Red Rocket Ventures Blog (Growth Consulting, Small Business Experts)

Sometimes a business owner has no choice. If they’re a car-parts producer as a business, they are virtually linked with the ebbs and flows of the motor vehicle industry (which is highly cyclical and linked with the health of the overall economy). But, when you’re able to, you should desire to have a good mix of customers across many industries. So, if one industry gets adversely impacted by the economy, it generally does not take your complete business down with it.

I have observed a lot of companies see their profits get cut in two overnight, based on some unforeseen financial event (e.g., 9/11 in 2001, home-loan crisis in 2008). Don’t let your business be one of them. Just like above, you want to avoid reliance on any specific customer.

You never want to have “all of your eggs in a single basket”, so to say. Inside a perfect world, no one customer should represent more than 10% of your current revenues. That real way, if you lose that customer for any good reason, you are just placing 10% of your earnings in danger.

Too often I have seen companies living dangerously close to the edge, with more than half of their income in danger with one customer. That customer is lost by you, you lose your business. And, that’s not a good situation to be in. Too often, a startup is so in need of revenues that it will be taken by them from wherever they can get it. Even if this means these are “going beyond their safe place” in conditions of exactly what is a perfect fit for his or her business.

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That is a formula for long-term disaster. Customers that do not fit squarely into the core competencies, places both company and the customer in a negative position. This may include taking on a task that is difficult to fulfill too. Or, taking on a customer who is satisfied, and has you spinning your wheels constantly.

It is flawlessly acceptable to walk from a person or a project if it’s not the right fit for business. Don’t get so romanced with close to term revenue, that you lose sight of long-term fulfillment heartaches and costs. Where you are able to, it will always be best to “productize” your business. You want your sales team trained on those products perfectly, and your functions team fine-tuned for fulfilling those sales perfectly.

Nothing causes more chaos in a business than custom sales requests. The sales force is not sure if the company can accomplish it, slowing them down. The technology team needs to drop what they will work on in your product street map normally, slowing them right down to squeeze with time for a custom development. Your function’s team is not sure how to fulfill it, slowing them down. Sometimes, custom sales are OK, if the product being customized was already in your long-term product roadmap anyway, and you are just accelerating it for a paying customer now. Or, if an enormous client is requiring it, to safeguard the partnership. But, generally, custom is a bad phrase when offering typically.

You can find out more about how exactly to productize your business in this other post I published about them. If you’re not sure your service or product will be successfully shipped with a high probability of self-confidence, do not sell it. Period. That means making sure you did an effective quality assessment of the merchandise, on your own, before pressing it live into litigant deliverable.

Red Rocket Ventures Blog (Growth Consulting, Small Business Experts)
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