Are you looking for that big score in your small business? That one great client who has a big budget and wants YOU for regular and profitable work? Life could be so much easier if you didn’t have to hunt down new business all the time. You just run your business knowing you have plenty of work coming in.
Yes, this sounds great. You may be tempted to chase this kind of elusive big score in your small business. But you could be setting yourself up for major problems down the road. Big clients will give you stability and cash flow. But what happens when that big client changes their mind and stops using you? Look at what recently happened to Heinz.
Heinz has been supplying ketchup to McDonald’s for 40 years. But when Heinz hired a new CEO from Burger King they lost McDonald’s business. Heinz is a big company and won’t go broke from this loss. But put yourself in their place. Can your small business lose a major client and still survive?
I’ve talked to entrepreneurs who built their business on a handful of major clients. When they lose one client they suffer huge setbacks. Some have even gone out of business because they couldn’t survive the hit.
You’ve probably been told it’s important to diversify your investments in the stock market and mutual funds. The same logic applies here in your small business.
1. Have a niche, but make it big enough to diversify your business.
Your market niche is the narrow focus you have to identify your target customers. For example, if you have a home cleaning business your customers likely won’t be living in small apartments. You’ll also focus on a specific area of town. But you shouldn’t narrow it down to just a 2-block radius. If most of your business comes from a few or even one client you’ve got all your eggs in a small number of baskets. And if stuff happens your whole business could evaporate. Diversify your business across a variety of clients.
2. Consider what a big client will do to your business.
You’re going to cater to a big client. The good thing about running a small business is that you can be flexible enough to customize your service to meet a big client’s needs. But problems can come when your big client asks you to do something that’s on the margin of your core business. Yes, you can do the job. But you may find your profit margin isn’t what you need.
For example, we had a big client ask is to stain and finish their hardwood floors. That’s not what we do, but we did the job to accommodate them. It turned out okay for us, but we’re careful to make this kind of thing an exception. We don’t plan to turn into a floor finishing company.
You can end up letting your business shift away from your core expertise if you make a lot of exceptions to satisfy a big client.
You will have a lot of advantages if you can land a big client. But make sure you’re the one running your business. Follow your plan for your business. And make sure you stay diversified enough to prosper no matter what happens with any of your clients.