2 Essential Rules for Running a Business The key takeaway here is this: Sales cures all.
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Sales cures all. We've all heard this before. It means that if you can hire a great sales staff, you'll be ahead of the game.
The phrase, however, never really had meaning for me until I almost lost my business.
Flash back to the first year of JAKT (my consulting business). Things were going great; we had two pretty solid, stable clients. One was a Fortune 100 company, the other a 3-year-old profitable business. We had a couple of other small clients as well, but those two were the big ones.
I was working 16-hour days to service these projects and was overbooked. I thought there was no need to look for more work because we were making more money than we'd ever imagined in our first year.
Then the tide turned. First, the Fortune 100 company decided it was ending funding for the project we were working on (not due to anything we did). In the same week, our other client reduced its monthly spend by 50 percent.
Boom. In that one week, we felt as though we'd lost everything. One minute we were cruising along; the next minute, everything was gone.
The problem: Because we were so booked, we hadn't thought to look for any other work. As any entrepreneur knows, when the s---- hits the fan, you have to react.
And so I did. I ended up getting through that down period, but it wasn't easy. Not in the slightest. But here's the thing: From every low point emerge a few lessons to be learned. This is what I discovered.
Rule 1: Always have a full sales pipeline.
You must always have a full sales pipeline. It's better to say no to work than to not have any work to say no to. Because if something happens, the way it did to me, you won't have anything waiting. And then it's scramble mode. Luckily for us, we had only two people to support at that time.
I've lost sight of this lesson on more than one occasion. And it always gets me in trouble. I then have to go into scramble mode. Thankfully, I'm a pretty good scrambler and always find a way out, but being in constant scramble mode can burn you out quickly.
Earlier this year, I made this mistake again; and it happened when I had 10 people on my team. Having to figure out a solution to support two people is one thing. Having to do it for 10 people is another. As I look to scale and grow my business, I know that this cannot happen again. If this happens with 20 people, it could mean the end of my business.
Rule 2: Don't be reliant on one customer.
There's one other key piece to running a business: Don't be reliant on one client. If any one client accounts for the major portion of your business, you're in trouble.
You might not be right now, but you will be. If that client decides to terminate a contract, what will you do? This has happened to me more than once, and I almost lost my business because of it. I thought I learned my lesson after the first time, but after a couple of years of solid growth, I lost sight of it. I forgot how awful it was when this happened, and I let myself get into that position again. Except the second time was worse because I had a team of 10 versus a team of two.
Yes, having a full sales pipeline can help alleviate the hard times when a client leaves. But if you rely on one big client, a full sales pipeline still might not be enough to replace all this lost business. However, if the client is just one of many clients, and each makes up a small portion of your revenue, you have a better chance of being okay.
Key takeaway: Sales cures all.
Yes, it does. Step one is having a full sales pipeline. In order to have sales, you must have a pipeline of leads. But equally important is not being dependent upon one client. If you are . . . having a pipeline of leads still may not save you.
One of my biggest fears is not having enough revenue coming in to support my team. Building a full sales pipeline and not being reliant on any one client reduces this fear and relieves stress. It's the difference between being reactive and being preventative.
As an entrepreneur, you can't prevent all fires. But if there are things you can do to prevent ones you know will arise, then do them, and do everything else you can think of, to survive.