So why am I talking about Switzerland? And what’s a Switzerland structure anyway? And what has it got to do with you? 

The idea comes from John Warrilow who first discussed it in his book ‘Built To Sell’ and again in his later book ‘Automated Customer’.

As you probably know, Switzerland is an independent country that’s obsessed with remaining neutral. They have not carried out nor participated in a war since 1815 when they declared military neutrality. Therefore they weren’t involved in the first two World Wars and they didn’t even join the UN until a Referendum as late as 2002, more than 50 years after the UN was formed. Switzerland has an obsession with not wanting to be dependent on any faction or constituency.

Why is this relevant to you? 

Independence is essential to building a successful and valuable company. Like Switzerland we also cannot be overly dependent on any of our business constituencies.

What does that mean?

Truly valuable companies do not rely on any one customer, employee or supplier. If something were to happen to your number one customer, supplier or employee, would your business still survive? We’ve got to get to a place where you can confidently say YES! Many businesses I have worked with had reliance on one or two customers. A staffing company I worked with recently had 80% of their business coming from 5 clients and one of them was responsible for 43% of their total business. That’s a risk and it reduces the value of the business.

How can you achieve neutrality?

Make sure that no more than 15-20% of your sales come from one customer or client. Sounds easy, but sometimes we get sucked into dependence without realizing it, and one day the business is in jeopardy and we suddenly realize how dependent we are on them and we may even start slashing our prices to keep them.

We should reduce dependence on key suppliers. Partnerships with our suppliers is so important. On the whole we do business with people we like (or at least sort of like). That’s natural and so often we slip into doing business with just one supplier because we like them, trust them and they have always been good to us. When I worked with McDonalds they had a cardinal rule about suppliers. There must must be a MINIMUM of two suppliers for any product or service, whether it was chicken, beef, potatoes or Happy Meal toys or promotional agencies.

And then to employees. You may be surprised to learn that many of the firms I have worked with have a situation where their leading salespeople are responsible for 75-80% of sales. What happens if they leave or get hit by a bus? Could your business survive that?

The Switzerland structure is a great reminder to all of us that we need to be as neutral as we can. We cannot afford to get too dependent on any of the three key areas of customers, employees or suppliers.