| Start up entrepreneurs and small businesses take | | | | serviced the automobile industry in the US went belly |
| massive pride when they land a big client. Getting a | | | | up when auto companies fared poorly. |
| large client account is associated with positive feelings | | | | What if you your existing client awards more contract |
| such as more prestige, better connections and fatter | | | | (meaning more future billings) to you? If you find hard |
| income. It is indeed a matter of celebration and source | | | | to turn it down, go out and hire more sales people and |
| of bragging rights for many. However, there are hidden | | | | business development executives to attract more |
| dangers in relying on one client who will account for a | | | | accounts. That way, you can maintain the optimum |
| major source of your revenue. Worse still is if you'd | | | | client mix. When you focus on sales, complacency will |
| hired extra staff to cater to these large accounts or if | | | | not set in and you will not be lulled into a false sense of |
| you neglected your smaller clients. | | | | security. Beware that the circumstances can |
| It is seductive and ego-boosting to have large MNCs | | | | dramatically change. Your fortunes can wax or wane |
| like the Fortune 500 ones but those deals don't last | | | | overnight. There is no such thing as 'security' in the |
| forever. They all go away! | | | | corporate world. |
| Once, a bulge-bracket (first-tier) investment bank in the | | | | Secondly, maintain flexibility. As mentioned above, |
| US hired a small public relations firm. This small PR firm | | | | diversification doesn't come easy at all times. Then |
| was staffed by some 20-odd people. This new | | | | what would you do? Just as you should be prepared |
| account was the proverbial golden goose for them - it | | | | to scale up operations, you should be equally prepared |
| contributed one-third or 33% of the firm's annual | | | | to scale down should the worst happen to you. Again |
| revenue. All was well till this investment bank suddenly | | | | in fund management, there is a pithy adage that says |
| terminated the contract as it was preparing for a | | | | "cut your losses and ride your winners". |
| merger deal. The PR firm was left struggling for cash | | | | In the case of the above mentioned PR firm, they did |
| flow. It had dip into the owner's personal savings to | | | | not go overboard with ramping up staff headcount. |
| pay staff salaries. | | | | Instead they hired only a handful and pushed existing |
| Conventional business management wisdom dictates | | | | staff to clock in overtime to cope up with extra load. |
| that small and medium enterprises should not depend | | | | That saved them money and (headache) in terms of |
| on one client as its major income generator. It is similar | | | | recruitment and severance costs (and legwork). |
| in vein to a popular investment truism - do not put all | | | | Another company hired freelancers and temp staff to |
| your eggs in one basket. However, this is easier said | | | | handle the extra load. The reality is that it is difficult to |
| than done. Nobody would have the nerve to decline a | | | | remain nimble when you are working with a big, |
| large client and the profitable billings that would ensue | | | | hard-to-placate brand. Whatever your strategy is, you |
| especially in a fickle economic climate. So how do you | | | | should ultimately focus on diversifying your client list. |
| manage reward-risk ratio? How can you reap the | | | | Finally, manage your big accounts well. Though you |
| benefits without risking everything? Is it possible? | | | | may be mentally prepared for the eventuality of losing |
| Firstly, monitor the percentage. In professional | | | | a big client, you may not really cherish it deep down. |
| investment management circles, they have something | | | | Though big brands are synonymous with flashy |
| known as optimal asset mix. Likewise, you should have | | | | advertising and branding exercises, they do not throw |
| an appropriate 'client mix'. Ideally speaking, no one client | | | | cash around. They are meticulous about performance |
| or no one industry sector should account for more | | | | measurement and metrics and parameters and all |
| than 25% of your revenue. Notice that I have | | | | those scary jargon that will stretch small business thin |
| mentioned client AND industry. This is because client | | | | and leave them high and dry. |
| profitability is directly correlated to and closely follows | | | | Big multinational corporations are looking for 'value'. |
| industry boom-bust cycles. Even if you had 100 | | | | Either you or your dedicated account manager should |
| different clients but all happened to be in the retail | | | | figure out the client's immediate concerns. Woo them |
| banking sector, you would be suffocating hard if a | | | | without fawning over them. Go the extra mile without |
| major banking crisis materialized. So if you cater | | | | compromising on new account creation and other |
| exclusively to an industry or a specialized niche, it's a | | | | smaller clients. |
| warning signal. A lot of marketing agencies that | | | | |