Investor Junkie
My Business and Financial Freedom Journey

Merry Christmas! We are Canceling Service with your Company

Let’s talk about risk management.  I pretty much know I’m loosing a customer I’ve had for over ten years.  It’s not official, as the client hasn’t contacted me.  I’m obviously not happy about it, but the relationship has been like a bad girlfriend for the entire term.  Have you ever have a client that wasn’t a match to your business philosophies and beliefs?  This one was the perfect miss-fit.  Over the years the manager has blamed us for many issues, and we were the scapegoat for his inept ability.  With this client in particular, everything was documented and triple checked before we said it.  We all made sure that our I’s were dotted and our T’s were crossed.

My company is an IT consulting firm, and one of the services we offer is on-site technical support for servers and IT operations.  The client is an 80 million plus year net income business, yet their IT budget was less than 1% annually.  This is a company that has over 300 employees.  To give perspective, in some years our own IT budget for servers was greater.  Even in their case, with manufacturing businesses being on the slightly cheap side, they are typically in the range of  5 – 10%.  We were always the fall guys for their lack of spending in IT.

How does this story relate to risk?  The client once told us, if their servers were down for an 8-hour business day, they loose a mythical $100,000.  You would think that with a potential loss that large, you would invest money and time in the proper infrastructure.  A little $50,000 from petty cash would have put enough in place to prevent any major crisis.  Problem solved, you’re the hero.  You know the things most business should do; proper risk assessment and risk management.  We’ve pitched them five ways to Sunday on why this is a no brainier of an investment.  I’ve unfortunately learned from life, like many Americans engorging too much on debt, most people don’t plan to fail, but fail to plan.  Business, as in life, and investing, is a chess game.  I try to plan five or more moves ahead. With system administration, if people see you running around like a headless chicken doing a lot of work, they assume you must be doing a great job.  The secret is that the exact opposite is true.  The system administrator who monitors their setup very closely, and takes action before items become critical is the one to follow by example.

In the case of this poorly planned customer, wouldn’t you know that one day, their myth turned into reality.  The manager calls me directly, and in a panic, needs to have my tech get to their office immediately.  Of course caring for the customer, we dropped every other customer, and were able to get over there within an hour.  Even then, their one server for the task was down the entire day.  The point of the matter, in business, as in investing, and even life there is risk all around you.

If the customer invested $50,000, it would have prevented them from losing $100,000 in worker productivity.  It’s the classic, penny-wise, but pound-foolish.

I know in the end, loosing this customer, is best for my company.  To put a positive spin on it, I’m glad they are moving on to another vendor.  This also puts the flame under my butt to find other customers that are more aligned with our beliefs.  I’m happy to replace that income with a more positively aligned customer. I’m not so much disgusted with the customer leaving, it more a matter that I have tried to have a somewhat personal relationship with the manager.  Like many previous un-returned phone calls and E-mails, I assume he will not contact me directly to cancel service.  The guy doesn’t have the integrity for that.  I’m sure we’ll get the notice from their billing department.

I left the corporate world to better my community and myself.  I wanted to run a business in the way I would feel proud.  It’s interesting; many people start their own business so they don’t have to work for “the man”.  When in-fact, I’ve got news for you, “the man” works everywhere.  He’s your customer, vendor and employees.  By becoming an entrepreneur and starting a business, you will ALWAYS have to deal with “the man”.  In some cases in even more annoying ways. I’ll give you a little secret to my business success.  Have a solid ground on your beliefs, ideologies on how to run your business, and stick to them no matter what. After all, you have to be happy with yourself in the end.  Life is too short to not ensure you have a meaningful impact with the people around you.  Shed the client, customers and employees that have shown to have a negative influence.  In the past I have “fired” customers because of their rudeness, or if they had unreasonable expectations with our service.  I won’t kid you, we work 110% to try to keep our customers are happy.  Unfortunately the 80/20% rule (otherwise known as the Pareto principle) applies to your customers and this customer was in the lower 20%.  A funny side note – the cheaper customers are usually the most difficult clients.

You’ll have to excuse me now while I go try to get some new customers.  Merry Christmas, Happy Holiday’s and I hope you have a great and prosperous New Year!

Update (December 23rd 2009): The client has finally responded to our Emails, after we approached them about the domain registrar changes.

Created: Friday, 18 December 2009 05:07 Last Updated: Saturday, 16 January 2010 09:15 Written by: Investor Junkie