Make Yourself Dependent

We recently went out for dinner with some good friends and in our discussions the husband touched on how his customers tell him if he was to leave they don’t know what they’d do (he’s in sales of technical production equipment). In other words, he’s indispensable, at least in the short-term.

I often mention how business owners need to reduce and eliminate dependencies but there’s a flip side to it. Often we need to make ourselves a dependency. This can take many forms.

As described above, an employee with special skills, especially in small to lower middle market businesses, has job security. Not only is it expensive to replace someone, in today’s market it’s darn hard to find great people. Our friend has good job security.

When your company provides crucial services to your customers you’ve become a dependency to them. Without abusing it, it’s revenue security. It’s why repeat business and any “value-add” service is the top choice of business owners (and buyers).

On the other hand, if you are the reason one of your suppliers has customer concentration issues you have some leverage (as long as there are other suppliers). This one is easy to abuse. I remember in grad school learning about how Sears would become the highly-dominant customer of mid-sized businesses and use that to buy the company, and not at what the price would be if they weren’t so dominant.

While I “preach” about the evils of dependencies, if you’re the dependency it can be a good thing.

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