5 Negative Impacts of a Codependent Business

Does your business depend too much on:

  • The income from a key customer;
  • A key employee who knows more than you do;
  • A vendor or supplier that is critical to your deliverables;
  • A process that no longer works; or
  • You in order for anything to move forward?

Have you unintentionally built a codependent business? 

The #1 reason small businesses are started, according to an article in Business News Daily, is because the founders wanted to be their own boss. I have no doubt that is no surprise to you. The top reasons businesses fail according to an Investopedia study are inadequate management, lack of funding, ineffective planning, and unsuccessful marketing. The Small Business Administration claims that approximately 33% of businesses fail in the first two years, 50% of those that made it past two years fail in less than five years, leaving around 33% making it past ten years. What do these depressing statistics tell you?


Managing a business isn’t sexy like starting a business. It’s work! 

There’s a whole lot you need to know between starting it and building it! After the initial honeymoon phase and exhilaration of taking the leap to start your business, then reality sets in. While you wanted to be your own boss, you cannot accomplish business success alone. It takes customers. It takes suppliers for what you need to operate your business and deliver your offerings. It takes capacity which means hiring employees or contractors. It takes systems and processes that help you do more with less.  It takes investing time, money, and resources. It takes you knowing all of these critical aspects of growing your business, and yet the reality is that you don’t know everything.


Yes, managing a business takes work. One of the greatest game-changers business owners need to learn early in their business-building journey is to have high expectations and then continuously manage to those expectations. What do I mean by this? Quite simply, don’t settle. Use your high expectations as your guide for planning, decision making, pricing, building your customer base, expanding your capacity, securing funding, and truly growing your business. Think about what it will take to thrive, not just survive, or get by. I guarantee that the businesses that didn’t make it two years were too focused on surviving. And the businesses not making it five years. Well, they were just getting by. 


Lowering expectations is what gets business owners in the biggest world of hurt. It is also what causes the business to become codependent. 


1. Client Attachment: What causes an unhealthy attachment to a client? Too often I hear a start-up entrepreneur say, “If I can get just one customer, then things will really take off. ”Why would you just want to focus on getting one customer? Why not have a strategy in place to attract multiple customers, multiple segments of customers, and realize a solid base of customers? Single-mindedness gets you nowhere fast. 



Momentum Building Decision #17

Your expectations should be in multiples.


Also too often, I find established businesses too heavily dependent on “that customer they can’t afford to lose.”  Either the customer is such a large percentage of their overall gross sales that it would really hurt financially to lose them, or the client is a real pain to deal with, but pays its invoices, so the business owner tolerates a less than ideal customer disrupting the entire operations. That was me about ten years into my business when I had a client that represented 40% of our overall gross sales. It was an exciting coup at first to have won out over much larger firms in gaining the work, until I realized they were not ideal in values or attitude, even though they paid their bills. I tolerated them initially too because, well, they were a big percentage of our projected sales. The best decision I made was firing them. 


Sure, it was scary walking away from the perception of 40% sales lost. However, operating from a mindset of multiples replaced that client threefold shortly thereafter with several clients, not just one, simply by asking ourselves, “What others were out there with the right mindset and attitude, who would value and truly appreciate what our company had to offer?”  The answer? Plenty! When you are thinking thriving instead of surviving or getting by, there is no limit to what you believe is possible. 

2. Key Employee Attachment: When you have a loyal employee, especially in this age of the Great Resignation and Quiet Quitting, it is most likely because you have made them feel valued and appreciated through recognition, acknowledgement, and fair or above-industry pay. You want loyal employees, and you want them to feel valued and appreciated. 


You want employees you can rely upon and who perform at high standards, ideally exceeding, not just meeting expectations. So, when you have someone who does perform exceptionally well, it is understandable you don’t want to lose them. The codependency occurs when you are so dependent on the employee that if they miss work for some unexpected reason, all work they were doing comes to a halt. Another way this can play out is that you believe they are the only ones who can do the job, and therefore, you don’t allow others to contribute or collaborate. 


According to an INC Magazine article, relying too heavily on top employees could stunt your business’ growth.  Why? Because scalable growth comes from repeatable systems, processes, and your ability to replicate success with multiple people, not just top people. 


Bottom Line Rule #15

Replicating success guarantees success. 


Make it a part of your company’s onboarding to have top performers cross train and mentor new hires. Make it a part of job responsibilities in various roles to document successful approaches for quality control, consistency in delivering, ease in training others, and ensuring any and all critical factors of execution can be performed by more than one person inside or outside of the company, even it if means your internal back-up plan is an external specialist you can call in when needed. 

3. Supplier/Contractor Attachment: Too many businesses don’t value their suppliers or contractors. This is a problem that typically causes a roller coaster of service problems in delivering what is promised consistently when you don’t realize the value of your suppliers and contractors. You treat them poorly, take forever to pay them, nickel and dime them, and they reciprocate by not making your company a priority when you need them to be. 


You can also get yourself into trouble when you rely too heavily on one supplier. With no other resource to turn to, you find yourself at the mercy of that vendor’s ability to provide what you need. Your co-dependency puts them in control because you have no one else as a resource. 


When you are too reliant on a single provider, you lose negotiating power. According to Guardian Small Business Network, when you are reliant on a single supplier or contractor, they are more likely to drive up their prices. Here are a couple of scenarios I have seen over recent years. A subcontractor’s hourly rate gets doubled without warning, and the business owner felt she had no choice but to pay because the subcontractor is so entrenched in the business. To find someone else and bring them up to speed was too overwhelming. A scanning technology vendor shifts from charging a day rate for services to charging per instance, tripling what the company must charge its customers, and eating the difference initially while scurrying to find alternatives. In both of these examples, what got hit the hardest was the business’ bottom line. All because of being codependent on a supplier. 

Bottom Line Rule #12

Always have a back-up plan.


Take the time and make the time to build a strong supplier, vendor, and contractor base. There is a reason football teams have back-up quarterbacks. You can still have your preferred suppliers, just always have a back-up plan.

4. Process Attachment: Have you caught yourself thinking or even saying, “It’s my way or the highway”? Or have you gotten caught up in the belief that “our industry has always done it this way” or “we’ve always done it this way”? When you are too attached to a certain way of doing things, you are not in a mindset of continuous improvement, and are actually settling for status quo.  In an age where businesses can become easily commoditized, you cannot afford status quo. 

Momentum Building Decision #13

Continuous improvement is how you become the best.


The way to open your eyes to your process potentially not working and its real impact is in taking a step back and honestly considering these potential realities. Due to unclear boundaries or lack of clarity around chain of sequence, a bottleneck occurs causing delays and confusion as to who is responsible. There are aspects of the process that accepts redundancy such as entering the same information into two places. There is a need for manually entering data with a potential for error at that entry level. There is a fear that taking information to the cloud or integrating sensitive or confidential information will get into the wrong hands. There is a gatekeeper to the process and no documentation available to reinforce steps or protocols, causing everyone to be at the mercy of the gatekeeper. There is no measurement associated with the process to merit its effectiveness, efficiencies, or value.  You know the process isn’t working but it will cost too much to switch vendors, systems, or get everyone transitioned. 


If you could relate to any of these scenarios, you need to detach and get into a mindset of process improvement. 


5. Owner Attachment: Could it be that your business is too codependent on you? Or could it be that you are too codependent on being the founder and business owner? If the business cannot run without you, you have a problem. If you believe your whole identity is wrapped up in your business, you have an even bigger problem. 


There comes a time, if you truly want your business to grow, that it must be able to run without you.


Just take a look at the other codependences to see why this is true. You cannot and should not build a business alone. It takes capacity, people, and resources. Period. The sooner you embrace the power of not doing it all and being it all, you unleash the true potential for your company to grow. More important, by the business not being so reliant on you, it becomes significantly more valuable. 

Momentum-Building Decision #23

Get out of your own way.  


It is understandable that you are attached to your business. It is your baby. You built it. You imagined it. You sacrificed for it. You ate, drank, and slept it. However, when you cannot separate your personal identity from your business, you have gotten caught in only honoring one aspect of who you are … the INC aspect. To truly live an amazing life, you need to honor all three aspects of who you are as a being. The ME aspect is the person you share with others – your family, friends, everyone you work with and acquaint yourself with. The MYSELF aspect is the you that has many passions and things that you love. What are you doing to nurture these other two aspects of you with the same passion that you nurtured your business? It’s time to detach from your business a little and reacquaint yourself with yourself. 


Yours in economic vitality,


P.S. I am honored to now be a part of the Forbes Councils, offering expert insights to Forbes Magazine.  Check out my tips in "15 Big Misconceptions About Leadership" and "How to Help Quiet Quitters Perform at Higher Levels."