As a director you open your business with great enthusiasm and work hard to build it up. A connection is made with one supplier or one purchaser and all is going well.
Together with this one company, you and your company grow.
Over time, whether it be short of long, you begin to notice that this other company has become your main supplier or your main purchaser. Then a decision has to be made. Are you comfortable to continue to work in this way i.e., to have all your eggs in one basket. Will this work going forward?
What happens when personnel change in the other company? Will they still want to work with you? How will this impact your business and thus your finances if they don’t want to work with you?
Diversification with your suppliers and purchasers may be something to work upon.
The other way having your eggs in one basket can affect your business is when the customer stops trading. Perhaps due to their own insolvency. If they owe you money, have you got the resilience to work through this rocky financial period? Will your own business need to shut down as the cashflow is not there to pay the bills as and when they become due?
Being supplied by or supplying to one or two entities may not be the best way for a business to function. Reviewing who you supply to and how much of the turnover that supplier commands is an important part of managing your business.
Download our guide to insolvency.
Our download guide is ideal for both accountants and business owners. You’ll get the benefits of our 30+ years experience in one easy to read guide.
Afterwards, you’ll not only gain a better understanding of the processes, but you’ll also discover how we’ve helped hundreds of companies and provided peace of mind to countless business owners.
