Sure, it’s great to have a big contract with a big company. But how do you know when you’re too dependent on that one relationship?
It happens like this: A young, growing business finally gets the call it longs for–a massive company (Wal-Mart, maybe, or Whole Foods, or whoever the dominant company is in the industry) wants their product or service. A lot of it. A big, big contract awaits. Heaven on a stick, right?
Well, no. In fact, most small companies that land mega-contracts with massive companies end up badly damaged and have their growth stunted over the long term as a result.
Here’s how it (usually) plays out:
1. One customer or client contributes more than 20 percent of revenue.
Apart from the very early days of a start-up (when even just one customer can represent 100 percent of revenue), it’s important not to allow one client or customer dominate the top line.
2. Meetings are dominated with discussions about one customer.
You know you’re in the grip of an over-large customer when practically every meeting begins to center around them.
3. Key personnel are weary.
When a single large customer buys from a much smaller organization, guess who dominates the relationship? Right: the customer. When this happens, over time, your employees lose the ability to work at their own pace, and are increasingly yanked from pillar to post by the powerful large client that “we can’t afford to lose”.
4. Your target market definition is blurring.
One of the most painful results of contracting with a customer or client many times larger than your own company is the dangerously distorting effect it has on your market focus.
5. New client acquisition is on the back burner.
Worst of all, as you begin to realize that this once-heavenly prospect of a huge contract with a massive organization is in fact a nightmare of epic proportions, it dawns on you that you’ve developed an in-built dependence on the contract that can’t easily be given up.
Why? Because servicing the 800-lb gorilla has been so all-consuming that it’s been months –maybe years–since you last pursued any substantive new business. Not only has MegaCo wrapped its giant tentacles around you, it has sucked you into its gravitational pull, preventing you from acquiring other customers and clients at the very time you most need to.
If you’re experiencing two or more of the patterns above, it may be time to rethink that contract or think about outsourcing your business development effort to an experienced consultant.
SOS is a business development expert and marketing advisor located in Southern California with clients located globally.
Specialty Coffee Industry Business Development Marketing
Original article thanks to Inc. Magazine – Les McKeown