Secrets to growing your business part 8 - The number one danger for all businesses
When growing a business there is one thing to pay attention to that can surprise and cripple a business, and that one thing is the number 1.
Having one supplier, one key client, one product, one key man, one merchant account all have the potential to put a business at risk if there is no redundancy factored in.
The risk for solopreneurs, entrepreneurs and small businesses is that if one of these things unexpectedly changes or disappears, the business at best goes on hold at worse collapses. One thing you can be certain of in business (and life) is that things do change so when building your business whether from start up or to grow and expand, look carefully at your structure and pay attention to any of the potential weak links.
Years ago I was coaching a corporate client to grow their business with the aim of selling in 5 years. During the initial consultation it became obvious that they were at risk because their whole business was built around a unique product and service they had developed that was maintained by a one-man band programmer. When they first started in business this relationship worked very well, he was affordable, collaborative and delivered exactly what they needed in order to establish the business.
Remember the coaching maxim “what got you to where you are now won’t get you to where you want to be”.
For this business to achieve its outcomes they needed to get systems in place that made the directors and any other key stakeholders effectively redundant.
It has taken a few years to migrate the system across to one where they now have in-house developers and can outsource work if needs be.
One caveat to the risk of number 1 is to avoid product and service diversification just for the sake of having more than one. Having a niche focus gives you clarity about your clients and your business which is invaluable. As soon as you add multiple product and service lines marketing, admin and support costs and systems tend to multiply. Before diversification (or more often die-worse-ification) first look at alternative suppliers so you have options.
Take some time step back from your business and ask your self these questions.
If I was an investor buying this business where can I see there are potential risks by being dependant upon 1?
How could I build in redundancy / back up while avoiding additional costs and admin.
When you do this reflective exercise focus upon solutions, these are the plan B’s you can have to hand while you focus on executing your plan A. Hopefully you will never need your plan B but if you do you will be grateful you spent the time on it.