Courting a really big client can often be like dating and asking out someone you know is way out of your league.
After all, if you summon the courage to ask your potential significant other out, it can almost be more unnerving if, instead of a rejection, you get a yes. Then you have to hope you can measure up.
It's often the same dynamic when a larger-than-life client is interested in working with your small but scrappy business. You may be worried about how that first date is going to go, knowing you want this to be an ongoing relationship. You don't want to say, "No, this isn't the right time," and blow your chances of ever working with this company again, but you also don't want to say, "Yes, I'd love to work with you," and break up soon after because the timing wasn't right.
So if you're looking for a way to yes, consider asking yourself the following questions first.
Do you have the time to take this on?
And if you don't have the time, the next obvious question is—can you make time, anyway?
Roberta Perry is the president of Scrubz Body Scrub, Inc., a Bethpage, New York-based natural skin-care product company. She started the business in 2006, working out of a renovated garage in her home until 2011, when she opened her first storefront. And not long after that, Perry was able to move into bigger quarters.
But in those early days, it was rough going, and she landed an order of 1,000 jars. "Our biggest order up until that date was 200 jars at once," Perry says.
She had two weeks to complete the order, but working out of a 52-square-foot production space, Perry knew she would need every spare moment. She even needed to call her distributor and order more jars—she didn't have enough on hand to complete the order.
Perry ended up enlisting her parents, sister and kids to help once the jars arrived about two days later. "And then the labeling. And then the shrink wrap," Perry says. "We are a handmade product, and it was tedious work."
In fact, with the labels, Perry reveals they had to handwrite the name of their scents on a generic 4-oz. label.
But the tedium aside, Perry says, "I'll never forget my mom's face of utter relief as we taped up the last box. It was well worth the work."
In fact, she adds, "It was one of those things that shaped us."
Can I outsource some of the work?
If bringing in your mom to help you isn't realistic and hiring full-time staff isn't in the cards, you could consider hiring contract workers.
Nick Espinosa claims he ran into this situation about 10 years ago as the founder of a growing IT consulting corporation, which eventually merged into his current business computer support and network service company, BSSi2, based in Chicago.
"Through a connection, we were approached by a multibillion-dollar corporation to do graphic design on a contractual basis for their advertising division," Espinosa says.
It was a fantastic opportunity, but Espinosa didn't have a graphic design background. Rather than decline the offer, Espinosa hired a close friend who was a graphic designer on a contractual basis, and the friend's expertise allowed Espinosa to deliver.
"We ended up working with this company for over a year," Espinosa says.
Tammy Katz, who owns Katz Marketing Solutions, a small brand marketing consulting firm that specializes in consumer products and food and beverage marketing, in Columbus, Ohio, has successfully taken on a few "huge clients, well beyond my bandwidth at the time," she says. And, she, too, often outsourced.
"I was extremely picky about who I chose to work with, either using people I have known, trusted and worked with for years, or selected and vetted by interviewing at least three options," she says. She also claims she was always very hands-on with the contractors she employed and put her expectations in writing.
Why is this good for my business?
For Espinosa, adding a large client to his roster was a substantial win. "It enabled me to walk into Fortune 100 corporations and pitch what I actually specialize in, which is technology infrastructure, IT security and design. It showed we could handle ourselves with the big players and thrive," he says.
And while the money was just so-so, ultimately, Espinosa says, "we did vastly increase our revenue for our core business."
Will I be intimidated by this client?
You might think, "Yes, and who cares?" But you should care, because you may need to push back occasionally.
John Kinskey, president and founder of Lenexa, Kansas-based AccessDirect, Inc., a provider of enhanced voice mail and automated attendant services, had a small client that quickly became a big client, to the point that Kinskey ended up investing over $150,000 in new technology and hiring two new staff members.
Then one Sunday morning, Kinskey received a phone call from the client's CEO that he had expected a faster rollout—despite an agreement that it would take four months.
"I had to swallow hard and push back to convince my customer that breaking the schedule and rushing it could lead to mistakes and jeopardize a smooth roll-out of the program, giving us both a black eye," Kinskey says.
Am I going to have to invest too much?
When Kinskey had to invest the $150,000 to ensure he could provide services to their new client, he didn't do that lightly, studying the impact of the increased overhead.
"Large clients can be a double-edged sword for small business. They can disappear as quickly as they appeared, leaving a small business with greatly increased costs and none of the revenue," Kinskey says, adding that every business owner should think about how they'll react if that large revenue source would one day disappear.
Will this client send my business on the wrong path?
Laurence Stybel, president of Stybel Peabody Associates, an executive outplacement firm in Boston, echoes Kinskey's thoughts. He points out that if you take on a big client and push out some of the smaller ones, you could find yourself with the too-many-eggs-in-one-basket problem.
"Remember why you started your own business," Stybel says. "For me, it was about control over my life. When one client represents more than 25 percent of gross revenue, I can't sleep well."
So be careful, Stybel warns, of a big client that accounts for more than 25 percent of your gross revenue but contributes less than 10 percent to net income. "You get a high by landing this important client," he says. "But staffing up for it reduces control over your life."
In fact, Stybel reminds you that if you work with a massive client, you may find yourself constantly looking for more big projects, to justify the additional staff and improved infrastructure.
"Now you are like an addict on a treadmill. Is that how you want to live?" he asks.
For a lot of business owners, the answer is likely, sure, bring it on. After all, you probably want to grow, and you may love the adrenaline rush and not mind a chaotic but meteoric rise to the top. But some business owners prefer a steady but more measured clip.
And for those entrepreneurs who take on a big client lightly, Stybel warns, "I remember a friend who said, 'The day I got that big contract was the best day of my life .... and the worst day.'"
Read more articles about strategic planning.