Big Sign Clients Often Come with Hidden Costs

I REMEMBER IT LIKE yesterday: 20 years ago, I landed my first really big client. They handed me a deposit check for $250,000 and I was so overwhelmed by the excitement, I drove back to my office holding the check in my hand, just to be sure it was real.

That one client transformed my business and my life. This was the quintessential dream client; they purchased often, and they went big when they did.

Our business was shaped by this “500-lb. gorilla” client. We hired based on The Gorilla’s needs, built a special service based on their projects, and spent time trying to replicate them in our marketing and sales efforts, hoping to capture another. When The Gorilla was busy, we were busy. The Gorilla’s needs often absorbed all our resources; other client and sales efforts were abandoned at the altar of serving The Gorilla.

I knew it was risky to have a client that represented 20-40% of our business, but no matter how large we grew, they somehow managed to grow right alongside, remaining in the 30% range. One client that size deciding to leave or being acquired and disappearing overnight can be catastrophic, and can happen without warning, despite their assurances.

In addition to the risk The Gorilla represented, they limited our ability to grow organically, to be flexible and responsive to the marketplace, and to maintain real control of what kind of business we wanted to be. We didn’t have the time or resources to grow as they would unexpectedly need us to serve a massive, complex project. We were stuck being the business they needed us to be, not the business we wanted to be.

Ultimately, the pandemic broke The Gorilla’s grip on us and we’ve rebuilt our company in a completely different way. Our largest client is now just under 5% of total sales — a much more manageable set of monkeys in a barrel!

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Do you have a gorilla in your business? Ask yourself these questions as a way of determining just what cost there is to keep The Gorilla fed and happy!

1. What percentage of your revenue is your largest client? More than 25% is extremely risky!
2. How much of your time and energy, as the business owner, are sucked away by the client’s needs? If your gorilla demands special handling by you, that is extremely costly.
3. Is the work The Gorilla gives you profitable? Sometimes we fall into a trap of avoiding raising prices or charging what something is worth out of fear of The Gorilla’s reaction.
4. Defensive management can damage your business long term. Are you “defending” the client or yourself in this relationship? Are you turning away work to protect The Gorilla’s needs? We spent years pushing away “small” work, like banners and yard signs — the most profitable, repeatable clients we could want!
5. Are you having to hire uniquely talented people to take care of The Gorilla? This is costly in many ways: increasing payroll, time consuming to find replacements and feeling trapped by specialized staff you might feel desperate to retain.

It can be scary or seem foolish to consider getting rid of The Gorilla — counterintuitive to reduce or eliminate a massive client. Don’t be fearful; believe in your experience and passion to get you through a transformation.

I’m delighted to tell you our efforts to reshape and retrain The Gorilla worked well, and now we are able to manage the needs of this client, and many, many others!

As you enter 2023, look back at 2022 and earlier to reflect on how a 500-lb. gorilla might be weighing down your business, your bottom line and long-term goals.