Of course, we are always interested in the numbers in a business. Not just the black and white numbers that make up the financial accounts of a business, but more of the numbers that contribute to the key success drivers of that business.

However, one number that we always monitor with interest when speaking with our clients is the number one.

This can be a very dangerous number for many entrepreneurs and we have seen many businesses fail when they have just one. That could be one of a number of things, but our concerns are especially raised when a business has one main customer, one key supplier, one critical employee, a single product or just go to the market using one marketing activity.

Yes, there are some very good businesses out there that just have a ‘one’ focus, but the numbers themselves tell us that this is not a healthy focus for the majority of small businesses.

The concern is that with so much reliance on just ‘one’, what happens if they leave you, let you down or it does not work out to plan?

For example, you could believe that your marketing should simply be down to online pay per click advertising, so invest your resources in this method, only to find three months down the line that it has not worked and now the cashflow is poor and no reserves for other marketing.

Our Commercial Director, Mike Foster, often share the following story “When I worked in Small Business Banking, I recall a customer who wanted to take a step back and put his business operation in the hands of one key person. They drove the business how he wanted and even made some great changes. However, he never documented the changes or shared the detail with the owner and later resigned. The business owner could not step back into his business and run the operations to the same detail required for the business as it was following his changes.”

We all know a story of having our eggs in one basket. Again, Mike recalls “I knew a farmer who supplied pork pies to a well known supermarket chain. Initially they were 40% of his business, but they wanted more. So he gave up his other customers to focus 99% on the chain, due to the level of business they were offering and the credibility he felt of supplying to such a big name. A year later the chain asked him to cut his prices by 22%, which he was unable to do, so they took the contract away from him leaving him without a business and many financed assets that were then immediately redundant.”

Therefore, we encourage you to take the same view of the number one and be mindful of the impact it can have on your business.

Sage Accountant Partner Logoiris kashflowFreeagent