Are You Letting One Customer Hold Your Business Hostage?

Financial advisers tell you to hedge your bet by diversifying your investments to minimize risk. You should also diversify your business for the same reason: To reduce risk by avoiding dependency. To insure that you remain in business, be certain that no one customer is in a position of controlling your company. You may lose control if you allow your business to be held hostage by a powerful customer. And it can happen easily.

There are countless stories of small- to medium-sized companies falling victim to the temptation of the comfort and ease of catering to a big customer. 

The anticipation of change should be part of your business planning. Greek philosopher Heraclitus left us with the enduring message: "The only permanent thing in life is change." We change, our customers change, our markets change, and our products must change. For example, you may have a large, profitable customer that accounts for the bulk of your business, but what if your customer fails? What if another company buys your customer? What if the customer decides to buy from your competitor? Many things are possible - so dependency on one or two customers is dangerous to your survival. Make sure you plan ahead and diversify your customer base.
 

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