What do you do if your creative enterprise suddenly loses a major client or income stream?

If we are honest we will realise the key decisions about working with or buying our products are in other people’s hands, not our own, and those hands may let us go.

What do you do if your creative enterprise suddenly loses a major client or income stream?

If we are honest we will realise the key decisions about working with or buying our products are in other people’s hands, not our own, and those hands may let us go.

Rob Garrett says it starts with the good old saying about not putting your eggs in one basket - so therefore you need to create more baskets.  Then he takes you through some steps to find more money, reduce your costs and secure future business streams.

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The shocks of the global financial crisis and the Christchurch earthquakes have caused massive disruptions to the confidence of clients, continuity of sales and access to markets for many businesses. These have been powerful reminders of the challenges businesses should be always prepared to address in order to survive, grow and thrive.

What do you do if your creative enterprise suddenly loses a major client or income stream? The simple answers are ‘find more money’ and ‘reduce your costs’; but there is equally the challenge of securing your business against future shocks. So we should also ask how your day-to-day business activity can be adjusted to reduce your vulnerability.

I am reminded of the old saying about not putting all your eggs in one basket, which carries the warning that if the one basket falls to the ground, all the eggs are lost. In our case it’s useful to think of the eggs as representing both the immediate profits as well as the future of your business; and the basket comes to represent your dependency on the major client or income stream.

Such dependency is risky; yet from time to time, especially for small businesses, a single client, market segment or product line may be inordinately successful and therefore also demanding of most of your energy and attention. But we must always be asking ourselves how sustainable this situation is.

If we are honest we will realise the key decisions about working with or buying our products are in other people’s hands, not our own, and those hands may let us go. If we do not control the basket, we cannot be sure of the eggs; and we never control the basket. Therefore we must create other baskets; the more baskets, the better.

What you put into your business

By now you will see that more baskets mean more clients or customers, a more segmented market, a greater diversification of your product range; and it may also mean a different range of price-points for your products or services.

But let’s think about the basket from another perspective for a moment. While the basket may be all the things we’ve said above, your clients, customers or income stream; it can also represent what you put into your business. It can be where you put your time, effort and money. You may be spending your resources and time on parts of the business that are not as profitable; but more than this, you may have ‘let go’ of the basket that holds the future of your business; and it is this ‘planning for the future’ basket that you can control.

Now our simple answers to the question what do you do if suddenly your creative enterprise suddenly loses a major client or income stream are ‘find more money’, ‘reduce your costs’ and ‘secure future business streams’.

So let’s get practical. Here are some tips to guide you when working out how to find more money, reduce your costs and secure future business streams:

Understanding what could go wrong or what did go wrong:

• If you lost a client, ask them for feedback;
• If you lost a major revenue stream, analyse what happened and why;
• Be clear about what you could do differently in the future to anticipate, adjust or avoid such losses;
• If the market is no longer interested in what you are offering, or your services have been supplanted, for instance by new technology, you need to understand this too so you can put your energies elsewhere;

Analyse your costs, including the hidden costs of your time and effort:

• Do you know where all your cash is going and which parts of your business are most demanding of your time and effort?
• If you have not been monitoring your money flows and your own labours, start doing this;
• Trim fat from your expenditure;
• Having this sort of information is only a start as you will also need to work out which expenditures and efforts are generating the best profit for you, and which are entirely unprofitable;

Identify your hierarchy of profitable activities by ranking your various business strands from most profitable to least profitable and be prepared to ruthlessly abandon unprofitable strands;

Have you spent quality time recently re-visiting your definition of your core business?

• Make time to refresh your inventive and entrepreneurial imagination about what you can offer;
• Have you identified everything that you could sell to clients?
• If you are offering services, could you segment and re-package your current offerings to make your services more affordable, diverse and interesting to different markets?
• Can you diversify your product or services range further?

Re-think your pricing:

• Do you know what your current and potential markets or clients can afford?
• Have you priced products or services across the whole range of your market’s ability to pay?
• Have you considered payment plans for your clients so that can spread their payments, or discounts and incentives?
• If you have been doing all of this already you will be well-equipped to assess which strategies are successful and which are not, for you;

Many of the tips above rely on you knowing your customers and understanding what they want from you and what they value. Do you know why your major client walked? Have you asked them for feedback, so that you can learn from the experience? Ask them about the factors that contributed to them ending the relationship; but be sure to ask about their whole experience with you and your business. The simple act of doing this may attract them back at a later stage because they will see that you are interested in the quality of their experience. Not only are you likely to discover some things that you can change, but you may get a better understanding of what you were already doing well.

Just as important, you will find that when you invest in customer retention based on the insights you gin from your customers, your business will be more profitable. As a general rule, retaining existing customers, or securing repeat business, takes 25% of the effort required to secure new customers or clients.

Finally, let’s nudge the analogy, from baskets and eggs; to pipelines. One of the keys to successfully working on your business rather than just working in it is the kind of effort you can bring to bear on securing future business. Pipelines bring resources from afar; pipelines ensure that what you need tomorrow is already flowing towards you today. The pipeline may carry new clients or customers, new market information, ideas for new products, or skilled people who can help you in your business.

The other point about pipelines is that they have to be built. You have to build yours!