As an entrepreneur, when you first embark on a new small business venture, you might be tempted to take on virtually any client that comes along.
But as things progress and your small business builds a regular client base, there comes a point when it will be in your best interests to be more strategic about who you choose to work with.
Think of diversifying your client base the same way you would diversify your financial portfolio, except… with clients. Here are a couple of points to consider when strategically building your client base:
Don’t put all your eggs in one basket
Every entrepreneur dreams of having that one great, adoring, well-paying client. And when that glorious client starts asking for more and more of your time, it’s easy to get complacent: before you know it, you are relying almost exclusively on them to keep your small business thriving.
While that can seem convenient at first, it’s not always wise. Before you know it, you’re pretty much relegated to the role of an employee! Remember all the reasons you went into business for yourself in the first place. Can you be sure that that one client will always be around? Do you have the flexibility and life balance that you crave as an entrepreneur? Does being an employee contribute towards your personal values and goals more than being an entrepreneur?
Instead of putting all your eggs in one basket, play it so that if you lose any one client from your client base, your other clients will sustain you long enough for you to find a replacement for the lost income.
Don’t depend on a single industry
Similarly, if all your clients depend on the success of the same industry, you might want to take a step back and rethink your strategy.
For instance, luxury weddings are not as popular in Toronto as they once were. Perhaps it’s because of the economy or the rising costs of starter homes, but brides and grooms have significantly scaled back their wedding day budgets, and are planning more DIY and low-key affairs. Certain services that catered to lavish weddings (high-end videography, for example) have experienced a hit.
Either target a market that relies on an industry that is destined to be rock solid forever or diversify your client base so that an unforeseen industry circumstance – something that is quite out of your control – doesn’t destroy your small business.
Don’t count on a trend
Trends come and go. If you know that something is going to be the “next big thing” and you are in a position to jump all over it, then by all means, do so. But be prepared to have an exit plan when it’s all over, or at least have a contingency plan.
There was a time when discussion forums were all the rage and marketers could manage online communities for people who had common interests and sell advertising and membership fees. But with the advent of social media, anyone with Internet could access online communities… for free. So the online forums (and their profits) died out.
Counting on a client base that relies on the success of a trend is risky. Diversify your client base with some high gain risk if you must but have that stable client base in your back pocket for when the bubble bursts.
Need a hand with your business’ brand? Call Kim Speed at Purple Moon Creative today!
