huge new client but huge investment
Discussion
Just been asked to provide debt recovery services for a well known uk PLC with 7000 branches. This would mean a massive investment in staff and systems otherwise we may not be able to service the client as we should.
I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
It always comes down to risk vs reward. Sit down and plan out the investment required. Work out a plan for the cost of new staff and how long it takes them to become effective. Try to gauge how long a honeymoon period you will have with the client. If you believe you can be fully up to speed and show results before the honeymoon period ends then go for it. You will need to think carefully about your clients expectations and how to manage them.
jamesuk28 said:
Just been asked to provide debt recovery services for a well known uk PLC with 7000 branches. This would mean a massive investment in staff and systems otherwise we may not be able to service the client as we should.
I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
Asked to provide or asked to tender for?I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
Now that's a conundrum. My feeling would be to go for it big time. Work out a worse case scenario and calculate if you'll still be alive at the end of it. Once you're working for a blue-chip company this could give you the credibility for landing other similar contracts.
Obviously I don't know the prices you're quoting, but my insticts would be to look at this as an opportunity to go for a step-change in the company's evolution.
Obviously I don't know the prices you're quoting, but my insticts would be to look at this as an opportunity to go for a step-change in the company's evolution.
jamesuk28 said:
Just been asked to provide debt recovery services for a well known uk PLC with 7000 branches. This would mean a massive investment in staff and systems otherwise we may not be able to service the client as we should.
I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
Firstly, well done.I am a bit reluctant to spend a small fortune on something that may not last (cant tie them into a long term contract obviously) but this would be a big feather in our cap to have a blue chip on board.
Any advice welcome as not sure which way to jump with this.
Cheers guys.
Even if you say no, it is a huge compliment that should underpin your business.
As for the deal itself, if taking it means you will have to increase manpower and systems then what is important to underpin the risk is the confidence that you have in using this deal and the larger operation to acquire additional mainstream contracts to hedge your exposure and also maximise your economies of scale.
I'd say, do the sums on that deal and produce a realistic target list for the next and a sensible timeframe to get the next big deal in and if when you look at all that you can't help but have a cheeky smile then go for it big time.
If you don't smile when you look down on the plan then assuming you've got it right then it means that it isn't going to suite your personal temprament and so best to sit tight doing what you clearly already do very well.
It's hard to give advice without more detail but the things I would look at are this:
1. Check the financial status of the PLC and ensure it isn't precarious. I know this is a bit odd when dealing with a blue chip but given the position of some FTSE 100 companies at the moment, it's worth a look I think.
2. Tie them in to as long a contract as you can. Taking an extreme example, if you could lock them in for five years and the client is financially stable then the up-front investment is likely low enough in risk that you could even get the bank to loan you money based on the contract if you needed it.
3. Consider if they are short-term ways of keeping costs down without compromising service. For example, can you overflow outsource a component of your service temporarily. Equally, consider how their requests for you to chase a debt are submitted - do you have a nice web interface they can submit requests directly through? If not we'll happily build one for you!
4. Can you ensure that your entire business, and hence other clients, benefit from any investment you make so if you do lose the big client at least your company is more efficient and responsive to your clients needs?
HTH
roadie.
1. Check the financial status of the PLC and ensure it isn't precarious. I know this is a bit odd when dealing with a blue chip but given the position of some FTSE 100 companies at the moment, it's worth a look I think.
2. Tie them in to as long a contract as you can. Taking an extreme example, if you could lock them in for five years and the client is financially stable then the up-front investment is likely low enough in risk that you could even get the bank to loan you money based on the contract if you needed it.
3. Consider if they are short-term ways of keeping costs down without compromising service. For example, can you overflow outsource a component of your service temporarily. Equally, consider how their requests for you to chase a debt are submitted - do you have a nice web interface they can submit requests directly through? If not we'll happily build one for you!
4. Can you ensure that your entire business, and hence other clients, benefit from any investment you make so if you do lose the big client at least your company is more efficient and responsive to your clients needs?
HTH
roadie.
pgilc1 said:
Asked to provide or asked to tender for?
Great minds think alike!James - if this isn't a tender, or you've just won one (in which case well done – and you should now know what you have to provide and at what price) I'd look to sub-contract in the short-term, and perhaps even buy a competitor in key areas long-term.
Also, whilst I remember - you should probably look into what happened to the previous incumbent, what made that relationship fall apart?
Good luck, and if you require any investment, drop me a line.
Thanks for all the replies.
1. Its not a tender, otherwise the post would have ben entitled "we have been invited to tender......." we have been asked to provide debt recovery services based on recommendation, I do know the differnce between tenders and actually being instructed subject to the finer details / terms / price etc
2. As mentioned thanks for all the advice, I do have an investor "chomping at the bit" to expand our debt collection operations (exsisting client!) but I do not want to overcook things. The comments re temp / sub contracted staff were something we had considered, and thanks for backing up our thoughts.
1. Its not a tender, otherwise the post would have ben entitled "we have been invited to tender......." we have been asked to provide debt recovery services based on recommendation, I do know the differnce between tenders and actually being instructed subject to the finer details / terms / price etc
2. As mentioned thanks for all the advice, I do have an investor "chomping at the bit" to expand our debt collection operations (exsisting client!) but I do not want to overcook things. The comments re temp / sub contracted staff were something we had considered, and thanks for backing up our thoughts.
It is always a pretty big risk to have just one client taking a very large percentage of your business, would your business fold if you lost the business during or after the contract?
Explain the investment required to service them to the standard they need and that you would only be happy in providing in order to maintain the standards you have already set, or try and take a smaller amount of the work until they have confidence in you and are prepared to offer a longer contract in return for the right level of investment. If you have to turn them down, do it without prejudice explain the risks to your reputation, how flattered you were to receive the invitation and that you would rather disappoint them now than disappoint them by offering them a below standard service without the required investment in systems and people.
It wouldn't be the first time a big company has ruined a smaller business dependent on them for most of their business though, especially when they arbitrarily change the terms of business or what you get paid without consultation (i.e. some of the big FTSE100 housing companies this week or the supermarkets who force suppliers to fund BOGOFs - well I know personally of two of the big ones who did this to a small business and they did subsequently go out of business, after 20 years of previous successful business)
Does the company get any funding of public money? A company of this size might have to tender via the European Journal if it does (worth knowing about).
If you have someone to share the risk and help with the all important cashflow and management headaches you'll have, good luck to you and I wish you well.
Explain the investment required to service them to the standard they need and that you would only be happy in providing in order to maintain the standards you have already set, or try and take a smaller amount of the work until they have confidence in you and are prepared to offer a longer contract in return for the right level of investment. If you have to turn them down, do it without prejudice explain the risks to your reputation, how flattered you were to receive the invitation and that you would rather disappoint them now than disappoint them by offering them a below standard service without the required investment in systems and people.
It wouldn't be the first time a big company has ruined a smaller business dependent on them for most of their business though, especially when they arbitrarily change the terms of business or what you get paid without consultation (i.e. some of the big FTSE100 housing companies this week or the supermarkets who force suppliers to fund BOGOFs - well I know personally of two of the big ones who did this to a small business and they did subsequently go out of business, after 20 years of previous successful business)
Does the company get any funding of public money? A company of this size might have to tender via the European Journal if it does (worth knowing about).
If you have someone to share the risk and help with the all important cashflow and management headaches you'll have, good luck to you and I wish you well.
Edited by thepeoplespal on Thursday 24th July 02:01
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