The more customers you have, the safer you are

Two roads diverged in a wood, and I —

I took the one less traveled by,

And that has made all the difference.

Robert Frost

It’s easier to build a business with only one big customer. The alternative is something like Facebook, with a billion customers!

  • Cash flow is easier. Only one invoice to send each month.
  • Customer service is easier. Only one complaining customer.
  • Strategy is easier. You only need to get into the head of one customer.

It is much more dangerous to have only one customer. If the procurement manager, or the CEO, or the HQ address changes, then suddenly POOF!, your deal is cut and you’re dead.

A business with many customers is much harder to build, but much easier to keep. The more customers you have, the better for your business. Why?

  • Price negotiation power. A million customers are unlikely to gang up on you and demand lower prices.
  • Product definition. A couple of big customers are more likely to tell you the way your product must look The freedom to design what you want to build only comes when you have many customers.
  • Communication. Whilst you have to deal with endless headaches of customer service, at least the customer doesn’t have your personal cell number and feel entitled to call you at 2am and insist on seeing your income statement.

And of course, if one customer leaves, you still have many other sources of revenue.

This applies to almost every facet of life, both business and personal. Shareholders, suppliers, children, etc.

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