How One Company LOST Half Its Business to Spreadsheets

Are you running your business on a bunch of disconnected spreadsheets and software? Or maybe you depend on a single employee for a lot of your core processes. If so, I have a cautionary tale for you – a story that happened to a potential client of mine a few years ago.

Their company seemed to be in great shape, everything appeared to be working fine, but then one seemingly small issue they thought they could ignore turned into a catastrophic problem.

This isn’t meant to scare you; it’s just food for thought. 

In this article, I’ll cover:

• Why relying on spreadsheets can be dangerous.
• A real-life story that happened to one of my prospects.
• Three simple, actionable steps you can take to protect your business right now, so something similar never happens to you.

Ready to dive in? Let’s jump to the story! 

P.S. What’s notable about this story is the timing of what happened.

The Story: A Client’s Data Mess

A few years ago, I started working with a potential client. Long story short, their customer contact information was a complete mess, and they were looking to fix it. It was scattered everywhere – in different Excel spreadsheets and other random systems.

The company distributes electronic components like computers, monitors, printers, and all the parts that go with them. They sold to large and medium-sized businesses and, with the rise of cryptocurrency, they started doing a lot of business selling video cards.

From the outside, it looked like business was booming. They were working hard, sending out invoices, making shipments, and closing sales. But behind the scenes, a big problem was waiting to happen.

The Disappearing Act

I met with the client and we had a strategy session. We created a plan to get them on track, specifically to fix their scattered contacts using digital tools. I prepared and sent a quote for the project, but just a few days later, the client just disappeared.

I have a rule: I try to contact a potential client at least seven times. If I don’t hear back, I close the deal as lost. I tried to reach them several times, but eventually, I had to mark the deal as lost.

The Shocking Discovery

After disappearing for a while, I finally reached the client, and he told me they had other priorities and needed to focus on some other things first. Fair enough.

About six months later, I saw on LinkedIn that one of his employees had opened a new company. I knew this employee pretty well because our offices were close; we’d often run into each other at lunch, at the store, or in the hallway. I decided to call the client and ask, “Hey, did your employee open a company just like yours, or am I mistaken?” I basically used it as an excuse to reconnect.

His response blew me away. He told me he couldn’t believe it. The employee had taken their entire client list and was badmouthing the company, using dirty tactics to steal their clients.

Since this employee had been a key salesperson, he knew everything – all the client databases, all the suppliers, and the entire logistical chain. He knew how the warehouse was organized and which components sold well. He even found an investor and made a large purchase of these components, creating a shortage that hurt my client’s business.

Not only were clients leaving, but the ones who stayed couldn’t even get the parts they needed. They were forced to buy from the former employee because he’d bought up all the stock with the help of his new partner.

Why Spreadsheets are Dangerous

This story isn’t so much a warning as it is a reflection on what could have been done to prevent it. I think we can all agree that most of us have at least one key employee – someone a lot depends on – whose departure would be a huge problem. While we trust our employees, what if something horrible happens?

Let’s get back to the story. The first question we need to ask is: Why was this situation even possible?

The most obvious reason is that the company was dependent on one employee. But also, it was using disconnected spreadsheets.

So should you stop using Excel? No. There’s nothing wrong with the software itself. I love spreadsheets, and honestly, a lot of stuff in my own company lives there.

The problem with files like Excel, Word, or any others where you can’t restrict deletion – is that lack of control. Even if you can prevent a file from being deleted, you can’t stop it from being modified. Without tracking changes, someone can just go in and completely wipe out the entire table simply by selecting all the cells and deleting everything. This is what happened to my client, or potential client, to be exact.

Your Emergency Plan: 3 Actionable Steps

The first step you need to take is to ask yourself, “Do I have an employee like this?” If you do, you need a plan – an emergency plan – even if everything seems fine. You must not let this situation continue and you need to solve it as quickly as possible.

The fastest, cheapest, and easiest way to do that is to first, create your own complete list of all your clients. A backup.

Create a private spreadsheet using something like Google Sheets. I know I’m suggesting another spreadsheet, but bear with me – this is a cheap fix. Think of this as an emergency solution, not a permanent one. What I’m suggesting is basically building a private spreadsheet that only you can access.

I won’t dive into the technicalities of how to do it with step-by-step instructions – you should audit your business and understand where your key customer data is stored, if stored at all – but here are three things I would do:

1. Automate lead collection. If you’re generating leads through marketing, use a service like Make.com or Zapier.com to automatically store them in a private Google Sheet. This ensures every lead is saved in a secure, central location from the moment it’s captured.
2. Require contact information for invoices. In your accounting or invoicing software, make the client’s name, email, and phone number required fields. Most programs allow you to do this. This way, every time an employee creates an invoice, they are forced to enter the contact information. You can then automatically sync this data to the same secure Google Sheet, giving you a backup of all client contact information.
3. Control employee contacts. Provide work phones to your key employees or use a service that links their personal phones to the company’s server. While this is a more complex process, it allows you to automatically back up all their contacts. You can then set up an automation to transfer these contacts to your secure Google Sheet.

The Immediate Lifesaver

This single spreadsheet will be a lifesaver later on when you’re ready for the next step. Now, it won’t stop someone from leaving and taking your contact list. It won’t prevent that malicious act. But what it will do is give you one crucial ability that my friend – the one we couldn’t help at the time – didn’t have:

It gives you the power to send out a mass email and warn your clients. You can let them know an employee has left, that the new company is a scam, and that they should ignore it. While you’re tied up with lawsuits, you’ll at least have a way to communicate directly with your entire client base. You’ll have all the phone numbers, all the emails, ready to go.

The electronics distributor I told you about, one of his biggest problems was that he had no single place to get all his contacts, upload them to a mailing service like Mailchimp, and send out an email the same day. A quick warning would have put that employee in a bad light, made people think twice, and helped smooth things over. The owner told me they lost almost half of their revenue. I don’t know if they ever recovered, but can you imagine? Someone comes to you tomorrow and takes half your business. That’s a huge blow, all because of something so simple.

Let me give you another example, which happened just last year. My accounting company, ClearTax, had this exact thing happen to them. A few employees left and started a competing business. The new company sent me an email saying it was time to submit my documents, with a logo very similar to ClearTax’s. I almost fell for it.

But because ClearTax had my contact information and could react quickly, they sent out a warning that the other company wasn’t legitimate. I was warned, so I stayed. I’m still a client. This is a simple, proven plan. It’s something you can – and should – do to keep your contacts safe. 

Now, let’s go a step further and talk about a systemic solution. 

The Systemic Solution: A Central Database

Getting all your contacts in one place is a great first step, but how do you solve this problem for good? You have to stop putting all your eggs in one basket. Your business shouldn’t depend on a single employee and scattered spreadsheets. The only way to achieve this is by building a strong business system.

Let’s take sales, for example. You can have different roles for the people who bring in new clients and those who service existing ones. The key is for clients to feel a connection to your company, not just to a single person. You can make this happen by having multiple people interact with a client.

For that to work without a hitch, you need a central database where all communications and information are stored. This system allows a new manager to pick up right where the old one left off. They can see when someone last called, what their orders were, where products were shipped, and even any personal notes about the client.

I recently worked with a client who made a great point during a workshop. They work with small businesses, and sometimes the owner is the whole operation. If they decide to go on vacation, they have to close their shop for two weeks. But what about a pending order? They have no way to check a note that says, “Don’t ship anything during these dates.”

This is where a single database, or what we call a CRM system, comes in. Now, a CRM is just a piece of software, a digital database with tables, like in Excel.

You can create a note field in the client’s record. Every time you’re about to send an invoice, you’ll open their file and see a red alert: “Do not send invoices or ship products between these dates.” This is how you solve the problem systemically. It’s about protecting your business, building processes, and ensuring all your valuable information is safe and accessible, no matter who’s working for you.

Build Relationships Beyond the Employee

The last crucial thing I want to talk about in this article is the importance of regular communication with your clients.

You shouldn’t have to rely on an employee to connect with a client only when they need to sell them something or discuss an order. You should have some minimal, consistent communication on your own.

Let them know, “Hey, we just opened a new office,” or “We’ve got a new warehouse,” or even, “We bought a new forklift and named it John!” Or “By the way, we have a new addition to the team; someone just had a baby.” You can turn these simple, human moments into opportunities to build relationships at the company-to-client level, not just the employee-to-client level.

This is how you prevent problems that stem from having fragmented information. I’m not even talking about the issues with different versions of data floating around – that’s a whole other topic. Today, we’re focused on the risks that come with this kind of scattered data. We tend to ignore these risks until a crisis hits. But they do happen, and they happen often.

It’s easy to think, “That’ll never happen to me; my employees are great.” But you just never know. We buy car insurance, even though we don’t plan on getting into an accident. We put fire extinguishers in buildings and install smoke detectors, not because we want a fire, but because we know they can happen.

As an entrepreneur, business owner, or manager, you have to think about these things. It’s your responsibility to make your business a little more secure for the future. You have to do this kind of homework. You should have a client database; you should have a system.

Think about what happens when you launch a new product. How do you inform your audience if you don’t have a single, unified list? I’m not trying to sell you CRM here, though I am, but the point of this whole article is different: stay vigilant, and while hoping for the best, prepare for the worst.

That’s all I have for today, folks. Let me know what you think in the comments. Do you agree or disagree? Are you still managing your business with spreadsheets and relying on a single employee for everything?

And if you need specialists who can analyze your current processes, set up the right systems, and make your business more secure, reach out to us. We’ll be glad to take a look and help you build a safer foundation for growth!