Hiring The Right People
Many franchises - such as food, hospitality and...
When you're running a Canadian franchise, it's only natural to be excited when you manage to land a large client. It can often mean a boost in revenue for your franchise, along with wider exposure and overall expansion. In short, it's time to break out the champagne and celebrate!
However excited you are, do keep in mind that having a large customer on your list also comes with specific risks. They tend to have more demands, and they might expect to be treated as if they are your only client. As they grow, you will expand as well, but this can stretch your franchise in ways you never considered before.
.
The risk of the bigger client
Larger clients can put strains on your business in various areas. If, for example, you are providing services for a big company, you will need enough staff to handle the volume. But what if you need the client's once-per-month payment to help cover that excess payroll? You may find yourself struggling to make payroll at times because your revenue is not coinciding with the times you have to pay all those employees.
.
Hedge your customer base
Just like you are supposed to diversify your investment portfolios to spread your risk, your client cases should be diversified. Develop and market other revenue streams to help balance out your concentration.
Remember that if you do take on a big client, anything that happens to that client--good or bad--will also impact you. Because of this, you need to develop revenue from various sources. No one or two clients should represent a significant portion of your revenue, so much so that your survival is nearly dependent on them.
When you diversify your base, it can actually offset your risk in other areas, too. For example, if your main focus was providing printed menus to restaurants in your city, an economic slowdown--such as the Covid-19 pandemic--would seriously damage your income. But if you had a more diverse customer base and were doing things such as printing for medical supply companies or offering digital services, you could still stay afloat even in such a difficult economic time.
Hedge your customer base as soon as you can, even before you take on your first big client. When you spread your risk, you'll be able to better enjoy the boon that comes from getting a new big customer.
