Big Firms Can Lead to Big Frustration
Michele Bolgla had just settled in at her desk with a morning cup of coffee and some industry publications when a headline caught her eye. She and her husband Mitchell had been selling men’s T-shirts to a large retail chain, which had just announced that it was shutting down its men’s section.The Bolglas quickly realized they were about to lose as much as 50% of their T-shirt design business, Halfmoon Productions. “We found out in the worst way,” says Mr. Bolgla. “We read about it in a trade magazine.”
“So that was it — over,” Ms. Bolgla recalls, “I remember screaming to Mitchell in the next office ‘Oh my God!’ ”
The Bolglas say they learned the hard way the perils of relying too heavily on a single big company customer. “It had been easy — big orders without any follow-up,” says Ms. Bolgla. “But even if you get into a groove with a big customer, you should keep your base of small ones. It’s more labor intensive, but not so scary when one drops out. And we knew this — but knowing it and living it are very different.” Three years later, “we’re still trying to reorganize ourselves to stay afloat.”
via Dr. Cornwall, who adds:
So think through very carefully any decision to get into a business relationship with a large corporation. Run it through your business plan to make sure you understand the financial, operational, and cultural implications for your business. And remember to be careful of what you pray for. You may just get it.
Photo by Mr. Wright.
Dharmesh Shah on June 30th, 2006 5:55 am
Great article.
I deal with a lot of startups and this issue of too much “revenue concentration” within a single customer is very common.
In the software business, this often leads to building products that conform to the whims of the single big customer (and missed opportunity to serve others). It’s a tricky game.
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