Have you ever pulled your brain together long enough to formulate this thought? It came for me after I landed a couple of large clients that suddenly made up over 75% of my revenue… potentially.
As a fledgling start-up, getting a couple big fish so early in the game was almost intoxicating. Using their names in circles of related businesses opened quite a few doors. Things were really looking promising. As we began to bring on these customers, it was apparent that we were going to bring on additional staff and take down some extra office space.
This is where things began to get shaky. Suddenly, cashflow became a screaming issue! If any one of those large clients slow pays you, you’re left holding the bag with your new employees, new landlords, etc. This is what happened in my case. I caught one of the clients on a “down” month, so we advanced more resources on the promise of catching up on the next bill.
Before I knew it, this became a snowball that I couldn’t contain. I was trying to beat checks from one bank to the other… try not to damage my start-up’s credit rating… you name it, it seemed like everything was going to come apart at the seams.
Fortunately, in my case, I have had mentors in the past that have instilled the values of planning for success into me so deeply. Almost immediately, I was able to see the beginnings of a massive train wreck. I realized quickly that I had gone against every investment principle I knew. I had not diversified my customer portfolio.
Here is what I did to regain control of the situation:
- Swallowed my pride – Was honest with my customer and communicated that not sticking within the boundaries of what our business could provide would jeopardize our long term success.
- Enforced Boundaries – As an old boss of mine used to say, “The customer is not always right, but the customer is always the customer”. I said “NO” to the customer… at the risk of the relationship. The initial shock of someone saying no to them was quickly overcome by a deep respect for our services and our company.
- Diversified – I got back to what I knew… talking to new prospects. Re-set the expectations of high maintenance customer’s access to our resources so our key players could be back out on the field bringing in new opportunities.
Not going to lie, it was bumpy… stressful… maddening… exhausting… etc. However, I was fortunate to recognize early enough that we were being pulled off course from our core competencies. We corrected in time, and we’re back on track bringing in new customers & giving great service to our existing ones… yes even the large ones.
Lesson learned: Be realistic with where you are in your company growth when bringing on new customers. Can you provide the service they’re seeking without compromising your core mission. I watched one very successful small business walk away from a deal with Dell that would have doubled revenue literally overnight… but it would have also taken the company in a new direction that was not consistent with it’s core.
