Strategic Planning - Why A Loss Of $400k In Revenue Was Nice For Business

Yep, you read the headline correctly

Yep, you read the headline correctly. Sounds quite crazy right? It happened about six years ago and in one spectacular 90 day amount, my three largest clients got better offers and tendered their resignation from our firm's service.

My first thought was, "holy %^! Currently what do we have a tendency to do?" But, after about 24 hours of worry, being extremely pissed off and examining every facet of the relationships, I realized that lack of loyalty, even to us with a ninety three% retention rate, was simply an indication of the days and that it was 'just business". We tend to had done nothing wrong, in fact, the clients even said to us "there is nothing wrong along with your service, we have a tendency to simply have a deal we tend to can't pass up from another vendor who offers one thing you do not".

Being an entrepreneur I immediately wished to grasp what this 'something' was that we have a tendency to didn't provide. In one case the client was being offered the service we have a tendency to provided, medical bill processing, for 60% but we tend to could charge. The catch, the corporate making the provide wanted a guinea pig for a brand new software program and our consumer was willing to gamble with their revenue to be on the leading edge of latest advancements.

The opposite two were related companies who were additionally offered a software combination package. A radio communications package that our consumer really needed to deploy was provided to them and their new vendor would provide them billing services at an 80% discount simply to get a shopper in our state. The discount came with a catch, the shopper would have to handle an increase in clerical work to arrange the claims for billing however the bright shiny communications toy was too engaging, thus they opted in.

So, all three purchasers were leaving to be, in our humble and biased opinion, crash check dummies for newly rising technology packages. Not a route I might take however I wasn't running their companies. But, their selections meant that I had to actually evaluate how I ran mine.

The a lot of our team looked...at everything we were doing within the business, the time we were spending and expenses connected to every item, the additional waste we tend to found. We have a tendency to had become fat, dumb and happy when the cash was flowing in at an virtually unstoppable pace.

We have a tendency to quickly developed an action plan. In 90 days we tend to renegotiated EVERYTHING from our rental agreement, to profit plans, to the costs, delivery and payment terms with every vendor we used. It absolutely was awesome!!

I additionally ramped up our marketing and landed 2 new, but smaller clients

The shift in business did mean that I let the 3 weakest team members go. I felt unhealthy doing it, but in the tip it too was a nice decision. When the mud settled, one hundred twenty days once notice was given, we have a tendency to were leaner, a lot of a lot of cost aware and during a better position than we were before they had left.

As we extremely analyzed what had happened...the three biggest downside shoppers had left. They had been the biggest abusers of workers time always asking for 'another thing', calling every day making an attempt to micro-manage things, you know the type. Also the 3 weakest staff should are relinquishing earlier, but due to the the requirements and the degree of those three purchasers we have a tendency to tolerated underperformance and we tend to should not have.

At the end of the year during the annual meeting with accountant here were the stats:

- $four hundred,000 of business left

+ $210,000 of operational price savings realized

+ $96,000 of employee price savings realized

+ $130,000 of recent business signed (no new staff needed to service the accounts)

You are doing the maths, we were smaller, operating with a much lower overhead and the general internet was a positive gain of $36,000 between income and decreased expenses. The subsequent full year was the foremost profitable year in our history and we tend to've not looked back since.

The ethical of the story: constantly review your costs, your desires and your procedures. Do this each year not simply throughout a crisis. Know that everything is negotiable. Take to heart that losing or firing a consumer will be excellent for business and for your mental health as a business owner.

by: James

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