The Gift That May Not Keep on Giving

I referred a prospect to a CPA friend of mine years ago. Business from that prospect (A non-profit organization) led to work with other non-profits and a new market niche for the firm. Within 18 months, the firm had taken on 5 new clients in the industry, based on one original referral. He and I called that original prospect “The Gift That Keeps on Giving”. At some point, focusing too much on the current “gravy train” may cause a problem: What do you do when your current focus no longer provides new business?
Oshkosh Truck Corporation relied heavily on a lucrative military business over the years, They are currently “vying with a handful of others for $8.4 billion or more the Defense Department is expected to spend on mine-resistant trucks” in the next few years. The risk: “An increasingly murky outlook for companies that rely on Pentagon spending”. The potential solution: Buy a company in another industry: Oshkosh recently spent $3.2 billion to buy a company that builds aerial lifts (for fire departments, construction workers, etc).
I’ve talked to many business owners who tell me: “I’ll pursue that new line of business once I have time- I need to focus on my current customers”. So often, the current pipeline of business dries up, and the company is not positioned to replace the revenue.
The Lesson: Diversifying into new business is time-consuming, but worth the effort.
Your Homework: Consider how you would replace your largest customer or your largest source of business. How would you market? Can you sell a related product or service to a new customer base? Can you put a plan in writing?
(Source: “Oshkosh Still Hears Calls to Arms”, Wall Street Journal, 5/7/07)