Posts Tagged business tips

Business Will Fall, It’s Part Of The Game

Business is a volatile world and it cannot be taken for granted. There is a series of reliances on multiple people, be it customers, staff, suppliers etc etc.

Things that effect those people can inevitably effect us as business owners and that is something we cannot change. We can prepare but we cannot influence the paths chosen and the decisions made by those parties that we interact with and rely on. It is not a reason to shy away from the business world but it is a reason to;

1. Be prepared,
2. Take action to adapt.

It may be that a customer uses your services for a long period of time and build to a certain level that they do not need you anymore. Bypassing you and going to the source is simply an economic decision and one that any business owner would make. It is difficult because the emotion around the loss of client that you depend upon may make you lose the clarity that it is simply business and that this is always going to happen.

Be prepared for these downturns and losses. Make sure that you have in depth knowledge of your cash and what is available to you. If you rely on this client excessively or they are a large part of your turnover then take the time to consider the implications of them leaving. Knowing where the cash is will help this. And this is not on a basis of having the figures in “your head”, you must have it on paper and know the calculations are real and absolute. Consider all possible debt such as BAS commitments, Tax Provisions, Wages until next income receipt, Bad Debts levels etc etc.

An added consideration if this is the type of situation you find your business in is, enjoy the cash flow of this large client, BUT always keep in mind that building a lifestyle or reliance on this income will be a bad idea and create pain if they leave. Build a buffer, use a portion of the profit and don’t get greedy because this is not the client to rely on too heavily. In the end, if they can achieve a large saving in their business, they will not maintain the profits in yours.

Take action to create safety in the event that the bad thing happens. Create marketing strategies to boost the customer base, use part of the buffer you have created to increase sales elsewhere. A part of the focus should be on ensuring that the bread butter for the business are the multitude of small business customers and not one large carrot. Losing 50 small customers out of a database of 1000 would not hurt as much as losing the one big fish so ensure that a strategy is to boost the bait fish and then go for the big one.

Being prepared and informed is the key to making it through the troughs and smack on the chin – and I assure you, the punches will come eventually but you can get through them.

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