Why can’t small businesses handle big clients?

“Too fast, too furious” – a great way of living life adventurously but for running a business? Maybe not. 

Why?

Pretend for a moment that you are a fairly new/small business owner. For days you are trying to contact the big clients of your niche, and by fluke, one day you got connected. You finally landed the deal of your dreams.

You are happy, successful and celebrating. Giving a speech filled with gratitude and motivation to your team and the world is beautiful. Inevitably, the time comes to plan and deliver, and you find yourself floundering to meet deadlines.

It turns out, you had not estimated the project requirements concerning your resources correctly, and now you are stuck.

Such is the story of many small businesses around the world, 20% of which fail in their first years and about 50% fail within the first five years. 

Reasons may be different, but it all boils down to unmet expectations. 

So if you too are a small business on the lookout for a “big-fish” client, make sure you are not making one (or all) of the following mistakes.

Lethal Amount of Owner Dependency

The problem: Most companies do not fathom how severe Owner Dependence is unless it starts being an issue because It speaks directly about the sustainability of a business

So if your answer to the question, “if I disappear today, would my company keep functioning the same?” is no, you are one of them. 

And business working on this line often fail to handle more significant projects and more prominent clients. The reason is mathematically simple – When more people are required to work parallelly to meet deadlines in an agile way, only one person has enough authority to do most of the tasks.

In such a scenario, the owner will:

  • Be the primary contact for clients 
  • Take care of delegating and assessments
  • Do strategic planning
  • Be the ONLY decision maker for every department
  • Handle the finances
  • Even being involved in everyone’s tasks

While this does not look feasible at all, especially in the case of bigger projects, it is, however, the reality of most of the small businesses. Also, it becomes one of the main reasons for businesses to fail themselves or lose their big clients. 

The solution: To eliminate this dependency, as an owner, you should,

  • List your daily responsibilities to gauge the situation and find people to whom you can delegate your tasks and give authority. 
  • Start working upon creating a standard of procedures (SOP), that will help your managers to plan strategies and work independently.
  • Reinforce your compensation policies and attach them with the achievement of goals. 
  • Build a team – managers, leaders, VPs, directors, and make them accountable. 
  • Go on holiday.

Human Resources

No, not the HR department, but your team. 

The problem: Big clients require thorough, more elaborate and exhaustive services. Small businesses either have a lesser number of employees or not enough suitably experienced employees. 

This situation leads to a series of defeats for small businesses.

  • Due to the high-demanding project at hand and not enough human resources, employees experience burnout.
  • Even though the work increases for the employees, they remain poorly compensated.
  • Since the small scale businesses mostly are more concerned about their revenue, they end up neglecting the employees.

In a small business, employees end up multitasking. So even if there is a big client’s project to cater, it is highly unlikely that a dedicated team will be working upon it. 

The solution: Highlight and make use of your advantages for a better service, like

Generally, small businesses are more prompt and responsive to their clients. 

This responsiveness can be used to build better relations with the clients. 

Having a smaller team means everyone gets heard. When in a larger group, individual (and often creative) ideas can get diffused, in a smaller group, you can present your creativity to the client. 

Premature Scaling

  • Scaling a business, in its simplest form, means expanding it. 
  • You invest more money.
  • Hire more talent.
  • Augment the infrastructure.

The problem: Scaling of operations is done when you are confident that your business can cope with more work all the while sustaining (rather, increasing) its overall efficiency. 

One of the most critical factors for scaling a business is a consistent AND predictable stream(s) of revenue. 

When it comes to handling big clients, small businesses often infer that they must scale their business to accommodate the client’s needs. However, what they fail to understand is that premature scaling collapses businesses.

The biggest reason for this mistake is that these businesses fail to recognise the inconsistencies in their system, such as,

  • High expenditures on customer acquisition/overcompensation
  • Investing in the product before scaling its market fit
  • Hiring too many employees or experts in the initial stages
  • Raising too less or too much money 
  • A faulty or rigid business model

The solution: Sustainable growth. There is no better way to avoid this trap than to be true to yourself. Asking one questing at every significant change – “are we capable of handling this, financially and physically?”

Always focus on the sustainability of the business rather than its growth in the initial stages. 

Lastly,

If your salesforce & project management team are strong, independent and well compensated, handling a big client becomes much more manageable. 

However, it takes time and patience to build such reliable teams. So, before making any impulsive decisions, think.

Adam Torkildson