It is common that many small businesses take on projects and clients that are outside their capacity in terms of both expertise and resources. Don’t be fooled by the bright lights! Initially it might seem very enticing to win big projects and deal with large clients. If your small business is not sufficiently skilled and resourced to undertake these projects and provide the necessary goods or services to these clients, significant damage can be done both from a reputational point of view, and also from a risk management perspective. In addition to this, they can become costly from a financial perspective given the additional (wo)man-power required to deliver on what has been promised.

It is important to remember for many small businesses, particularly those just starting out, that small fish are sweet. I’ve seen many times over the years, where my clients across various industries have operated their businesses extremely profitably. They are comfortably able to service the needs of their clients or complete a project, and are able to “get in and get out” without taking excessive amounts of time to do so. Often, once comfortable taking on these smaller tasks and completing them profitably, instead of progressively increasing the capacity and the complexity of the project or task, they inevitably decide to take on a significantly larger client or project. All too frequently, this has resulted in disaster, and the client had to spend 12 or 18 months recovering from the trail of destruction left behind. This is not to say that small businesses should not try and progress the complexity and size of their projects and clients, but this should be done in a very measured manner, always remembering the very important mantra that small fish are sweet.

Clients and projects you are able to service or deliver with relative ease given your experience with them and the level of work required are your bread and butter, and these should not be left behind in search of “the big one”. Keep smashing these out and make sure these clients are super happy with what you produce. Build efficiencies in these projects, create checklists and redundancies (train lower level staff) within the business so you can gradually move your more highly skilled technicians onto the more difficult projects as they arise.

Ensuring you have client diversity and are not hinged to one client or project reduces concentration risk – this is not ideal from a business model perspective, nor from a succession planning perspective.

It is important to have a range of clients and it is always important to remember the bell curve – there are many more in the middle providing solid fees and job profitability, and the outliers on the larger size should be taken on progressively as your small business develops the capabilities and resources to undertake these larger projects and tasks.