Best Practices

AshleyEaglesonPhotography

By William R. Hall III

Executive Summary:

Not all clients are created equal.

Take stock of your client base

An article I read made the analogy that diversifying clients is the same as diversification in your stock portfolio for a your business. At first, I wasn’t sure what I thought of that. Are you basically looking at clients as a stock certificates that can be bought, sold and traded based on performance? I didn’t like that analogy because for us at Beacon, client care is paramount.

The article described having clients that are the blue chips and do business with you on a regular basis. Then there were the regular stocks that could spike on occasion or drop off the revenue radar, but you could usually count on their value over the year. Lastly, they talked about the penny stock clients, the ones that the business made very little money usually and mostly just cost your business money. As a former financial adviser, I began to understand what they were saying. Your client makeup for steady and measurable growth, much like a portfolio, needed more blue chip and average clients. Instead, you needed to minimize the penny stocks that were just huge takers of time, without any significant return.

Didn’t seem a whole lot different than what they taught us in college. The more I chewed on this idea the more I thought about how this applies to my business. As a consultant, our client portfolio is super important to manage correctly. We need a good blend of clients who can use our services without putting our whole firm’s future in one client’s hand. Starting out, sure…but we are five years in, and things look different now. I began to review our client accounts and in doing so found a lot of diversification. We have a couple of bigger clients for sure; however we have some clients that pay their part each month and while anyone of them we wouldn’t want to lose, it wouldn’t put the company at risk if they did. As I think about some of the most successful businesses in America, your Amazons and Walmarts of the world, they too have diversified strongly in both their in-store and on-line platforms.

So, what’s the takeaway? Mine was simply, not all clients are created equal. The best businesses find as much value in their clients as their clients find in them. Sometimes the penny stock clients that cost you more than they produce must just cut loose – taking short term take the loss for the betterment of the portfolio/business.

William R. Hall III is Chief Executive Officer for Beacon Partners Consulting in southwest Roanoke County. Reach him at will.hall@ partnerwithbeacon.com