Simple Questions to Ask Before Signing Your Next “Dream Client”
In 2003, my dad had quit his job to start his own business He built a small a small third-party logistics company servicing 15-20 courier firms (fish). He managed to achieve profitability within three months. His business partner - who worked with a national courier company - convinced him to on board larger courier firms.
My dad and his partner spent 5-6 weeks engaging with three large firms (whales). They managed to onboard two of these firms. All of a sudden, their monthly revenue shot by 300%. They decided to exit the smaller contracts to focus their efforts on two big whales they landed.
In the next three months, they exited their older contracts and focussed only the two big contracts. The two big players had better payment terms with similar margin structure as their older contracts.
Soon my dad's two big customers found delivery volume sufficient to setup their own delivery operations. Slowly, they started expanding their delivery operations. Nine months after my dad started working with them, delivery volume fell down by over 85%. Soon the business was no longer self-sustainable.
The contract that my dad signed provided no assurance of delivery volume. The two big firms promised commitment but it was never written down on paper.
When my dad reached out to his older customers, he noticed that they were working with other vendors who prioritised them. They were not keen to engage the services of my dad's firm.
After a few months, my dad's business partner left, and he pivoted his business from delivery to warehouse management. The business soon became profitable but never earned enough that made up for salary foregone by my dad. My dad sold the business and joined TopsGrup to head their revenue management in Mumbai.
My dad's experience made to build two simple operating principles that I follow even today:
- A business needs enough small fish to stay alive even when it loses a whale.
- Reliability and Trust are not earned easily but easy to lose
Just ask yourself three simple questions when chasing your next big opportunity:
- How easily could they do this without me?
- Does the contract reflect real commitment, or am I taking all the risk?
- What bridges am I burning to chase this?
It doesn't mean you don't take risks or chase whales for your business. Just don't forget about the small fish in the process. If your business is dependent on the whims of just one or two contracts, it is not a business but just a freelance opportunity.