Losing your biggest customer isn’t the end of the world. The truth is, you may not even know the real reason they left you. Perhaps the industry in which your customer operates is struggling, maybe they’ve had a change in management, or maybe they’re stepping back to reevaluate their company strategy. Whatever the “why,” you need to leap into action. Follow our drill to keep your business propelling into the future.
Drill 1: Take a Deep Breath
Client loss is inevitable, so don’t get bogged down in the “what-if’s” or “we shoulda’s.” And don’t do anything drastic, as desperate measures are moves you’re likely to regret. Realize that the most important thing you can do at this moment is to accept your loss, look to the future and carefully evaluate all of your options. Figure out how to best manage the sizeable drop in your sales volume.
Drill 2: Update Your Financial Forecast
Determine what your business looks like without your lost customer in the mix. Draw a realistic picture to truly understand the depth of the problem and the timeframe in which you need compensation for lost cash to feel the least impact. In terms of losses, analyze how and where can you make cuts. A word of caution, though: be careful not to eliminate expenses that can hinder your ability to serve your other customers well.
Drill 3: Analyze Your Fixed Costs
At this critical juncture, you may wish to evaluate your workforce to ensure your employees are covering all the bases when it comes to meeting your customers’ needs. For those who aren’t meeting expectations, determine if there’s a better role within the company that they can fill. If you have several employees whose job responsibilities overlap, think about how you can make adjustments to make everyone as productive as possible.
In terms of other fixed costs, if you have employees who travel on business, you may be able to limit travel expenses by taking advantage of video conferencing or by negotiating special rates with hotels or car rental companies when travel is necessary. Many times, companies can cut fixed costs without affecting efficiency.
Drill 4: Seize the Opportunity to Work for the Competition
Does your recent loss present a prime opportunity for you to approach the competitors of your lost customer? Now may also be an ideal time to reach out to current customers to discuss their business and how your team can better serve them. Some of them may even be ripe for an upsell, which can help you to minimize the burn from your recent loss.
Drill 5: Notify Your Bank
When bad news hits, it’s wise to talk to your banker, who may be able to give you better terms or a temporary advance rate increase for cash flow needs. It’s worth the ask. Your banker will want to do everything possible to protect their investment in you, so keep them regularly apprised of your situation.
Read More: How to Cultivate Your Relationship with Your Bank
Drill 6: Inform Your Board
Be proactive and inform your board of your recent loss. Like your bank, your board has a vested interest in your company’s success and will need assurance that you’ve run the numbers and thought-through solutions. Board members may also be a watering hole for advice as well as introductions to individuals whom they know could help you navigate through this challenging time.
Drill 7: Contact an Experienced Bankruptcy Attorney
In the event your customer files bankruptcy, you’ll need to protect your claims. Be certain to consult with experienced bankruptcy counsel to follow proper procedures and maximize the speed and amount of your claims. Note that failure to file a proof of claim definitely will eliminate any chance you have of getting paid. Check the bankruptcy filing notice to see what the deadline is for filing. On the flip side, assess whether filing a proof of claim is even worth your time, or if you should simply take the loss. Your attorney can provide insight to help you draw a conclusion.
There you have it… our seven things to do immediately following the loss of your largest customer. What’s the takeaway?
Know where you stand with your customers at all times.
Whether you have a diversified portfolio of clients or a single big customer, talk with them regularly to understand what’s happening inside their business. Are you meeting their expectations? Are there additional products and services for which they have a need and you could fill? How are they being impacted by what’s happening in their industry? Where do they stand in relation to their own customers? The more knowledge you gain, the better you can chart your own course of action.
No matter how busy you become, never stop your business development initiatives.
Unfortunately, many businesses don’t follow this golden rule. As soon as they get buried in work and face increased demands, these efforts fall by the wayside. However, it’s vital to be thinking about and generating new business all the time. Think of this pipeline as your company’s lifeline.
G-Squared can build a solid financial framework for your company. Rely on our experienced financial team to help you streamline your business processes, create efficiencies and improve your financial analysis and reporting. Contact us today to get started.