You Just Landed A Large Client. Now What?
As small business owners, we find themselves scrambling to get large contracts with big companies. Like our friend "Same Way Sal" we often fall into the trap of defining success that way. We finally land a multi-year contract with a large company and think to ourselves we are set. But is that success? Today we are going to answer that question.
The Trap of Relying on One Large Client
Gene Marks at Entrepreneur wrote an excellent article about this in June (you can find it here). In his article, he tells a story about a friend of his. They are a small business owner and relied heavily on one client for 2/3 of their business. One year that client was purchased by another company who decided to source the product sold by his friend's business internally. That year the business almost went bankrupt. If more than half of your business comes from one company you don't run a business you are just a division of the company you serve but without the benefits.
Disadvantage of Having One Large Client
One of the many advantages of being a small business owner is the freedom you have to make decisions and changes. But when you are beholden to one large client you become their hostage. They can make unreasonable demands, and you will fill helpless to tell them no.
For Example, a friend of mine worked for a family owned metal fabrication company. They fabricated a part for a large multi-national company. The year before my friend left they came to him and asked him to cut the price of the part they purchase significantly, or they would go else where.
As can see, you might have a great relationship with that large company now but that can change quickly, and you can't control it. You have little to no leverage if they make up more than half of your business.
What do you do When You Land that Dream Client
Celebrate! You, just landing a big client.
Once have done that, get your team together and assess where you are and what advantages this new client brings to your company. Think about ways to utilize the extra capacity, capital, and momentum to attract new large clients.
You may be tempted to get complacent. Don't. If you have met or exceeded your business goals. Take a few weeks off to decide where you want to go next.
Many small businesses land a big client and think they have made it. They are now bigger and doing more business than they could dream of or due to inadequate processes have more work than they can handle. In either case, you need to take a step back and ask the question is your business where you want it to be and what is next.
At Walston Advisory Firm one of our goals is to resource small business owners with the knowledge and software to make running their business easier so they can concentrate on what they love. We would love to partner with your business and build a plan to move past one big client to many.