ways you can be of more help. They also advises that before making any major investments, try to get a long-term commitment from the customer, one that allows for price adjustments and that they are tied to you for a length of time to allow you to invest.

The Way Forward 

If you find yourself growing quickly with one customer, you may be tempted to terminate smaller accounts. Smaller accounts give a business a constant, reliable source of income even if it is dwarfed by large orders from one customer. 

My own personal view on this is that people are missing a massive opportunity. How many small businesses have the chance of growing? 

In an optimistic world, all of them. But as they grow your business will grow. The next small business that you take on, may well be the next medium sized business. Nearly 3 years ago, I worked with a business that was turning over £20,000 a year. And now? Over £300k a year. As you can see, if you work with the smaller businesses and I’ve always suggested that if you have one big client you should have the equivalent of at least 5-10 smaller ones that are the equivalent of the larger income, when the next big crash comes along, (and it will…history dictates that), the worst case scenario is that you’ll lose 50% of your business, but you’ll still have a business.

Here are some other ideas and tips…

Run periodic credit checks on your prime customer – Don’t rely on assumptions and data from last year. You owe it to yourself to stay abreast of your big customer’s creditworthiness.

Create a survival plan you can implement if your prime customer goes under – Your plan may include cost-cutting, rapidly expanding your offerings to your smaller customers, or borrowing. No plan is perfect, but—like keeping a flashlight under the bed—it’s good to know it’s there.

Understand exclusivity – Exclusive arrangements—sometimes common with large accounts—prohibit you from supplying to others. These arrangements can be very profitable but they can also be a ball and chain. If you are tied to an exclusive deal, ask for a written agreement with regular guarantees—for example, minimum annual guarantees, and if possible price adjustments. 

I mentioned the phrase earlier. ‘You owe it to yourself’ to stay ahed of the curve and stay ahed of trouble. The business I spoke to immediately grasped the concept, switched their marketing up several gears and is now busier than they were BEFORE CoVid19. Smaller accounts. More accounts. And now more of an opportunity to grow, and survive. A win/win I’d say.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

More from Business Growth...

After an awful 2020 for small business could 2021 be the year that small business shines?
 

2021: The Year of the Freelancer?

Whether your business has thrived or barely scraped by this year, it’s been a rough ride. We’re all going to need to plan, strategise, and draw on all the resources available to us next year. With that in mind, I wanted to delve into an interesting trend I’ve noticed and ask this question: will 2021 be the year of the freelancer?

how do you get rid of a customer that you don't want?
  

How to Break Up with a Client

Whatever the reason, sooner or later there will likely come a time when you have to break up with a client. But there’s a right and a wrong way to do that. Here are a few things to bear in mind as you navigate the sometimes-messy process of ending a business relationship. 

do you need to hire a virtual assistant? YBKBS magazine
 

Do You Need to Hire a Virtual Assistant?

There’s been a lot of buzz about virtual assistants in the last couple of years. Perhaps you’ve already worked with one, or thought about doing so. But maybe you’re not entirely clear how a virtual assistant (VA) can help your business, or whether you’re at the stage where hiring one would be helpful. 

Today, we’re talking about all things VAs! 

5 small business myths that might be holding you back
 

5 Small Business Myths That May Be Holding You Back

Do you feel like you keep posting and posting on social media but you’re getting little to no response? Have your follower numbers plateaued? If so, your content might be the problem. Too many business owners fall into the bad habit of only posting when they’ve got something to plug, or posting the same types of content again and again.

Here are a few ways to add variety to your content and get your engagement rates soaring:

Listen to Our Podcast...