Vince Forgione sold his Lisa’s Gourmet salad dressings products through Loblaw’s for more than 20 years. When Loblaw’s decided not to continue working with him, he saw his revenues plummeting by $3.5M or 90% in total, putting a serious threat to his business. Forgione has relied heavily on the giant retailer to sell his products and relations were good for the past 20 years. Things went south when Loblaw’s increased listing fees, which Forgione decided he can’t afford to pay.
How many customers do you have? Does one or small number of customers account for a substantial chunk of your revenues?
A useful test of your current state can be had by assessing the impact to your business of a top client’s defection.
Small businesses are especially sensitive to these situations where they have less negotiation power and typically their distribution channel is limited.