There is an old adage about the cobbler whose children were always without shoes, because he focused all his time on making shoes for other people and their children. In business we often do the same. In other words, we work on other people’s businesses, problems and issues and fail to spend time working on our own businesses, issues and problems, until we get a wakeup call that we can no longer ignore.
If you are focused on working on outside business and forget (or neglect) working on your own, you may find that the business is not as solid or successful as it once was. For instance, let’s say that your business has been blessed with a single, large customer that requires 60% of your company’s resources and generates 80% of its profits. In addition, you have 30 other customers that take 40% of your efforts and account for the other 20% of profits
You focus on getting the work done for these existing clients. You are working hard, getting the projects done on time and the clients are happy. Then one day, your major client informs you that they have awarded their next major project … but not to you! A competitor has actually picked up the next project, and it’s one you didn’t even know about. What happened? Here are some possibilities:
- The project bid/proposal requests are posted on the client’s website, and you are expected to monitor the site for opportunities
- The client sends out requests for proposals to qualified vendors; but because your vendor file was not current (it was something you intended to get to, but never quite found the time to do it) you were overlooked
- While you thought the project was going great, the client did not agree … and you weren’t aware of any problems
The bottom line? You blew it!
Whatever the reason, in this situation your business shifts from being 100% committed to client work to having only 20% of your resources used and billable. What must you do to fix the situation? Here are a few steps you should consider:
- Assess the current state of the remaining clients’ projects
- Ask directly about pending projects; be sure you know what clients current and future needs are
- Check client websites, do an Internet search and be aware of your clients’ operations
- Review prospects and past clients to contact for new projects/orders
- Work ON your business!
- Understand the fixed costs of your business, including the ones you cannot change today or in the next 30 days
- Assess your business operations; how will you reduce the costs of business until new projects come in?
- Do your housework and update registrations, vendor files and other information your customers and prospects need to send you proposal requests
- Look for bid and proposal sites and sources so you do not miss opportunities again
- Select some fast-acting tactics that could lead to small opportunities or have quick turnaround times to use your idle capacity, including LivingSocial, Groupon and other Internet marketing tools that may generate immediate sales
- Develop a marketing strategy and lead generation system (or revamp the one you have)
- Increase visibility through social media, email newsletters and other in-person and virtual contact mechanisms
- Network, network, network
For the long-term health of your business and finances, it is important to take steps to mitigate your risk, especially when the majority of your business is dependent upon a single customer. Keep your relationship with that primary customer a high priority; treat them with respect and never take their business for granted.
In addition, make sure you are continuing to focus on your own business!
- Maintain your marketing and business development efforts even when your big customer seems to be locked in
- Do not get in the mode of overspending on wants versus needs…
- Keep sufficient funds available to keep the business going through a two or three month period (minimum) as an emergency fund just in case something goes wrong with the customer relationship, project, or business
- Develop a solid relationship with a regional/local bank that can get to know you and your business personally
Sometimes we take success and our long-term customers for granted, expecting things to go on as they have been. That is one of the biggest mistakes we can make. Don’t make it in your business.
Author: Lea A. Strickland, MBA CMA CFM CBM GMC
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