Project Management

What to do when you lose a big client

If you have one or two big consulting contracts, here are five things to keep in mind when you eventually lose their business.

If you're in the consulting business for any length of time, you'll experience the vicissitudes of the feast or famine phenomenon. As you go through its ups and downs, sooner or later one of those downs will take you by surprise. When a large contract suddenly goes away or gets drastically reduced, you might find it hard to pay the bills. You could even begin to wonder whether you can make it as a consultant after all. Here are some things to remember.

Don't panic

If you don't have other prospects already lined up, you could find this situation rather frightening. You might want to jump at the first thing that comes along, or even leave consulting for the supposed security of a salaried position. You might think about drastically slashing your rates in order to quickly attract new business. Keep your head cool and think about what's best for your business. You don't want to find yourself a year from now slaving on low-paying projects that keep you too busy to find anything better. The skills that got you the client you just lost will help you find others.

Don't blame yourself

This event can easily become the entrance theme for a magnum performance by the Impostor Syndrome. Some of his best lines include:

  • If you were for real, you would have kept that client.
  • They dropped you because they finally saw through you.
  • You allowed your skills to stagnate, so now you won't be able to find new work.
  • It's time you quit pretending to know what you're doing.

Those are all BS. The truth is that nobody knows everything about their job, especially in IT. We're all learning all the time, just to do our jobs. We can't keep up with everything in the field, so there will always be some domain of knowledge about which we think, "I should have already learned about that." Even though that may be true, beating yourself up about it isn't going to help. It will only paralyze you.

Analyze your mistakes

Without blaming yourself, think about whether there were things you might have done differently to keep the client. Then ask yourself whether that is likely to apply to other clients as well. We can all stand to improve ourselves in one way or another. We may need to learn new skills, or work on our interpersonal communications. Did you fail to remove some false dilemma that made the client think that they either had to let you go or suffer some worse consequence? Did you miss or ignore any warning signs that this was about to happen? It's always good to examine ourselves for the cause of our difficulties, but don't forget that sometimes circumstances have nothing to do with anything we did or could have done.

Find new work

Even though you may feel compelled to work extra hard for your remaining clients, you probably need to set aside some time to deliberately seek new business. If you try to make up your losses on your existing clients, you may overburden their budgets and create problems in those relationships. When looking for new work, keep a cool head. Desperation doesn't sell. Stick to your proven methods of finding work, or innovate thoughtfully -- but don't grasp at straws.

Prepare for the next time

These downtimes are never fun. Wouldn't it be nice if you could ride through them more comfortably? There are at least two things that you should do. First, set aside some money on a regular basis in a fund specifically designated for getting through these rainy days. Second, keep your client base diverse. If each client is only a small fraction of your business, then losing one or even two at the same time becomes a speed bump instead of a "bridge out ahead!"

Conclusion

A dozen years ago I lost a client who had been with me for ten years, and who at the time accounted for almost 50% of my business. I didn't recover quickly. It took years to build my revenue again by piecing together smaller contracts. I had become too comfortable with that regular chunk of income every month.

How about you? Do you have one or two big contracts that are making you complacent? What could you do to soften the blow when they eventually go away?

About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

21 comments
sales
sales

I wish I would have read this article while I was between consulting jobs for over 9 months a few years ago. I found that you need three things to keep you going during slow times: 1. passion for what you do 2. strong belief in your technical ability 3. stamina to hang in there until things turn You may need to start another venture to expose yourself to a new market. I tried photography during this slow period. smile

mjd420nova
mjd420nova

In my experience, the loss of our biggest customer was caused by two things. The first was the failure of the salesforce to have counter and counter-counter bids for the contract they had negotiated for six years with no competition. Two, a disgruntled former employee went to work for a competitor and clued their salesforce to the process. Kiss a big contract goodbye and four employees filed for unemployment.

lenaria317
lenaria317

I wish I had this problem! Just started out in contracting, and seeking my first client. But not worried yet. I really appreciate these articles...they provide sound advice for my (hopefully soon!) consulting career. Keep up the good work! Tom

viProCon
viProCon

Those of us around long enough in life hopefully come to understand that success is not about what comes your way, but HOW YOU HANDLE what comes your way. That means you celebrate the good stuff but be aware of and trained on how to handle the bad stuff . What do I mean by trained? Well, most people don't handle bad situations instinctively well, it's something you have to teach yourself to do. It starts by finding the good in all situations, look at the positive. No, it's not a positive situation when a client is lost, but then you find a bigger client or what not and suddenly what was once a terrible thing paved the way for a thing that's even better than the original. Those that have been through this cycle a couple of times tend to remember it, so then, they can be positive even beofre the next good thing comes along, so they stay posistive throughout. This skill, if everybody could practice it always, would keep us all very sane in this fast paced world where, unfortunately, your feelings are amongst the last things considreed. (PS: Do I use too many comma's?) :)

26Alfred
26Alfred

Chip, I agree with you on most points. However I sorely miss one most important step we all should remember: Rely On Your Network! And I am not talking about social media but real life contacts, peolple you have done business with, colleagues and partners. Let them know you're in a fix and they usually will try to help you. I can testify to this, having lost a major, major contract last year. No personal reasons, just a very sudden and unexpected budget slash that sent me tumbling out into the snow. After getting to my feet again I sat stunned for a while and then started calling my network contacts. A couple of weeks later the first small things came in and now I'm up and running again. Make sure you have some real friends out there!

marcotekitup
marcotekitup

Chip my friend you are again right on the money, especially about not blaming yourself and keeping a cool head after this happens. It did for me a year ago and this client represented almost 30% of my income! You have to do a sincere and candid "post-mortem" after stuff like this happens but one never gets anything from doubting ourselves. Keep going and find better and more creative ways to keep the pipeline full and don't try to oversell on your current clients.

mitch_mccarley
mitch_mccarley

Great article. I learned through experience to do exactly what you suggested - don't panic, think about what you can do to improve your business, and most importantly MOVE ON. Every time I've lost a big client, the following year has seen IMPROVED business! It helps keep us hungry, and make changes to provide better service. I've usually found, looking back, that clients that move on were the difficult ones - wanted discounts on their bills, didn't appreciate my efforts, and took up a disproportionate amount of my time. Once they were gone, I had more time to commit to my other clients and to grow the business. It makes for a few reduced cash flow months, but it can actually be good for your business long term.

XoomXoom
XoomXoom

Very good article and I experienced this very thing in 2012. Lost two major clients of over six years, as desperate consultants had been hitting them hard and promising the Moon if they'd go with them. Panic set in and I went through a lot of what was outlined in the article. On Christmas Day one of the clients called me and they were losing $40k a month in revenue after firing me in June and going with someone else. They are now back. The second one has called me and setup an appointment this week to discuss my taking the account back over. I guess the Moon wasn't that good. It did wake me up that I have to concentrate on getting the front door open wide again, because the back door can get larger in a slow economy. If you are a good consultant, you also have to keep the faith and stay positive. Learn from these bumps because it would be very easy to go into a tailspin from this.

timwessels
timwessels

Two major events at a client can and do tend to put you and your consulting business on the outside looking in. One is an acquisition, where the acquiring company has its own stable of consultants to call upon. The other is a change in management, when pretty much the same thing happens but on a smaller scale. In the former you are not likely the only vendor to be affected by the acquisition or merger. In the latter, a new manager, probably from outside the business, is being brought in to make things happen and that typically means this new manager will bring in their trusted consultants and not rely on you. Either way, it is always dangerous to have more than 50% of your revenue tied to one client. Best not to get stuck in that situation if you can avoid it.

CACASEY
CACASEY

Chip, thanks for bringing this topic up. Consulting (or contracting) by its very nature is project-centric, which by definition has a definite end. Depending on your focus (and aptitude), every engagement may be a single event, with little or no reason for the client to retain your services once the job is complete -- especially if you do an exemplary job. With rare exceptions over a 30 year history, this is how my practice runs. You are fortunate your offering meets a need some customers have repeated and continuous use for. Regardless, your points about having cash reserves available to ride out the inevitable slow periods and that effort to secure new business while delivering on existing contracts must be expended are on the mark and whose importance can't be overemphasized.

Sterling chip Camden
Sterling chip Camden

In some ways, the prospect of losing income that you've come to rely on can be more terrifying than never having gotten it to begin with. Good luck, and thanks for the kind words!

viProCon
viProCon

I just want to add that I realize waiting for the next good thing to come along as being the catalyst for you having a happy day isn't always ideal - what it it takes a long time, do you wallow in depression? But it really helps to know hat if you keep your head up, a bad situation will always fade away to a good one, just be persistent and patient with yourself.

Sterling chip Camden
Sterling chip Camden

It doesn't help to run from uncomfortable truths, does it? I wonder why when we do face them we also feel compelled to chide ourselves.

Sterling chip Camden
Sterling chip Camden

Some of the scariest times in my career came right before changes for the better. Darkest before dawn and all that.

Sterling chip Camden
Sterling chip Camden

... and the encouraging story. Nice to be the one they came back to, even if they had to experiment with someone else to appreciate you.

Sterling chip Camden
Sterling chip Camden

Another cause can be the economy we're in. A lot of companies are simply shrinking their expenditures across the board.

Sterling chip Camden
Sterling chip Camden

Some consultants, myself included, have recurring business as the norm. While that's very nice, it can make us a little complacent about finding new business.

fo128
fo128

"Every bad occurance happens for a good reason"