how reliant is your business on any one person or group?

by | Apr 15, 2014 | build a Mother of a Business, business ideas & thinking, exit strategy, Finish Unfinished Business, how to sell a business, Sell Your Business, SELL your Mother of a Business, so you think you're in business, start with the end in mind, the business model | 0 comments

MileWide

So, one of the key questions I ask when talking about exiting your business is:
“how reliant is your business on any one customer, supplier, employee or even on you?”

More times than not,  the answer will usually suggest that there is on a reliance on at least one of these.

I’m sure there are many reasons and justifications why this is:

  1. maybe it’s because you’ve landed a very large client because they want all you produce, consuming all your business has available. You keep delivering and they keep broadening the list of products and services they want you to supply.
  2. may it’s because once you found the supplier that delivered what you wanted, you didn’t/haven’t ever bothered trying to find anyone else, leaving you to focus on other tasks.
  3. maybe it’s because you brought someone in to help you as your business grew, with them making some of the activities their own and knowing more than anyone else about them.
  4. maybe it’s because you’ve done an excellent job serving a small number of great customers and they ask you personally to handle more of their work.

From a saleability point of view, that’s not such a good thing for a number of reasons:

  1.  Are you locked into pricing and timeframes that means your business cannot make an impact on increasing margins (whether you like it or not).
  2. Are leaving your business at the mercy (to some extent) of not having a backup supply arrangement.
  3. Are you allowing one to have a lot of power with one without having locked them in?
  4. Are you making good money serving the expanding needs of this small list of “great customers” so you keep falling deeper and deeper into the trap.

Pretty soon, your business’s offering is an inch deep and a mile wide and the only person in your business with the depth of industry experience to deliver all of the services is YOU. But you’re trapped because your expenses have crept up as your revenue has exploded – leaving you dependent on the sales you get from a small group of demanding customers.

With no more hours in the day, your business stalls and you run on a hamster wheel just trying to keep what you’ve got.

Is this sounding familiar?

The next post will assist in providing some of the answers…

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