When Kristi Faulkner co-founded marketing firm Womenkind, she soon landed a well-known global bank as a client. Over the next seven years, Faulkner’s New York City business worked with the financial services giant on female-friendly marketing, content, and strategy. It eventually became Faulkner’s biggest customer, accounting for 50 percent of Womenkind’s revenue in 2014.
And then one day, it all came to an end. The megabank decided to consolidate all of its accounts with one agency–not Faulkner’s specialist firm. Almost overnight, Womenkind lost half its business.
“When you are small and you lose something big, it’s hard,” Faulkner says, adding that the recovery process was “devastating”: She had to let go of several employees to reduce costs. A year later, Womenkind is back on its feet, but its founder is still shaken. “It was almost like we had to become a startup again,” Faulkner says.
Losing a major client is a precarious moment for any small company. It’s a particular risk if your business sells to other businesses, because it’s more likely that a few clients could account for a significant portion of your revenue.
Ideally, you should never rely on any one or two customers for a majority of your sales, but it happens all the time. According to David Mitroff, the chief executive officer of Piedmont Avenue Consulting, industries such as construction and large-scale catering are particularly prone to an overreliance on a few big customers.
“There’s always a huge temptation to chase Fortune 500 companies, but it leaves you vulnerable if you let yourself be dominated by them,” says Anne Miner, the founder of the Dunvegan Group, a marketing research consultancy.
If that sounds familiar, realize that there’s only so much you can do to protect those relationships. Another business’s needs might change, it might experience money woes, or it might close its doors entirely. Or, adds Mitroff, “there are times when an existing client no longer feels the need to work together. This is organic and part of the process of any expanding business.
So even if your customer relationships are strong right now, you should regularly game out your strategy for a business breakup. “Make a plan,” says Miner. “Know what action you’ll take immediately, and by regular milestones thereafter.”
If the worst happens, try to stay both realistic and positive, no matter how dire things look. When Miner lost a contract worth seven figures annually with barely a month’s notice, she had to lay off the majority of her staff. But then she turned around and started pitching, including to former accounts. “I didn’t say I was devastated. I said we ‘had capacity,’ ” she explains. “You need to keep yourself together.” Within six months, she signed up a big new customer and was able to hire back some of her team.
Still, it can easily take three to six months to bring in new business, and longer for big clients. While you may be currently operating at capacity, don’t completely neglect your sales pipeline. As Faulkner has realized, “business development is a slow process. It doesn’t happen on your timing.”
Since losing her bank client, Faulkner has recovered a big chunk of her lost revenue. She recently acquired a new customer: Stamford, Connecticut-based fragrance company PDC Brands. This time, she says, “I’ve learned to keep things much more in balance. You can’t treat one client like the big kahuna. You have to treat all your clients like the big kahuna.”