The business crippled by an elephant
Wow! It’s exciting when you bag an elephant.
No. I don’t mean the large animals you see on National Geographic specials. In this case, elephants are those very large clients who immediately change the whole makeup of your business. They are those special clients who can move you to a whole new income level. Some elephants might even double or triple your revenues overnight.
To properly care for an elephant, businesses often rework their pricing structure, add new staff, and move to larger quarters.
Generally, people are pretty enthusiastic about bagging an elephant. It’s a source of pride. Competitors may openly envy your elephant since they’d really like to have one of their own.
Who wouldn’t love an elephant?
For starters, just ask the guy who has to feed it and clean out its pen.
As you might imagine, yes, there are a couple of downsides to having an elephant. And, if you’re going to be working with one, you should know about the dangers.
Question: Where does a six-and-a-half ton elephant sit?
Often, to bag an elephant, a business needs to make some concessions to close the deal. That can mean anything from special handling to lower profits. While not desirable, most business people figure they can make up for lower margins with the expected increase in volume.
Surprisingly, elephant handlers often find they have to work twice as hard to make the same amount of profit.
Now for the other downside; It’s the one that keeps savvy business owners worrying late at night.
What happens if your elephant leaves you? You’ve ramped-up your production, added staff, and purchased materials, all based on feeding your elephant. If they leave, you’d be left holding the bag.
A sad (but true) tale
A client of mine had built a solid, growing business. When they bagged an elephant they had a sudden surge in business. They began getting large orders for some of their most expensive products. Their elephant was literally snapping up the product as fast as it could be made. The company went from about two million dollars in revenue a year to five and a half million dollars almost overnight.
To handle the demand, new people were added and the production lines were ramped-up. Everything was right in the world.
Except for the one thing that I pointed out many times in meetings. (Yup. I was the pain-in-the-neck person who kept pointing at…well…the elephant in the room.)
What they needed to continue their success was a herd of elephants, not just one.
While everyone agreed that was what was needed, they never really put a plan into action for developing new — and large — clients.
And then it happened. Their elephant stopped ordering.
Sales levels dropped like a shot bird. Available cash got sucked-up. Staff were laid off. Expensive sushi lunches became a dim memory.
And, since the sales efforts to attract new clients had been relatively nonexistent, they were faced with a long, painful road to recovery.
So, what do you want in your zoo?
The message you should take away from this is: If your business is built primarily on the back of one elephant, you are at risk.
You need to fill out your client mix with a range of clients. In an ideal world, no single client would represent more than about 20% of your revenue. That way, if you ever lost that client, you would experience a drop, but it wouldn’t kill your company.
Also, ask yourself if it really makes sense to give up the majority of your profit margin to get a big account? At the end of the day, it’s not important how much you make, what’s important is how much you keep.
So if you bag an elephant, go out and celebrate your success. The very next day, begin the hunt to get four or five more of them.
One elephant is a problem waiting to happen. A herd of elephants is a solution worth pursuing.
Ready to become a big game hunter? For your best success, it’s wise to include an elephant guide who can help you succeed on the Savannah. Call Sentium to schedule a a no obligation telephone meeting. We’ll discuss your goals and help you with a marketing strategy that makes sense.
To your business success,
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Richard Wilson is the Founder/Chief Marketing Strategist for Sentium Strategic Communications which helps companies craft the right message for extraordinary results. Over the past 31 years, his clients have ranged from start-ups to major technology companies.
© 2009 All Rights Reserved. All people who are looking to dramatically boost their business should read this e-zine. Don’t even think about reproducing this document or its contents without written permission from Richard Wilson. But feel free to forward this to all of your friends. For reprint permission, please call 800-595-1288.