Big contracts, bigger risks
Your business is navigating a slow-growth phase. You’ve just wrapped up a couple of major projects, and cash flow feels tight.
Then, out of the blue, a new client approaches you with a year-long project — worth a substantial amount. In fact, this deal could make up 95% of your revenue. The work is exciting, ground-breaking even.
Should you take it?
This was the exact dilemma one of our clients faced.
The appeal was obvious: A large cash injection just when they needed it most, along with a year of relative certainty. They would gain valuable experience to help attract future clients.
But the risks were equally clear. Relying on a single client for the majority of your revenue is dangerous. What if they don’t pay on time — which, in this case, became a reality? What if they’re difficult to work with, or worse, experience financial trouble themselves?
The temptation of a giant contract can often blind businesses to these risks. There’s pressure — especially from sales teams — to seize a lucrative opportunity, even if the dangers could spell disaster.
Now, I’m not saying turning down the offer is always the right move. It could very well be the opportunity your business needs!
But you need to enter into these relationships with your eyes wide open. You need a clear understanding of both the upside and the potential pitfalls, mapping out the financial implications whether things go right — or wrong.
If you decide to move forward, you also need a plan to manage those risks. For instance, if one client will dominate your revenue stream, it’s essential to build a close relationship with their key decision-makers. The last thing you want is unexpected surprises.
When your finance department is doing its job, it doesn’t just balance your books. It provides you with this perspective and advice, helping you understand how things could play out financially each way – with real, concrete numbers for you to look at, not just generalities – and putting together a plan to mitigate the risks.
That’s exactly what we do here at Insight Associates, when we manage your finances. We’re here to help you grow faster and maximise your profits, and that means thinking strategically about your finances, giving you the insights and advice you need to make informed decisions.
If you’d like to discuss how we can help your business grow faster and more securely, book a consultation today. Simply email garry@insightassociates.co.uk or call us on 01279 647 447.
Let’s talk about how we can help you take on clients that propel your business forward — without the risks holding you back.
Warmly,
Garry
