It’s easy to let your­self rely on big, lu­cra­tive clients. But what hap­pens if they ditch you?

It’s easy to let your­self rely on big, lu­cra­tive clients. But what hap­pens if they ditch you?

Inc. (USA) - - CONTENTS - He­laine Olen is a vet­eran per­sonal finance jour­nal­ist, the au­thor of Pound Fool­ish: Ex­pos­ing the Dark Sideof thePer­sonal Finance In­dus­try, and the co-au­thor of The In­dexCard: WhyPer­sonal Finance Doesn’t Have to BeCom­pli­cated.

WHEN KRISTI FAULKNER co-founded mar­ket­ing firm Womenkind, she soon landed a well-known global bank as a client. Over the next seven years, Faulkner’s New York City busi­ness worked with the fi­nan­cial ser­vices gi­ant on fe­male­friendly mar­ket­ing, con­tent, and strat­egy. It even­tu­ally be­came Faulkner’s big­gest cus­tomer, ac­count­ing for 50 per­cent of Womenkind’s rev­enue in 2014.

And then one day, it all came to an end. The mega­bank de­cided to con­sol­i­date all of its ac­counts with one agency—not Faulkner’s spe­cial­ist firm. Al­most overnight, Womenkind lost half its busi­ness.

“When you are small and you lose some­thing big, it’s hard,” Faulkner says, adding that the re­cov­ery process was “dev­as­tat­ing”: She had to let go of sev­eral em­ploy­ees to re­duce costs. A year later, Womenkind is back on its feet, but its founder is still shaken. “It was al­most like we had to be­come a startup again,” Faulkner says.

Los­ing a ma­jor client is a pre­car­i­ous mo­ment for any small com­pany. It’s a par­tic­u­lar risk if your busi­ness sells to other busi­nesses, be­cause it’s more likely that a few clients could ac­count for a sig­nif­i­cant por­tion of your rev­enue.

Ide­ally, you should never rely on any one or two cus­tomers for a ma­jor­ity of your sales, but it hap­pens all the time. Ac­cord­ing to David Mitroff, the chief ex­ec­u­tive of­fi­cer of Pied­mont Av­enue Con­sult­ing, in­dus­tries such as con­struc­tion and large-scale cater­ing are par­tic­u­larly prone to an over­re­liance on a few big cus­tomers.

“There’s al­ways a huge temp­ta­tion to chase For­tune 500 com­pa­nies, but it leaves you vul­ner­a­ble if you let your­self be dom­i­nated by them,” says Anne Miner, the founder of the Dun­ve­gan Group, a mar­ket­ing re­search con­sul­tancy.

If that sounds fa­mil­iar, re­al­ize that there’s only so much you can do to pro­tect those re­la­tion­ships. Another busi­ness’s needs might change, it might ex­pe­ri­ence money woes, or it might close its doors en­tirely. Or, adds Mitroff, “there are times when an ex­ist­ing client no longer feels the need to work to­gether. This is or­ganic and a part of the process of any ex­pand­ing busi­ness.”

So even if your cus­tomer re­la­tion­ships are strong right now, you should reg­u­larly game out your strat­egy for a busi­ness breakup. “Make a plan,” says Miner. “Know what ac­tion you’ll take im­me­di­ately, and by reg­u­lar mile­stones there­after.” If the worst hap­pens, try to stay both re­al­is­tic and pos­i­tive, no mat­ter how dire things look. When Miner lost a con­tract worth seven fig­ures an­nu­ally with barely a month’s no­tice, she had to lay off the ma­jor­ity of her staff. But then she turned around and started pitch­ing, in­clud­ing to for­mer ac­counts. “I didn’t say I was dev­as­tated. I said we ‘had ca­pac­ity,’ ” she ex­plains. “You need to keep your­self to­gether.” Within six months, she signed up a big new cus­tomer and was able to hire back some of her team.

Still, it can eas­ily take three to six months to bring in new busi­ness, and longer for big clients. While you may be cur­rently op­er­at­ing at ca­pac­ity, don’t com­pletely ne­glect your sales pipeline. As Faulkner has re­al­ized, “busi­ness devel­op­ment is a slow process. It doesn’t hap­pen on your tim­ing.”

Since los­ing her bank client, Faulkner has re­cov­ered a big chunk of her lost rev­enue. She re­cently ac­quired a new cus­tomer: Stam­ford, Con­necti­cut–based fra­grance com­pany PDC Brands. This time, she says, “I’ve learned to keep things much more in bal­ance. You can’t treat one client like the big kahuna. You have to treat all your clients like the big kahuna.”

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