Recently Avana Bakeries, a cake factory based in Newport Wales, announced that 650 jobs were under threat of redundancy. A well run and profitable company only a short time ago and now this. How could it possibly have happened?
Simple really, 85% of their turnover was from one client. The client decided to buy elsewhere.
This is what we can learn from Avana’s fate: a good profit is not always a good profit.
Too much revenue from too few clients is easy to manage and so more profitable but it’s also highly dangerous; a bit like living on the slopes of a sleeping volcano: sooner later it’s going to blow and when it does it’s going to feel mighty unpleasant.
You might argue that like Avana you have no choice; the revenue is there so you take it and I’d agree but I’d also stress that your sales function should be utterly focused on winning business elsewhere. If they are unable to do this you must either change the way they sell or change them.
Active analysis and management of your revenue/client spread is a vital element of businesses these days. You decide the mix of small, medium and large clients you want and then set your sales team to achieve it.
It takes time. It takes focus. It takes a sales team able to achieve it but in today’s fickle world active client portfolio management is vital.
Be in control of how your business grows!