Will a large donor in a small team stifle growth?

By on February 2, 2016

I recently had a conversation with a university fundraiser who explained the volatility of having a few very large donors within a small development team. It got me thinking about the similarities I have experienced whilst working in small teams and servicing large customers.

I believe closing a huge customer or donor too early in a company’s lifecycle can be the death of its growth.

I know, it sounds counter intuitive.

In the early years of any company or fundraising team, cash is inevitably tight. You have a million things you know you can do to scale if you only had the resource – money and people.

Sometimes you’re fighting to stay afloat or fighting internally for a piece of next year’s budget which can be both stressful and time consuming.

When you’re in this position it is very easy to be fixated on the low hanging fruit and the larger the fruit the better. After all, a major prospect is the golden ticket to kick start growth that will lead to prosperous times.

Or is it..?

Here are 5 things i’ve learnt from securing major prospects

1) Major prospects always take longer to close than you think

I’ve lost count of the number of times I have left a meeting with that giddy feeling – if you’re in sales or fundraising you’ll know the feeling I mean.

You can’t wait to tell everybody about the amazing conversation you just had with a really big prospect who was super excited about giving us their money.

I’ll always remember the first time I got that feeling. I had an inbound lead from a huge multinational company who said they wanted to buy our most expensive product and deploy it across many locations.

That giddy feeling has an amazing ability to distort reality and sense of time. That 3 month close cycle just became 18 months, then 36 months and it still feels like yesterday.

It is fair to say that particular deal actually outlasted my time in the job so I don’t know if it closed – I’m sure it is stuck in someone’s pipeline somewhere.

Odds are the larger the deal the larger the number of hoops you have to jump through.

2) Too much time spent on 1 prospect can destroy the rest of your pipeline

Spending so much time on one large deal means you don’t have time to fill the rest of your pipeline.

The largest deal I have ever closed was the most incredible feeling. I’ll never forget reading the successful tender letter and running over to the CEO and Ops Director of the company and embracing them. The deal took almost 2 years to orchestrate and many nights of bid writing to close so it was a huge release.

I’ll also never forget the next day and the dread I felt looking at my unloved and neglected pipeline. I really had let it slip.

Mentally it is so much easier to just do a little more work on that proposal we are working on to land the hero deal rather than starting from scratch with other leads.

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3) You need to create an expensive new support structure overnight

Once you secure a major prospect, it can very quickly become apparent that your support infrastructure may not be up to scratch to support a customer so large and you’ll need to invest in it quickly.

The thing that really sucked about hiring support quickly for one client was the down periods. One such client was so resource intensive, we hired a new support person and a few months later the support tickets dried up. Cue a bored, underutilised support hire.

Don’t get me wrong, having to hire great support people, changing the type of paper we use for documents (not sure if this ever worked but we felt prouder of our work), and designing new processes to deal with the volume of queries, are all fantastic investments in any successful venture. It is just not how you envisaged investing all of the money from your new big deal.

The plans to expand your sales or fundraising team may have to be put on hold for the time being.

4) Major prospects can suddenly dictate your direction without you realising it

When I buy, I like to buy from small outfits.

Great support? Check. Innovative services? Check. Access to decision makers? Check.

But really, I know I have leverage to create a partnership that is going to benefit me in the long term, or I’ll leave. It is very likely that small companies will go above and beyond to win my business but most of all to retain it. To the point where I can be quite demanding – things you wouldn’t even bother trying with a huge supplier like Google.

No one uses this leverage better than big companies that know they are a supplier’s biggest customer.

Having a big customer feeding into your product and services like this is actually incredibly valuable. But when you’re only a small shop it can feel like you’ve built a team that is specialised to serving one customer whilst your strategic plan has to take a back seat.

5) Renewal time is the scariest time

Renewal time should be a great relief, a time for joy as you receive that cash injection.

But what if?

What if your one huge customer doesn’t renew? What if they are secretly unhappy? Or, have been poached from under our noses?

Until the deal is done you will spend at least 2 months prior to the renewal closing with this lingering in the back of your mind and it’s hard to shrug.

Everything you have built hinges on this one deal. Really, how did I let that happen?

Conclusion

Look, I’m not saying having a big customer or large donor early on in operations is completely unmanageable but it shouldn’t be your only strategy.

Try and have a healthy spread of small, medium and large size deals in the mix. Remember, with the correct nurturing small deals turn into medium deals and medium deals turn into large deals. Try to never be at the mercy of one customer or donor.

The key is sustainable growth.

Further Reading

Donor churn – how is it affecting your fundraising goals?
Re-designing the donor pledge flow
Are your donors jumping ship? Improve donor retention with these strategies

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