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The Swiss are known to value their independence. They don’t use the Euro currency despite
being sandwiched between France and Germany, and they never officially picked sides in the
World Wars for fear of tying their wagon too closely to one geopolitical regime over the other.
That’s why we give the name the Switzerland Structure to a business model that is set up to be
free of a reliance on a key customer, employee, or supplier.
You probably already know that a customer or employee dependency can undermine the value of
your business, but have you ever stopped to think how one of your suppliers could also lead to a
Acquirers want to invest in businesses that inoculate themselves against danger and being
dependent on a supplier can be a risk.
In 1994 Robert Hartline started selling phones in the back of his car. By 2019 he had built
Absolute Wireless into a chain of 56 wireless stores and 350 employees. He had two main
carriers that supplied him with the bulk of his data plans.
Hartline was able to systematize his business while he grew by creating employee onboarding
videos and delegating key processes for his new employees to follow.
The business was a success, and Hartline was riding high up until early 2020. The pandemic hit,
and two of his wireless carriers merged, leaving Hartline’s business spinning out of control.
One carrier assumed the dominant position in the marketplace and promptly delisted its legacy
dealers from their Google search listings. Panicked by the abrupt change of posture from his
wireless carrier, Hartline decided to sell to another dealer, who was on better terms with the now
Hartline agreed to an acquisition offer, but as diligence progressed, the carrier insisted Hartline
drop 10 of his stores. Hartline’s acquirer promptly dropped the acquisition offer by $4 million.
Frustrated but still happy to get out, Hartline agreed to the lower number only to be told the
the acquirer was not prepared to pay cash and that he would be asked to finance almost half of their
acquisition over time.
Hartline has gone on to create successful businesses since his experience with Absolute Wireless
and now prefers software businesses, which are not beholden to a major supplier.
If you find yourself too dependent on a supplier, make sure you invest in your customer
relationships so that your customer thinks of themselves when buying from you, not your
supplier. Next, consider cultivating a relationship with alternative suppliers even if it costs you a
point or two of margin in the short term. Over time, the diversity of suppliers will allow you to
avoid the valuation discount you incur when you become too dependent on a single supplier.
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The core way we help B2B SaaS leaders progress and achieve their goals.
Executive Navigation is based on experience, not just theory. It is successful entrepreneurs helping growing entrepreneurs scale their business from $1M – $10M+ in revenue.
Executive Navigation is designed to accelerate growth by flattening the learning curve. Want to learn more?