Eggs & Baskets: The Risks To ‘One Market’ Businesses

stressbusiness

It is not a good idea to put all your eggs in one basket…

…the risks to ‘one market’ businesses.

In 1999 I joined a company in Banbury as UK Sales Manager.  I had been assured that they had a good spread of customers across a variety of industries. 

This was one of a number of statements made that proved to be untrue.  In fact, as I soon found out, they had over 70% of the business firmly in the telecoms market and their supporting industries.

I spent the next two to three years working hard to broaden the customer base and was successful in winning business from other markets.

But… What happened next?

However, as I learned later, this was not enough and when the ‘telecoms crash’ happened in 2002, we still lost more than a third of our business almost overnight.

While I was experienced in sales, I was less so in the matter of running a business, and what was not realised was that we were ‘below critical mass’ as a company. 

That is, our overheads remained too high to sustain the existing business, and we needed to make some dramatic changes.  Little was changed until the debts were too large to be properly funded. 

In short, I left the company, lost a lot of money, and the company folded two years later…

I learned many useful lessons from that painful experience.

A man holds his face into his hands, avoiding looking at his computer screen, he is clearly stressed. - for blog: one market businesses

Beware One Market Businesses…

The most important lesson is not to rely on one market.  I know some businesses that rely on just one or two customers!

The risk of this approach is HUGE.  There are many economic and other influences that can destroy markets overnight, as with the telecoms crash.

Internal management decisions can destroy individual companies in a very short time – these could be companies that you are relying on to provide you with substantial income.

What can you do?

Take a look at your customer base.  Is it nicely spread over a number of markets, or at least over a number of customers?  If not you run a serious risk of losing your business if theirs collapses.  Believe me it can be very financially painful!

What is a good spread of businesses?  There is no hard and fast rule, but at least 6-8 customers with similar levels of spending will ensure that the loss of one will not kill your business.  If you can serve a number of different markets DO SO! 

Such a spread of customers will mean that the risk of losing one customer will be tiny and your business would be guaranteed to survive. And do not forget that new markets will require different sales approaches, different marketing messages, different priorities and so on.

Don’t fall into the trap of one market businesses. Build a broad customer base, keep your business secure, and give it the best chance to grow!

If you want some more personalised advice for your business – get in touch!

Leave a Reply

Your email address will not be published. Required fields are marked *