We're in the software development space, and staff augmentation for product development/software development is a core part of our offerings.
I spent a significant part of Q4 on two things -
- 2.5x the team of an existing client resulting in ~2.5x to 3x the revenue (cilent 1)
- closed a new client where we mapped out a series of projects to start on (some were fixed cost vs another being a monthly retainer) (client 2)
The MRR for this quarter/rest of the year from these two client was looking really good, until client 1 tells me today suddenly (been just a month since we expanded their team), that they cannot continue since their biggest client is churning, and being a small company, they can't really pay us due to cash flow issue. I cannot really enforce our contract here where we have stipulated a minimum of 90 days lock in, bcoz it is not going to help either of us. They can't pay us and if we force them to pay, we lose them forever coz of the experience (we have been working with them for almost a year now - good client overall).
Client 2 - we have a new project (fixed cost) starting soon, but he came to me yest and mentioned that they've gone through the process of acquisition (we knew they were getting acquired over the last 3 months), and the new owners are not too comfortable with them running too many projects at once. They'd like to slow things down, and he has to respect this decision. Our monthly retainer from them has disappeared overnight due to this decision. Same as above, we have a lock-in of 90 days with them, but not worth fighting over (we're already 70 days in) as we have this other project and a potential new project running in parallel.
However, given the above - I have a massive chunk of MRR/ARR missing from my revenue pipeline just like that.
It is quite a disappointing outcome given the amount of work that went into getting these two accounts in place. Have you been in a scenario like this? What would you suggest I do here, and what's the best way to ensure that something like this doesn't happen again?
Overall, both clients have very valid reasons, and I realize that this isn't something that I could have controlled or foreseen, but it'd be nice to know if there's a way to avoid something like this happening in the future.
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