The Horrors Of Investing Too Much In One Customer
- Client Portfolio Diversification Makes Business Safer
- Getting A Handle On Operating Costs
Could one customer make or break a building service contractor’s company? It’s likely a problem that keeps many business owners awake at night. Regardless of ownership structure or current life cycle of the business, the psychology, strategy and leadership of a building service contractor can make the difference between success and failure.
Many BSCs go into this business because they enjoy working with people and they want to make a difference through service. There is a vision for something greater than just oneself and, as an entrepreneur, there is a compelling feeling to leave a lasting legacy. Often, owners can get easily distracted by the details of running an operation, especially when the top and bottom lines look healthy. However, if leaders aren’t continuously standing guard at the door of the business, they could be putting the future of their companies and their people in jeopardy.
The last eight years of my career were spent running a premier facility maintenance company in New York. Most people wouldn’t even know the business existed, though on any given day, one could find more than 60 trucks and 125 technicians in the streets of New York providing maintenance services to more than 7,000 pieces of street furniture.
I helped build a highly profitable, niche business that serviced the world’s top out-of-home advertising clients. My contract cleaning company provided jobs to hardworking people, developed its own reporting technology, and created a family-like company culture that offered opportunity for upward mobility. In the winter, we even had the unique challenge of clearing snow from 3,500 bus shelters in New York — in less than four hours.
However, the problem was, roughly 70 percent of the business was with one major client. The contract was very demanding, required a huge allocation of resources and 24/7 support. We worked tirelessly, earned the client’s praises and, in a lot of respects, could make the argument that their high standards made our company stronger. But it was still too much focus on only one customer — and it would be our downfall.
A Dangerous Partnership
The relationship with our major client began with us providing outdoor cleaning services. The customer was thrilled with our performance. Within the first couple of years, this customer began asking, “What more can you do for us?” We were also asking the same of ourselves, “We’re already in the door — what other services can we provide to them?”
Naturally, we were going to say yes to this added revenue. Over the next few years, we expanded the scope of our services dramatically. We added new service lines to our organization so that we could better service our major client. The client was extremely happy with our service model and we were able to help them keep their operating costs low. We figured this would be a lasting partnership.
Unfortunately, we were wrong.
Last August, we were dealt a surprise when that same major client decided to take our services in-house. Less than a year later, we were out of business and I was tasked with walking a 52-year-old organization to its funeral — in less than 45 days. I can remember locking the doors for the last time, seeing the imprint on the carpets where desks once stood and hearing only the hum of the A/C unit.
Strangely enough, shutting down a business was one of the most educational experiences that I’ve undertaken in my career and I was grateful to have gone through it. The pain was severe, but I knew if I didn’t take some time to reflect on the shutdown and accumulate all of the valuable lessons learned, I’d be leaving a lot of knowledge behind that could help myself and others.
Client Portfolio Diversification Makes Business Safer