Why You Should Never Depend On One Client For The Majority Of Your Business

The success of a company is based on its engagements with clients. When a company works with clients and ensures their full satisfaction, things work smoothly and the company’s clientele continues to grow.

By Victor Ochieng

George Morris, the President of The FRAMEWORK, gave a similar account about his company, which he said was doing very well with a large client engagement. Things went on smoothly and his biggest client started engaging them more, resulting in healthier inward revenue flow. Morris was wary of letting one client account for over 20% of his company’s revenue, but he fell for this client because of excitement about the potential of their cordial working relationship. The future looked brighter and they let the client go beyond the 20% threshold.

At some point, the two companies started discussing a large, long-term engagement. It’s actually their client that brought up the issue, showing how excited their company was working with Morris’ company. Considering the nature of the expected engagement and how secure it appeared, Morris went into hiring decisions before even sealing a deal with the client company. He did so in readiness for the new workload expected as soon as the two inked a multiyear deal. The prospect looked so good that Morris stopped looking for other clients.

After Morris’ team submitted their proposal to the client, no response came. Weeks passed by, but the typically chatty client wasn’t saying anything. He would later learn that the client company had frozen all vendor work due to poor financial performance.

That was a big disappointment for Morris. He felt compelled to cut down his staff, going as far as sending away some employees who had been with his company for more than four years. Moreover, his company was compelled to sublet its space and lease a smaller one.

Morris and his team started building a new clientele, taking advantage of every opportunity that came knocking. He had to augment his team with some freelancers to meet client expectations. In about four months time, things stabilized and the company started hiring. They also moved to a bigger and better office that complemented the company’s image.

After that experience, Morris said he’ll never again make the mistake of focusing on a single client at the expense of others. He adds that he wouldn’t let a single client control a significant portion of his company’s revenue stream.

Looking back, he says he should have at least created a bridge contract to the fascinating multiyear deal he was expecting before adding any workers to his team.

To avoid a repeat of such a costly mistake, Morris has delegated several operational decisions to a wider team of company directors. He says they’re now better placed to forecast and weigh risks. He’s also made a decision never to hire people in expectation of an engagement unless the deal is signed and a contract is in hand.

Comments