In a difficult environment, key factors for a business to survive may not be obvious. Some lapses can be recovered from…
Early warning signs may show up in the numbers, such as
- changes in gross profit margin
- customer acquisition cost
- customer churn (loss)
- employee turnover
But what your customer’s business absolutely has to do to survive – where a lapse may be fatal to their business – may not be reflected by ratios nor in their financial statements. To stay in business they may need to, for instance:
- meet regulatory requirements
- maintain access to a raw material
- keep an organizational accreditation
- maintain a perfect safety record
Survival factors will vary with your customer’s industry, type of business, and on their business environment.
It pays to identify and track those factors, for at least two reasons:
- A critical risk point for your customer’s business can become a risk for your business. You can use the knowledge gained to protect your own business.
- Performing a risk assessment of your customer, and understanding what is critical to their business survival can reveal ways for you to become uniquely valuable to them, beyond the product or service you supply.
So, where to start?
If your customer is a public company, many of these risks will be itemized in footnotes to their financial statements, available on their website and public to all who read that fine print (and more importantly, know to look for it).
If their business is privately owned, you can start with their industry association websites and publications. Look for published policy positions, forum discussions, news releases and advocacy statements, as these will often touch on what matters most to organizations in that industry or profession.
And of course if there are publicly listed companies in their industry, many of the things listed in the footnotes to their financial statements will apply to privately owned companies in that sector as well.
To get maximum benefit, visit. Meet with your customers’ business owners and senior managers. In those conversations, focus on how to help their businesses in areas central to their success, over and above simply being a good supplier of your products and services.
Become key to your customer’s survival and growth, to secure your own.