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Fortunately, our biggest customer is Sears (or GM, or DEC).
Until recently, having a big account with a major corporation was an enviable position. You didn't need to chase around for the nickels and dimes -- the dollars flowed in. But as the people who supplied desk lamps to the Sears catalog can verify, losing a big piece of business on short notice can hurt. (Nearly as painful -- and sometimes as life-threatening -- is when your customer squeezes your margins.) Realistically, you may not be able to diversify your customer base overnight, given your current products or capabilities. But if you haven't thought about what you'll do if you lose your biggest piece of business next week, now's the time.
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If we boost revenues, most will fall to the bottom line.
You're making money at $1 million. So why not crank up revenues to $3 million or more? If your systems can handle the extra load and if you're able to maintain your profit margins, then the benefits can be huge. But for many companies, those turn out to be very big ifs. Imagining how a business will work from a spreadsheet and then seeing what happens when all the pieces come (or don't come) together can be a rude awakening, says venture capitalist Alan Patricof, chairman of Patricof & Co. Ventures Inc., in New York City. "Even if you think you've done all the steps before, you don't really know how everything will work in combination." Many companies find that the bigger they get, the harder it is to keep their margins where they want them. The minute they think they're losing a sale, they panic and cut the price. Unless you're careful, you'll yearn for the days when you had a nice $1-million business.
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I say, If it ain't broke, don't fix it.
Entrepreneurs don't often lose sleep worrying about their successful products. But if the successes are to continue, they probably should. If the market is attractive enough, you can bet that competitors are eyeballing ways to get a piece of it -- and almost always at your expense. Rather than hang on for dear life, one way to keep competitors guessing is to embrace entrepreneurial cannibalism: spin out new models and new levels of service on a regular basis -- even if it means eating into your existing market. In today's world, many experts argue that it doesn't much matter if you've got a high-tech product or a low-tech ser-vice. "You need to be willing to eat your own young," people everywhere seem to be saying, "because if you don't do it, someone else will."
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Hey, did you see us last week on CNN?
Strange things happen to some people when they're discovered by the media. They begin to forget the important things that helped earn them the recognition, and they get swept up in the curtain calls and the video replays. The mind plays other tricks: What was once admitted to be "luck" gets miraculously transformed into "foresight." We're not suggesting that you labor away in obscurity and tell the reporters and camera crews to stay away. A certain amount of public acknowledgment is great for morale and maybe for business as well. Remember, though, that ultimately you'll be judged not on yesterday's film clips but on how well you meet your customers' expectations tomorrow.
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Actually, our important numbers have never looked better.
The power of the mind to rationalize unwelcome news is truly amazing. We've seen extraordinarily successful entrepreneurs who, for unexplained reasons, dismiss leading indicators of potential trouble. The data say that overhead costs are climbing fast or that the number of repeat buyers is slipping. "Oh, that's just a temporary thing," the optimist argues. And it may be. But if the numbers aren't lying, the longer you put off admitting there's a problem, the harder the fall can be.
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We've reached a point where the business practically runs itself.
You've got an established business that's raking in money, has no debt, and has no minority shareholders. You can come and go as you please, and you're fortunate enough to have managers and employees who know the market and the customers at least as well as you do. With luck, it could continue like that for years. But what if your key managers were to pull the rug out from under you by quitting to launch a competitive business? We've seen it happen. You may or may not be able to fight off such a challenge. One question you might ask yourself as you assess the strength of your business is where the Achilles' heels are. Be honest. It's a lot easier to take preventive actions now (even if it means revamping your reward systems) than it is to watch the company you've built evaporate before your very eyes.
