Issue #3 - The Big Customer Blues
Reflecting on initial customers, how they influence short- and long-term prospects, and the questions you need to ask yourself
This week we’re talking about “massive customers”. The ones where you instantly recognize them based on their logos or branding.
Many of us would love to have them as clients, but have we really stopped to think about what that could mean for our businesses?
That’s where I come in with a reality check. Probably not fun… for you. But I’ll be lounging in my favorite chair, eating potato chips, while you squirm.
I’m just joking about the above. Kinda. Sorta. That would make me a hypocrite given my first business took on a goliath of a client, almost died (figuratively), and yet lived to see another day.
Specifically, I want to explore two aspects of chasing big customers:
What happens once you get them. As in, the operational issues that befall your professional firm after work commences.
How to recognize a big customer that will kill your growing business. This speaks more to financial considerations and realistic growth projections.
So, you’ve landed that big fish. What happens next?
I recently wrote about the dark side of landing a big customer on Medium. Focusing on the pitfalls that I encountered when growing my first professional firm. You see, I was lucky - in the traditional sense - to land a massive customer early on.
What I didn’t know were all the trade-offs I’d be making. They weren’t always obvious either. It was death by a thousand cuts, as they say. Small decisions that added up to major implications.
Since I don’t want that to happen to you, I shared my thoughts on Medium.
But, how do you know when a customer is too big?
Glad you asked. It dawned on me that just highlighting the dangers of taking on a big customer may not be enough to help you. So I wrote a second article on Medium.
This one focuses on three rules of thumb that I use to evaluate big customers when they come knocking. Two specifically call out revenue and cash flow - financial metrics - that should be considered. While the third one sheds light on the ‘is this a pattern you want to repeat’ question that you should be chewing on.
What should you take away from this?
In a nutshell, big customers should not be pursued without first thinking through the consequences. They may represent a way to grow quickly and earn a boatload of revenue, but they can also consume you alive.
I’m a proponent of sustainable growth. That means potentially tabling thoughts of grand clients until they can be serviced without over-leveraging your people and resources. Ask yourself whether the growth required to meet their expectations is reasonable in the short-term.
If they are a great fit for your overarching business vision, consider waiting until you can provide them with outstanding service, without sacrificing every other client that has entrusted you to help improve their businesses.
I didn’t heed my own advice when first starting out. Yet it worked out for me, so take that for what it’s worth. My business could have collapsed under the weight of that first massive customers’ expectations, but my partners and I managed to find a path to success. The probability was extremely low though.
If you do end up chasing and landing your massive customer, just do me a favor, go in with your eyes wide open.
Until next time,