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Do Not Rely To Much On Just One Customer
If your company is in the business of selling services or products to other business then having a large number of clients is important. Not just from a sales standpoint but it can become an issue of survival too.
By: Cash Miller
If your company is in the business of selling services or products to other business then having a large number of clients is important. Not just from a sales standpoint but it can become an issue of survival too.
By: Cash Miller
Often for a small business to get over the hump it can be seen as necessary to land that one big client. The whale within the sea. If that does happen for you great. But have you ever considered what would happen to your business if you lost that client? Just as they were able to help your company make that great leap forward they could also destroy your business if they were to suddenly disappear on you. That’s why it is so important to keep a diverse clientele.
The old saying “never put all of your eggs in one basket” definitely applies to this situation. It’s preferable in fact that no one customer represents more than 10% of your annual sales. Because if something were to happen to them your business is going to be the one suffering. It could even be the result of something that has nothing to do with you. Maybe they went bankrupt! But maybe they switched vendors. The reason doesn’t really matter it’s the consequences that do.
So if you do land the big fish then you need to take advantage of it rather quickly. Preferably by landing more clients. Yes you could become overloaded with business. But you need to reduce your reliance on that client as much as possible as soon as you can. This can be particularly true if your business with them varies. Say you have a service oriented business. Your big client may account for over 25% of your business during the course of a year. But what if there are slow months. What exactly are your employees going to be doing to earn their pay?
One big client can throw a lot of different things off for you. You need balance in your business. That’s why the 10% rule exists. Yes you want large customers but they still should not represent more than 10% of your overall sales. But neither do your smaller customers need to reach that figure either. You can have ten different clients each representing 1%. That side doesn’t really matter. All that matters is how big are the big players. The better your sales spread is the more protection your business has for the unforeseen.
So when working to build your business please keep in mind the 10% rule. Doing so can save you from some unfortunate consequences that you just might be on the receiving end of but had nothing to do with. It would be unfortunate if your business were to suffer or even fail because of the financial ramifications that can be caused by the loss of a large customer.
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
The old saying “never put all of your eggs in one basket” definitely applies to this situation. It’s preferable in fact that no one customer represents more than 10% of your annual sales. Because if something were to happen to them your business is going to be the one suffering. It could even be the result of something that has nothing to do with you. Maybe they went bankrupt! But maybe they switched vendors. The reason doesn’t really matter it’s the consequences that do.
So if you do land the big fish then you need to take advantage of it rather quickly. Preferably by landing more clients. Yes you could become overloaded with business. But you need to reduce your reliance on that client as much as possible as soon as you can. This can be particularly true if your business with them varies. Say you have a service oriented business. Your big client may account for over 25% of your business during the course of a year. But what if there are slow months. What exactly are your employees going to be doing to earn their pay?
One big client can throw a lot of different things off for you. You need balance in your business. That’s why the 10% rule exists. Yes you want large customers but they still should not represent more than 10% of your overall sales. But neither do your smaller customers need to reach that figure either. You can have ten different clients each representing 1%. That side doesn’t really matter. All that matters is how big are the big players. The better your sales spread is the more protection your business has for the unforeseen.
So when working to build your business please keep in mind the 10% rule. Doing so can save you from some unfortunate consequences that you just might be on the receiving end of but had nothing to do with. It would be unfortunate if your business were to suffer or even fail because of the financial ramifications that can be caused by the loss of a large customer.
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
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Successful Project Management Is Critical!
Take Time For Your Business Education
Do Not Be Afraid To Drop A Bad Customer
Does Your Business Take A Toll On Your Health?
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