Issue link: https://docs.hic.us/i/403552
requiring new equipment, more employees and perhaps additional space. Things are looking bright, the machines are busy and the money is rolling in smoothly and consistently. Some of your other customers begin to "grumble" because they are no longer receiving the service that they are accustomed to. But you don't worry too much about it, because to be honest, their orders are getting in the way of servicing your number one client. Gradually, some of your other customers begin to drift away in search of someone who can better service their needs. Now a new twist develops. Your star customer points out that he is sending so much business your way, that he deserves a better price, because after all, you aren't the only Embroiderer in town. You quickly respond with a price cut that will appease the customer. A few weeks later, the customer announces that he needs better payment terms. Payment upon delivery just doesn't fit his needs. So you agree to something like thirty day terms. This works okay for awhile, then he starts getting later with payment. Thirty days becomes sixty days. You want to say something, but are afraid to lose his business. On paper, this account looks great, providing you with record-breaking sales. But with everything it takes to service this customer, your cash flow and financial resources are taking a big hit. And you don't dare complain, lest you offend him. So now this customer owns you! Big Mistake! But it happens all the time. What happens if he leaves you for another Embroiderer? Will you survive? Situations like this are real. When you do finally develop a relationship like this, it's easy to get carried away. Don't let it happen. If you have any one customer who becomes more than 25-30% of your business, you are headed for trouble. Never ease up servicing your existing customers, or searching for new ones. Turnover is natural. Businesses come and go. Always focus on developing a diverse mix of clients. Develop a Capital Reserve Sales are cylic, it's a fact of life. One day you have too much business, the next you have none. Like it or not, market conditions change, the economy fluctuates, and customers are fickle. And of course, there are normal seasonal fluctuations as well. Christmas is booming, January is a ghost town. The reality is that you never know what tomorrow will bring. You might be faced with natural a disaster such as flooding, an earthquake or a hurricane. These disasters can hit without warning and devastate a local economy. To safely weather such conditions, you need to have money set aside in a safe place. When business is slow, it will give you something draw from. When business is booming, you can put the funds back. Such a reserve is like having an www.hsi.us care@hsi.us 69