Don’t let your business relationships turn into liabilities

It was a great idea at the time.

The plan was for the two founders to split the operations side of the business from the sales. Of course, that meant most of the late-night dinners and airline trips would fall on one of them, but that was okay since the other didn’t really like hotel food all that much anyway.

This formula worked for a few years and the company grew from strength to strength. But as with many start-ups, storm clouds loomed on the horizon. Gradually, and then all at once, the partnership between the founders ended when founder ‘A’, the one in control of the sales and client relationship role, decided to call it quits.

Nothing else in the business changed. Founder ‘B’ was still there, keeping everything running smoothly. But it didn’t seem to matter because every month fewer clients were renewing their contracts, and the customers wouldn’t return phone calls. Revenue soon dried up and there was a real chance of company failure.

The problem was that all the key client relationships were developed and maintained by founder ‘A’ – and that person was now gone. The equity built through the intangible asset of relationships had gone from hero to zero almost overnight.

A lot of companies are probably in this exact position today without realising it.

Sales might be going gangbusters, but it’s worth asking if the pipeline and critical client relationships are dependent on only a few people. Good managers know the importance of creating redundancy just in case a critical employee gets “hit by a bus.” But how many managers think about ensuring no client relationships are reliant on a single person?

It’s tough to create redundancy in relationships because they tend to be intensely human affairs and as such can be powerful intangible assets.

A strong business relationship can have all the history, vulnerabilities and unspoken codes that only those within the inner circle can appreciate. Deals get done at speed, problems are solved with a simple conversation and phone calls are always returned.

Now, it’s common sense not to interfere with anything that works well. After all, a manager’s only job is to ensure everyone else can do their jobs. It doesn’t make much sense to stick an oar into a relationship for no good reason, so they mostly choose to leave it alone.

Yet if the manager does nothing to de-risk the chances of important relationships breaking up or disappearing, there is a huge risk of this bottleneck getting tighter and tighter over time.

For that reason, it’s best to start as you mean to go on. That means ensuring there is no single point of success or failure around any of the company’s core assets – including relationships.

So, rather than allocating a single salesperson or relationship manager to a client, a better tactic is to assign each client to a team of relationship managers. That’s not to say the entire team needs to book a table at the restaurant or be at every meeting – that would be a waste of resources – instead, the idea is for the team to share the engagement with a client between them.

There is absolutely no reason this strategy should change the quality of the relationship with a client. It may not reach the depths of some friendly relationships, but it won’t be sterile either. The goal is to find a Goldilocks Zone (not too hot, not too cold) where the client feels cared for and the sales team responds to the client’s needs.

In this way, the client is always engaging with the company first, not with a specific person. This is a crucial difference. The strategy encourages clients to think about what will result in maximum profit, rather than make decisions based on their feelings (good or bad) about a person.

Spreading the weight of business relationships across multiple relationship managers has the added bonus of keeping everyone honest and means no one can hold the other to emotional ransom.

It is always good to de-risk intangible assets, especially when those assets involve humans. The longer a manager dawdles before doing this, the harder it will be for them to salvage the relationship when that well-placed team member inevitably leaves.

Don’t be like that founder in the apocryphal story above, faced with company collapse because all the most important business relationships were controlled by one person.