The Dangers of Relying on One Customer
Often for a small business to take the next step it can seem necessary to land that one big client. Some sort of whopper client. If that does happen for you great. But have you ever considered what would happen to your business if you were to lose that client? Just as they helped your company make that great leap forward they could also destroy your business if they were to leave you. That's why it is so important to keep a diverse clientele.
The old axiom "never put all of your eggs in one basket" can definately apply in 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 it might be 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 really true if the business you do 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 does not 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.
About the Author:
Cash Miller is an experienced entrepreneur and speaker who has spent over a decade as a small business owner. His years of experience in small business cover a variety of topics. If you are looking for more small business information you can go to http://www.smallbusinessdelivered.com
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