|
Small businesses all across the country are adapting to the new normal caused by the global COVID-19 pandemic. From limiting person-to-person contact to increasing cleaning and sanitization behaviors and providing PPE for their staff, the cost of surviving COVID-19 for some businesses can be steep.
And while some businesses may close forever as a result of the pandemic, others are learning how to adapt in other ways. No matter how big a business is, there’s always the potential for losing important clients or customers. For most, it’s how you bounce back from that loss that helps determine your success.
For a closer look at how to survive losing your biggest client, and how many businesses are facing this dilemma, we surveyed over 1,000 business owners and decision-makers about the impact of COVID-19. Read on as we break down how many businesses have lost their biggest clients due to the pandemic, what percentage of their revenue that client represented, and, most importantly, what businesses are doing after these losses to survive.
According to the more than 1,000 people polled, nearly 3 in 4 reported having lost their biggest business clients in the past. Among those, 82% said the loss of their biggest client came after COVID-19 began. It isn’t always just the biggest client, either. On average, business decision-makers indicated losing three clients each.
The loss of their biggest client resulted in a 48% decrease in revenue, on average, and even more for some businesses. Nearly 14% of business decision-makers said the loss of revenue was between 50% and 59%, and more than 1 in 5 respondents indicated forfeiting between 60% and 79% of their overall revenue due to losing their biggest client. In response, respondents also acknowledged having to let go of an average of 13 employees per business to accommodate the loss in earnings.
While 8 in 10 respondents also admitted to anticipating the loss, that may not make recovering from it any easier. Three in 4 businesses reported losing their largest client more than once, including more than 20% of businesses who said they’ve lost their biggest clients three times in the past. Seventy percent of business decision-makers agreed that all business relationships have to end at some point, even if a global pandemic isn’t a great time for them to move on.
The full impact of losing their biggest clients can vary between smaller and much larger businesses. While micro-businesses (those with 1 to 9 employees) reported the lowest (albeit still substantial) loss to overall revenue after losing their biggest client (42%), midsize businesses (50 to 249 employees) reported the highest revenue loss (51%).
And while large businesses (those with 250 or more employees) reported slightly less loss in revenue, they lost the highest number of employees on average (18) compared to smaller firms.
Half of business decision-makers indicated losing their largest client as a result of the pandemic, and another 46% reported their client lost funding. While less common, a change of direction or goals (36%), change in leadership (32%), and failed business models (27%) were all reasons businesses reported having lost their biggest clients.
Eighty percent of businesses also made an effort to keep their biggest clients from leaving, most commonly by volunteering a discount (50%), offering to do more work (42%), and offering to renegotiate terms to better benefit the client (40%). While slightly less common, 34% of businesses proposed meeting with clients in person to save their business, 30% scheduled a call to learn more about their shifts, and 28% of businesses reduced the scope of the work they were doing.
And while 85% of business decision-makers reported asking their biggest clients for an honest review before losing them completely, another 1 in 10 admitted they believed the bridge was burned after their client left.
As with most things in 2020, getting by is all about how you adapt to changes and embrace the "new normal." After losing their biggest clients, many business decision-makers reported looking for new opportunities (41%), evaluating client "fit" issues (30%), and focusing on client retention and satisfaction (28%).
Of course, not every reaction to losing big clients and revenue was positive. Thirty-six percent of respondents reported notifying business partners and employees of the change, while 33% admitted to drinking, and another 28% turned to layoffs.
For 53% of businesses, the loss of their biggest client was considered a temporary setback and for 19% of businesses, something they knew was coming. In contrast, 19% of business decision-makers said this loss was the end of their business, and another 8% said it was a totally unexpected turn of events. And even though 19% thought their loss could end their business, most decision-makers had a plan for rebuilding (91%). Ultimately, when we asked decision-makers to rate their confidence level in whether or not their business would bounce back, 85% said they felt confident.
The economic impact of the COVID-19 pandemic has affected businesses across every industry and trade. For most, the loss of a major client occurred after the pandemic began, and many admitted to being caught off guard by the decision. These major clients don’t just represent an individual relationship, either. Business decision-makers we surveyed admitted their biggest clients accounted for a higher percentage (sometimes more than half) of their total company revenue, and losing those clients forced many businesses to reduce staff and lay off employees.
In looking forward to the future, most businesses believed they’d survive the COVID-19 setback, and almost all had plans for rebuilding. From finding new opportunities, to focusing on client satisfaction and boosting their marketing presence, businesses are taking immediate action to mitigate the loss of their biggest clients.
Skynova has a simple mission: Help businesses get paid faster. With online software applications to help simplify and speed up the billing process, Skynova provides solutions for invoices, accounting, time sheets, and more – all designed to support small businesses where they need it most. In addition to their small business invoicing solutions, Skynova also provides insight to the business world with in-depth articles like these based on surveys, statistics, and research that’s relevant to business owners and decision-makers.
For this study, we surveyed 1,011 U.S. company decision-makers via Amazon Mechanical Turk.
Of those, 39.9% were female, and 60.1% were male. The average age of respondents was 37 with a standard deviation of 11 years. An attention-check question was used to identify and disqualify respondents who failed to read questions and answers in their entirety. This study’s main limitation is the reliance on self-report, which is faced with several issues such as, but not limited to, attribution, exaggeration, recency bias, and telescoping. This survey ran during October 2020.
Businesses are adapting to the new normal, and many are making immediate decisions about how to move forward in these unprecedented times. Share the results of our findings with your readers for any noncommercial use by including a link back to this page in your story, so they have access to our full findings and methodology.