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The danger of large accounts.


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A place to talk about general business discussions.
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Old 11-04-2008, 06:43 AM
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Default The danger of large accounts.

It seems like every year I hear a similar story in different variations. A new business is just getting itself stabilized with a hand full of customers when a large account seems to be calling them from up high atop a mountain of promised money. The call becomes so enticing that the entrepreneur can not stop themselves from holding back.

Does the beginning of this story sound familiar?

This time the story revolves around a lawn care and fence installation business. The business had been started the previous year with just the owner running the it with a helper from time to time. The owner also had a full time job to cover his expenses. All was going fine. The business was growing slowly until that fateful phone call came in. This large commercial property needed lawn care and a fence installed.

The job was going to be a big job but the owner was going to have to float the project for 60-90 days. That is how long it would take to get his first payment. Could the owner do it the caller asked. A big fat five figure project was just waiting for him if he said yes. So he gambled and said what the heck, I deserve this, this is my time to step up, and he said yes.

At the time he started this job, he had managed to save a few thousand dollars. He thought this would be enough to get him and a few helpers through the next 2 month or so. The next day, he quit his full time job and showed up to this commercial facility to start work.

The grass was tall and unkept so it took more time than normal to cut it down. The fencing. Where do I begin. The fencing was going to cost him big money that he didn't have. He would have to pay for this on his credit card. He would also have to buy a large commercial mower on his credit card. But there was no risk right? I mean he would most certainly make his money back on all this and them some. Right?

Within a handful of days from the time he took the call. He had quit his steady full time job. He had hired a few extra helpers. He had depleted his savings and gone into a 5 figure credit card debt.

After the first month he submitted his invoice and he was elated. Never had he submitted such a big invoice to anyone in the past. He was finally a big lawn care business. He already had plans to upgrade his truck and trailer. He made it.

The second month rolled on and he started to get nervous, especially when he saw the for sale sign go up. He called and asked about that. Surely he was still going to get paid right? Oh sure they said, you will be paid. He was getting worried because he figured he had about 3 more weeks of living on his credit card before it was maxed out.

Now do you want to guess what happened?

The check never came. The commercial property was sold. He never got 1 penny. He lost it all. He had to quit working on his business and get another full time job. And he will never ever be able to start another business again. His wife has threatened him with divorce if he ever brings it up.

Listen to me when I say this. There are a non-stop supply of such stories. Prevent this from happening to you. Start small and scale up. Grow at your own comfortable pace.

Have you ever had anything like this happen to you or to someone you know? Tell us what happened and what you would have done differently.
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