My guest today is Larry Anderson. Have you ever wondered what you would do if your biggest client suddenly dropped you? Larry has experienced that first hand. He is an “accidental entrepreneur” that came back home to help with the family business. Since getting his start in the industrial repair field, Larry has pivoted into many technology niches including contract manufacturing and most recently, the online freelance market.

During today’s episode, Larry walks me through his business experience and offers some hard-learned lessons. He is inspirational for his tenacity and flexibility within his industry. If you are looking at a possible pivot, Larry Anderson is an excellent example of staying positive and moving forward.

You will learn about:

Larry’s entrepreneurial background.

How industrial repair and contract manufacturing differ.

Lessons Larry learned from his first business sale.

The ups and downs of serving just one large client.

Why the contract manufacturing industry changed.

What came after the big blow?

How Larry pivoted

Finding the right buyer and business broker.

The importance of doing due diligence before exiting the company.

What Larry would have done differently.

Today’s guest covers a couple of big risk topics, namely lack of customer diversification and technical expertise. We all get into our businesses to satisfy a need and should never undervalue our expertise in that market, but when it comes to expanding to areas we aren’t familiar with (including selling our business), it’s best to reach out to others who have a greater understanding of these areas. For Larry Armstrong, these two factors caused him to become an entrepreneur in the first place and have led to the reason why he is on the show today.

Diversifying from Your Biggest Customer Is Mandatory to Increase Company Value

When it comes to customers, there is safety in numbers. Larry, however, had a business where one client made up 99% of their revenue. While that wasn’t a concern for him at first because that client was so reliable and they had such great communication, it eventually became a bit of an issue. As much as you want to trust the people you work with on a daily basis, the bottom line is that each one of us has to look out for what’s in our best interests. When Larry’s client eventually came to the conclusion that different services would better suit their needs, Larry was left holding the bag and putting money into a company that wasn’t putting out returns.

Eventually the client let Larry know that his services weren’t required anymore, but Larry had already been hanging on for two years and not turning a profit. While there are some businesses that do only have one or two major clients, it’s important to get as much information from them as possible about their future plans so you’re not left in the lurch—or, better yet, go out and actively seek new clients so your portfolio is more diverse.

Another way to decrease risk for your business, without necessarily expanding your clientele. Go for long-term contracts and renewable contracts. The more locked-in a client is, the more likely they are to stay. Clients stay where they’re comfortable and well taken care of, so as long as you are fulfilling your contractual obligations with this client, you should have no issue getting a long-term contract from them. This gives you an idea of the stability of your future earnings by those who agree to stay for the