How to get customers easily: Vanessa Lader: When I worked in private equity, we would often decide not to invest in an early stage company due to high customer concentration (a large per cent of revenue from one or two customers) which made the investment risk too great.
And yet, as an entrepreneur, if Naivas, for example, decides they want your product and your sales will suddenly triple, are you really going to say “Sorry Naivas, I don’t want the customer concentration, I can’t do business with you.” It might be the smart thing to say, but it is not likely to be the first that comes to mind.
There is a risk with launching too quickly with a single large customer. You may only have one shot and if everything doesn’t go perfectly, you don’t get a second chance.
Because of this “one and done” risk, you may want to consider taking a more gradual growth trajectory. There can be distinct advantages to starting small, building up a loyal base, thoroughly testing product market fit, and working out any issues or potential flaws.
Being patient and growing slowly isn’t necessarily a bad thing. Many of us have been taught to turbo charge everything. In part, because the venture capital community encourages this kind of sprint to the finish.
And yes, it can be necessary to rush and be first to market in a highly competitive industry. But other times, you may end up shooting yourself in the foot.
If you’re able to bootstrap your business – instead of depending on significant outside capital – as you start to generate revenue, you can re-invest it. This gives you room to experiment, to get it wrong, to do the “drunken walk” that so many entrepreneurs talk about, without betting the farm on any single strategy succeeding.
The truth is that one way to prevent losing a big customer is to not take them on in the first place…at least not until you’re ready. It’s easy to be eager and impatient as an entrepreneur, think about what you could do if you were disciplined and patient instead.
If you do take on a REALLY BIG customer, it’s important to develop a deep relationship with the right people in that organization so that if you do hit a bump in the road, they have enough trust in you to navigate through it.
And if you end up with a really big customer and lose them, it’s vital that you train your mind to respond in a productive way. When a company loses their biggest customer, most people go into a state of fear and panic. Unfortunately, this puts you in fight or flight mode, shutting down the pre-frontal cortex of your brain.
This matters because that is your creativity center and you need it for coming up with the best solution. The most important thing you can do when things don’t go as planned is to get back into your creative mindset. This will put you in an optimal state for problem solving rather than being stuck in fear.
To do this, ask yourself one simple question: “What are at least three ways that this problem could turn into a gift and opportunity in the future?”
At first, your fear-based mind may try to answer that question with something sarcastic like “Well, if I’m bankrupt I can go lie on the beach and drink Mojito all day.”
Simply ask the question again until you get back into the creative problem solving side of your brain, and hear an answer like “Well, by losing our biggest customer, we now have to develop those new products we’ve been thinking about for other customers.
Another benefit is that we now have more time to focus on our smaller customers and serve them better, and this might improve our word of mouth marketing and grow that side of our business more.”
As you continue this line of thinking, you will come up with more and more ideas for your business. Rather than responding with fear, you will respond with creativity, and this will make all the difference.