The big one that got away; dangers lurk in having too few clients, but here’s how to make it work for you – Sales & Marketing
Jim Rada recently quit his job to launch a biotech-oriented editing and writing business. Almost immediately, he hooked up with two regular clients. Rada believes the two could keep him busy, but even though he longs for large, steady clients to replace the regular income he cherished as a full-time employee, he worries. Maybe he should diversify a little, rather than depend on a small client base, he wonders. “One client is looking for a fulltime writer–and if he finds one, I know I’m gone,” says Rada.
His wariness may be justified, especially given the business experience of his father many years ago. James Rada, St., operated a food-brokerage firm that relied on one client for the bulk of its sales. That client was bought out by another company, and Rada St. lost the account. Rada says his father’s business never fully recovered from the loss.
According to Mike Fish, a Baltimore counselor with the Small Business Development Center, a nonprofit agency dedicated to helping small businesses, Rada should be leery of building his business around one or two clients. “I’ve seen businesses like that in the past,” says Fish. “They get dependent on that one customer, then that customer dumps them, and they are in trouble.” Generally, he adds, “they fold because they’ve gotten so complacent they haven’t done any marketing. They are totally unaware of what is going on in the marketplace.”
Having one or two big, regular clients can be very comfortable, but it can also cut you off from other contacts. You may have an in with a company or client, but you must assuage that client on a regular basis if you don’t want him to stray. In the meantime, your smaller clients may feel neglected and find someone else to take care of their needs. Or your other clients may develop different needs you won’t even recognize because you’re spending so much time on your top client. As time goes on, you may find yourself out of the marketing loop with your other clients. Ultimately, you lose future sales.
Less devastating, but just as real, is your sense of vulnerability when you spend a lot of time working with one client. As the relationship progresses, the client will certainly know the power she wields over your company via finances. She may use that to force you into cutting deals you wouldn’t normally make, whether it be for cheaper prices, more work or other problems.
“Because a big client represents such a large portion of your business, you feel inclined to always make her feel happy, sometimes to your detriment,” says Frank Fox, executive director of the National Association of Secretarial Services in St. Petersburg, Florida. “When you have one client that gives you 80 percent of your business, you realize how vulnerable you are to that client leaving or to that client turning the screws on you in terms of pricing and special favors.”
THE DESLITE FOR A BIG DEAL
Most people don’t go into business with the mindset that they will net one or two clients and then be set for life. But it’s hard not to get excited when someone dangles a large contract before you (especially when your pickings have been slim up to that point). If you find yourself presented with a deal that could keep your company busy most of the time, keep it in perspective, warns Coralee Smith Kern, head of the National Association for the Cottage Industry and owner of Maid to Order, a cleaning service based in Chicago. She remembers the chidings of a former boss who taught her a lesson she still adheres to today. Kern worked for a temporary service that did inventory for companies. One day she ran into her boss’s office to tell him she had just landed a job that would entail 500 employees working double overtime to do inventory for Woolworth’s on New Year’s Day. She recalls her boss saying, “My dear Mrs. Kern, I don’t want to offend you, but please do not ever run into my office again and tell me that you have one job for 500 people. When you get 500 jobs for one person, then you’ll be successful.”
Though Maid to Order has done a few huge cleaning jobs that provided fat paychecks, Kern has intentionally focused on keeping many clients for many years. “It was probably the most important lesson I ever learned in life,” she says. “Consequently, in any business that l have been in, l have never been dependent on one client.”
BUT ONE CLIENT WORKS WELL, IF…
Sometimes business owners get into a bind with a big client because they are too eager. Fresh out of college, Donna Q (she prefers to remain anonymous) launched a secretarial services business and immediately hooked up with an entrepreneur as her first main client. By the end of it all, Donna Q says, she was pretty much running the man’s business for him–to the detriment of her own fledgling company. When the man finally burned out and closed up his business, Donna Q was left, basically, with no client and no business for her efforts.
It doesn’t have to happen that way, particularly if you know how to safeguard yourself. Like Donna Q, I took over a major project for an entrepreneur, a man I genuinely like and a project I believed in. At the time I took on the project–the production (writing, editing, and desktop publishing) of Maryland Maturity, a monthly, 32-page newspaper–I was earning a decent living writing for national publications, living the independent writer’s dream.
Still, all but a few business owners get tired of having to scramble for work. The same was true in my case. I took on the newspaper in hopes it would replace the income of several little clients.
The difference between my story and Donna Q’s is that I went into the relationship with several goals in mind besides a regular paycheck. That way, if the newspaper didn’t make it, or if the publisher and I parted company, I wouldn’t have lost everything I had worked for. Basically, I reasoned, I would think of the job as a well-paid internship. I could have taken courses or attended seminars to enhance the skills I knew l would learn by taking on the project, but in this case, someone would pay me to learn things I wanted to learn.
For example, the newspaper would be a good place for me branch out into travel writing. As a newcomer, it would have been difficult for me to compete in many of the travel markets. I wouldn’t have earned enough to pay for the trip itself, let alone made a living wage.
Moreover, I had owned a desktop-publishing system for several years but never really had the chance to use it. The newspaper made me learn the ins and outs of Ventura Publisher, a scanner, and several graphics programs. Now I’m proficient in DTP and could easily turn to a variety of clients in the event writing dries up or I face burnout.
Despite the clear-cut goals, I was wary of taking on a project that could cause me to lose the contacts I had fought for nearly a decade to establish. lf I did the entire project alone, I would certainly have run that risk. In writing a 32-page newspaper, I would be superhuman if I didn’t run out of things to say by the end of the day.
So l decided to contract out much of the writing, keeping just the occasional piece that was of interest, which left me time to write articles for other publications. Not only did this stave off the burnout of being consumed by a single client, but it also gave me the time I needed to keep my hand in different areas as a safeguard against losing the client.
More important, I knew when it was time to wean myself from the client. After a year and a half of meeting the enormous monthly deadlines I had contracted for, and performing many other little jobs I hadn’t bargained for (helping with sales letters, putting together longterm editorial schedules, some public relations), I knew I was in danger of being consumed by the single client. It was time to get out.
In all it was an amicable relationship– because I had gone into it with clear goals and intentions, and I kept sight of the fact that I had a business to run, one I had worked hard to establish.
SUCCEEDING WITH ONE BIG CLIENT
Generally, to rely on one or two main clients is to invite disaster. Still, you can make it work in some situations.
Go in with a plan. To rely on one client for no other reasons than that they keep you busy and that you really don’t like making sales calls is just plain lazy and crazy. On the other hand, if you have clearly defined goals that would be enhanced by the income or presence of a big client, by all means do it.
Have an ulterior motive. Can you take something out of the situation? Can you use it to make valuable contacts? Can you use it to boost your client list? Do you need the exposure within that marketplace?
Knew your limits. This is probably the most important point to consider. What lengths are you willing to go to keep this client? Just how high will you jump when he asks? If you don’t define your limits, you’ll find yourself scurrying to fulfill the whims of that client for fear of losing him. If you think it through up front, you’ll determine just how much you need him and how much that relationship will be worth to you. You won’t put out more than you want to.
Build some insurance. This may not be feasible for everyone. But as you see one client taking over your list, save a little insurance cash–at least a few months’ income to give you the time you’ll need to jump start your business if the client leaves.
Job out. You’ll have to keep a close watch on any outside work done for your big client, but you can make the client happy and continue to grow your business if you learn to contract some work. Keep what is most satisfying and profitable for you, and let others do the rest.
Knew that it can end. Though you go into the relationship with the best intentions, think of this relationship as a marriage with an emotional prenuptial agreement. Keep in mind that the most important business is yours, and be ready to walk if the need arises. .
Ellicott City, Maryland, marketing professional KIM REMESCH wrote “Get the Word Out Fast” in the July 1993 issue.
COPYRIGHT 1993 Freedom Technology Media Group
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