A news story caught my eye this week. 650 jobs are at risk at a South Wales bakery because Marks and Spencer has not renewed a contract for its cakes. Sadly the M&S work accounts for 75% of the bakery’s sales so its loss will have a catastrophic impact on the business. It really demonstrates the importance of spreading our risks.
It’s very easy as small business owners to get caught up in the moment, totally focussed on serving our current customers and perhaps not making the time to prospect for new ones. This is dangerous. Customers can be fickle. Their primary concern will always be their own interests. There is always a chance that they will be looking for better deals, rationalising their logistics or that new buyers will want to bring in their own contacts.
Keeping our existing customers happy is important and they are our best source of increased business. However it is vital that we spread our risk by making sure that we are not over exposed to one customer.
When a significant proportion of our business is with one account we need to stay close, to understand our customer’s business development plans and to find ways of making ourselves indispensable. We also need to be well aware of when contracts are due for renewal and enter into discussions about the future long before they come to an end. In this way there will be no nasty surprises.
However it is vital that we make time for marketing on a regular, probably weekly basis. That way we should never have ‘too many eggs in one basket’ as we should have a good spread of customers and new ones ready in the wings.