For most businesses it would really sting, and yes, for some it could mean closure.
Most business owners would imagine that this could not happen as they work hard on the relationship and provide, and continue to, an excellent service.
But, This is what is happening to a number of companies that supply Russia.
With the reciprocal sanctions that have just been put in place, companies that supply certain products and services to Russia have had to cease trading with them. Sometimes there are forces outside the control of a business.
Although the example I share is a foreign country, it could be that a customer is stopped from trading by other issues.
How can you mitigate this issue if it arises?
One option is to take out insurance, or you could work on making your client base more balanced.
One client was dependent on a customer who was providing 85% of their turnover. This put my client in a very uncomfortable position. After working on growing the business for a number of years, the dependency on that one customer is now only 6% of the overall turnover.
That makes for a much better balance of business, and when that customer hot hard times, due to the recession, the impact was negligible when all the work dried up.
My client was able to find another customer to replace that work and now that the original customer is back trading, it has increased the turnover.
If you are relying to heavily on one customer, what could you do to make sure their loss would not cause a major problem for your business?
Maybe a review of your customer base is in order.
What are your thoughts? Please let us know so we can share ideas…