If you are dependent upon one supplier there's a decided advantage to that supplier. Sooner or later the supplier could begin dictating terms that are to your disadvantage. In this case, you can gain a little protection by being part of a buyers' group or by having strong networking relationships.
Likewise, dependency on one customer can pose significant vulnerability. When a few customers each constitute a large portion of your customer base there is still a high risk and, especially, if all are subject to the dynamics of the same industry.
Oftentimes you have no option to avoid one or both situations.
When one or both situations do exist you must face the reality of change. Consider the consequence of a loss of the supplier or customer. Reserves, contractual penalties and contingency plans are advisable until you are able to broaden the bases.
Stories from members will add great value to these maxims
Please post your story by emailing it to max@unclemaxsays.com.
Don't forget to sign up for our free newsletter.
© 2004-2006 UncleMaxSays.com
UncleMaxSays.com is a division of Kamloops International College Inc.
Privacy Policy Terms of ServiceSmall Business - Time Management - Business Plans - Business Plan Coaching
