What should our backup plan cover if our largest customer leaves while we are preparing to sell?

Question

Tyler Smith · Accepted Answer

Build a customer-loss scenario now, while you still have time to improve the business. The purpose is to understand the exposure and prepare decisions, not to produce a reassuring forecast that assumes immediate replacement sales.

Start with the account's revenue and gross profit contribution. Then identify which costs would disappear, which would remain temporarily and which are effectively fixed. Losing revenue does not translate into an equal reduction in expenses.

Your plan should cover:
- Cash exposure from unpaid invoices, customer-specific inventory and outstanding commitments.
- The timing and feasibility of expense reductions.
- Staff, equipment and capacity that could be redeployed.
- Existing opportunities that could realistically replace some contribution.
- Responsibility for customer retention, cash monitoring and operational decisions.

Separate signed replacement business from qualified opportunities and early leads. State the assumptions behind timing and margins. If those assumptions are uncertain, show the uncertainty rather than treating the pipeline as guaranteed revenue.

Use the exercise to identify preventive work. That may include diversifying client sources, limiting customer-specific commitments or transferring relationship knowledge from the owner into shared systems and team responsibilities.

My recommendation is to review the scenario with your finance lead and leadership team, then act on the biggest vulnerabilities. If a loss actually occurs during sale preparation, update the financial outlook and discuss the implications with your sale advisor promptly. A contingency plan does not erase concentration risk, but it helps you manage the consequences deliberately.