How I recovered from the loss of major customers

Chris Marshall founded IT services group Blue Apache to service the SME sector, providing infrastructure and other IT services. He picked a good niche, with the company turning over $4 million in 2010.

But it hasn’t always been easy. When the company first started, Marshall says it only used one customer as the majority of its revenue base, and when that customer left, the company was forced to find another, stopping it from diversifying into new clients.

Marshall says the entire process put strain on cashflow, and taught him that running a business requires more than technical expertise in your field – it needs extensive attention to business management.

How has the business performed lately?

In terms of our services development and products we are offering, our business has really been maturing. We’re taking it to the next level, launching new cloud services, which has been a significant investment focus for us.

Also, one of our key clients went into receivership which put a dent into our figures. But because we have a range of customers, it hasn’t been a significant impact.

So what happened with this original customer?

So back then, it was an education customer. When the business first started, they were the key account that made it commercially viable for me to start the business.

What’s interesting is that this customer was giving us 50% of our revenue, and so we were depending on that.

What made it so hard to find new customers?

The companies changed, but the revenue amount didn’t. So during the first four years, every year it would be a different customer. But it meant that with such constrained resources, we spent so much time on this one customer there wasn’t an opportunity to grow the business elsewhere.

What happened to all these customers?

We’d find the business would be acquired… that was probably the biggest hurdle for us. It happened to us a number of different times, where the business would be acquired by a larger organisation and they would use their own infrastructure support services.

As a result of that, we were forced to go out canvassing for new business. So it was getting the balance of providing support and then going out and actually developing the business.

How stressful was this process?

Incredibly stressful, especially considering when you have all these other elements. All the employees are reliant on the revenue from that one customer, and you have a commitment to your staff to give them professional development opportunities – you definitely take that on your shoulders.

Was it a near-death experience?

It never really got that bad. But it was at the third or fourth time it had happened, and you think to yourself, “this is crazy”.

Blue Apache was one of the first small to mid-market businesses to enter today what is the IT outsourcing, managed services space. So we had a unique offering, in that fixed-price monthly support space. So we were well set for growth, we just had to go out and get it.

So how did you fix this situation?

It was really just about a change of focus. I started the business as a computer engineer, using the computer tools every day. We started to have a formalised strategic review with our leadership team, and part of that was us identifying that we really needed to spend more time developing business strategy and talking to new customers.

Was that challenging for you personally?

Being a technical person, it took some time to really refine our pitch to the customer. I had to remove myself from something I’m very passionate about, and that was probably harder than anything.

Even today I still have a good knowledge of the technical aspect of the business, but having to step away from that is very difficult.

Do you have any policies now to make sure your revenue is diversified?

I don’t think it’s so much policy driven as it is anything else. Because if a customer came along that was 10 times the size of our largest customer, you’re not going to turn them away. So it’s just that we have a better focus now on what we’re actually doing. We support our existing customers and add new ones.

When I mentioned before that a customer went into receivership this year – that dented our finances but it goes to what we are talking about. Because of the different revenue streams we have, it wasn’t a significant impact.

What should other businesses learn from this situation?

It’s more about paying attention to business development. We came up with the idea that if the business isn’t growing – and that doesn’t need to be in revenue but products and services too – then you are going backwards.

If you’re not doing anything to mitigate your risk, then you can’t evolve. We’ve put a real focus on business development here, and that’s something a lot of technical or professional services businesses find challenging.

It’s all about recognising that while business development may not be your strong point, it’s critical to growing the business.