Choosing the Right Clients
Posted on November 20th, 2008
Jim Christy, like many entrepreneurs, set out to boost revenues by getting a bigger market. But Incredible Foods CEO and founder, a dessert delivery service soon found that bigger sales don not necessarily equal to better business.
Christy, 55, got an inspiration in a bakery’s cheesecake located in San Diego. He bought a slice and found love it at a first bite. After ordering over 30 cheesecakes from the same bakery, he launched Incredible Foods to sell the pastry to local food vendors in his home state-Pennsylvania.
Christy’s business soon expanded beyond its flagship product. Landing accounts providing universities, hotels, and restaurants with everything from tortes to Danishes. He hired outside drivers who delivered his sweet products across the state.
Christy’s enterprise, Incredible foods quickly landed became one of the biggest accounts of all- Starbucks.As it multiplies, his workload ballooned. With revenues reaching $3.4 million in the year 2005, his overhead wiped out his profits.
New stores opening in Ohio and Pennsylvania wanted to deliver a single product which is the crumb cake and two of my employees did nothing but to write reports for Starbucks. The Starbucks opens ten branches a year in each of its regions, so five trucks are on the road going to different locations. Fuel, employee benefits, insurance and workers’ comp are costly and made the whole thing completely unfruitful.
That year, Christy then decided to stop it. The last pastry delivery in Starbucks was in October 25. The account generated 48% of Christy’s annual revenues but he believed that he could run a stronger company without Starbucks. He focused his marketing attention on local customers, shrank the staff from 13 to six and eliminated one of his two offices.
It turns to positive outcomes. Incredible Foods posted an 11% increase in profits on revenues of $2.2 million last year and he expects a 22% revenue increase this year.
Now, a pastry distributor achieves business nirvana by ditching his biggest customer. Christy can do half the business, make twice the money, and have a tenth of the headaches.”
